The government of Ghana and the German Development Cooperation (KFW) have signed a loan and financing agreement to support the local government system in the country.
A statement issued in Accra by the Public Relations Unit of the Ministry of Finance and Economic Planning, said Dr Kwabena Duffuor the sector Minister, signed the agreement on behalf Ghana on December 10.
The agreement, which involves 14.9 million euros, is to support the District Development Facility (DDF).
The DDF is designed to effectively improve the performance of the Metropolitan, Municipal and District Assemblies (MMDAs) through additional discretionary funding of investment for local level service delivery, strong
incentives for MMDAs to improve institutional performance and systematic and demand driven capacity building.
The statement said DDF would address challenges confronting efficient local government service delivery, by reducing the funding gap for
investments and creating strong incentives to improve the districts' performance in critical areas.
These included management and organization, human resource development, planning and budgeting, financial management and accountability.
The statement said the performance would be measured on annual basis by the Functional and Organizational Assessment Tool (FOAT) that focuses on MMDAs' performance within the critical areas.
It said that the districts that were performing well and meeting the FOAT's minimum conditions receive significant additional funding for investment measures.
The statement said FOAT's result would also be used to determine the capacity building needs which would be addressed through capacity building grants under the DDF.
The DDF is a joint funding scheme for the government of Ghana, the Canadian International Development Agency, the Agence Française de
Developpement, DANIDA and the GDC.
Through this financing agreement, Germany will show its strong support for the poverty reduction strategy of Ghana and for the Government's commitment towards decentralization.