Good governance enables inclusive development

Project description

Title: Governance for Inclusive Development (GovID)
Commissioned by: German Federal Ministry for Economic Cooperation and Development (BMZ)
Country: Ghana
Lead executing agency: Ministry of Finance (MoF) and Ministry of Local Governance and Rural Development (MLGRD)
Overall term: 2019 to 2022

Context

Ghana has made great progress in its economic development and had the world’s fastest growing economy in 2019. However, large sections of the population live close to the poverty line. Despite very positive development overall, the government is not generating sufficient revenues, which are needed to provide central public services. 

Actual expenditure is often higher than planned – in part as a result of widespread corruption and the limited control capacities of state audit institutions and civil society. Both the government and the municipalities are still heavily dependent on external donors. The municipalities could also make much more targeted use of their funds to reduce poverty among their citizens and boost economic potential. 

Due to its focus on reform, Ghana is a reform partner of the German Government, including in the area of governance. 

Objective

National and subnational institutions are able to finance inclusive development.

Approach

The project aims to: 

  • boost revenues by improving tax policy and tax management;
  • increase the independent income of a total of 90 municipalities by establishing tax registers linked to property;
  • make budget management more reliable and transparent and gear it towards government objectives, taking marginalised population groups into account in particular;
  • strengthen the control function of state audit institutions and civil society, enabling public funds to be budgeted and spent in line with national development goals and in compliance with regulations; 
  • support dialogue between municipalities and companies on agriculture and food, leading to the creation of needs-based joint initiatives. 

The project promotes reforms in the partner institutions by providing training and targeted specialist advice, supporting process management and encouraging cooperation between institutions.

On behalf of the German Federal Ministry for Economic Cooperation and Development (BMZ), the project works closely with financial cooperation initiatives implemented by the Kreditanstalt für Wiederaufbau (KfW). The project also coordinates its measures with the activities of other donors working together to improve and decentralise Ghana’s public finances.

Results

Capacity building among state actors in the area of finance has been a priority in Ghana for a long time and significant progress has already been made: 

  • Simpler customs clearance for imported goods 
  • Introduction of an online model for forecasting non-tax-based revenues
  • Establishment of tax registers linked to property in 50 municipalities that enable the municipalities to collect property tax
  • Regular analysis of tax risks by the Ministry of Finance
  • Improvements in the quality of budgets for the government and municipalities
  • Support for a total of 17,000 women and 14,000 men to participate in local planning processes
  • Leadership training for women, after which 20 participants registered as candidates in local council elections
  • Reduction in the time taken by the parliament’s Finance Committee to process accountability reports on the use of revenues from the extractive industries