The opposition has accused government of breaching constitutional procedures by prescribing how local assemblies should spend their statutory funds before Parliament approves the distribution formula required by law.
Francis Asenso-Boakye, Ranking Member on the Local Government and Decentralisation Committee of Parliament, claims the 2026 Budget Statement and Economic Policy illegally dictates District Assemblies Common Fund (DACF) utilization guidelines, including earmarking 25 percent for the flagship 24-hour economy initiative, before lawmakers have scrutinized and approved the formula that determines how these resources will be shared among Ghana’s 261 Metropolitan, Municipal and District Assemblies.
The accusation represents the latest flashpoint in contentious debates over Ghana’s 2026 budget, presented to Parliament on November 13 by Finance Minister Dr. Cassiel Ato Forson. The budget projects total expenditure of GH₵302.5 billion, with GH₵63.6 billion allocated for grants including transfers to the Ghana Education Trust Fund, National Health Insurance Fund, and DACF.
Ghana’s 1992 Constitution mandates under Article 252 that Parliament allocate at least five percent of total national revenue to DACF for Metropolitan, Municipal and District Assemblies to implement local development programmes. The Constitution further requires the DACF Administrator to propose annually a formula for distributing these funds among assemblies, which Parliament must consider and approve.
According to established procedure, Parliament first approves the distribution formula before funds can be disbursed based on that approved framework. The formula typically weighs factors including population, developmental needs, revenue generation capacity, and geographical considerations to ensure equitable resource allocation between urban and rural districts.
The opposition contends that prescribing specific utilization percentages before Parliament approves the formula undermines this constitutional sequence. Such pre-emptive directives could restrict local government autonomy and violate principles of decentralization that empower districts to determine spending priorities reflecting their unique circumstances and development needs.
Ghana’s decentralization framework assigns district assemblies responsibility for overall district development, requiring diverse financing sources. Beyond DACF, assemblies generate revenue through property rates, market tolls, business permits, and licensing fees. However, many Metropolitan, Municipal and District Assemblies depend heavily on DACF transfers because internally generated funds remain modest due to weak revenue collection systems and limited economic activity.
The government’s 24-hour economy initiative aims to extend business operating hours through tax incentives and infrastructure support, targeting creation of over 1.7 million jobs over four years. Companies signing up receive exemptions from import duties on manufacturing equipment and raw materials, while firms running two shifts qualify for 25 percent corporate income tax rebates. Strategic agriculture sector participants can access complete corporate tax exemptions.
The programme carries an estimated initial cost of four billion dollars, with government committing 300 million dollars as seed capital. Public-private partnerships led by the Ghana Infrastructure Investment Fund would mobilize remaining funding. A 2.5 percent import levy on locally producible goods including processed foods, cosmetics, pharmaceuticals, and sanitary products will support the initiative financially.
Critics have questioned whether the 24-hour economy policy includes sufficient implementation detail, noting the absence of concrete projections for employment generation, export growth, or revenue impacts. The Institute of Public Policy and Accountability recently concluded the initiative lacks a credible implementation plan despite its ambitious scope.
The Minority in Parliament has characterized the 2026 budget as fiscal deception featuring cosmetic rhetoric rather than substantive economic transformation. Former Finance Minister Dr. Mohammed Amin Adam, now Ranking Member on the Finance Committee, argues capital expenditure at just 3.6 percent of gross domestic product remains too low for infrastructure-led development, while rigid commitments constrain transformative investment.
Minority Leader Alexander Afenyo-Markin has questioned the viability of the one job, three shifts model central to the 24-hour economy, asking whether the policy will genuinely absorb Ghana’s growing labor force without new investments, infrastructure expansion, and private sector incentives. He criticized government for failing to provide Parliament comprehensive policy documents enabling proper oversight assessment.
Historical tensions surround DACF disbursements. The Ministry of Finance accumulated arrears exceeding GH₵6.4 billion between 2019 and 2022, prompting Parliament to declare non-release a breach of Article 252 of the Constitution. The 2017 Earmarked Funds Capping and Realignment Act created further complications, with the Supreme Court later ruling sections affecting DACF unconstitutional after prolonged implementation stalled infrastructure projects and service delivery.
President John Dramani Mahama has pledged his administration will remit at least 80 percent of DACF allocations directly to district assemblies, reversing past practices where nearly half the fund was disbursed from the center. The commitment aims to eliminate delays and empower local governments to plan and execute projects with greater certainty.
Michael Harry Yamsom, sworn in as DACF Administrator in March 2025, expressed determination to ensure the fund fulfills its constitutional mandate by bridging developmental gaps through equitable resource distribution. He outlined plans for robust monitoring and evaluation mechanisms to track fund utilization, ensuring accountability and efficiency in project implementation.
Whether the 2026 budget indeed violates constitutional procedures depends on specific provisions within the budget document regarding DACF utilization before Parliament approves the distribution formula. The opposition’s allegations highlight continuing struggles to balance executive authority with legislative oversight in Ghana’s decentralized governance system.
The controversy underscores tensions between national policy priorities and local autonomy. While central government pursues flagship programmes requiring coordinated resource deployment, district assemblies seek discretion to address immediate community needs. Resolving this tension requires respecting constitutional procedures that protect both national coherence and local self-governance.
Parliament has begun debate on the 2026 budget, scheduled to continue through November 26. Lawmakers from both sides will examine spending priorities, revenue projections, and policy initiatives before voting on budget approval. The DACF distribution formula for 2026 requires separate parliamentary consideration and approval following established constitutional procedures.
Source: newsghana.com.gh
