Mahama Ayariga, the Minister-designate for Local Government, Chieftaincy and Religious Affairs, has called on Ghana’s Metropolitan, Municipal and District Assemblies (MMDAs) to become financially self-reliant. He stated that the Constitution intends for assemblies to fund their administrative operations through internally generated funds (IGF), not central government transfers.
Mr. Ayariga made these remarks during his vetting before Parliament’s Appointments Committee on Thursday, August 27. He argued that the District Assemblies Common Fund (DACF) and other central government allocations are specifically for development projects. This means local assemblies should primarily use their own revenue for day-to-day administration, reducing dependence on national coffers.
This push for financial autonomy aligns with Ghana’s broader decentralization agenda, aiming to empower local governance structures. Historically, many MMDAs have struggled to generate sufficient internal revenue, often relying heavily on the DACF for both administrative and development expenditures. This reliance has sometimes strained national budgets and limited the scope of local development initiatives across the country.
“The first thing that we have to understand is the intention of our Constitution: that assemblies should be self-financed,” Mr. Ayariga explained to the committee. He further noted that an assembly’s capacity to generate its own revenue is a key criterion for granting it assembly status. This constitutional provision underscores the foundational expectation for local government financial independence.
Mr. Ayariga, who is also the Member of Parliament for Bawku Central, identified several avenues for MMDAs to boost their revenue. He specifically mentioned property rates, market revenues, and various local charges as significant untapped sources. He stressed that the potential of property rates, in particular, has not been fully exploited by many assemblies. This suggests a need for improved valuation and collection mechanisms at the local level.
He also linked local government financing to Ghana’s rapid urbanization. Growing urban centers present significant economic potential that MMDAs can harness to strengthen their financial bases. Mr. Ayariga cited major international cities as examples where local governments have built strong financial foundations by leveraging economic activity within their jurisdictions. Ghana’s urban population growth offers similar opportunities for revenue generation.
If approved as Minister, Mr. Ayariga's priority will be to establish a comprehensive urban structure. This structure would identify key elements required for effective local development and enhanced revenue mobilization. He believes effective urban planning, combined with stronger revenue collection, will give assemblies greater capacity to finance projects and provide essential services. This approach aims to reduce their excessive reliance on central government support, fostering true decentralization.
The implications of this policy shift are significant for local governance and national development. MMDAs will face increased pressure to innovate in revenue generation, potentially leading to new local taxes or more efficient collection of existing ones. Success in this area could free up central government funds for other national priorities, while failure could exacerbate financial challenges at the local level. Investors and businesses operating in various districts should monitor these developments closely, as changes in local taxation and service provision could affect their operations. This renewed focus on local financial strength is crucial for Ghana's long-term economic stability and equitable development.