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WHAT IS LATF?
LATF is an intergovernmental transfer system which provides resources to local authorities (L.As) to supplement the financing of services and facilities required by the citizens.
LATF became operational in 1999 under the LATF Act No. 8 / 1998 and distributes 5% of the national income tax which is allocated to LAs on the following objective formula:
• A basic amount of Kshs.1.5 million per LA (5.25%)
• 60% based on relative general population of LA
• 34.75% on relative urban population of a LA. The LATF allocation criteria and individual allocations by LA are published annually in the newspaper.
HOW IS LATF STRUCTURED?
LATF policy is under the responsibility of the Minister for Finance, while the administration is done by the Permanent Secretary, Ministry of Local Government.
The Officer Administering the Fund is responsible to ensure that LATF monies are released and received in a timely and accountable manner by those LA(s) who comply with the LATF regulations.
An independent LATF Advisory Committee headed by the private sector, provides advice on policies and operations of the Fund. This Committee meets on a quarterly basis.
WHAT CAN LATF MONIES BE USED FOR?
LATF monies are provided as budget support to LA(s) to be spent in accordance with local budget priorities, which are identified in consultation with the citizens and approved by full council and the Minister for Local Government. Eligible local budget expenditures include those on personnel, operations, maintenance, debt resolution and capital projects.
HOW ARE LATF MONIES MONITERED?
All LA revenue and expenditures, including those LATF monies, must be managed, executed and monitored in accordance with the Local Government Act.
Elected Councillors and local government officials, as well as other local community and stakeholder groups are also responsible for monitoring proper budget execution and accountability. In addition, the Kenya National Audit Office is responsible for audit of all accounts.
HOW DO LA(s) RECEIVE LATF?
LATF allocations are released to LA(s) upon submission of planning and financial information. Deadlines for these submissions are:
• Budget Estimates, along with statutory creditor clearance letters: 15th June
• Statement of Actual Revenues and Expenditures, Cash/Bank Balance: 30th September
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Statement of Creditors and Debtors and Debt Repayment Plan update: 30th September
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Abstracts of Accounts: 31st December
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Revenue Enhancement Plan: 28th February
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Local Authority Service Delivery Action Plan (LASDAP): 30th November
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WHAT SUBMISSIONS ARE REQUIRED?
To be eligible to receive 60% of the LATF monies, LA must submit a budget estimate which meets the following conditions:
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Sixty percent (60%) is released upon submission of the annual estimates (budget) which must allocate a maximum of 55% of total expenditures for personnel and a minimum amount of 65% of the LATF for capital expenditures. In addition, LA(s) must confirm payment of required annual statutory creditors payments.
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Forty percent (40%) is released upon submission of a statement of actual revenues and expenditure, debtors and creditors, abstracts of accounts, participatory service delivery plan (LASDAP) and a Revenue Enhancement Plan. |
Submissions must be timely, complete, include all required forms and be accompanied by full council minutes. Failure to provide the complete submissions by required deadlines results in a penalty of 15% (up to 30 days late), 40% (from 31 - 60 days late) and 100% (over 60 days late).
Monies not released to LA(s) are retained in the LATF Account at the Central Bank to be disbursed according to the disbursement formula the following fiscal year.
HOW DOES LATF AFFECT ME?
LATF provides important resources and generates information which can enable LA(s) to improve service delivery, financial management and accountability and reduce debts.
LATF resources, together with own source local revenues, are available to enable LA(s) to provide improved local health, education, transport, water, markets and sanitation services.
LATF is linked to other ongoing local level reforms related to planning, budgeting and financial management, participatory planning and monitoring and evaluation.
Through these related LATF reforms, citizens are enabled to participate and work closely with their communities and local authorities to identify, plan, implement and monitor local services and development projects through the LASDAP process.
LATF is generating important local level information for the citizens, stakeholders, officials and councillors to improve local responsiveness, efficiency and accountability. This improved information is enabling more realistic local level budgeting, better financial management and revenue mobilization and enhanced service delivery. Better functioning LA(s) with active citizen participation can generate the level and quality of services and governance needed for sustained socio-economic development and wealth creation.
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