Component One: Strengthening the Fiscal Framework for Decentralisation

Team Members

Mr Joseph Antwi – Head

Mr Tony Mends – Technical Advisor

Mr Sivert Ofori – Procurement Specialist

Overview of Component 1

Component 1 of the LGCSP is working towards the establishment of a more predictable and transparent fiscal framework for local governance within the framework of the national decentralization policy. This includes reviewing all mechanisms for revenue mobilisation for local government authorities to ensure a more predictable revenue and expenditure streams.

Some of the key activities being undertaken by the component towards the realisation of this objective include: Developing an intergovernmental fiscal policy, which include the revision of the 2008 Intergovernmental Policy Framework. These include the set of rules and regulations on the how, what, when and where central government transfers resources to local government as well as guidelines for utilising these resources and reporting. This component also provides support to efforts local Government Public Financial Management reforms in the areas of budgeting, reporting and auditing, revenue management, asset management and social accountability. The component has also introduced yearly regional composite budget hearings for the MMDAs to enhance social accountability and participation in the budgeting process of the MMDAs. Over the years, it is attended by traditional leaders, ordinary citizens, CBOs development partners, among others.

Some of the key completed outputs of this component are as follows:

  • Developed Simplified Public Financial Management Templates for the transmission of complex budget and audit information to citizens.
  • The 2008 draft inter-governmental fiscal framework has been revised and approved by Cabinet for implementation.
  • Full rollout of the composite budget system for the MMAs. This includes a system for monitoring system capture and analyse all Metropolitan, Municipal and District Assembly (MMDA) data with respect to annual budgets, transfers, quarterly returns and financial statements. MMDAs manual system of budgeting has been converted into an electronic system.
  • Instituted yearly budget officers’ conference to enhance community of practice among the budget officers.
  • Completed studies on Budgeting, Reporting and Auditing reforms towards the introduction of PBB in the MMDAs.

Citizen Public Financial Management Templates: Simplifying Public Financial Management Information for Citizens

The Government of Ghana is implementing the Local Government Capacity Support Project (LGCSP) through the Ministry of Local Government and Rural Development (MLGRD). The Ministry of Finance (MOF) is implementing Component 1, which aims at strengthening and deepening decentralization in general and fiscal decentralization in particular. A key objective of Component 1 is to improve the transparency and accountability of the public budgeting process in the Metropolitan, Municipal and District Assemblies. This will require active involvement and participation of the citizenry in the decision making process.

To this end, the LGCSP has developed simplified budget and financial templates in simple and easy to understand formats to enable MMDAs present key public financial management (PFM) information regularly to the public.

The simplified templates were developed by the Ministry of Finance’s Fiscal Decentralization Unit in collaboration with the Ministry of Local Government and Rural Development, the Controller and Accountant General’s Department, Internal Audit Agency, Audit Service, and the National Development Planning Commission.

The purpose of the PFM Templates is to enable District Assemblies disseminate financial information to the citizens. The Templates are intended to help ordinary citizens and the community as a whole to understand and participate in the management of the finances of the Assembly and in the process, to improve transparency and accountability of the public budget process to the citizens.

The administration of the template will enable the District Assemblies to

  • provide regular financial and budget information and also feedback on on-going projects to the citizens;
  • elicit support and participation in the implementation of projects in the districts by citizens; as well as
  • communicate first-hand information on the activities of the Assembly to citizens.

The simplified template use a combination of photos, charts, figures and text to simplify complex financial information in a way that ordinary citizen will understand. A guiding principle for the design of the template is that it must be simple enough for someone with basic education, up to primary 6 level, to understand.

The template is designed primarily for all people within the Assembly, targeting the following group of people:

  • Trade Associations
  • Self-employed artisans and professional associations and groups
  • Landlords/Land owners
  • Drivers Associations/Unions
  • Civil Society Organizations
  • Youth groups
  • Faith-based organizations
  • Women groups
  • Disabled and marginalized groups
  • Traditional authorities
  • Other interested organizations and persons

 In all, there are five sets of budget and five sets financial templates. (Insert link for templates)

Budget templates include the following:

  1. Things the Assembly plans to do this year
  2. Funds available to the assembly and sources
  3. Uses of Assembly funds
  4. Mid-year budget review
  5. Budget performance

 Financial Templates

  1. Money for the Assembly
  2. How the Assembly spends its money
  3. Assembly’s financial position
  4. Capital projects implementation status for the year
  5. Annual audit template

Each of the 260 District Assemblies have been issued with a set of budget and financial templates with accompanying guidelines on how to complete the templates, validation process, timelines for circulating completed templates and responsibilities.

A quick feedback from a cross section of citizens in 46 MMAs, where the template is used by the assembly, indicates that citizens are taking more interest in PFM issues since the introduction of the first set of templates. This is a great encouragement for efforts at increasing citizen’s interest in MMA budgets.