A.1 Asset and liability management reporting framework in Nairobi City County B.1 Integrated asset management as a conduit across sectors and functions:

FIGURE A.1

Asset and liability management reporting framework in Nairobi City County

Development partners

Finance and Economic Planning Department County Assembly Finance, Budget, and Appropriation Committee

Supply chain management

Asset management director Asset Management and Disposal Committee

Service departments

Subcounty and ward offices

Source: Nairobi City County Government.

Policy review

This policy will be reviewed five years from the date of approval based on the long-term plan cycle. When considering changes to the policy, consultation will include the following as a minimum:

• The county governor • The CECMs • The CECM of the Finance and Economic Planning Department

Implementation framework

Employees will implement the policy through the development and use of AM guidelines and practices. Since the performance of AM in an organization is specific, reflective of knowledge, technologies, and available tools, and will evolve over time, the responsibility for obeying guidelines and practices is delegated to employees.

Capacity building on AM to the CECMs, chief officers, directors, and other key employees will be spearheaded by the AMDR director on an annual basis.

Asset codes Organizations face a significant challenge in tracking the location, quantity, condition, maintenance, and depreciation status of their fixed assets. This challenge is met through asset identification and tagging.

Asset tracking This is the method used to monitor and track an entity’s physical assets. This is normally done using asset tags.

Asset tags Asset tags identify equipment using a unique serial number or barcode. Asset tags are typically labels that have an adhesive backing. (Common asset tag materials are anodized aluminum or laminated polyester. Common designs include the company logo and a border that provides contrast to the equipment.) Asset tags have four basic functions:

(1) Tracking equipment: Where is my asset? Tags are used to track the asset’s movement, for example, from room to room. Asset tags must stay with the asset over its lifetime.

(2) Inventory control: What assets do we own? Asset tags are the critical link for performing periodic audits of NCC asset and inventory control.

(3) Preventing theft: Could you return the asset? This makes it easy for anyone to return a valuable, for example, a laptop or equipment, to the proper owner.

It prevents “accidental” misappropriation of an asset by another department.

(4) Maintenance, repair, and operations information: What maintenance needs to be done? Scanning a barcode can quickly bring the user to a database of repair instructions or maintenance schedule.

Main asset codes The most modern and simple way of asset barcoding is to have a serialized barcoding process in which tags are sequentially generated for the approximate number of assets NCC possesses. For example, if NCC has an estimated 10,000 assets irrespective of class of assets, the asset tag numbers will be generated and appear as follows NCC00001 to NCC010000.

A tag is physically attached to the asset. The tag number then becomes the primary number identifier in the property record. If one wants to find out about a particular asset, for example, a laptop, entering the tag number (sometimes called the asset number) into the master property file brings up the complete record. This is essentially the only approach that will work when trying to find a specific asset in a file that may have thousands of items.

Templates

Policy administrator, owner, and approval form The administration of this policy shall be spearheaded by the AMDR director (more templates can be attached by user counties).

The owner of this policy is the chief officer of finance and economic planning.

This policy was approved by the Nairobi City County Government on the…………………………..…day of…………….……...…………………..…........................in the year …………………………………….

Signed……………………………………………………………Stamped…………………………….

By…………………..………………………………….………………………………………………………..

Designation…………………………………………..……………………………………….…………..

Witnessed by …………………………………………………………………………………………….

REFERENCES

Cape Town. 2012. “Asset Management Policy.” City of Cape Town, South Africa. https://apps .treasury.act.gov.au/__data/assets/pdf_file/0006/1069989/Budget-Paper-3.pdf. Fiix. 2019. “Asset Management Policy Template.” Toronto, Canada: Fiix Software, Information

Technology and Services. https://www.fiixsoftware.com/blog/asset-management -policy-complete-guide. Kenya Constitution. 2010. http://kenyalaw.org/kl/index.php?id=398. NALM (National Assets and Liabilities Management Department). 2020a. “National Asset and

Liability Management Policy, 2020.” Nairobi: NALM. https://www.treasury.go.ke/wp -content/uploads/2021/03/Asset-Liability-Mgt-Policy.-doc-Final.pdf. NALM (National Assets and Liabilities Management Department). 2020b. “General Guidelines on Asset and Liability Management in the Public Sector.” Nairobi: NALM. https://www .treasury.go.ke/wp-content/uploads/2021/03/GeneralGuidelines-on-asset-and-liability -management-2020-Final.pdf. NALM (National Assets and Liabilities Management Department). 2020c. “Guidelines for

Management of Specific Categories of Assets and Liabilities, 2020.” Nairobi: NALM. https:// www.treasury.go.ke/wp-content/uploads/2021/03/Specific-guidelines-2020-Final.pdf. PFM. 2012. Public Finance Management Act, no. 18 of 2012. https://www.pcf.go.ke/index.php /public-financial-management-act. PPAD. 2015. Public Procurement and Asset Disposal Act, no. 33 of 2015, December 18, 2015. http://kenyalaw.org:8181/exist/kenyalex/actview.xql?actid =No.%2033%20of%202015.

APPENDIX B

County Asset Management Strategy Model

INTRODUCTION

This template presents an asset management strategy (AMS) drafted for Nairobi City County (NCC). The NCC government (NCCG) has not approved it, but it represents a well-developed draft that could serve as a template for other counties. We present this because NCCG has been in the forefront in developing asset management (AM) frameworks, systems, and instruments, and this draft AMS is built on the approved and published strategy, and this strategy is cross-referenced to the noted documents. Other counties may lack some of these legislative documents, so they would need to tailor this NCC strategy to local circumstances.

The AMS is built on the NCCG’s vision, mission statement, and the NCC Strategic Plan (SP) 2015–25 and covers 2016–25 (NCC 2014b). The SP puts high emphasis on developing AM policies, strategies, plans, and respective systems, procedures, databases, and capacities. The AMS also considers key strategic development objectives, the seven key performance areas (KPAs) of the SP, and other plans like the Nairobi County Integrated Development Plan 2013–17 (NCC 2014a), the Nairobi Integrated Urban Development Plan (NCC 2014c), and metropolitan vision 2030. A key mission statement from the SP includes the following:

Asset management strategy allows us to make the right amount of investment in the right asset at the right location at the right time. It is through evidence-based decisions that NCC spends our financial resources to manage our physical assets for the best long-term benefit (NCC 2014b, 16).

The SP states that the mission of NCC is to “provide affordable, accessible and sustainable quality services, enhancing community participation and creating a secure climate for political, social, and economic development through the commitment of a motivated and dedicated team” (62).

The SP also states, “Nairobi City County as the Capital City, the seat of the National Government, the host to international and regional organizations, as well as the regional hub for international travel and economic activities [needs] to establish the necessary world class services within the City County” (16).

Against this strategic vision, the SP’s situation analysis indicates a low level and poor quality of urban services, dilapidated assets due to deferred or poor maintenance, incomplete asset takeover from defunct local governments and state entities, and a lack of coordination across various NCC sectors and entities in developing and maintaining assets.

The SP aims to “translate the overall City County strategic objectives into sector-specific action plans, align existing sector plans and County Integrated Development Plan (CIDP) with the new Nairobi City County strategic objectives, and align sector and departmental budgets and resource implications” (25). The AMS and plans are coherent parts of the NCC strategic objectives and actions and eventually will be conduits in aligning strategies, objectives, and budgets across sectors.

The SP identifies seven KPAs, of which six include substantial and specific strategic programs or initiatives toward establishing an integrated asset management system, a key instrument in reducing the current silo-based planning and service approach.

Based on the stakeholder engagement themes, seven thematic Key

Performance Areas (KPAs) were identified. These cross-cutting KPAs form the basis of the strategic framework used to develop the strategic plan. This effectively addresses the silo planning approach previously followed by sectors and departments and will ensure that integrated planning is achieved (24).

COUNTY ASSET MANAGEMENT STRATEGY 2016–25

The AMS summarizes the most critical areas and actions required for establishing reliable AMSs, procedures, and capacities in the medium to long term in line with and to support the objectives of the NCC SP. The AMS aims to achieve an integrated asset management system that is also fully integrated into or interlinked with the integrated financial management information system (IFMIS), and other business processes, such as long-term planning, capital project prioritization (also known as capital improvement planning, or CIP), financing, and budget planning and implementation systems and procedures (many of which are still to be developed, too). NCC lacks an asset management policy, strategy, plan, systems and reliable databases, although some elements and procedures of a needed asset management system do exist in various service units of the sectors, and these can be useful parts of the planned new systems.

The AMS is the set of planned strategic actions that will enable the assets to provide the desired levels of service in a sustainable way, at the lowest life-cycle cost (for example, through preventive rather than reactive maintenance) and with measured and managed risks. AMS in cities with a long tradition of reasonable asset management addresses areas and actions to improve, via maintenance, renewal or rehabilitation, replacement, disposal, and expansion of assets in line with procurement, cost analysis, risk management, and integrated planning and financing. In contrast, the AMS for NCC requires putting emphasis first on establishing the core systems, procedures, and reliable databases before planning to use more sophisticated asset management tools and practices. However, full integration can reasonably be achieved by the end of the 10-year strategy cycle of the AMS.

Key strategic objectives of the AMS

The AMS is a set of asset-related actions that, taken together and in a coordinated manner, helps achieve the lowest overall cost of operation as opposed to the lowest cost for each individual action or asset. The AMS aims to coordinate capital spending across sectors and multiple assets and optimize life-cycle costs (for example, to replace water or sewer mains in coordination with major rehabilitation of a city road section, rather than doing them in separate actions).

The SP summarizes the “desired future” of the AM that can be considered key strategic objectives of the AMS (NCC 2014b, 73):

• A functional central asset register, management system, and procedures • All county property secured and in full possession of NCC • Controlled acquisition, management, and disposal of all assets • Well-maintained assets that support cost-effective and quality services

Key actions and areas

The SP highlights key actions and areas, but the AMS needs to include more. These actions need careful planning, timing, and sequencing since completing these altogether requires a decade or more of work:

• Positioning AM in the NCC organization, systems, and procedures • Establishing the core AM system • Adopting AM strategy, policy, and short- to medium-term plan • Developing and maintaining asset registers • Verifying all assets taken over (or to be taken over) from defunct local entities and central government bodies • Reaching settlements on disputed assets and liabilities • Completing and maintaining needs assessments by sectors • Completing assessments of asset condition, replacement value, risk, and life-cycle cost • Introducing an information technology system for the integrated asset management system • Institutionalizing preventive asset maintenance and reducing the role of reactive maintenance • Institutionalizing integrated capital improvement planning led by the Asset

Management Directorate (AMDR) and coordinated with engineering units, directorates, and sectors • Fostering collaboration among engineering, operations, planning, and finance/AMDR departments • Integrating AM systems with IFMIS, capital planning, engineering, and service operations • Developing adequate human capacities for AM

POSITIONING ASSET MANAGEMENT IN COUNTY ORGANIZATION AND SYSTEMS

From an organizational perspective, AM has been structured to be a key element that fosters collaboration with multiple business units. In this sense, AM will be a conduit of communication and coordination between traditional