INTERGOVERNMENTAL FISCAL TRANSFERS: (DIS)INCENTIVE TO DISTRICT ASSEMBLIES’ OWN-SOURCE REVENUE MOBILISATION IN

THE CENTRAL REGION OF GHANA?

PRESENTED BY

CHRISTOPHER DICK-SAGOE, DOCTORAL FELLOW, PUBLIC ADMINISTRATION, VNSGU

AND DR. PRITI GARG, PROFESSOR, PUBLIC ADMINISTRATION, VNSGU

BACKGROUND

• STUDIES CONDUCTED TO ASSESS DECENTRALISATION HAS PRODUCED MIXED RESULTS (SUCCESS

AND FAILURES)- (SMOKE, 2015)

• FAILURES HAS BEEN ATTRIBUTED TO SO MANY FACTORS

• PROMINENT AMONG THE FACTORS IS FISCAL INCENTIVE CREATED BY INTERGOVERNMENTAL

TRANSFERS

• THIS STUDY LOOKS INTO THE REVENUE AND EXPENDITURE RECORDS OF DISTRICT ASSEMBLIES IN

THE CENTRAL REGION OF GHANA.

OBJECTIVES

• TO FIND THE STATISTICAL RELATIONSHIP BETWEEN OWN SOURCE-REVENUE AND INTERGOVERNMENTAL FISCAL

ALLOCATIONS FOR THE DISTRICT ASSEMBLIES IN THE CENTRAL REGION OF GHANA; AND

• TO ASSESS THE STATISTICAL RELATIONSHIP BETWEEN THE REVENUE SOURCES AND CAPITAL EXPENDITURE

HYPOTHESES

IN A BID TO ACHIEVE THE STUDY OBJECTIVES, THE FOLLOWING NULL HYPOTHESES WERE STATED AND TESTED FOR

THE STUDY. THESE ARE:

• HO: THERE IS NO STATISTICAL RELATIONSHIP BETWEEN OWN-SOURCE REVENUE GENERATION AND

INTERGOVERNMENTAL TRANSFERS (GRANTS) FROM 2008 TO 2010.

• HO: EXPENDITURE ON CAPITAL IS THE SAME FOR GRANTS AND OWN-SOURCE REVENUE

THEORETICAL BASIS

FISCAL INTEREST MODEL

OFFICIALS OF DISTRICT ASSEMBLIES ARE BIASED TOWARDS POLICIES WHICH SEEK TO INCREASE THEIR REVENUES.

IF INTEREST FALLS ON OWN-SOURCE OF REVENUES, THE FOLLOWING ADVANTAGES ACCRUE (WEINGAST, 2013):

1. LOCAL PUBLIC GOODS MEETS THE SPECIFIC DEVELOPMENT NEEDS OF THE LOCAL PEOPLE

2. ATTRACTS ACTIVE PARTICIPATION OF LOCAL PEOPLE

3. LOCAL GOVERNMENTS ARE CAREFUL IN SPENDING TAX REVENUES (OWN-SOURCE)

METHODOLOGY

RESEARCH APPROACH

• QUANTITATIVE (POSITIVIST, EMPIRICIST PARADIGMS)

• STUDY DESIGN: SECONDARY ANALYSIS OF REVENUE AND EXPENDITURE DATA FROM 2008 TO 2010

DATA ANALYSIS

• MULTIPLE REGRESSION

• CORRELATION

RESULTS

STATISTICAL RELATIONSHIP BETWEEN OWN SOURCE-REVENUE AND INTERGOVERNMENTAL FISCAL ALLOCATIONS

(GRANTS) FOR THE DISTRICT ASSEMBLIES IN THE CENTRAL REGION OF GHANA

• HIGHER GRANTS MATCHES LOWER OWN-SOURCE REVENUE GENERATION

PEARSON CORRELATION = - 0.005

• THERE IS A SMALL RELATIONSHIP BETWEEN GRANTS AND OWN-SOURCE REVENUE (COHEN, 1988).

• INTEREST IN GRANTS HELP TO EXPLAIN 0.0025 PERCENT OF THE VARIANCE IN OWN-SOURCE REVENUE

COLLECTION

COEFFICIENT OF DETERMINATION (R2 = 0.005 X 0.005= 0.000025 OR 0.0025 PERCENT).

TO ASSESS THE STATISTICAL RELATIONSHIP BETWEEN THE REVENUE SOURCES AND CAPITAL EXPENDITURE

DEFINITION: CAPITAL EXPENDITURE ACTUALLY REFLECTS THE EXPENSES ON THOSE PUBLIC SERVICES AND GOOD (SUCH

AS ROADS, SCHOOLS, HEALTH ETC.), WHICH HAS THE CAPACITY OF IMPROVING THE WELFARE OF THE LOCAL PEOPLE.

CORRELATION

• OWN-SOURCE CORRELATES NEGATIVELY WITH CAPITAL EXPENDITURE (R= -0.060, SIG 0.337)

• GRANTS CORRELATED POSITIVELY WITH CAPITAL EXPENDITURE (R= +0.906, SIG 0.000)

• STRONG POSITIVE CORRELATION BETWEEN GRANTS AND CAPITAL EXPENDITURE (R =0.906) (COHEN, 1988).

MODEL SUMMARY

GRANTS AND OWN-SOURCE EXPLAINED 82.4% OF THE VARIATION IN CAPITAL EXPENDITURE

STANDARDIZED BETA VALUE

• OWN-SOURCE MADE NO CONTRIBUTION TO CAPITAL EXPENDITURE (BETA= -0.055, SIG = 0.365)

• GRANTS MADE SIGNIFICANT CONTRIBUTION TO CAPITAL EXPENDITURE (BETA= 0.906, SIG = 0.000)

PART CORRELATION

PART CORRELATION EXPLAINS THAT PART OF THE TOTAL VARIANCE IN THE R-SQUARED, WHICH IS SINGLY

CONTRIBUTED BY THE INDEPENDENT VARIABLES TO THE DEPENDENT VARIABLE

• OWN-SOURCE (PART = -0.055)

• GRANTS (PART = 0.906= 0.906 X 0.906= 0.82 OR 82 %- EXPRESSED IN PERCENTAGE)

MODEL EQUATION

• CAPITAL EXPENDITURE = 25562.982 + 0.848 GRANTS – 0.210 OWN-SOURCE REVENUE

CONCLUSION

• OBJECTIVE 1: THE EXISTENCE OF A NEGATIVE RELATIONSHIP BETWEEN OWN-SOURCE OF REVENUE

AND GRANTS.

• OBJECTIVE 2: GRANTS IS THE MAJOR CONTRIBUTOR TO CAPITAL EXPENDITURE FOR THE PERIOD

UNDER STUDY

• COMPARING THE RESULT TO THE FISCAL INTEREST MODEL: INTERGOVERNMENTAL FISCAL TRANSFERS

(GRANTS) INCENTIVIZES THE DISTRICT ASSEMBLIES MORE THAN OWN-SOURCE REVENUES

THE END

CAN CONTACT THE PRESENTER: MR. CHRISTOPHER DICK-SAGOE ON THE FOLLOWING

PHONE: +918141333272 OR

EMAIL: DICKSAGOE@GMAIL.COM (PREFERRED METHOD FOR CONTACTING

ME)

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