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Financing Strategies for Rural Development

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Submitted By danaasamuel
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YONSEI UNIVERSITY

Graduate School of Government and Business
Master’s Degree Program on Community Development Leadership

Course Title: Global Poverty and Economic Development

Term Paper Research Proposal Topic

FINDING AN APPROPRIATE MIX OF FUNDING STRATEGIES FOR DISTRICT ASSEMBLIES TO PROMOTE POVERTY REDUCTION AND SUSTAINABLE RURAL COMMUNITY DEVELOPMENT IN GHANA

PRESENTED TO: Professor Chung – Sik Yoo

PRESENTED BY: Samuel Danaa

DATE: September 23, 2014

1.0 Introduction:
Ghana was the first country in Sub-Saharan Africa to attain independence and the post-independence economy appeared stable and prosperous raising the development hopes of its citizens. This was a period of real hope and expectations. After over fifty years its actual development is far below the development potential it holds and various propositions have been offered as to the way forward.

Nearly more than half of Ghana’s population live in rural areas under what, by modern standards may be characterized as harsh and subnormal conditions. Every Ghanaian government since independence has been committed to improving the quality of life in the rural areas; however, they have been overwhelmed by economic conditions most of which they have been unable to control. Examining the achievements agencies tasked with responsibility, it is quite apparent that their successes in combating the development problem in rural areas are dismal.

Having come to grips with the failures of past development model, development experts and practitioners have not relented in striving to find and propose new models that can best improve the lives of the citizenry.
While the debate continuous as to what strategy is best workable, decentralization, especially fiscal decentralization has been proffered to be the conduit and driving force in creating wealth and propelling the rural development agenda in Ghana (Yaw and Andrew, 1992).

1.1 Problem Statement:
Unfortunately, sources of income to the various Assemblies are highly unpredictable. A major funding source, the District Assemblies Common Fund (DACF) which was envisaged to be the life line for financing rural development is also highly unpredictable. Most Assemblies are unable to generate the needed funds internally, even when they are able to raise some, there are equally competing needs; hence rural development issues are often always pushed to the back burner. The Assemblies have a sense of powerlessness because of inadequate financial resources to meet the local development needs of their people.

Consequently, the only viable method of financing development projects is through the transfer of funds from central government to the local government. Given the intense pressure for the limited resources at the national level and a policy bias in favor of developing the urban areas, the rural areas are often forced to forgo their development project needs.

Although, the creation of the DACF is a constitutional requirement, there have been instances where the payment into the fund has delayed for more than a year resulting in the failure to disburse funds to the various Assemblies. More so, there have been complaints and reports of alleged misapplication and financial malpractices in relation to disbursing the funds. (King et al, 2003).

Considering the indispensable role financial resources play especially in rural development and in the face of dwindling government financial allocation to rural community development and cuts in donor support, it has become pressingly necessary than ever to find an appropriate mix of sustainable funding strategies for District Assemblies to promote poverty reduction and sustainable rural community development in Ghana.

1.2 Research Objectives:
Based on the above stated problem; this research is conceivably guided by these objectives; * To identify the various monetary and non-monetary funding mechanism available for District Assemblies. * To examine the challenges encountered by District Assemblies in meeting their revenue mobilization targets. * To find an appropriate mix of funding strategies for District Assemblies to promote poverty reduction and sustainable rural community development in Ghana.

1.3 Hypothesis for Research:
Want to hypothetically establish or otherwise that; * Sustainable financial strategies promote sustainable rural community development.

1.4 Significance of the Study:

The main driving force to have propelled this research is the need to find an appropriate mix of funding strategies required for promoting poverty reduction and sustainable rural development in the face of dwindling government financial allocation to District Assemblies. Compounding this is also a drop in donor and development partners support for this all important sector of our society.

1.5 Research Methodology:

The methodology to guide this study comprises the following; * Data Sources; the study will make adequate use of both primary and secondary data sources with particular attention to reviewing already exiting information like reports, books, journals, articles etc.
Questionnaires and interviews will be an integral part of the research. * Analysis of Data; the study will be both quantitative and qualitative in nature. The uses of Microsoft Excel and SPSS for data analysis will be highly incorporated.
Explorative approach will also be used to help further analyze and substantiate the study.

1.6 Temporal Conclusion:

* In the face of dwindling financial allocation to the various assemblies, a careful consideration should be given to the remarkable role non-monetary funding strategies can play in meeting their expenditure responsibilities.

* District assemblies have tremendous revenue generating ability but they majorly rely on fiscal transfers from central government which is highly unreliable. This hampers development projects and improved service delivery.

* Options such as Public Private Partnerships (PPP), Corporate Social Responsibility as a community development tool and exploiting the benefits on the financial and capital markets will all help in raising adequate financial resources to create wealth, eradicate poverty and promote rural development.

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