UNCDF contracted ODI to support Puntland State of Somalia to formulate a strategy for financing LGs to deliver basic services. The first step was to conduct an assessment of how LGs are currently being financed.
On 23rd March 2015, UNCDF held a workshop to validate the Puntland Local Government Financing Assessment Findings. The workshop was attended by 58 participants constituted of the mayors of 7 districts (Garowe, Gardo, Bossaso, Bayla, Eyl, Jeriban and Galkacayo), the Ministries of Interior, Finance,and Sectoral Ministries of Health, Education, Environment, Water and Road Authorities, Champion Office for Decentralization of members of UN Joint Programme (UNDP, UH-Habitat, and ILO.
The participants debated and contributed inputs on the LG Financing Assessment Findings that was conducted by a UNCDF commissioned Oversees Development Institute (ODI) in February 2016 toprovide inputs into the development of a Fiscal Decentralization Strategy for Local Government Financing Framework for Service Delivery in Puntland. The assessment studied how LGs are currently financed, deeply elaborating challenges, gaps and recommendations on the local government Structures and functions; Local government revenues and expenditures, local government systems for budgeting and expenditure management, and the Inter-governmental fiscal relations.
By deeply going through the assessment findings on the above four areas, the participants collectively validated the findings and made further points to be elaborated into the report. On behalf for the Puntland Ministry of Finance, The Director General of Inland Revenue Mr. Ali Farhan commended UNCDF’s support to the Ministry of Finance to implement comprehensive Fiscal Transfer System enhancing central government transfers, and improving Local Governments’ financial capabilities to deliver efficient services to the community.
Similarly, The Director General of the Ministry of Interior appreciated the contents of the report in general and the report’s findings in particular showing the ministry’s firm commitment to push the implementation of the Fiscal Decentralization Paper which strengthens the Local Governments Capacity to deliver service.
The validation of the LG Financing Report will help ODI to complete the remaining pieces of work which includes, the documentation of international experiences, and the development of the fiscal decentralization strategy and action plan expected to be finalized by May 2015 UNCDF as part of the UN Joint Program on Local Governance and Decentralized Service Delivery (JPLG) supported this effort by facilitating the consultation process and providing specialized international expertise for the drafting and review of the Decentralization Policy, allowing for incorporation of decentralization best practices and experiences.
UNCDF led on the fiscal decentralization component of the Policy which operationalizes the principle of “finance follows functions” and defines the assignment of revenue and expenditure responsibilities as well as intergovernmental transfers to local governments. UNCDF is already supporting the Ministry of Finance in implementing a pilot fiscal decentralization scheme which includes center–local transfers where central government allocates portion of the national budget to the local governments’ development activities through the LDF (Local Development Fund) administered by UNCDF.
The JPLG programme has five participating UN agencies (UNDP, UNICEF, UN Habitat, ILO and UNCDF) and supports the improved decentralized service delivery of seven local governments in Puntland (Garowe, Gardo, Bosssaso, Eyl, Bayla, Jeriban and Galkacayo).