takeover of responsibilities and assets in CEE

incentivized stakeholders to seek mutually acceptable solutions out of court and without appeals. Many countries, however, issued more detailed regulations for asset and liability takeover within one year of the devolution after learning the initial experiences about disputed cases.

Asset data systems in CEE were also incomplete or imprecise, but legislators took pragmatic approaches to ensure uninterrupted use of assets and relatively fast takeover of the bulk of both assets and liabilities. Unclear ownership was quite common, with missing, overlapping, or conflicting ownership documents, but legislators built pragmatic and operational conflict resolution procedures. However, laws included rules to motivate stakeholders to seek mutually agreedupon solutions. As a result, over 90 percent of transfers and takeovers (including both assets and liabilities) were completed within one year, although some complicated and problematic cases took several years to close.

Taking over assets together with liabilities was the common principle, but in turn governments (treasuries) often provided grants to ease the financial burdens posed by liabilities inherited by the new local governments (Poland) or the treasury took over and served most inherited liabilities (Slovak Republic). Major disputes related to the valuation of public enterprises if new local governments had to take them over with an unmanageable magnitude of liabilities, such as unpaid bills and debt service. These issues often overlapped with the national privatization programs in CEE, and some resolutions were reached by the national privatization entities’ offsetting assets and liabilities (Croatia). Disputed private ownership and compensation obligations appeared in most of the countries (especially Poland); these resolutions often ended in court procedures, and many took several years to conclude, but these represented overall a small share of total asset value.

INSTITUTIONAL FRAMEWORKS AND PROCEDURES FOR TRANSFER AND TAKEOVER OF RESPONSIBILITIES AND ASSETS IN CEE

The most fundamental difference between Kenya and CEE is apparent in the institutional framework. The transfer in CEE countries was based on sets of designated entities such as committees in each key stakeholder and a higher-level entity for appeal and final decision power, but the new municipalities were in the driver’s seat to initiate and effectively did initiate the processing of disputed cases. Legislators had anticipated conflicts and disputes, so they built in checks and balances, a framework, and rules for dispute resolution, whereas “mandatory” negotiations and compromises were the most fundamental instruments.

The basic idea was to clean up the ownership system after transition as quickly and simply as possible. This was successful overall, since 80 to 90 percent of properties had minor administrative issues, and the committees had to deal with only the remaining cases, mostly ownership and compensation issues with state enterprises and private owners. This way, the new municipalities became de jure and de facto owners of most assets within a few months or in the first year of devolution.

Hungary’s and Poland’s models represent the two basic institutional frameworks followed by other CEE countries with different modalities and are worth considering in Kenya.

The Hungarian model is an example of a decentralized model of asset transfer, in which a new local government takes over assets from national ownership and