Govt to help assemblies raise private funds for dev

29-08-08
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THE government is developing a bill which will provide a comprehensive law to guide Metropolitan, Municipal and District Assemblies (MMDAs) in raising private capital and other resources, the Minister of Finance and Economic Planning, Mr Kwadwo Baah-Wiredu, has said.
The Local Government Bill, he said, would “establish a Municipal Finance Authority with the mandate to mobilise resources from both internal and external resources on behalf of the MMDAs, to channel them into productive ventures”.
Mr Baah-Wiredu, who said this at the opening of a two-day inter-district forum at the Institute of Local Government Studies in Accra, underscored the need for alternative and affordable sustainable sources of financing to be sought for Metropolitan, Municipal and District Assemblies.
That, he said, would wean them off the central government financing and at the same time ensure sustainable and consistent development at the rural level since the implementation of decentralisation came with additional financial responsibilities.
Mr Baah-Wiredu said domestic revenue had become weak due to several reasons, including over-reliance on central government transfers, which were also under very intense pressure from all quarters of the economy.
“The capital markets, both domestic and international, are one of such alternative sources of financing for governments, private sector and districts. Capital markets have always served as a cheaper source of long term capital, which is mostly required for rural development,” he stated.
He said the bill would also include mechanism for knowledge transfer to MMDAs in any area which lacked the capacity to contribute to rapid economic empowerment, growth and poverty reduction.
Mr Baah-Wiredu indicated that the bill would also help the functioning of the Ghana Municipal Finance and Management Initiative, which is to assist MMDAs to significantly increase their internally generated funds, identify ways of minimising and finally eliminating financial leakages, among other things.
The Managing Director of African Connections Ghana Limited, a business consultancy firm, Dr Ayesha S. Hakeem, said this was the time for the country to accelerate the pace of her economic development toward achieving middle income status by re-invigorating her financial system and creating a bond market which would enable her to cost effectively borrow locally and internationally for sustainable rural development.
“In order to ensure middle income status, Ghana must commit its resources in a manner that allowed it to accelerate development. This requires the public and private sectors to take full advantage of current financial market conditions,” she said, adding that in order to develop a vibrant bond market, there was the need for regular in-service financial training for local government officials.
She said there was therefore the need to facilitate capacity building for MMDAs to recognise and understand various financial solutions available to them, saying that such capacity building would assist MMDAs to put in place internal structures that would serve as catalysts for collaboration with the private sector in a public-private partnership.