Public Participation - Private Sector (SEK0004)

Issue to be addressed: STMA is mandated under the Local Government Act, 1993 (Act 462) and LI 1928 as the local government authority responsible for assessment and collection of assigned fees and rates for local development; a critical part of this mandate is the participation of businesses in fixing the fees (“setting the tax rate”) together with STMA. However, big businesses – some of which are members of private sector associations – have largely been overlooked in the participatory fee fixing process. The Assembly has not always found the time to proactively engage these businesses. Primary objective: To promote inclusiveness, openness and participation in fixing of fees to build the trust of businesses in government contribute to enhancing local revenue generation. Short description: Partner with private sector associations to kick-start a systematic and participatory way of engaging with large businesses in setting fees (in international terms taxes) that they pay to the Metropolitan Assembly. The Metropolitan Assembly will engage the leadership of the private sector associations; AGI and STCCI to develop a strategy and engagement work plan for fixing fees. OGP challenge: The implementation of this commitment would promote civic participation in decision-making, transparency, innovation and openness in fixing fees with regards to the publication of the negotiation processes. With the private sector participating more in fixing fees, they are empowered to negotiate fair rates and fees in a transparent manner The processes will contribute to building trust and confidence in local government processes and result in increased local resource mobilization.

4. Public Participation – Private Sector

Commitment Text

Partner with private sector associations to kick-start a systematic and participatory way of engaging with large businesses in setting fees (in international terms taxes) that they pay to the Metropolitan Assembly. The Metropolitan Assembly will engage the leadership of the private sector associations, AGI and STCCI, to develop a strategy and engagement work plan for fixing fees.

Milestones

4.1. Develop strategy for targeting large businesses. The Metropolitan Assembly will meet with the two key private sector associations – AGI and STCCI – to understand their membership systems and relationships with large businesses. We will work together to develop a strategy of targeting large businesses in fixing fees.  

4.2. Develop a new fees fixing model and work plan together with the appropriate associations that present local businesses. We will develop an engagement work plan for fixing of fees with large businesses (modelled on current efforts to engage mainly informal companies in the Assembly’s register). 

4.3. Test the participatory model with 50 or more businesses over 5 months. We will publish the process and results of the engagement for all citizens to see.

4.4. Assess the performance of new model. The Assembly will conduct an assessment of the benefits of the participatory fee fixing model. We will gather feedback from businesses that participated in the process to learn about their experiences. We will work with the associations to analyse the data to understand where progress had been made and where challenges still exit.

Commitment Overview

Commitment Aim

Overall Objective & Relevance

Under the Local Government Act, 1993 (Act 462) [7] and LI 1928, the STMA has a mandate to assess and collect assigned fees and rates for local development. It is expected that the STMA will involve businesses in fixing/setting the fees and rates. However, big businesses, which form part of the private sector associations, have been neglected in the processes of fixing fees.

The implementation of this commitment would promote greater participation of local interest groups in the making of critical decisions that affect their interest. It is anticipated that through the AGI and STCCI, STMA would reach out to the larger businesses through AGI and STCCI (two leading private sector associations) and promote their active involvement in economic decision-making. The open-door approach whereby STMA makes conscious efforts to engage with the AGI and STCCI that represent local businesses in fixing fees payable, could lead to popular acceptance of the local taxes and provide basis for legitimacy of the fees. The transparent and participatory process will further engender the business groups' cooperation in determining fees and their acceptance. The wider consultative process, which allows the participation of large established businesses in fixing fees, would also create opportunity for formal channels of information dissemination and accessibility. The publication of the processes will help legitimize the processes for future negotiations. Similarly, the active participation of the private sector could enhance transparency in the fixing of the fees and foster trust, confidence, and commitment among local businesses in the payment of local fees.

Specificity and Potential Impact

This commitment has the potential to transform the local fee-fixing landscape, proposing a more open approach to engaging the various stakeholders. This is because, unlike the existing arrangement, which has ignored the perspectives of the local business groups, the participatory process will signal to them that they are important partners in the local economic decision-making process. Refusing to involve strategic private associations and the sector in general has been an issue for a long time. In the past, organizations like AGI have denounced bad practices for fee fixing process, straining the relationship with the private sector community. [8] The publication of the processes for fixing the fees would provide a local framework and model for arranging compromises among local actors in determining common interests. There are some limitations to the commitment in regard to scope. Although stakeholders have identified the need to improve the fees fixing process, Sekondi-Takoradi has seen greater challenges in tax collection. According to the World Bank and the International Bank for Reconstruction and Development’s report (prepared in collaboration with the Public Private Infrastructure Advisory Facility), the main challenges in the taxation system are as follows:

• The lack of an inventory that properly identify tax payers (goods/services/economic activities) within the STMA area;
• The need to update the property cadaster;
• Study for increases of minimum rates and ranges of some taxes for goods and economic activities in light of the expected increase in economic activity cadaster; and
• The lack of tax management capacity.

This commitment could lead to a significant change in regard to improving the fee-fixing process, but, as written, would not imply a transformation of the status quo to enhance local revenue generation.

Completion

Substantial

The STMA has engaged and developed a working relationship with the two associations (STCCI and AGI) to understand their membership and the general private sector landscape. To do so, the president of the STCCI has been appointed by the Assembly to serve on both the Development Planning Subcommittee and the Works Subcommittee. In this way, issues affecting the private sector are made on the floor of the Assembly. Both AGI and STCCI are now members of the Metropolitan Planning Coordination Unit (MPCU). The MPCU meets quarterly. Its function was enshrined in the Local Governance Act, 2016 (Act 936) Part III, Section 84 & 85.

During the implementation period, the Ministry of Local Government and Rural Development in the national administration was already working on the development of fee-fixing guidelines. In July 2017, these guidelines came into effect, providing a framework for charging fees for the country, including metropolitan, municipal and district assemblies. [9] The STMA used this model to fix the 2018 fees with active involvement of key stakeholders. [10] However, there is no evidence to determine whether the STMA piloted the model with 50 businesses. Considering the government engagement with the two associations and the development of the new rates for 2018, the IRM researcher determined that this commitment has seen substantial progress.

Early results: did it open government?

Access to Information: Major

Civic Participation: Major

The commitment sought to partner with private sector associations to kick-start a systematic and participatory way of engaging with large businesses in setting fees (taxes) paid to the Metropolitan Assembly, to be implemented over the 2017 fiscal year period. The commitment was expected to transform the local fees fixing landscape. It is noted prior to the implementation of the commitment, however, that the Assembly did not have a thriving relationship or engagement with the private sector (AGI & STCCI); members of the aforementioned organizations were often reluctant to honor their local tax obligations. As a result of the implementation of this commitment, a representative of the STCCI now serves on both the Development Planning Sub-committee and the Works Sub-committee. There are also representatives of AGI, STCCI, and other NGOs on the Metropolitan Planning Coordination Unit (MPCU). The formal integration of the AGI and the STCCI has helped deepen the relationship with the private sector and the STMA. Although by the end of the implementation period there was still no concrete evidence of the impact of this improved relationship, the STMA expects that it will positively impact the revenue generating capacity of the Assembly. This has improved opportunities for the public to be involved in government decisions. Considering the significant change in government practice, the IRM researcher considers that this commitment has had a major effect on civic participation.

Recommendations

The IRM researcher recommends the STMA to continue complete the implementation of this commitment and focus on lessons learned with the continued participation of the private sector associations. In particular, it is important to reach out beyond the associations to foster the relationship between government and businesses. Furthermore, the STMA could consider increasing the ambition of a similar commitment by aiming to improve tax collection management through increased transparency, especially due to the expected growth in economic activity associated to the oil sector.

[8] News article in Modern Ghana: “Involve business associations in fee fixing” (June 2008), https://www.modernghana.com/news/172401/involve-business-associations-in-fee-fixing-assemblies-urg.html Article from Ghana Business News, “Don’t neglect us in fee fixing – ASSI urges STMA”, (May 2013), https://www.ghanabusinessnews.com/2013/05/08/dont-neglect-us-in-fee-fixing-assi-urges-stma/

[9] Fee fixing model, published in July 2017: file:///Users/opengovernmentpartnership/Downloads/Fee-Fixing%20Guidelines%20Signed..pdf

[10] Imposition of rates for 2018: http://stma.gov.gh/stma_metro/docs/8632018%20APPROVED%20FEE%20FIXING%20RESO%20FINAL,final1.pdf