Parliament has approved the report of the Committee of the Whole on the vertical revenue allocation formula from the Administrator of the District Assembly Common Fund (DACF).
The report, which suggested a sharing formula of 60% for equality for Metropolitan, Municipal and District Assemblies (MMDAs), 38% for MMDA needs, and 2% for service pressure based on MMDA population density, was unanimously approved.
Habib Iddrisu, MP for Tolon and Second Deputy Majority Whip, moved the motion to approve the formula as the foundation for the distribution of GH¢4,554,034,657, which was seconded by Kwame Governs Agbodza, MP for Adaklu and Minority Chief Whip.
According to the formula, 6% of the 38% will be used to improve health facility and population ratio, another 6% to improve health/professionals-to-population ratio, 12% to education and educational facility to population ratio, 8% to improve trained teacher-pupil ratio, 3% to improve road coverage, and 3% to improve water coverage.
The DAFC Administrator suggests an annual formula for allocating and distributing the Common Fund to the MMDAs.
The District Assembly Common Fund Act 1993 (Act 455) created the District Assembly Common Fund in accordance with Article 242 of the 1992 Constitution.
The goal of establishing this fund is to provide resources to assist the local government’s development activities, having been established from the Consolidated Fund to channel development resources from the central government to local governments.
The DACF is a resource reserve consisting of at least 5% of national revenue put aside to be distributed among all District Assemblies in Ghana according to a formula approved by Parliament.
DACF Purpose
The fund is to ensure equitable distribution of the national resources for the development in every part of Ghana to improve housing schemes, support sanitation management, and strengthen decentralisation.
It is also meant to promote sustainable self-help development communities, improve upon primary healthcare delivery in all parts of Ghana, improve the country’s educational facilities, and ensure quality education as well as be used to support community policing.
Finance Sources
A minimum of 5% of total tax revenue is transferred quarterly into the fund as well as income from investment of the fund, donations and grants.
Charged On The Fund
There is disbursement to MMDAs/MPs, disbursement to Regional Coordinating Councils (RCCs), direct expenditures on behalf of MMDAs (reserves), administrative expenses directly related to funding administration (audit fee, bank charges etc.).
Spending Approved Areas
The MMDAs can use the fund on economic ventures (energy, markets, agriculture, services roads), social services (education, health, water, sports and recreation, self-help projects, educational activities), administration (capacity building of District Assemblies staff and Assembly members, accommodation, office equipment), environment (sanitation, disaster management), and MPs Common Fund.
By Ernest Kofi Adu, Parliament House