MUNICIPAL FINANCE
GROUP 8
MUNICIPAL FINANCE ASSIGNMENT 1
MEMBERS
ITSIAH EMMANUEL
OSEI BENJAMIN YEBOAH
ABUBAKAR ABDUS-SAMIU JUNUO
DEBRAH MAKAFUI MIRANDA
INTRODUCTION
Municipal finance simply talks about the revenue and expenditure decisions of a municipal
government.
It covers the sources of revenue that are used by municipal government. taxes (income, sales,
property, excise taxes), user fees, and intergovernmental transfers.
It is made up of ways for financing infrastructure by the usage of operating revenues,
borrowing, charges on developers and public-private partnerships.
Issues about expenditures at the local level, accounting for expenditure and the revenue
decisions, including the budgetary process and financial management.
SECTIONS OF THE ACT 936 THAT GIVES RESPONSIBILITY
AND POWER TO MMDAS TO COLLECT AND SPENT REVENUE.
Section 124 of the Act 936. Revenue of District Assemblies.
Subsection 1. The revenues of the District Assembly comprise of;
 The decentralized transfers.
 Internally generated funds.
 Donations and grants
Subsection 2. The decentralized transfers comprise funds from the following revenue sources;
 The District Assembly Common Fund.
 Grant-in-aid and any other revenue transferred from the central government.
Subsection 3. Internally generated fund comprises of funds from the following sources;
 Licenses
 Investment income
 Fees and miscellaneous charges
 Rates
 Taxes
Subsection 4. A District Assembly shall open and maintain a bank account for revenues and other moneys raised or
received by it.
Subsection 5. A District Assembly may borrow to finance projects in accordance with relevant laws.
Section 125. Establishment of the District Assembly Common Fund.
The District Assemblies Common Fund consists of money allocated by parliament and any interests and dividends
that accrue from the investments of moneys from the Common Fund.
Section 126. Parliament shall annually allocate no less than 5% of the total revenue of the country to the District
Assemblies for development.
Subsection 137. Charges for license
 A District Assembly may charge fees for a license issued by or on behalf of the District Assembly,
Subject to guidelines in respect of the charging of fees for license as may be prescribed by the Minister.
Subsection 138. Licensing of vehicles
 The owner or a person in possession of a vehicle of a type mentioned in the Ninth Schedule use within a
district shall obtain a license for the vehicle from the District Assembly and pay the fee required by the
by-law.
Section 138. Entertainment licenses.
A person shall not undertake or do any of the acts or things specified in the tenth schedule within a district
unless the person has obtained a license from the District Assembly for that purpose and paid the fees
specified in the by-law.
Section 141. Power to charge fees.
 A District Assembly may charge fees for any services or facilities provided by that District Assembly or for any
permit issued by or on behalf of the District Assembly subject to guidelines on fee charging prescribed by the
Minister.
Section 142. Taxes and other revenues
 A District Assembly shall collect the taxes chargeable on the income of the income earners listed in the twelfth
schedule. The Minister in consultation with the Minister responsible for finance and subject to the term and
conditions agreed upon with and appropriate public body, authorize that the public body collect taxes imposed on
the income earners on behalf of the District Assembly.
Section 143. Investment income.
 The District Assembly in consultation with the Minister responsible for finance invest any portion of moneys of
the District Assembly in safe security other than government treasury bills. Income from this investment shall
constitute part of the revenue of the Assembly.
Section 144. Rating authority.
 The District Assembly shall be the only authority to levy rates for a district despite any customary law
to the contrary.
Section 145. Duty to levy sufficient rates.
 The District Assembly shall levy sufficient rates to provide for the total estimated expenditure to be
incurred by the District Assembly during the period in respect of what the rate is levied.
 The District Assembly may levy rates for an additional amount required to cover expenditure
previously incurred by the District Assembly to meet contingencies or to defray any expenditure
which needs to be defrayed.
 The additional rates may be made and levied before the date on which payment is received in respect
of the immediate rates.
Section 92. Development charges
Subsection 1. A District Planning Authority may levy a development charge in respect of a permit
to carry a physical development.
Development charges shall be utilized for the provision of infrastructure and services.
Development charges shall rate by, payable to and collected by the District Planning Authority to
the exclusion of any other body, except in the case of land estate where other specific bodies take
responsibility to provide infrastructure and services.
QUESTION 2: RELATE THIS TO CURRENT OR EXISTING
SITUATION IN ANY MMDA OF YOUR CHOICES.
From the Act it can be seen that the constitution gives the mandate of district assemblies to
spend and collect revenue but the problem facing the current district assemblies is poor
revenue mobilization.
Below is a brief finding on spending in the 2020 composite budget for Ablekuma Central
The Internally Generated Funds (IGF) for
Ablekuma Central had a budget of
4,879,752.79 cedis but in reality, was able to
make 1,229,462.56 representing less than a
quarter of the expected funds. Investments
and miscellaneous did not generate anything
for the Municipality.
Painting a picture of low generation of
revenue which in turn has drastic
consequences on the municipality i.e. slow
pace of government developmental works.
SOURCE; 2020 COMPOSITE BUDGET FOR
ABLEKUMA CENTRAL
Also, low revenue performances are as a
result of inadequate transfer of funds from
central government. As evident, the table or
budget was as a result of the identified
responsibility and power to MMDAs to
collect and spend revenue against their roles
and responsibility towards the citizens
WHAT ARE THE LEGAL FRAMEWORKS FOR MUNICIPAL
FINANCE IN GHANA AS LEARNT IN THE ACT 936?
Legal framework simply means a set of laws, rules and regulations that apply in a specific country. The
legal framework to be review is based in the municipal finance in Ghana, therefore, the legal framework
for municipal finance in LGA Act 936, 2016 talks about the district budget submission of the budget
estimates the revenue of the district assembly and the district assembly common fund.
District Budgets
Section 122 The budget for a District Assembly shall comprise
the aggregate revenue and expenditure of the Office of the District Assembly, the Departments of the
District Assembly; and
the budget for the annual development plans and program of the Departments of the District Assembly.
Submission of budget estimates
Section 123
Each District Assembly is responsible for the preparation, administration and control of the budgetary
allocation of the Office of the District Assembly and the Departments of the District Assembly.
Each District Assembly shall before the end of each financial year, submit to the Regional Coordinating Councils, the detailed budget for the respective district that states the estimated revenue and
expenditure of the District Assembly for the ensuing year.
The Regional Co-ordinating Council shall collate and coordinate the budgets for the districts in the
region and shall submit same to the Minister responsible for Finance
Revenue of District Assemblies
Section 124
1. The revenues of a District Assembly comprise
 donations and grants.
decentralized transfers;
internally generated funds
2. Decentralized transfers comprise funds from the following revenue sources:
a. the District Assemblies Common Fund;
b. grants-in-aid from the central government; and
c. any other revenue transferred from the central Government to the District Assembly.
3. Internally generated funds comprise funds from the following sources:
 taxes, investment income and rates
licenses,
fees and miscellaneous charges,
4. A District Assembly shall open and maintain a bank account for revenues and other
moneys raised or received by it.
A District Assembly may borrow to finance projects in accordance with relevant laws.
For the purposes of this section “grants” means donations being funds paid directly to
HOW DOES THIS COMPARE WITH OTHERS IN AFRICA
In Nigeria, there are three tiers of government guaranteed by the 1999 constitution, namely; the federal, states and
the local governments.
These levels or tiers of government are existing in order to help develop the economy of Nigeria. For the purpose
of realizing the objectives of the government, they make every effort to provide the basic needs of the people
within their geographical area.
Danjuma (1994) realized that the ancient Nigerian history showed the setting-up of six adhoc Revenue Allocation
Commissions, they are Philipson Commission (1946), The Hicks-Philipson Commission (1951), The Chicks
Commission (1953), The Raisman Commission (1958), The Binns Commission (1964) and The Dina Commission
(1969).
Later efforts including Allocation of Revenue Act (1981) and that of the Allocation of Revenue Amendment Act
(1984). These efforts continued to increase the revenue accruable to the Federal Government at the expense of
state and local governments.
Therefore, internally generated revenue and stabilization funds are significant in the funding of the total
expenditure of states in Nigeria at both 5% and 1% levels of significance, loans and grants are insignificant
THE GOOD AND BAD SIDES OF OUR SYSTEMS IN WHEN
COMPARED WITH THE OTHERS?
Since the central government has allocated at least 5% of the nation's revenue to local
government in the United States, our system is far better on the local government's side than it is
in Nigeria.
The drawback of our system is that, in contrast to Nigeria, where funds are distributed from the
federal to the state governments, the regional coordination council depends on the district
assemblies for income mobilization.
It is clear from the study that local governments in Africa rely more on grants and internal
money than they do on external funding, notably Central Government funding for their
expenditure profile.
These put them in risk and hinder their efforts to achieve the much-desired political
sovereignty.