www.udsspace.uds.edu.gh UNIVERSITY FOR DEVELOPMENT STUDIES ASSESSING THE NEXUS BETWEEN INTERNALLY GENERATED FUNDS AND INFRASTRUCTURAL DEVELOPMENT OF THE MMDAs IN THE NORTHERN REGION OF GHANA IBRAHIM ADAM 2020 1 www.udsspace.uds.edu.gh UNIVERSITY FOR DEVELOPMENT STUDIES ASSESSING THE NEXUS BETWEEN INTERNALLY GENERATED FUNDS AND INFRASTRUCTURAL DEVELOPMENT OF THE MMDAs IN THE NORTHERN REGION OF GHANA BY IBRAHIM ADAM UDS/MCM/0149/17 THESIS SUBMITTED TO THE DEPARTMENT OF ACCOUNTING AND COMMERCE, SCHOOL OF BUSINESS AND LAW, UNIVERSITY FOR DEVELOPMENT STUDIES IN PARTIAL FULFILLMENT OF THE REQUIREMENTS FOR THE AWARD OF MASTER OF COMMERCE DEGREE IN ACCOUNTING. JUNE, 2020 2 www.udsspace.uds.edu.gh i www.udsspace.uds.edu.gh ABSTRACT SEND-Ghana (2008) report revealed that MMDAs have 130 deficits in infrastructure with majority of the MMDAs in the Northern Region and 45% of most local infrastructures remain uncompleted especially IGF finance infrastructure. The study assessed the nexus between internally generated funds and infrastructural development of the MMDAs in Northern Region of Ghana. The study specifically identify whether there is significance difference between IGF of the MMDAs in the Northern Region and national IGF average, to examine the effect of internally generated funds (IGF) on infrastructural development in the Northern Region of Ghana and to explore the challenges facing the MMDAs in the Northern Region in mobilizing and utilizing of internally generated funds (IGF). The study employed descriptive research design with a sample size of 127 selected through purposive and simple random sampling. Data was collected using closed and open ended questionnaire. The study employed one sample T- Test, Generalized Method of Moments and Kendall’s Coefficient of Concordance. The study found out that there is difference in internally generated fund mobilization performance between the MMDAs in the Northern Region and that of the national internally generated average with MMDAs in Northern Ghana performing below the national average. Also, we observed there is positive relationship between internally generated fund and infrastructural development which is significant at all conventional levels. The positive effect of internally generated fund is significant irrespective of the model specification. Inadequate linkage between the tax payment and the services, weak tax rate payment, lack of enforcement of payment of property rates among others. The study recommends the MMDAs to be creative and innovative to enhance the mobilization of internally generated fund to enhance infrastructural development which is critical for local economic growth. ii www.udsspace.uds.edu.gh ACKNOWLEDGMENT I express my gratitude to the Almighty Allah for granting me sustenance for persuing this degree. My special acknowledgement goes to my Supervisor Mr Andrew Salakpi, of the University for Development Studies, Wa Campus, Ghana, whose direction and efforts aided the outcome of this research and Dr. Ibrahim Osman Adam the HOD of Accounting and Commerce, SBL, University for Development Studies, Wa Campus for their resourcefulness. Your valuable contributions, encouragement and assistance throughout the research will always be appreciated. My endless appreciation goes to Mr. Abubakari Zakaria a course mate and an intimate friend for your support and resourcefulness. Indeed you are a good friend. I also appreciate the support of all my course mates. It would have been difficult for me to do it without your support and encouragement. My special thanks also go to Mr. Abdulai Wumbei Snr. Asst. Registrar TaTu, Mr. Osman Baba Daney, Regional Accountant RCC N/R, Hudu Zakaria GMFO Gusshegu Municipal Assembly for paying special attention towards my academic progression. I also thank Dr. Alhassan Musah, Dr. Ibrahim Kaleemof UDS Wa campus for your encouragement and advice. To my dear wife Hajia Ramlatu Kadri, I say God bless you for your advice and prayers in this academic journey. I further extend my appreciation to all the lecturers, staff and students of School of Business and Law (SBL) and to all my family and friends, I say big thanks to you all. iii www.udsspace.uds.edu.gh DEDICATION I dedicate this work to my father Chief Adam Dasana Prusaya (late) of Wulensi, my mother Zelia Mumin, My lovely wife Hajia Ramlatu Kadri and my children, Yasir Pumaya, Muhsin Tiyumba, Samira Katari, Saalim Suhuyini and Sudais Namzooya. iv www.udsspace.uds.edu.gh TABLE OF CONTENTS DECLARATION ............................................................... Error! Bookmark not defined. ABSTRACT ........................................................................................................................ ii ACKNOWLEDGMENT .................................................................................................... iii DEDICATION ................................................................................................................... iv TABLE OF CONTENTS .................................................................................................... v LIST OF TABLES ............................................................................................................. ix LIST OF FIGURES ............................................................................................................ x LIST OF ACRONYMES ................................................................................................... xi CHAPTER ONE ................................................................................................................. 1 1.0 INTRODUCTION ........................................................................................................ 1 1.1 Background to the study ............................................................................................ 1 1.2 Problem Statement .................................................................................................... 3 1.3 Research Objectives .................................................................................................. 4 1.3.1 General Objective ................................................................................................... 4 1.3.2 Specific Objectives ................................................................................................. 4 1.4 Research Questions ................................................................................................... 5 1.5 Significance of the Study .......................................................................................... 5 1.6 Scope and Delimitation ............................................................................................. 7 1.7 Limitations of the Study ............................................................................................ 7 1.8 Organization of the Study ......................................................................................... 7 CHAPTER TWO ................................................................................................................ 9 LITERATURE REVIEW ................................................................................................... 9 2.0 Introduction ............................................................................................................... 9 2.1 Theoretical Framework ........................................................................................... 11 2.1.1 The Theory of decentralization ............................................................................ 11 2.1.2 The Theory of Fiscal Decentralization ................................................................. 16 2.1.3 The Recent Theories ............................................................................................. 18 v www.udsspace.uds.edu.gh 2.1.9 Evidence of the Impact of Fiscal Decentralization on Economic and Fiscal Variables ........................................................................................................................ 21 2.1.4 Powers/Roles/Functions and Authority of Districts Assemblies. ........................ 35 2.2.1 The Human Resource ........................................................................................... 36 2.2.2 Arguments for fiscal decentralization .................................................................. 38 2.2.3 Arguments against fiscal decentralization ............................................................ 39 2.2.4 Fiscal Decentralization in Developing Countries ................................................. 44 2.2.5 Trends of Fiscal Decentralization ........................................................................ 46 2.2.6 The Elements of a Good Fiscal Decentralization Program in Developing Countries ....................................................................................................................... 48 2.2.7 Fiscal Decentralization in Ghana ......................................................................... 49 2.2.8 Historical development of local government in Ghana ........................................ 52 2.2.9 Problems with the post-independence local government system ......................... 54 2.3 Factors that militated against the local government system .................................... 58 2.4 Decentralisation Policy ........................................................................................... 60 2.4.1 Composition of the local government structure ................................................... 62 2.4.2 Functions