In 1993, the DACF Act 455 was passed by Parliament five clear months before the parent law regulating the institution of local government Act 462.

Sections of the Law:

Section 7:
(a). To propose a formula for distribution of funds for approval by Parliament

(b). To administer and and distribute monies paid into the fund among District Assemblies in accordance with the approved formula

(c). To report to the Minister on how allocations made from the fund in the assembnlies have been utilised

(d). To perform any other functions that may be directed by the President.

Section 9:
The Minister responsible for Finance shall in consultation with the Minister, determine the category of expenditure of the approved development budget of District Assemblies that must in each year be met out of amounts received by the Fund

IMPLEMENTATION PROCEDURE

• Approved guidelines allocate 5% of DACF for distribution to District Assemblies
• 50% of five percent allocated to Members of Parliament as Constituency Development Fund
• Ministry issues yearly guidelines to District Assemblies on the utilisation of the disbursed ninety five percent based on conferred poweres in Act 462 (Section 91(1) and 10(3)
• Ministry manages the reserve fund on the basis of "exigencies"
• Minstry issues guidelines on the utilisation of the constituency development fund
• Ministry does not issue guidelines on the utilisation of allocated funds to Regional Coordinating Councils

SOME CHALLENGES OF THE DACF

• The basis of determining what goes into the DACF yearly is not clearly defined and not transparent
• Parliament's constitutional obligation to make provisions for the allocation of not less than five percent of the total revenues of Ghana to District Assemblies is visibly not fulfilled
• It is speculated that the amount paid into the DACF does not necessarily represent five percent of the "total revenues of Ghana" as required under the fourth republican Constitution Article 252(2)
• The Ministry's guidelines and DCEs oversight/reporting role of MPs in the utilisation of their constituency fund tend to undermine Parliament in its constitutional role to ensure due deligence in the five percent total revenue allocation into the fund
• The ministry's yearly guidelines to Assemblies on the utilisation of the DACF tend to undermine the Assemblies' governance status and overall development agenda
• Since 1995, the Ministry has effected what it calls "statutory deductions" from the DACF without consultations with the District Assemblies. The practice which displeases Metropolitan, Municipal, District Assemblies (MMDAs) also disturbs their budgetary implementation process.

ACHIEVEMENTS OF THE DACF

• Single most effective source of revenue to MMDAs for development
• Constitute a tremendous source of infrastructure provisions by MMDAs on financial resource management
• Set the tone for decentralisation based on financial devolution.