Fiscal decentralization is not a new phenomenon, however, as noted by the World Bank, (2000) its implementation in developing economies became a development trend during the 1990s. Fiscal decentralization is the shift of expenditure functions with accompanying revenue to local government entities for improved service delivery. In Ghana, since 1992, various studies have shown that some progress has been made in its implementation, the rate of progress however, has been slow.
This study was carried out using stakeholder analysis tools to understand stakeholder roles and responsibilities, power influence relations, incentives and political dynamics in the implementation of Ghana’s fiscal decentralization policy and to suggest some recommendations to support for the current efforts at implementing some policy reforms.
The study revealed that factors which have contributed to slow implementation of fiscal decentralization in Ghana include; incomplete transfer of functions; low IGF collection by MMDAs iii), limited borrowings rights of MMDAs; excessive deductions from DACF; poor coordination of many multiple stakeholders with divergent interest, power and influence; and inadequate understanding of stakeholder of the policy on improved service delivery.
The study again suggests that the setting up of Inter-Ministerial Coordinating Committee (IMCC) chaired by H. E. the President, has accelerated the process since 2011. Key among recent achievements includes transfer of 30,000 civil servants, composite budget implementation and revision of the local government Act 1993, Act 462, among others.
To accelerate the current effort at implementation, there is the need: i. to design a well-structured coordination system to manage the multiple stakeholders’ divergent interest which has plagued the process over the years. This can be achieved with the formation of coordination committee with representation from all interested parties ii) to conduct effective sensitization of central level stakeholders as well as training of MMDAs and other stakeholders on their roles and responsibilities; iii) to strengthen IMCC facilitate the coordination to reduce conflicts, protection of interest etc; and iv) reduce and ultimately eliminate the deductions from the DACF and set up line item in the national budget to implements MPs projects and national priorities