UNIT 1: INTRODUCTION (DEFINING THE CONTEXT OF DEVELOPMENT FINANCING)

1. UNIT 1: INTRODUCTION (DEFINING THE CONTEXT OF DEVELOPMENT FINANCING)

2. Decentralization, Decentralized Planning & Fiscal Decentralization What do You Understand by Decentralization? UNIT 1: INTRODUCTION

3. Decentralization, Decentralized Planning & Fiscal Decentralization What is the Purpose of Decentralization? • Failure of centralized systems to deliver efficiently • Decentralization has the potential to ensure a more equitable distribution of resources • It is part of the good governance/democratisation agenda • It is supposed to engender popular participation in decision-making UNIT 1: INTRODUCTION

4. Decentralization, Decentralized Planning & Fiscal Decentralization What are the Various Types of Decentralization? 1. Administrative Decentralisation • Transfer of public service delivery functions from central government to local governments, field offices of MDAs, etc • Two main types: • Delegation • Deconcentration UNIT 1: INTRODUCTION

5. Decentralization, Decentralized Planning & Fiscal Decentralization What are the Various Types of Decentralization? 2. Economic Decentralization (Divestment) • Transfer of economic planning, production, distribution or other economic functions from government to voluntary, private or non-governmental institutions. • Examples: • Privatisation (a.k.a. Market Decentralisation) • Deregulation: UNIT 1: INTRODUCTION

6. Decentralization, Decentralized Planning & Fiscal Decentralization What are the Various Types of Decentralization? 3. Political Decentralisation: • Transfer of political power from central governmentto lower-tier authorities. • Devolution is the ultimate form of political decentralization UNIT 1: INTRODUCTION

7. Decentralization, Decentralized Planning & Fiscal Decentralization 3. Political Decentralisation (cont.): • Devolution: • Full transfer of resource mobilization and allocation responsibilities from central government to an quasi-autonomous, sub-national public authority that is fully independent of the devolving authority • Usually culminates in the establishment and empowerment of local governments that is accountable to the local population. • Usually involves the establishment of a legal and regulatory framework UNIT 1: INTRODUCTION

8. Decentralization, Decentralized Planning & Fiscal Decentralization What are the Various Types of Decentralization? • Decentralized Development Planning • It is the transfer of development planning (and implementation) functions and powers from central government to local governments, communities and other sub-national entities. UNIT 1: INTRODUCTION

9. Decentralization, Decentralized Planning & Fiscal Decentralization What are the Various Types of Decentralization? • Fiscal Decentralisation: • The restructuring of existing systems of resource mobilization and allocation with the aim of empowering local government authorities to perform their decentralized functions UNIT 1: INTRODUCTION

10. Decentralization, Decentralized Planning & Fiscal Decentralization What are the Various Types of Decentralization? • Fiscal Decentralisation (cont.): • Fiscal Decentralisation may include: • Formulas for transferring revenue to local govts; • Legally empowering local govtsto collect and retain some taxes, fees, etc; • Legally empowering local govtsto prepare their own budgets and disburse funds • It is a key ingredient for successful devolution. UNIT 1: INTRODUCTION

11. Overview of Ghana’s Decentralization Policy Some Key Features: • Re-demarcation of administrative jurisdictions (metropolitan areas, municipalities and districts) • Establishment of Metropolitan, Municipal and District Assemblies • Establishment of sub-district structures: Town/Area Councils, Unit Committees, etc UNIT 1: INTRODUCTION

12. Overview of Ghana’s Decentralization Policy Some Key Features (cont.): • Restructuring of resource allocation and resource sharing b/n central and local govts • E.g. District Assemblies Common Fund, land rates and minerals royalties, grants, transfers, and external credits to local governments • Designating MLGRD as the agency responsible for implementation of the decentralisation policy UNIT 1: INTRODUCTION

13. Overview of Ghana’s Decentralization Policy Some Key Features (cont.): • Establishment of NDPC to co-ordinate decentralised development planning • Establishment of structures and mechanisms to enhance probity, accountability and transparency in public administration at all levels of government UNIT 1: INTRODUCTION

14. Overview of Ghana’s Decentralization Policy Main Components of Ghana’s Decentralization Policy • Political decentralisation • Administrative Decentralisation • Decentralized Development Planning • Fiscal decentralization UNIT 1: INTRODUCTION

15. Overview of Ghana’s Decentralization Policy Main Components of Ghana’s Decentralization Policy A. Political decentralisation • Re-demarcation of the country into districts • Establishment and empowerment of the RCCs, MMDAs & the Sub-District Structures to perform various functions • Establishment of the MMDAsas legislative, administrative, planning, service delivery, budgeting and rating authorities • Sub-district structures to facilitate resource mobilization and popular participation UNIT 1: INTRODUCTION

16. Overview of Ghana’s Decentralization Policy Main Components of Ghana’s Decentralization Policy B. Administrative Decentralisation • Restructuring of ministerial institutions and transferring defined functions, powers and resources to local govts • Integration of sectoral programmes, resources and assets into the Assembly system • Restructuring of 22 deptsinto 16, 13 and 11 deptsunder the Metropolitan, Municipal and District Assemblies respectively • Passage of a Local Govt Service Act to bring all employees of the MMDAs into the public service. UNIT 1: INTRODUCTION

17. Overview of Ghana’s Decentralization Policy Main Components of Ghana’s Decentralization Policy C. Decentralised Development Planning • A bottom-up, integrated and participatory development planning system. • Planning at district level, sub-district and sectoral levels coordinated by the DPCU • RPCUs responsible for harmonising and synchronising district devtplans based on national development policy framework and guidelines issued by NDPC • Development of service centres as well as rational, efficient and sustainable settlement and land use patterns UNIT 1: INTRODUCTION

18. Overview of Ghana’s Decentralization Policy Main Components of Ghana’s Decentralization Policy D. Fiscal Decentralisation • Meant to enhance the Assemblies’ access to resources • Creation of the DACF , allocated based on a formula prepared by the Administrator of DACF and approved by Parliament • Establishment of ‘MPs Common Fund’ • Ceding of income tax payable by informal sector operators, vehicle operators, and betting, entertainment and advertising companies to the MMDAs. UNIT 1: INTRODUCTION

19. Overview of Ghana’s Decentralization Policy Main Components of Ghana’s Decentralization Policy D. Fiscal Decentralisation • IGF sources of the MMDAs: user fees, rates (basic and property), licenses, investment incomes, loans/overdrafts, etc • Submission of MMDA budget to the RCCs for harmonisation, co-ordination and collation and approval of by Min. of Finance. UNIT 1: INTRODUCTION

20. Financial Capital as One among Several ‘Capitals’ Needed for Development: • Finance (or Financial Capital) • Natural Capital • Human Capital • Institutional Capital • Social Capital UNIT 1: INTRODUCTION

21. Discussion Question • What kinds of knowledge about Development Financing does the Planner require? • Why should Planners be Knowledgeable about Development Financing? UNIT 1: INTRODUCTION