the city of Varaždin, Croatia

Committees (CALCs) that were mandated to verify inherited assets in Kenyan counties often list a substantial number of assets verified as grabbed, encroached, or disputed and that need proper valuation and resolution. As a result, many such properties may have been lost in some Kenyan counties.

In Kenya, securing counties’ property rights is urgent, given the uncertainty in this area. For example, the Nairobi City Council, according to a PricewaterhouseCoopers report, was able to produce title deeds only for about 30 percent of the land it claimed to own (PwC 2013). The identification of land parcels has improved substantially through the work of the CALCs under the guidance of the Intergovernmental Relations Technical Committee, whose 2018 report states that about 85 percent of land inherited from defunct entities has a registration number, but only 58 percent of counties’ land parcels are surveyed nationwide, suggesting that 42 percent of land has no clear title and remained unsurveyed (IGRTC 2018).

Furthermore, recognizing the real estate nature of these immovable assets at the county level will establish a foundation for deploying specialized expertise and approaches to strategic management of building and land portfolios, an element universally acknowledged internationally as good practice (Deloitte 2011, 2012; Detter and Fölster 2015; Hentschel and Utter 2006).

Coordinating actions related to both aspects—legal ownership and accounting—requires sequencing steps depending on many factors. Approaches implemented in other countries that decentralized government and devolved assets often included an iterative process of clarifying legal rights and respectively revising lists of fixed assets included in the balance sheet (box 1.4).

Classifying assets specifically for good asset management

The dual nature of the assets discussed helps counties recognize that standard accounting classifications are not sufficient for the strategic and tactical decision-making and actions required for proper AM. Therefore, in managing their assets, virtually all governments proactively deploy other classifications as well. However, there are no universal types for such classifications; they often depend on the purpose of the classification, the focus of AM efforts (for example,

BOX 1.4

Reconciling legal rights to land and buildings and the balance sheet in the city of Varaždin, Croatia

The types of properties that had to be transferred to municipal governments in Croatia, after self-governments were reintroduced upon the disintegration of Yugoslavia, were defined by law. However, Croatia also embraced restitution of property (returning property or compensation to former private owners from whom property was expropriated and nationalized by socialist governments of Yugoslavia). This implied that some properties devolved to local governments were subject to restitution. Given this situation, the city government decided that it would not invest in valuation and maintenance of the properties that were going back to previous private owners. In addition, each year, a list of properties included on the municipal balance sheet was revised to exclude the properties restituted or otherwise disposed of and to include new acquisitions.

Source: USAID and UI 2006.