LATF was established in 1999 through the LATF Act No. 8 of 1998, with the objective of improving service delivery, improving financial management, and reducing the outstanding debt of local authorities (LAs). LATF, which comprises 5% of the national income tax collection in any year, currently makes up approximately 24% of local authority revenues. At least 7% of the total fund is shared equally among the country’s 175 local authorities; 60% of the fund is disbursed according to the relative population size of the local authorities. The balance is shared out based on the relative urban population densities. LATF monies are combined with local authority revenues to implement local priorities.
LATF transfers 5% of central income tax revenues to local authorities to supplement revenues raised locally through land taxes (rates), single business permits and other sources.
It is the most structured and established of the funds in that it results from processes put in place by the Kenya Local Government Reform Programme (KLGRP) based in the Ministry of Local Government.
Structure of local authorities
The structure of local authorities in Kenya was inherited from the colonial period but over time local authorities have increasingly failed to provide mandated services to residents. The reasons are complex but include rapid population growth leading to a fast increasing demand for services, a weak culture of public service, corruption of both elected councillors and officials, patronage issues, poor management and local (and national) political interference.
It is also important to note that while local authorities are democratically elected bodies accountable to their electorates their actual powers are strictly circumscribed. Under the Local Government Act (Cap. 265) they are in fact closely controlled by the Ministry of Local Government. Changes in the Act are planned but await the finalization of the Constitutional review process.
LATF monies, together with revenues generated by individual councils, are used to implement development projects. Since 2001, LATF’s general objectives were to improve service delivery to the public, financial management, and accountability. It was expected that councils would eliminate debts within five years. LATF transfers funds from Central Government to civic authorities under the supervision of the Ministry of Finance. The funds should ideally be used to address needs identified through a participatory process called Local Authority Service Delivery Action Plan (LASDAP).
The release of LATF monies is based on specific conditions: 60 percent is released if councils follow laid down public fund rules. 40 percent on submission of documents, which include a statement of actual revenues and expenditures statement of debtors and creditors, a debt repayment plan, an abstract of accounts/cash balances a revenue enhancement plan and a Local Authority Service Delivery Action Plan (LASDAP).
Councils are fully accountable for all budgetary funds like LATF and local revenues. The Local Government Act and related financial regulations provide structures for financial management, monitoring and financial inspections, and disciplinary action. Councils, which must have internal auditing arrangements, are subject to audit by Controller and Auditor General.
The Local Authority Service Delivery Action Plan
LASDAP is a three‐year programme detailing activities and programmes meant to deliver new, extended or improved services. It addresses direct service delivery to citizens, focusing mainly on health, education, roads, street lighting, water, sanitation, waste disposal, garbage collection, parks, and recreation and sports facilities. However, services do not have to be provided directly by the local authorities. Councils can use private sector and community organizations.
Citizens are encouraged to participate in LASDAP by demanding involvement. On the other hand Councils should involve citizens and stakeholders identifying projects, their management, monitoring and evaluation.
To involve the citizens, councils must prepare a list of community based organizations within the civic authorities’ area of jurisdiction, make public the preparation of LASDAP and the resources available and invite inputs and proposals from residents.
The councils must hold consultative meetings to which these organizations are invited, to identify needs and service delivery activities. Councillors should be present at these consultative meetings to listen and provide information. The purpose is to give the authorities a chance to hear from citizens. Ultimately the Full Council is supposed to make the final decision.
The following stringent deadlines are set for LATF have to be complied with. Each council is required to prepare and submit:
- A Statement of revenues, expenditures, cash and balances must be ready by every September 30.
- A Statement of creditors and debtors and debt reduction plan must be availed by September 30.
- An Abstract of accounts for every previous Financial Year must be ready by December 31.
- A Revenue enhancement plan every February 28,
- The LASDAP by February 28.
LATF money is disbursed directly from the fund to the Local Authorities’ bank account through a direct bank deposit, with notification given by the officer administering the fund. The money is disbursed thrice a year on 30 September, 31 January and 30 April.
Local authorities can be penalized for non compliance in three ways. If a council lacks annual estimates, it can be denied LATF. Late submissions of up to 30 days attract a 15 percent penalty, 30‐60 days, 40 percent and over 60 days 100 percent. In cases of inaccurate, false or misleading information on Annual Estimate or performance related documents, amounts would be recovered from the following year’s allocation.
For more details, contact
Jogoo House “A”, Taifa Road
P.O BOX 30004, Nairobi