US$20m earmarked for dev’t fund .. DACF takes over donor partner support

The District Assembly Common Fund (DACF) have set aside US$20m in this year’s Proposed Formula for the management and disbursement of the District Development Fund (DDF).

For 2018, DACF are expected to manage and disburse the DDF, the Donor Partner Support to the Metropolitan Municipal and Districts (MMDAs), a report of the ‘Committee of the Whole’ on the Proposed Formula for the Sharing of the District Assemblies’ Common Fund for the year has revealed.

“In the past, the Ministry of Finance either delayed or was unable to make funds available for the counterpart funding support and this stalled disbursement of funds from the donors to the DDF.

An amount of US$20m has therefore been earmarked in this year’s formula as counterpart fund for the DDF” the Administrator for the DACF, Irene Naa Torshie Addo told Parliament last  Thursday following the approval of GH₵1.8billion as Proposed Formula for the sharing of the 2018 DACF.

According to the report, the decision to allow the DACF manage and disburse the DDF is part of the Responsiveness Factor component of DACF. It is also to strengthen the performance based grant for improved service delivery as well as incorporate the achievements of the DDF into the DACF Responsiveness Factor.

Contributing to the motion for the adoption on the Proposed Formula for the Sharing of the District Assemblies’ Common Fund for the year, the Administrator for the DACF, told Parliament that the main strategy is to use the District Performance Assessment Tool (DPAT), which is a common assessment tool to evaluate all MMDAs and the result used to allocate and distribute the DACF RFG due to all the Assemblies.

The Administrator stated that managing the DDF will help improve disbursement of the DDF as funds will be made available as counterpart funding support.

The annual allocation to the DACF in 2018 as contained in the Appropriation (No.2) Act, 2017 (Act 951) is GH₵1.8billion. The total allocation was based on 5percent of projected national tax revenue for 2018.

In developing the Formula, the Administrator was guided by the ‘Basic Needs’ approach to development with the following indicators: Health Service, Education Service, Water Coverage and Tarred Roads Coverage.

Under this approach, MMDAs with more facilities/services receive less in order to bridge the development gap between the Assemblies.

The proposed Formula also took into account other factors such as: Responsiveness – improvement in revenue generation and collection, Budget implementation status; Service Pressure and Equality.

A total of 38 new Assemblies have been established bringing the total number of MMDAs  to  benefit from the Fund in 2018 to 254, the report captured.

The Administrator indicated that the new Assemblies will have to depend on the data of their parent Assemblies, for their share of the Fund.

Capping of Earmarked Funds

The report of the ‘Committee of the Whole’ on the Proposed Formula for the Sharing of the District Assemblies’ Common Fund for the year 2018, also indicated that the capping of earmarked funds as provided for by the Earmarked Funds Capping and Realignment Act,2017 (Act 947) has drastically reduced funds that should accrue to the DACF.

For instance prior to the enactment of Act 947, 7.5percent of total tax revenue was earmarked for the DACF. This implies that the estimated amount for the Fund for the year 2018 will have been about 2.71billion (based on 7.5percent of total tax revenue for 2018).

However, due to the provisions of Act 947 which capped the total allocation to the Fund at 5percent, the total amount due the Fund for 2018 is GH₵1.8billion.

It was noted that having capped the amount due the Fund to 5percent, the Budget Statement of the Government for 2018 Fiscal Year made further allocations from the 5percent due the Fund to finance other Projects and Programmes.

This implied that total amount available to the Administrator to disburse to the Assemblies is GH₵788m.

The Committee was of the view that the amount left for the Fund to disburse to the various MMDAs is woefully inadequate. The shortfall will seriously impair the planned activities of the MMDAs who needed these funds to complete the numerous projects being undertaken by the Assemblies.