The Puntland Government Cabinet under the leadership of President Abdulwali Mohamed Ali Gaas approved the Decentralization Policy. This marks an important step in achieving one of the aims that the Puntland Government has been pursuing in recent years – to devolve local service delivery to district governments.

Decentralization process started in 2003 with the adoption of Law on Local Governments and formation of district councils and administrations. In 2005–2008, the Ministry of Interior, Local Governments and Rural Development established 25 local councils in 25 different districts across Puntland. To put the decentralization process into a more strategic framework, efforts were initiated in 2010 to develop a comprehensive and cohesive decentralization policy.

Puntland Cabinet chaired by the President is endorsing the Policy Paper In 2012, the Government established the Decentralization Champion Office headed by the Vice President. The Vice President and the Inter-Ministerial Committee on Local Government have since been the driving force behind the designing and implementation of the decentralization process, ensuring national ownership and providing invaluable assistance in finalizing the Decentralization Policy approved by the Cabinet on 10 July. The Policy presents a comprehensive vision of decentralization in Puntland and covers various aspects of political, administrative and fiscal decentralization. As expressed by the Government it is to achieve, by 2020, a fully decentralized government system, with identical functions being planned and implemented by districts as well as sector ministries linked to clearly defined functional assignments in each sector and commensurate with the capacities of local governments.

UNCDF as part of the UN Joint Program on Local Governance and Decentralized Service Delivery (JPLG) supported this effort by facilitating the consultation process and providing specialized international expertise for the drafting and review of the Decentralization Policy, allowing for incorporation of decentralization best practices and experiences. UNCDF led on the fiscal decentralization component of the Policy which operationalizes the principle of “function follows finance” and defines the assignment of revenue and expenditure responsibilities as well as intergovernmental transfers to local governments. UNCDF is already supporting the Ministry of Finance in implementing a pilot fiscal decentralization scheme which includes center–local transfers where central government allocates portion of the national budget to the local governments' development activities through the LDF (Local Development Fund) administered by UNCDF.

The JPLG programme has five participating UN agencies (UNDP, UNICEF, UN Habitat, ILO and UNCDF) and supports the improved decentralized service delivery of seven local governments in Puntland (Garowe, Gardo, Bosssaso, Eyl, Bayla, Jeriban and Galkacayo).