Economic Characteristics

a) Municipal Finance

The Municipal Assembly is governed by certain financial regulations rooted in Article 245 and 252 of the 1992 Constitution and Section 34 of the Local Government Law 1993, Act 462 which at various sections indicate the types and nature of transfers that central government has to make as well as the revenue sources of the Assemblies. They include Recurrent Expenditure Transfers, District Assembly Common Fund and Special Transfers and Internally Generated Funds. Recurrent Expenditure Transfers.

Under this funding source, the Government of Ghana assumes full responsibility to handle the payment of salaries and other remuneration, including pensions of staff, provided these fall within manpower ceiling of the Assembly.

District Assembly Common Fund (DACF)

This is another Central Government transfer which has been a very important revenue source for a new Municipality such as the LEKMA and has served to provide the basis for key administrative infrastructural interventions for the new Assembly. The fund is based on Article 252 of the 1992 Constitution of the Republic of Ghana which makes a provision for District Assemblies to benefit from a District Assembly Common Fund which shall be;

1. Allocated annually by Parliament not less than five (5%) percent of the total revenues of Ghana and payable in quarterly instalments for development;
2. Distributed among District Assemblies on the basis of a formula to be provided by parliament
3. Administered by a District Assemblies Common Fund administrator
4. Act 455, which establishes the DACF defines the “total revenue of Ghana” for this purpose to mean “all revenue collected by or accruing to the central government other than foreign loans, grants, non-tax revenue and revenues already collected by or for D/As under any enactment in force”.
5. The object of the Common Fund is to make available to the D/As additional resources for development. 6. Section 9 of Act 455 states that “the Minister responsible for Finance in consultation with the Minister (responsible for Local Government), shall determine the category for expenditure of the approved development budget of the D/A that must in each year be met out of amounts received by the Assembly from the Fund.

The DACF is also disbursed based on guidelines developed in line with prevailing government policies.

Special Transfers

These include other transfers from the Central Government apart from the Common Fund. This may include Stool Land Revenue or other funding that the Municipality may enjoy based on government policy.

Internally Generated Funds (IGF)

In line with the aim of ensuring autonomy of the various MMDAs to give meaning to the current decentralization policy of the nation, the Assemblies are empowered to collect their own revenue. In deed this is expected to constitute the main revenue of the Assembly while Central Government Transfers are provided to supplement the efforts of the Assembly in revenue generation. These revenue sources comprise:

Rates: Included under this revenue are; 1. Basic rates (poll tax): It is a kind of tax which is levied on every adult between 18 and 70 years of age 2. Property rates (Landed property owners): It is levied on landed properties in the area of authority of the LEKMA. This source of revenue is the most important 3. Special rate: These are rates imposed by LEKMA through fee-fixing resolutions to raise funds for specific projects. Property Valuation

The Assembly at its inception took steps to revalue all properties within it area of jurisdiction in collaboration with the Land Valuation Board. As per the original Accra Metropolitan Divisions for valuation of properties, the new Municipality falls within divisions 18 to 23. The valuation exercise revealed that out of the total of 33,880 properties identified, the expected revenue is GH¢1,105,499.47. It is expected that the Assembly would be proactive in its revenue generation efforts to tap the full potential of these properties. This is depicted below.

Valuation of

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Properties in LEKMA

No.DivisionsNo. of PropertiesExpected Revenue
1181,22091,190.64
21911,031267,341.29
3204,77486,555.58
4213,717184,871.97
5224,932143,834.88
6238,206331,705.11
Total33,8801,105,499.47

Fees: The Assembly under section 34 of Act 462, have the authority to levy fees on a range of items. Some of the fees are on slaughterhouses, market dues; market stalls, trading kiosks etc. Licenses: The Assembly is assigned to raise revenue from issuance of licenses from host of items and activities. They include dog licenses, extension of hours, hotels and restaurants, beer and wine sellers, petroleum installations, lorry parks overseers, self-employed artisans.

It should however be mentioned that in line with the 1992 Constitution, Central Government still reserves the right to collect certain taxes in the MMDAs. Some of the important ones include; Income Tax, Value Added Tax, Import and Export Taxes and Excise Duties.

Comparism of External Grants and Internally Generated Funds

As at 31st December of 2008, it was realised that 21% of revenue was derived from Assembly’s own resources while the remaining 79% were from external sources. It is clear that there is a heavy reliance on external support for the various projects and activities embarked upon. This situation is expected from a new municipality like LEKMA but it is envisaged that in the long term internal funds shall be enhanced to give meaning to the financial autonomy that the Assembly seeks.

Table: IGF and Central Government Grant

Funding SourceGH¢%
District Assembly Common Fund2,233,243.4470
Internally Generated Funds661,579.9421
Government of Ghana Grants271,606.009
Total Revenue3,166,429.38100

Fig: Composition of Internally Generated Funds

The analysis was also extended to cover the performance of the various components of the IGF and it was revealed that the Assembly performed relatively well in Rates with 42%. This was followed by Business Operating Permits, Fees and Fines and Rent on Assembly Property in that order.

Table :Internally Generated Funds Composition

INTERNALLY GENERATED FUNDSValue%
Rent on Assembly Property1,220.000.21
Fees and Fines138,389.8223.39
Business operating permit fees198,745.1033.59
Rates253,313.6642.81
TOTAL591,668.58100

Municipal Level Expenditure

In the discharge of her duties and functions, the Municipality makes expenditure which are reflected under the nine line budget items comprising 1) Personal Emoluments, 2)Travelling and Transport, 3)General Expenditure, 4) MTCE Reps and Renewals, 5)Other Recurrent Expenditure, 6) Subventions, 7) Constructional Works, 8)Vehicles, Plants, Equipments and Furniture and 9)Other Capital Expenditure.

Municipal Expenditure patterns for the 2008 period are shown below.

Table : Expenditure Patterns

No. Expenditure ItemsBudgeted for 2008Actual as at 31st Dec 2008Variance (Annual)
1Personal Emoluments97.375.00125,487.42 -28,112.42
2Travelling and Transport101,200.0069,644.7031,555.30
3General Expenditure317,871.00149,351.12168,519.88
4MTCE Reps and Renewals58,000.002,850.4855,149.52
5Other Recurrent Expenditure363,400.00910,829.30-547,429.30
6Subvention000
7Constructional Works173,000.001,513,951.55-1,340,951.55
8Vehicle Plants, Equipments and Furniture246,170.00169,666.0676,503.94
9Other Capital Expenditure100,000.0078,128.1121,871.89

The table 12 shows that most of the budgetary provisions on expenditure were not met and this may partly be due to the high expenditures experienced on contractual works giving a wide variance of -1,340,951.55 for that particular expenditure item. It may therefore be inferred that the other expenditure items were starved of their funds thereby leading to the shortfalls.

This is further illustrated in the chart below when one appreciates the wide difference between the actual and budgeted amounts for contractual works.

Figure 10 Expenditure Patterns

The wide adverse variance observed in contractual works may be due to the immense pressure exerted on management to initiate and implement all manners of development projects for the new Municipality which is severely challenged in terms of development. Notwithstanding this challenge, it would be expedient for more balance allocation of expenditure to ensure holistic and harmonious development in LEKMA.

b) Economic Sectors

Banking and Commerce

In view of the strategic location of the Municipality in the Greater Accra Region and more still its specific location between the national capital, Accra and Tema, the second largest city in the Greater Accra Region, LEKMA is well placed to attract large investment concerns for its economic development due to the prevailing economic climate in the region. The Municipality is therefore gradually assuming the role of an emerging commercial centre. Among other factors, this is due to the internal economic opportunities that the Municipality provides as well as rising cost and scarcity of economic land within the large cities thereby shifting concentration to neighbouring areas like LEKMA. Consequently the Municipality is now gradually taking its place as an important economic zone for commerce, manufacturing and finance, third after Accra and Tema. Other sectors such as tourism are yet to be developed to their full potential.

In other to facilitate the economic growth of the Municipality, management of the Assembly appreciates that the process of planning for the general development of the economy must of necessity involve broad guidelines and incentives to drive the private sector to both municipal and nationally desired aspirations. This entails close and transparent partnerships between the public sector and formal and informal private sectors so that problems can be identified and addressed pragmatically to ensure that the path of the entrepreneurs are facilitated and smoothened. Issues to be considered in this regard include quick permitting procedures and infrastructural provision to enhance businesses.

Formal Businesses

The Municipality has several industrial establishments, banks; commercial, development and merchant and a few foreign exchange bureaux. These financial institutions together with strings of shops, restaurants, large scale industrial establishments and other commercial concerns which make up the formal economy are usually located on the Spintex Road, making it the most important commercial zone in the Municipality.

Some formal commercial establishments in the Municipality along the Spintex Road

The next commercial zone along the Teshie-Nungua Road, although important is however not up to the status of the Spintex Road in terms of socioeconomic infrastructure.

The importance of these road corridors and their adjoining businesses created through injection of private capital enhances the economic value of land in these areas and the Assembly is expected, among other interventions, to enhance the spatial environment of these businesses through infrastructural improvement and landscaping to further upgrade the land value in these areas as a basis for charging economic rates. In reality however these areas lack the necessary infrastructure in terms of pavements, landscaping etc and the few cases of such interventions are done by the companies themselves. Consequently there is sometimes poor sanitation reflected in choked drains and unkempt environment. Another challenge also relates to the insanitary conditions along the beaches which negatively affects the hospitality industry in particular and tourism in general. The need for an efficient beach front development scheme with a strong sanitation component is essential to enhance the tourism industry.

Poor Sanitation near a beach resort Unkempt environment in commercial areas.

Informal Businesses

Apart from formal businesses, the municipality has a very large informal sector which operates with very limited institutional structures to support them. In most cases the Assembly is challenged about appropriate zoning for their operation since they spring up at almost all locations in the municipality thereby causing some conflict with city authorities in some instances. They nevertheless contribute immensely in the growth of the local economy in terms of service provision, industry, employment creation etc. in this light the Assembly should leave no stone unturned to ensure that a sound environment is created for them to thrive.

A typical Informal Business Establishment in the Municipality

Most of the Small and Medium Scale Enterprises in the Municipality are engaged in the local ‘susu’ system where they contribute an average amount of 50Gp per head every week to accumulate capital that is rotated to members through the ROSCA System where the money is rotated till each members has benefited from it. There are currently twenty four (24) groups comprising 884 members registered by the Assembly and the key challenge facing them is the difficulty in accessing credit. The table below shows the women and youth groups in LEKMA.

Table 14 Women and Youth Groups in the LEKMA Markets

NoName of AssociationMembershipTotalArea of Operation
MaleFemale
1Ekomefeemo Drama Group201030Drama/ DancingCBO
2Teshie Youth Reformers221032AdvocacyCBO
3Community and Rural Development Foundation30AdvocacyCBO
4More Hope for Disabled Foundation Tahoe20CraftsCBO
5Widows Group155469Fish MongersIGA
6Teshie Apostolic Women's Group3535CounselingCBO/ IGA
7Teshie Fish Mongers Women's Group3535Fish MongersIGA
8Nungua Fish Mongers3535Fish MongersIGA
9God is Able3535TradersIGA
10Universal Traders Association22325TradersIGA
11Presby Youth GroupCounselingCBO/ IGA
12Freedom Club201030CraftsCBO
13Association of Teshie Youth Development102030CraftsCBO/ IGA
14Awikunaa Social Club27Social ActivitiesCBO
15Senegal Fun Club42WelfareCBO
16Galaxy Youth Club40Youth Activities, DevelopmentCBO/ IGA
17Charity Youth Club31Social ActivitiesCBO/ IGA
18Awikunaa Ekome Feem Kpee23Social ActivitiesCBO
19Sutbrunaa Women's Club2525WelfareIGA
20Hope for Life Women's Club3535WelfareIGA
21Negba Social Club30WelfareIGA
22Castle Youth Club150Social ActivitiesIGA
23New Castle Youth Club30Youth Activities, DevelopmentIGA
24Akwesi Fun Club45Fun ClubIGA

The Municipality also has three markets in the municipality namely, Nungua market, Tsuibleo and Lascala markets both in Teshie. Food commodities such as tomato, pepper, okro, garden eggs, onions, cassava, plantain, exotic vegetables (carrot, lettuce, cabbage) etc. are sold at these markets. Most of the traders in these markets buy their foodstuffs from other regions apart from buying from farmers in the municipality. This is to ensure the continuous supply of those commodities to consumers. However these markets are currently in very bad shape and would require massive investments to upgrade them to befit a municipality such as LEKMA.

Poor State of Teshie Market Poor state of access roads leading to Nungua Market

Another key problem observed in the markets is the absence of bulk breaking points for the users of the markets. Space should be allocated as a mater of urgency for the purpose to enhance the economy of the municipality.

Industry

The Municipality can boast of a wide range of industries ranging from the production of concrete products to filtered water bottles. Below are a few of the industries located in the Municiplity.

Table 15 Some Industrial Establishments in the Municipality

NO.Name of CompanyBusiness TypeServices/ Products ProducedPresent Energy Use
1Bafla LtdManufacturingConcrete ProductsElectricity
2Miniplast LtdManufacturingPlastic WaresElectricity
3Aqua Plast Co. LtdManufacturingPlastic Water BottlesElectricity
4Ide Alluminium SystemsManufacturingAluminium Composite PanelsElectricity
5Ghandour Cosmetics LtdManufacturingCosmeticsElectricity
6Brothers Union Company LtdManufacturingTake away boxes, plugs, sockets etc.Electricity
7Prime Concrete ProductsManufacturingDust and concrete blocksElectricity
8Interplast Ghana LtdManufacturingPlastics and Pipes IndustryElectricity
9Strong Plast LtdManufacturingPlastic tables and chairsElectricity
10Yamco Manufacturing LtdManufacturingEmulsion PaintElectricity
11Makan Kaolin LtdManufacturingKaolin and Calcium CarbonatesLPG
12West Coast Const LtdManufacturingConcrete ProductsElectricity
13Papaye Fast Foods LtdRestaurantFast FoodsElectricity & Gas
14Metalex LtdManufacturingRoofing Sheets.Electricity
15Cob-A Industries LtdManufacturingFiltered water: bottled and satched waterElectricity
16Mola Concrete Products LtdManufacturingConcrete Products, pavements and building blocks.Electricity
17Banket Development Co LtdImportation of ethanol and flavoursMarketingElectricity
18UNA Agencies LtdTradingSowing of Curtains and making of blindsElectricity
19SC Johnson WaxMarketingInsecticides (eg Raid)Electricity

Most of the industries use hydroelectric power as their source of energy with a few recorded cases of Liquid Petroleum Gas.

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