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Opinions of Sunday, 26 April 2020

Columnist: GNA

Coronavirus and its impact on MMDAs Internally Generated Funds

The flu-like virus is no respecter of persons or countries - sweeping lives as well as revenues The flu-like virus is no respecter of persons or countries - sweeping lives as well as revenues

The COVID-19 pandemic has caused more disruptions in the global economy, resulting in many countries announcing major stimulus packages for Industries and households.

These measures are meant to lessen the burden brought about by the novel coronavirus - COVID-19.

The flu-like virus is no respecter of persons or countries - sweeping lives as well as revenues from both the poor and the rich, the powerful and the weak.

COVID-19 is the Tasmania of our time, crushing the very small gains of the poor, supply chains, business operations and disrupting policies and procedures. It is changing the normal way of doing things.

It is against this background that all Metropolitan, Municipal and District Assemblies (MMDAs) will be affected in terms of their revenue mobilization drive - their internally generated funds (IGF). COVID-19 has caused the government to take measures that are not entirely helpful to revenue generation of the MMDAs. These are however, needed to safeguard the very existence of the MMDAs.

The measures include:
* Stay Home
* Social Distancing
* Closure of recreational and entertainment centers
* Limited participation in the local market activities (such that only those in the food supply chain can go out to sell)
* Limited commercial cars plying on the roads and many more.
The measures mean an automatic closure of IGF to MMDAs.
In terms of IGF generation, the measures will mean the following to Rate Payers or the Assemblies;
Say No to or please stay home ‘do not collect the following:
* Property Rate Collection
* Market Toll
* Lorry park toll
* Business Operating Permit
* Toilet / Urinal fees collection
* Building Permit collection
* Bill Board fees collection
* Renewals, etc

The MMDAs generate their IGF from these sources and therefore this is going to have serious financial constraint on them, something that would affect developmental projects in the communities.

The IGF is used in varied ways:
* Paying of salaries of those not on Controller and Accountant Generals’ Department (CAGD) payroll
* Maintenance or minor repair works on roads / schools
* Honorarium to Assembly Members during Assembly sittings
* Projects
* Mass Education / Sensitization etc


MMDAs are going to experience substantial decline in their IGF leading to huge financial burden on the Assemblies. The reason being that Revenue Collectors, for fear of becoming exposed to the pathogen, will not be keen to step out to do revenue collection, especially market tolls – even after the lifting of the restrictions on movement.

Besides, rate payers would deliberately refuse to pay or may not have the means to pay due to the reduced income resulting from the long stay at home. Also, the fear of catching the virus from Revenue Collectors shall make some rate payers shy away from giving money to the Collectors.

MMDAs would have many of their planned programmes shelved due to funding difficulties.

A reduction in donor funds should not be unexpected given the impact of the pandemic on countries where these funds are coming from. Many a donor-funded project, including those on sanitation girl-child education, are likely to be abandoned and this could exacerbate the sanitation challenges in our communities, surge of teenage pregnancy, juvenile crimes, etc. Significant percentage of these funds go into training of the youth to deal with these social issues.

Agitation from salaried workers not on CAGD payroll is going to increase and going to be regular, and the reason is simple, non-availability of funds resulting from the dry up of the IGF.

Assemblies that are cosmopolitan and endowed with properties and businesses like AMA, KMA and TaMA would, however, not be badly hit. The ‘smaller’ Districts (in terms of accumulated revenue and not land size) shall be the hardest hit. This is because the total annual revenue of many of such Districts represent just a month’s total collection of that of Tema, AMA or KMA.


The effects are real and are hitting the MMDAs now. This calls for a well-thought-out, carefully- structured and pragmatic strategies to reduce the impact. The strategies must be home-grown but must be facilitated by the Local Government and Rural Development Ministry.

Firstly, MMDAs endowed with arable lands must a matter of urgency consider going into large scale farming. They could venture into farming with thorough and painstaking measures to ensure successful cultivation of food crops and or animal farming.

They could take advantage of the value chain in the Agri-business to rake in more revenue. Although land acquisition for such projects is not going to be easy, with proper consultation with the chiefs and land owners, this is doable. Any such project should be led by the Department of Agriculture in the District and must come under the strict supervision of the Metropolitan Municipal and District Chief Executives (MMDCEs).

Secondly, MMDAs with markets (big or small) are presented with an opportunity to segregate the market to enhance revenue collection. For example, move all fish sellers (including those breaking the bulk) to one area.

Categorize these sellers into big players or small players and generate a unique identifiers (i.e numbers and give out ID card) to them. The segregation and categorization can help the Assembly to know how much revenue can be mobilized in a given area. All these must be done with the help of the market queens.

The Assemblies may consider coordinating with a Telco Company to provide them with a unique shortcode to enable these market women to pay their rate no matter how small to their account without incurring a service charge. Task Force shall only be deployed to chase those who fail to pay their expected rates and fees.

All new entrants to the market must first register with the market queen and the details sent to the Assembly for the unique identifier before the new entrant can start trading.

The MMDAs as matter of urgency must review their budget and present same to the General Assembly. The reviewed budget must state realistically, the expected revenue and what the Assembly can do with such limited revenue. The Assembly Members should also get involved in the collection of revenue in their electoral areas. The Assembly must agree on revenue collection targets for the various electoral areas with the Assembly Members to ensure effectiveness in the mobilization of revenue.

Mass Education is one of the tools the Assemblies could employ to encourage ratepayers and market women to pay their rates. This education must be regular and timely to aid the ratepayers have a better understanding of why they should pay taxes to the Assembly.

MMDAs must resort to the use of efficient revenue mobilization technology to collect revenue even in difficult and abnormal times. There abound revenue apps but most of them do not stand the test of time as well as not configured to the needs of the Assemblies. Therefore, it creates user problems for the Assemblies and such apps get discarded after few months of purchase.

The Central Government must accept to increase the District Assemblies Common Fund (DACF) by 25% to make up for the lost revenue, particularly, for this year 2020.

Additionally, the third and fourth quarter MPs common fund must be paid directly to the MMDAs with the consent of the MPs, though. This will help to shore up the revenue of the Assemblies to enable them to implement more projects including humanitarian programmes, mindful of the fact that a number of people would be losing their jobs because of pandemic.

The Assemblies have no option but to help deal with the urgent needs of the people, especially food and shelter.

Finally, MMDAs must be innovative and come up with projects or programmes that would attract donor funding.