On Saturday 30th November 2014, the Government of Puntland agreed to a plan, proposed by Puntland's Minister of Finance (MoF), to allocate 1% of the national budget for transfers from the national to the local levels through the UNCDF/JPLG Local Development Fund (LDF).

This plan allows the Accountant General to transfer 1% of the monthly national income to MoF’s LDF account in the State Bank as part of the Central Government's contribution to the LDF projects implemented by the UN Joint Programme on Local Governance and Decentralised Service Delivery (JPLG) in Puntland's districts of Garowe, Bossaso, Bayla, Eyl, Jeriban and Galkacayo.

Puntland's Minister of Finance, Mr Shire Haji Farah, welcomed this move as it reaffirms Puntland's commitment to implement fiscal decentralization initiatives by transferring funds from the central to local governments.

The Minister added that “this initiative is part of the national commitment to implement the recently approved Decentralization Policy Paper”, that was designed to enable the government to plan, implement and monitor service delivery at the local level.

The Puntland Policy Paper was developed in consultations facilitated by the Inter-Ministerial Committee, headed by Puntland's Vice-President, and with technical support of the JPLG programme. The paper was endorsed in July 2014 and covers the areas of political, administrative, and fiscal decentralization, enhancing fiscal capacity to develop intergovernmental transfers and incentives for local governments to maximize their service delivery capacities.

Through the implemention of the fiscal decentralization initiatives, Puntland's Government aims to undertake holistic reforms to improve the quality and efficiency of government services, including improvements in institutional arrangements that underpin fiscal policy, and that enhance transparency and accountability at all levels of government.

The fixed percentage (1%) of central budget being reallocated to local governments in the context of the LDFs, will resolve delays on fund transfers to local governments, create smooth and timely programme implementation, and finally enable the government to allocate more funds to other sector models such as health, education, Local Economic Development (LED), that are part of 2015 JPLG work plan.

From 2011-2014, the Ministry of Finance's contribution, as part of the Central Government's 10% contribution to 7 districts implementing LDF funds, amounted to more than USD400,000.

In 2015, Central Government is expected to increase its support to about USD300,000, expanding to the health, education, and LED sectors in the JPLG 2015 Workplan.

UNCDF provides institutional support to the Ministry of Finance to implement fiscal decentralization initiatives to transfer funds to 64 projects implemented during the 2011-2014 period, chanelling more than USD 3,000,000 to support local government delivering services to their communities.

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UN Joint Programme on Local Governance and Decentralised Service Delivery (JPLG)

The UN Joint Programme on Local Governance and Decentralized Service Delivery for Somalia is implemented by UNCDF, UNDP, ILO, UN-HABITAT and UNICEF and supported by Denmark, DFID, Norway, the EU and Sida.

The underlying hypothesis of the programme is that local governance contributes to peace and equitable priority service delivery in selected locations. The programme adopts an holistic approach to developing local governance capacity while broadening civic awareness and participation.

Within this framework, UNCDF is piloting a Local Development Fund in Somaliland and Puntland, two relatively peaceful regions of the country. The local fund has been designed to support financing of local infrastructure, with the aim to demonstrate how local governments can deliver both infrastructures and services that respond to the expressed needs of communities.