- DACF Pushes Municipal Bonds, 10% Funding Floor in Sweeping Plan to Devolve Power from Accra
Ghana is considering one of the most ambitious overhauls of local government financing since the Fourth Republic began, including municipal bonds for financially strong assemblies, a doubling of the constitutional floor for the District Assemblies Common Fund and elected Metropolitan, Municipal and District Chief Executives from 2027.
Harry Yamson, Administrator of the District Assemblies Common Fund, said Ghana’s three-decade decentralisation project had reached a “crossroads”, arguing that the country had made considerably more progress transferring money from Accra than transferring genuine fiscal, administrative and political power. His proposals would seek to turn the country’s 261 MMDAs from predominantly grant-dependent administrative bodies into institutions capable of raising revenue, borrowing for infrastructure and becoming engines of local economic development.
“Article 240 of our Constitution did not envisage a system of grants management,” Mr Yamson told the National Policy Dialogue on Decentralisation. “It envisaged fiscal, administrative, and political decentralisation moving together — resources, staff, and power passing from the centre to the people, in a coordinated and deliberate manner.”
The criticism is striking because Ghana already operates a sizeable performance-based local government financing system. The current DPAT IX allocation pool stands at GH¢833.50 million, comprising GH¢503.70 million from government, GH¢251.90 million from German development bank KfW and GH¢78.00 million from Switzerland’s SECO. Yet Mr Yamson said not one of Ghana’s 261 MMDAs has achieved genuine fiscal autonomy.
That diagnosis goes to the heart of the reform. Assemblies may receive larger transfers and become better at meeting grant conditions, but that is not necessarily the same as becoming financially independent institutions capable of determining and financing their own development priorities.
Mr Yamson warned that dependence on large central transfer pools can create a “perverse incentive” under which assemblies optimise for compliance with assessment criteria rather than focus primarily on improving governance and economic conditions within their communities. He also pointed to persistent audit infractions, fragmented institutional mandates and central control over local government staff as symptoms of a deeper structural problem.
His response is a six-pillar reform agenda covering fiscal sovereignty, democratic deepening, digital transformation, grant reform, institutional rationalisation and the constitutional entrenchment of key decentralisation commitments. But some of the most consequential proposals concern how districts raise and spend money.
Under the fiscal sovereignty pillar, creditworthy MMDAs could eventually be permitted to issue municipal bonds, subject to central government oversight. Mr Yamson argued that a financially sound assembly should be able to finance a market, clinic or other revenue-supporting infrastructure against future revenues instead of waiting indefinitely for a capital grant from central government.
Municipal borrowing would represent a substantial change in Ghana’s local-government financing model. Properly designed, it could allow economically stronger districts to finance long-lived infrastructure over the period in which residents and businesses benefit from it, rather than requiring every project to be funded upfront from annual transfers.
But municipal bonds would also introduce new fiscal risks. Weakly governed assemblies borrowing against optimistic revenue projections could create liabilities that ultimately return to central government, meaning any framework would require strict creditworthiness tests, borrowing ceilings, audited accounts and clear rules preventing implicit state guarantees from encouraging reckless debt accumulation.
The second major intervention is the District Own-Revenue Mobilisation Compact, under which every MMDA would be expected to increase own-source revenue by at least 15.00% annually as a condition for full access to the grant envelope. Assemblies exceeding the target would receive performance bonuses, while citizens would be able to monitor revenue performance through publicly accessible dashboards.
Importantly, the detailed speech proposes that the existing 100.00% retention of internally generated funds should continue, while a wider future local-revenue base should enjoy a constitutional minimum retention guarantee of at least 70.00%. The proposal is therefore a floor rather than a reduction of the current IGF retention arrangement.
The wider revenue base envisaged by the DACF Administrator could include digitised property rates, modernised business licensing and new local charges developed with support from the Ghana Revenue Authority and fintech partners. The economic objective is to move assemblies gradually from depending on transfers towards building fiscal capacity within the economies they govern.
That ambition carries an important equity problem. Accra, Tema and Kumasi possess much larger property, commercial and business tax bases than poorer rural districts, meaning a uniform 15.00% annual revenue-growth requirement could be considerably easier for some assemblies than others.
The proposed grant architecture attempts to address part of that inequality. Mr Yamson wants the existing fragmented grant structure replaced with three windows: 75.00% distributed on performance, 15.00% directed towards Ghana’s 50 most deprived districts and 10.00% allocated competitively for innovative local solutions.
He also proposes doubling the constitutional minimum allocation to the DACF from 5.00% to 10.00% of national revenues. That would materially increase the resources constitutionally protected for local government if ultimately approved.
Yet the reform agenda is not simply financial. Mr Yamson argues that fiscal decentralisation will remain incomplete while professionals working at assemblies continue to have their recruitment, posting, appraisal and disciplinary arrangements controlled from Accra.
“Fiscal sovereignty and institutional rationalisation mean little if the professionals executing them still answer to Accra,” he said, calling for administrative powers to move progressively towards assemblies themselves.
The political component may prove even more consequential. The reform programme targets the election of MMDCEs in the 2027 District Assembly elections, after Cabinet approval of plans to amend Article 243.
Mr Yamson described appointed MMDCEs as “the single greatest structural impediment to genuine local democratic accountability”, arguing that the country should preserve an alternative parliamentary route for non-partisan elections if a wider constitutional referendum is delayed.
The reform would fundamentally alter who local chief executives answer to. An appointed MMDCE has strong incentives to remain responsive upwards towards the appointing authority; an elected executive would derive political legitimacy directly from local voters.
Greater local political power would, however, also increase the need for transparency. The DACF plan proposes turning the District Development Data Platform into a National Local Governance Intelligence Platform, publicly displaying geotagged projects, audit compliance, citizen feedback and budget execution in real time.
A further proposal would ring-fence 5.00% of every infrastructure grant in escrow until an assembly demonstrates a credible maintenance plan. The idea addresses a familiar weakness in public investment: governments frequently fund construction but provide inadequate resources to preserve the asset afterwards.
The economic argument behind the entire package is ultimately that decentralisation should produce development, not merely decentralised administration.
Mr Yamson said assemblies have remained largely “permit-issuers and compliance-checkers” when they should become institutions actively supporting enterprises, markets and jobs within their jurisdictions. That would require local authorities to think about revenue, infrastructure and private-sector development as connected components of local economies rather than simply administer projects determined elsewhere.
Implementation is envisaged in phases through 2030. Immediate work would include designing the revenue compact, citizen accountability scores and digital performance systems, followed in 2027 by the MMDCE elections and institutional reforms, full digital deployment in 2028–2029 and eventual consolidation of the higher DACF floor.
The scale of the ambition is considerable, and constitutional amendments, legislation and political consensus mean much of it remains proposal rather than settled policy.
But the diagnosis is harder to dismiss. More than three decades after Ghana constitutionally embraced decentralisation, the country still has local governments whose finances, senior personnel and political leadership remain heavily dependent on decisions made in Accra.
Mr Yamson’s proposals therefore raise a question larger than the future of the DACF: whether Ghana is prepared to accept the consequences of genuine devolution.
If districts are to become what he calls “fiscal, democratic, administrative, and developmental powerhouses”, central government must ultimately surrender not just additional money, but some control over revenue, staff and political authority.
That is where Ghana’s decentralisation debate becomes difficult. Transferring grants is relatively straightforward; transferring power is not.
