The main sources of local government revenue in Ghana come under three broad categories namely internally generated funds, central government grants or transfers and loans as well as other donor funds from external sources.
In this Senior High School Government tutorial on the sources of local government revenue, I will show you a breakdown of the above major sources of revenue available to local government authorities in Ghana and West Africa as a whole.
So if you’re ready to know the sources of local government revenue in Ghana, then continue reading.
Remember that this topic comes under the section on Public Administration in the WAEC/SHS Government syllabus. Now if you’re a candidate for other equally important external examinations like JAMB and NECO/SSCE you might need these notes too.
Here comes a WASSCE Government past question on the major sources of local government revenue. We shall approach this tutorial using this often repeated WAEC Government past question as our reference point.
IDENTIFY FIVE MAIN SOURCES OF REVENUE AVAILABLE TO LOCAL GOVERNMENT AUTHORITIES.
How to Answer This Question
To be able to answer this WAEC Government to the satisfaction of your examiner, I would advise that you follow the following simple essay format.
- Briefly define local government. Click here for the definition of local government.
- Then state and explain the sources of local government revenue
Make sure to write with specific examples from your country. That is if the question specifically asks you to write about your country.
SEE ALSO:
Top 5 Features of the Best WASSCE Remedial Schools in Ghana
Analysis of The Good Morrow by John Donne
5 Reasons You Can Obtain a WASSCE Certificate without Attending SHS
Top 7 Reasons for the Colonization of Africa
You now know how to approach your Government essay on this topic under Public Administration in the SHS Government syllabus. Let’s identify the sources of local government revenue in Ghana, Nigeria, Sierra Leone, and other places.
We will begin with the internal sources of revenue and end with the external sources.
1. Rates or Taxes
Rates constitute one of the most important sources of local government revenue in most developing countries including Ghana and Nigeria.
Examples of local government rates are property rates, market tolls, poll tax, and other special levies.
In Ghana, for example, District Assemblies rely heavily on property rates to generate revenue locally.
2. Proceeds from Business Ventures
These are profits or interests that District Assemblies or local councils gain from taking part in commercial activities.
Such business ventures include real estate or rental properties, commercial transportation, trading, agro-processing, and any other investment permitted by law.
3. Service Charges
Closely linked to the revenue from business activities are funds generated from service charges. A local government may go out of its way to provide certain services to the public that enable it to generate some income.
A good example is public places of convenience which include baths and toilets.
4. Fees and Licenses
Additionally, most district, municipal and metropolitan assemblies in Ghana make money through fees and the licenses they issue.
Examples are building permits, small business operation licenses, motor and bicycle licenses.
5. Fines
Another reliable source of revenue available to local governments is the collection of fines. These are monies collected from people who violate local government bye-laws in particular.
The fines may relate to sanitation and road safety bye-laws.
6. Ground Rent
Ground rent refers to money that a property owner pays to a government agency (e.g. The Lands Commission in Ghana). The funds are then forwarded to the traditional owners of the land that the property occupies.
Thus, part of the ground rent could be disbursed to local governments if the law allows it.
It has not been easy collecting ground rent from businesses and individual property developers. All the same, we can still mention it as an official source of local government revenue in many countries.
7. Royalties
The last source of locally-generated revenue for local governments in this list is royalties. Typically, revenue from royalties comes in the form of charges for the exploitation of natural resources.
Two quick examples are royalties that mining and lumbering companies have to pay to local authorities in compensation for the exploitation of their resources.
8. Grants from the Central Government
In Ghana, for example, the law obliges the central government to give a certain percentage of the annual Gross Domestic Product (GDP) to each of the over 200 district, municipal and metropolitan assemblies.
The District Assemblies Common Fund, as it is popularly known in Ghana, remains one of the major sources of external revenue for most local government areas.
9. Loans or Donor Funds.
Finally, the law permits local governments to generate revenue from other external sources such as loans.
However, these need express approval from the central government.
Final thoughts
It is clear that local governments have different ways of generating their revenue. These are both internal and external in nature. It is important that you give examples that relate to your country if that is what the question demands.
You can find other useful revision notes on SHS/WASSCE Government here.
Also, there are lots of sample SHS essays to guide you come up with your best essays in the examination.
Would you like to download more study guides and tutorials in the form of PDF documents and e-books to help you take your studies to the next level? Click here to begin downloading.
And, finally, do not forget to sign up for our weekly newsletter to remain current on what is happening at Cegast Academy.
Did you find this information helpful? Then share it on your favourite social media platform for the benefit of others you care about. Thank you!
