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INTRODUCTION

The Local Government Capacity Support Project: Enhancing Fiscal Decentralization and Financial Management Reforms

Overview of the Local Government Capacity Support Project

The Local Government Capacity Support Project (LGCSP) is a five-year project being implemented by the Government of Ghana with funding from the World Bank. The LGCSP, which started in 2012 and will end in 2013, is implemented by the Ministry of Local Government and Rural Development (MLGRD) in collaboration with the Ministry of Finance and Economic Planning and the Local Government Service. The project targets 46 Municipal and Metropolitan Assemblies that were in existence before 2012.

The LGCSP uses a combination of policy reforms and capacity building initiatives as well as provides additional resources to 46 MMAs through existing district assembly funding mechanisms to strengthen local government capacities. It focuses on fiscal decentralization and financial management reforms, given the importance in supporting administrative decentralization as well as enhancing local service delivery and governance outcomes. It is expected that the project will result in the promotion of overall decentralisation in Ghana as well as strengthen transparency and accountability in the local governance process. The LGCSP also strengthens local government accountability mechanisms to ensure that district assemblies are held to account by citizens and national government.

The objectives of the LGCSP are:

  • To strengthen inter-governmental fiscal framework;
  • To strengthen local public financial management and accountability for improved infrastructure and services in urban assemblies; and
  • To improve citizens’ engagement with urban assemblies and their perceptions of urban management.

The LGCSP contributes to Ghana’s Shared Growth and Development Agenda (GSGDA) as well as comprehensive local government and decentralization reforms being undertaken by the Government of Ghana (GoG). Two of the pillars of Ghana’s Shared Growth and Development Strategy are particularly relevant to the LGCSP. These are: (I) infrastructure and human settlement development and (ii) transparent and accountable governance.

The project has four components, each of which contributes to a specific objective of the project. They are:

  • Component 1: Strengthening the fiscal framework for decentralization.
  • Component 2: Enhancing decentralized urban service delivery.
  • Component 3: Stimulating demand for accountable governance and service delivery.
  • Component 4: Institutional and project management support.

The Fiscal Decentralization Unit (FDU) of the Ministry of Finance and Economic Planning is implementing component 1, while MLGRD is implementing components 2, 3 and 4. The Local Government Service Secretariat (LGSS) is responsible for a sub-component of component 2, which is the capacity building of the 46 MMAs.

The LGCSP complements and harmonizes with existing and planned support from other development partners to the overall decentralization framework. Specific support to administrative decentralization is already being provided by the Danish Government (through DANIDA); French (through AFD) and German (through GIZ and KfW) governments, with further support planned by the European Union (EU).

 

The LGCSP Project at a Glance

Total project cost
  • $175 Million dollars
Source of funding
  • World Bank IDA credit
Number of beneficiaries at the Metropolitan and Municipal areas
  • 46 Metropolitan and Municipal Assemblies (Link to list of MMAs and Region – GIS Maps)
National level project beneficiaries

 

  • Ministry of Finance and Economic Planning
  • Ministry of Local Government
  • and Rural Development
  • Local Government Service
  • Media
  • Civil society organizations
Local level, project beneficiaries
  • The 46 urban assemblies
  • Local civil society organizations that support social accountability in the urban assemblies
  • Initiatives and citizens resident in the jurisdiction of metropolitan and municipal assemblies (or MMAs) that receive the UDG.
Specific reform areas LGCSP

 

  • Budget reform
  • Reporting and auditing systems
  • Revenue management
  • Asset management
  • Social accountability