Revenue Generation in
STMA, Ghana under BMGF Funded
IncluCity Program, a program under
Cities Alliance management
Revenue Management Master Class
13th-17th October 2014 (Durban, South Africa)
by
Ishmael Adams (Program Director); and
Mathew Kirk-Kwofie (Metro Finance Officer)
Outline
• Introduction
• Annual Revenue Improvement Action
Planning
• Property tax (rate) and Business
Licensing Reforms
• Conclusion
2
Introduction
• Local governments are tasked with :
• provision of services to its citizenry
• coordination of local economic development
• Financing development in Municipalities:
• Internally Generated Revenue (IGF) Sources (rates, licenses, lands, rent, investments and fees, fines and charges)
• External Revenue Sources (DACF, DDF, GUMP, Grants)
• IGF is the only source which MMDAs can directly influence with the highest level of autonomy
• MMDAs in Ghana are mandated (local government Act 462, 1993, section 10) to develop yearly Revenue Improvement Action Plans (RIAPs):
• to facilitate improved revenue generation
• requirement for the Functional Organizational Assessment Tool
• Municipal finance Bill truncated along the line
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Definition of Revenue Items at the Assemblies:
Revenue Item Definition Breakdown
Rates Rates are basic, property and special taxes payable by the public,
public corporations and organizations owning property in the area
of jurisdiction of the District Assembly.
These include Basic Rates (a link of poll tax which
is levied on every adult in the active age group),
Property Rates (levied on landed properties in the
area of authority of the Assembly) and special
Rates (levies on special projects in the district)
Fees, Charges
and Fines
Fees are tolls, levies and dues mostly generated from the use of
markets, lorry parks and sanitation facilities of the Assembly. Fines
are revenues generated from the imposition of court and spot fines
on offenders.
These are; Markets Toll, Marriage/Divorce, Court
Fines/Spot Fines
Lorry Parks, Cemetery Burial Permit
Entertainment & Road Blocks, etc.
Licenses These are taxes generated from issuance of business operating
permits from the Assembly. Metropolitan, Municipal and District
Assemblies are mandated as licensing authority for a number of
activities within their area of jurisdiction.
They include hawkers’ license, extension of
houses, hotels and restaurants, lorry parks
overseers, self-employed artisans etc.
Lands Lands are revenues generated from payment of royalties from stool
lands, minerals and timber resources.
These are; royalties from stool lands, minerals and
timber resources and Building Plans/Permit.
Rent Rent involves the payment for the utilization of the Assembly’s
properties or facilities which may be landed or mobile in nature.
Key items within this categorization include the
utilization of grounds, classroom, stores, stalls,
bill/sign boards and Lorry parks etc.
Investments Investments are revenue derived from trading activities, interests
and dividends from investments and treasury bills or government of
Ghana bonds.
They constitute; interests and dividends from
investments and treasury bills or government of
Ghana bonds.
Miscellaneous
These are unspecified receipts that cannot directly be classified
under any of the key revenue items.
Examples are; Sale of Unserviceable Vehicle,
Recovery of Overpayment, Unspecified Receipt,
Tender Forms, Donations etc.
Introduction
4
Metro Profile
• STMA land area: 219 km²
• Total Population:559,548
(PHC 2010)
• The population is currently
projected at 635,956
• Female: 286,112 (51.1%)
• Male: 273,436 (48.9%)
• Population Density: 2555
persons/km2
Administrative Status:
Regional Capital
Economic Activities:
• Industry: 19.1%
• Agriculture: 21%
• Service: 59.9
Introduction
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6
Challenges in STMA that necessitated
interventions
i. STMA had no RIAPs and did not get corresponding scores
for the national assessment on FOAT
ii. STMA had no objective and defensible basis for
determining business licensing fees
iii. General Revenue was low and they needed more funds
to respond to the increasing advocacy from the poor
neighbourhoods in particular.
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Process Who Support
Performance review of previous
IGF/RIAP
This is carried out at a review
workshop with key revenue staff of
the Assemblies through the
facilitation of a Consultant
The IncluCity Project supports this
process by engaging the right Consultant
for the review and working with the
Assemblies to organize the workshop.
Identifying revenue items,
setting targets for the
generation of IGF in the next
year and Outlining key activities
to be implemented to enable
the Assemblies achieve the
targets set
This is undertaken at second
workshop with revenue staff of the
Assemblies through the facilitation of
the Consultant for the purposes of
gathering the required data for the
next RIAP preparation.
Drafting and Validation of
RIAPs
A validation workshop is organized
for the revenue staff to comment on
the Draft RIAPs before they are
finalized by the Consultant.
The IncluCity Project validates the RIAPs
as well as provides resources for the
workshop.
Presentation of Final RIAPs At an arranged meeting, the Final
RIAPs are presented to the
Managements of the Assemblies by
the IncluCity Project.
Implementation, Monitoring and
quarterly review of RIAPs
This process is facilitated by the
RIAP Implementation Teams at the
Assemblies.
IncluCity Project supports this process
by augmenting the logistics of
Assemblies to ensure effective revenue
collection/implementation of the RIAPs.
The Project also works with the
Assemblies to ensure regular quarterly
review of the RIAPs.
RIAPs Processes
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Gallery – RIAP Workshops and Presentation of Logistics for RIAP Implementation
RIAP Review and Data Gathering Workshops - STMA RIAP Validation Workshop
RIAP Quarterly Reviews – STMA Respectively
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2014 RIAP Strategies for Revenue Generation –
STMA
Implementation Framework
Revenue Heads Objectives Activities Expected Outcomes Implementation Strategies
Monitoring Framework
Revenue Heads Activities Indicator Frequency of
monitoring
Responsibility
Some RIAP Activities
Update property roll database
Street naming and property addressing system in selected Communities.
Intensify collection of property tax arrears from both commercial and residential properties
Establish frequent interactions between the assembly and the private sector companies collecting revenue on its
behalf
Upgrade facilities and services at 2 No. major markets and lorry parks
Sensitize traders and drivers at the markets and lorry parks on the need to honor their tax obligation
Update the assembly database on all existing businesses
Establish a taskforce to identify defaulting businesses and collect BOP arrears
Intensify monitoring of physical developments to ensure developers have acquired appropriate building permits
Update the database on all rentable facilities and properties of the assembly.
Prepare tenancy agreement between the assembly and all individuals and businesses who have rented assembly
properties
Eject and prosecute rent defaulters
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Gallery – Small Grants Projects serve as incentives to communities to be engaged
Ngyiresia School Urinal, Essipon Water Storage Facility and Bakado Toilet Extension/Renovation – STMA 2012
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REVENUE
ITEMS
2011 2012 (RIAP YEAR) 2013 (RIAP YEAR) REMARKS
Budgeted Actual
%
achieved Budgeted Actual
%
achieved
Budgeted
Actual
%
Achieved
The general increases in revenue in
2012 and 2013 is attributed to:
1. The improvement in efficiency of
internal revenue collection
management system of the Assembly
through RIAP implementation.
2. The 2013 phenomenal growth in
miscellaneous occasioned by a lump
sum payment made by GHACEM Ltd
to the Assembly as part of the
company’s Cooperate Social
Responsibility.
3. Improved database of businesses
resulting in effective distribution and
collection of bills.
4. However, the declining revenue from
investments in 2012 and 2013 is
mainly due to the absence of clear
policy direction (from central
Government) on the investment base
of the Assembly making it ensure for
the Assembly to engage in some
levels of investment.
RATES 695,000.00 554,338.46 79.76
890,000.00 770,464.17 86.57
1,025,000.00 1,021,656.86
99.67
LANDS
185,500.00 236,474.02 127.48
225,500.00 272,436.00 120.81
340,000.00
318,057.13
93.55
FEES,
CHARGES &
FINES
636,000.00 681,414.00 107.14
693,000.00 742,042.60 107.08
1,130,500.00
1,112,135.24
98.38
LICENCES
1,235,200.00 1,222,554.81 98.98
1,297,100.00 1,426,513.31 109.98
1,099,400.00
1,042,362.29
94.81
RENT
174,100.00 124,429.18 71.47
178,000.00 112,631.66 63.28
156,830.00
117,777.98
75.10
INVESTMENT 36,100.00 29,307.68 81.18
36,100.00 14,855.16 41.15
-
-
MISCELLANE
OUS 53,100.00 137,463.21 258.88 43,100.00 57,273.06 132.88
962,000.00
967,212.88
100.54
TOTALS
3,015,000.00 2,985,981.36 99.04 3,362,800.00 3,396,215.96 100.99 4,713,730.00 4,579,202.38
97.15
Analysis of Revenue Collection Performance – STMA (Actual Versus Budgeted) 2011 - 2013
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Total IGF Growth Trend in STMA (2011 to 2013)
IGF Growth Trend
Growth Pattern of Revenue Items (2011– 2013)
• General growth in total revenue collected in the RIAP Years of 2012 and
2013 compared to 2011 revenue generation.
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PROPERTY TAX REFORMS IN STMA
UPDATES
Situation Before
• Paper Based Manual System which is difficult to
update
• Layouts are sketches not drawn to scale and lack
the proper orientation
• Layouts have no linkage to the revenue database
• LVD block maps are sketches without proper
orientations
• Street and parcels without names and numbers
• Property valuation uses the replacement cost
method (floor area, type of material used, etc,)
Background
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Collection
of data
Data processing
by MIS
Transfer of the
Data to Revnet Ltd
Generation
of Bills by
Renvet
Distribution of Bill be
Revnet team and
Assembly collectors
without proper
identification system
Payment of bills at
collection points
Submission of
returns to
Assembly Finance
Office
Budget Officer
accesses information
from Finance and
Revnet Offices for
revenue performance
analysis
Use the data
from the
analysis for the
preparation of
draft IGF
estimates
Setting of
targets by DA
Review of the
draft IGF
estimates by
F &A and
Revenue
Sub-
committees
Final Draft
IGF
Estimates
Approval by
General
Assembly
Existing Billing and Collection Process
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Setting up a GIS Unit (July-August, 2012)
• Renovation of PPD Drawing Unit – STMA
• Computers, Printers & Scanners -GC
• GIS Software – GC
• Training of staff
Situation Now: Establishment of GIS Unit
Ten (10) Desktop Computers
Ten (10) UPS Machines
One (1) Server Machine
One (1) A3 Scanner
One (1) A3 Officejet Printer
Capacity
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Digitization of Parcels from Orthophoto/Layouts
Street Addressing
Consultations and Public Education
• Stakeholder consultations
Chiefs, Assemblymen, community leaders
For Street Names, compilation of existing
street names
• Radio jingles & discussions on 4 local Radio
Stations
• TV News Coverage (by Sky TV)
• Community announcements via STMA
Information Vans
• Naming of streets
• Numbering of
properties
• Preparation of
data collection
maps and
questionnaires
Preparation of Maps
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• Fieldwork
Training of 160 fieldworkers
Participants at the 6-day training workshop were trained in:
• Basic Map Reading
• Questionnaire Interviewing Skills
• Stencilling of Street Names & House Numbers.
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• Fieldwork
• Stenciling of House
Numbers and Street
Names
• Collection of Property and
Business data
• Lasted from June 2013 to
May 2014
Data Input and Scanning
• Field Verification of Geographic data
• Editing of Geographic data
• Scanning of property and business record
sheets
• Editing of the scanned record sheets
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Linking of Property Values to the property addresses(Geocoding)
• Identification of LVD blocks and
valuation numbers on the maps
• Matching the property addresses to
the valuation numbers
• Entering property addresses into the
LVD database
• Restructuring of database and linking
it to the GIS map
• Final database:
Property: 35157
Business: 5411
UPN valno Property Address countyno suburb zcode pucode Owner's name occupier valdate inspdate ratevalue
642-0545-0010 SK11010012 41Boundary Rd 7D SEKONDI R2 RG GHANA POLICE SERVICE OWNER 01-Jan-10 17-Sep-12 385639
642-0546-0018 SK11011003 114STMA Rd A 7A SEKONDI R2 OG W. A. E. C. OWNER 01-Jan-00 15-Sep-12 224559
642-0545-0050 SK11011011 3Heave Ct - SEKONDI R1 OQ GHANA EDUCATION SERVICE OWNER 01-Jan-00 15-Sep-12 208725
641-0545-0309 SK11023004 12Philip Archer Ave 24A/17 SEKONDI R2 RP GEORGE ACQUAH OWNER 01-Jan-10 13-Sep-12 336267
637-0542-0169 EK08006010 1Twin City Cr 8/9 WINDY RIDGE HI IP OWNER 01-Jan-10 14-Nov-12 540918
637-0542-0170 EK08006009 16Paa Grant Blvd 7/9 WINDY RIDGE HI IP TAKORADI FLOUR MILLS OWNER 01-Jan-10 14-Nov-12 634458
637-0542-0171 EK08006008 18Paa Grant Blvd 6/9 WINDY RIDGE HI IP PARK AVENUE ROUTERS LTD OWNER 01-Jan-10 14-Nov-12 349623
637-0542-0174 EK08006007 22Paa Grant Blvd 5/9 WINDY RIDGE HI MX SETH GYEDU OWNER / FAMILY 01-Jan-10 14-Nov-12 338833
642-0545-0427 SK11020030 13Kwamina Anaesi Blvd 39/12 SEKONDI R2 OP 01-Jan-10 12-Sep-12 229795
639-0542-0150 TD07040025 9Catechist Daadze Ave 120 - 123/2 NEW TAKORADI R3 RP L. N. USSHER OWNER / FAMILY 01-Jan-10 09-Aug-12 186034
638-0542-0151 TD07024008 5Monkey Hill Ave 96A/12 MONKEY HILL MD RQ VODAFON GHANA OWNER 01-Jan-10 24-Jul-12 218190
636-0542-0061 EK08001001 32Paa Grant Blvd PT. 1 WINDY RIDGE HI OP BAKER HUGHES GHANA LTD OWNER / TENANTS 01-Jan-10 18-Jun-12 4071840
636-0542-0094 EK08001004 10Independence Ave 3/9 WINDY RIDGE HI OP ANIMENS TENANTS 01-Jan-10 16-Nov-12 279525
636-0542-0095 EK08001003 8Independence Ave 1C/9 WINDY RIDGE HI IP MULTIWALL PAPER SACKS LTD OWNER 01-Jan-10 16-Nov-12 1194887
636-0542-0097 EK08006001 30Paa Grant Blvd 2A/9 WINDY RIDGE HI IP TAKORADI FLOUR MILLS OWNER 01-Jan-10 14-Nov-12 219712
637-0542-0147 EK08007017 11Twin City Cr WR. 1A WINDY RIDGE R1 LP MR. YIADOM BOAKYE-DANQUAH OWNER 01-Jan-10 19-Oct-12 187520
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Training of STMA staff on LUPMIS IGF Component
Participants
• MIS Dept.
• Finance Dept.
• Budget Dept.
• Development Planning
• TCPD
• GIS Staff 25
Property Rate model & LUPMIS
• Installation of
LUPMIS
• Set-up of network
• Creation of
accounts for staff
for access to
LUPMIS
• Loading of
database into
LUPMIS
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Property Rate model & LUPMIS
• Determination of rate
impost for properties
• Determination of
business permits using
factors
• Generation of property
rates and business
operating permits
• Generation of demand
notice
• Demarcation of
property rate collection
zones
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Property Rate model & LUPMIS • Printing of bills
• Distribution of bills
• Entry of payment
• Continuous updating of GIS database
(Capturing of new properties that might
result from subdivision and
consolidation)
• Entry of payment information Indicators Variables Weight as in % points
SEC A. Basic Indicators & Variables applicable to all businesses
1 Location 100
Prime 50
Good 30
Fair 20
2 No. Of employees 100
Permanent employees only Over40 30 31 to 40 25 21 to 30 20 11 to 20 15 0 to 10 10
3 Impact on the environment 200
Pollution
Noise 30
air 30
Water 30
Green gas emission 40
Extent of roal use and municipal services 40
Volume of waste generated 30
4 Type of business office operations 100
Main office 40
Area office 30
Branch office 20
Agency 10
5 Nature of the business enterprises 100
International 50
National 30
Local 20
Grand Total Weights 600
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Sample Bills
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Reformed Billing and Collection Process
Collection of data on Properties
and Businesses
Data processing by PPD
Data accessible to Finance, Budget,
MIS and LVD
Generation of Bills by Revenue
Distribution of Bill by Assembly collectors
based on demarcated zones and property/
business spatial information
Payment of bills at 10 active collection
points
Submission of returns to
Assembly Finance and MIS Offices for processing
Budget Officer accesses information from the system for
revenue performance analysis
Use the data from the
analysis for the preparation of
draft IGF estimates
Budget and Rating Input FFR and
targets
Review of the draft IGF
estimates by F &A and Revenue
Sub-committees
Final Draft IGF
Estimates
Approval by General
Assembly
LVD, Finance and MIS provide
information to Budget and Rating for target setting
Status Maps
Red: Not paid Green: No Property/Fully paid
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Implementation in Pilot Areas
Phase I
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• Bills printed for Pilot Phase I (Chapel Hill)
Property Bills: 1758
BOP Bills: 1973
• Collectors oriented on map reading and street addressing system
• Collectors currently validating printed bills using the maps and
making necessary updates
Pilot Phase I (Chapel Hill)
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• Assign specific zones to revenue collectors and their supervisors
• Know the exact revenue to be generated
• Know the coverage area
• Know areas that are not paying their rates so that they can be targeted
for public education
• Location based tracking of defaulters and revenue collectors
• Monitor the performance of revenue collectors and supervisors
• Easy location of property rate payers since they will be linked to
physical addresses
• Use of maps by the revenue collectors
Benefits of the System
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Emerging Lessons
• Communication and Citizen Participation Need to Inform Taxation Reforms:
Effective and fair taxation results from an implicit bargain between citizens
and government.
• Software Implementation Requires Gradual, Patient Approach: Developing
and implementing new ICT systems with local government requires a
gradual approach and considerable patience.
• Quality Data is Essential: Cities do grow organically, but it is critical to have
accurate data on all particles of the organism – maps, data, street names,
who lives where, what services they need
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