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metro finance

Source of Revenue
Development in Accra is financed from 2 levels and several sources. The two development financing levels are central (external sources) and local government sources (internal sources). The sources and the types of revenues and expenditures determine the structure of finance of the Assembly.

Structure and Level of Revenue and Expenditure
The revenue structure of AMA can also be categorized as internally generated or external sources. The degree of each source describes the level of financial autonomy of the Assembly. 

The higher the proportion of the internally generated revenue the greater the level of fiscal autonomy of the AMA from Central Government controls. The converse of this statement is applicable to AMA. AMA receives about 53% of its revenue from Central Government. This makes AMA vulnerable to GOG control. The GOG grant to the Accra Metro Roads Department alone forms about 25% revenue to AMA. 

Structure of Revenue: 2001 Financial Year
Local Revenue          Amount   %
Property Rates     7,302,242,908.60 12.71
Basic Rates              71,221,250 0.12
Land Revenue        247,224,114.50 0.43
Fees 10, 233,157, 396. 54 17.81
Licences     6,420,594,073.13 11.18
Rent on Assembly Properties         1,337,805,172 2.33
Investment and Savings Revenue         70,415,499.61 0.12
Miscellaneous    1,300,122,822.33 2.26
Sub-total 26,982,783, 236.71 46.96
Central Gov’t    
Salaries       5,282,373,254 9.20
Govt grant to AMRD 14,820,669,923.51 25.80
Central Gov’t         Amount    %
Central gov’t grant            64,885,000 0.11
Sanitation grant       5,000,000,000 8.70
Other grants             6,153,000 8.70
Common Fund       5,133,875,320 0.08

Receipt from

          43,878,400 8.94
Sub-total 30,351,834,897.51 52.91
Bi-and multi donors  
UNDP        18,850,000 0.03
KFW Grants UNDP        87,600,000 0.10
Sub-total       10,645,0000 0.13
  57,441,068,134.22 100

Nevertheless, with a large fiscal capacity, AMA has the propensity to generate more revenue to subset transfers from Central Government. However, analysis of internally generated revenue reveals that AMA generates large revenues from small segments of it tax base. It generates about 90% from three sources. These are property rates, Fees and Licences.

Composition of Internally Generated Revenues
Property Rate constitutes 27.06% whilst Fees and Licences constitute 37.92 and 23.80 respectively. Table 35 shows that AMA is not committed to making financial investment as it sees itself a facilitator of development rather than a profit  making institution. This is consistent with Central Government policy where profit-making investment is left in the hands of the private sector.

Composition of Internally Generated Revenues
           Local Revenue         Amount %
Property Rates     7,302,242,908.60 27.06
Basic Rates              71,221,250   0.26
Land Revenue    2    47,224,114.50   0.92
Fees 10, 233,157, 396. 54 37.92
Licences      6,420,594,073.13 23.80
Rent on Assembly Properties       1,337,805,172.00  4.96
Investment and Savings Revenue          70,415,499.61  0.26
Miscellaneous      1,300,122,822.33  4.82
TOTAL    26,982,783,236.71 100.00

As the capital of the nation, central government subvention to AMA is quite large in relation to other Districts/Metros/Municipalities. As at the last fiscal year, Central Government made subvention to the Assembly in the form of emoluments and development expenditure amounting to ¢30,351,834,897.51. G0G transfer to AMRD constituted the largest of the subvention – 48.83%.

Composition of Central Government Subventions to AMA as at 2001 Fiscal Year
Components            Amount    %
Salaries       5,282,373,254 17.40
Govt grant to AMRD 14,820,669,923.51 48.83
Central Gov’t Grant            64,885,000   0.22
Sanitation Grant        5,000,000,000 16.47
Components            Amount     %
Other grants               6,153,000   0.03
Common Fund         5,133,875,320  16.91

Receipt from

            43,878,400   0.14
TOTAL   30,351,834,897.51    100

AMA receives the bulk of its revenue from G0G. As indicated in Table 36. In 2001 it received ¢30,351,834,897.51 from Central Government sources. In order to achieve effective autonomy, AMA has to increase its internally generated revenues.  

Expenditure Structure of AMA
There are two types of expenditure in AMA– recurrent and capital expenditures. Recurrent expenditures refer to those categories of expenditure that are recurrent in nature, that is, occurring in every time period.

Expenditure Structure of AMA
Expenditure Type Amount %
Recurrent Expenditure    
Emolument 12,699,037,902.99 22.0
Travel and Transport 3,688,887,006.49 6.4
General Expenditure 2,690,613,228.07 6.7
Maintenance, Repair & Renew 776,470,010.35 1.3
Miscellaneous 17,661,857,879.59 30.3
Subvention 149,800,000.00   0.3
Sub-total 37,666,666,027.49 66.7

Capital Expenditure

Social and Economic Infrastructure 18,419,698,094.13 30.6
Plants and Equipment 1,295,621,913.44 2.2
Other Capital Expenditure 282,147,625.00 0.5
Sub-total 19,997,467,632.57 33.30
TOTAL 57,664,133,659.93 100

Capital expenditure relates to undertakings that generate benefits over a number of years; example construction of roads and schools.  AMA spends 66.70% of its revenue on recurrent expenditure whilst 33.30% on capital Expenditure.  However, 92.21% of the capital expenditure is on social and economic infrastructure.

Components of Capital Expenditure as at 2001 Fiscal Year
               Components Amount %
Social and Economic Infrastructure 18,419,698,094.13 92.21
Plants and Equipment 1,295,621,913.44 6.38
Other Capital Expenditure 282,147,625 1.41
TOTAL 19,997,467,632.57 100


Fiscal Capacity of AMA
The ability of AMA to carry out its fiscal tasks (expenditure responsibilities) is determined by its tax base. AMA as the primate city of Ghana has a large tax base. Although the extent of this tax base is not clearly defined, the rateable value of over 50,506 identified residential properties and about 4,054 commercial/industrial/mixed properties is estimated to be at ¢1,384,901,377,745.00. 

Its fiscal capacity is estimated to be at ¢89,426,107,890.  The fiscal capacity measures the revenue, which could be obtained if AMA applies the standard rate for taxable properties and entities in its tax base.

Tax Effort of AMA
The tax effort of AMA can be defined as the degree to which AMA as an authority actually uses its fiscal base to generate revenue to support its fiscal needs. It is actual revenue generated as a ratio of revenues that could have been raised if the standard tax rates were applied.

As such the tax effort of AMA in the last fiscal year – January 2001 to December 2001 is:
        26,982,783,236.71        X      100    = 30.17%


It has thereby, estimated that AMA has only 30.17% tax effort. The low tax effort of AMA is explained by the over dependence on Central Government for its fiscal needs. The Central Government provided 52.91% of AMA revenue in 2001. This jeopardizes the financial autonomy of the Assembly as well as the statutory authority of managers of the city of Accra.

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