Key messages

4

Finance, Resource Allocation, and Use

KEY MESSAGES

Overall

• The intergovernmental fiscal transfer framework and revenuesharing process forms the backbone of fiscal devolution but needs a stronger link to county service delivery needs. • County planning and budgeting processes do not answer four key questions: What services are resources being spent on? Where have the resources been spent? What resources have been allocated to service delivery facilities? What are the results? • There is an absence of sectoral guidance on how to finance, budget, manage, monitor, and report on funds for service delivery (including generating and using assets).

Priority Interventions

• Sector budgeting and expenditure norms and standards need to be developed and implemented corresponding with clear county sector delivery objectives. • Uniform processes and systems are needed to capture and monitor targeted and actual service delivery results from fiscal planning, budgeting, monitoring, evaluation, and reporting processes— ensuring capture of both financial and nonfinancial data in a consistent and comparable way over time (and integrated with national sectoral information management systems). • Development of an incentive-based conditional grant framework is needed to provide additional results-oriented and qualified financing to counties in a harmonized way. The framework should be used by both development partners and government and tied directly to implementation of key reform steps that would enhance service delivery. These include increasing own-source revenue, improving cash management, decentralizing control and distribution of resources to service delivery units, and other reforms.