New guidelines for devolution funds 

Source: New guidelines for devolution funds | The Sunday Mail

New guidelines for devolution funds

Debra Matabvu

IN a move aimed at streamlining the Government’s devolution programme, local authorities, as well as metropolitan and provincial councils, will now receive allocations of the Inter-Governmental Fiscal Transfers (IGFTs) every month.

According to new guidelines contained in the Zimbabwe Inter-Governmental Fiscal Transfer System Administrative Manual approved by Cabinet earlier this month, any unutilised devolution funds will be rolled over to the following financial year.

This is expected to eliminate the risk of year-end rushes to spend allocated funds, which at times has resulted in wastage.

The manual outlines stricter financial controls, where devolution funds will be deposited into a dedicated ring-fenced bank account requiring up to six signatories and monthly audits by a designated senior official.

These measures seek to ensure the transparent and accountable use of funds allocated for development projects at the local level.

Devolution, enshrined under Chapter 14 of the Constitution, seeks to promote the equitable distribution of national resources and empower local communities to participate in their development.

The 2024 Budget allocated $2,7 trillion (old currency) towards devolution initiatives.

“The capital and operating transfers should be disbursed to Provincial and Metropolitan Councils and local authorities, on a monthly basis subject to quarterly reviews.

“A specific ring-fenced account shall be a prerequisite for the transfer of the funds,” reads the manual in part. The sum total of quarterly transfers by Treasury through the ministry responsible for Local Government shall be at least 5 percent of actual revenue collected for each quarter pursuant to compliance with the constitutional provision in Section 301(3).

“Unspent and committed outstanding balances of the equitable capital transfer amounts should be rolled over to the next financial year.

“Provincial/Metropolitan Councils and local authorities are required to prepare a report on the financial and physical progress of capital projects using the format included in this manual, to be submitted to the Ministry responsible for Local Government and copied to Treasury.”

The manual says the reports should be submitted monthly.

It continues: “Quarterly financial reports must be submitted to the ministry responsible for Local Government and copied to the Treasury, by mid-month following the end of the quarter. Issues for corrective action should be raised by the ministry responsible for Local Government within one month of receiving the report.

“The biannual report on the physical progress of capital projects should be completed by the end of January and July respectively.

“Issues for corrective action should be raised within one month of receiving the report.”

The Ministers of Finance, Economic Development and Investment Promotion; and Local Government and Public Works, the manual adds, will appoint committees to effectively monitor use of the funds.

“In order to effectively implement the Inter-Governmental Fiscal Transfers, there would be an Institutional Framework comprising of an Inter-Governmental Fiscal Transfers Committee that will look at the key design elements of the IGFTS, particularly the transfer formula and weighting,” the manual reads.

“The committee will be appointed by the Minister responsible for Finance in consultation with the Minister responsible for Local Government and shall have experts in the fields of finance, economics, law, engineering, public administration and any other profession as the Minister sees fit.”

For administration of the transfers, a transfer administration unit will be established in the Ministry of Local Government (and Public Works). Further, an inter-governmental fiscal affairs unit will also be set up in the Ministry of Finance to consider inter-governmental budget policy matters. Local authorities, as well as provincial and metropolitan councils, will also be required to engage residents before planning and implementing projects.

“The sub national tiers of government will be required to establish appropriate mechanisms, processes and procedures to engage residents showing evidence thereof, in the preparation of the expenditure plans,” the manual added.

“The development plans and annual expenditure plans for Provincial Councils and local authorities should also incorporate projects that are being funded through conditional transfers. This is necessary as it ensures harmonisation and coordination of interventions.”

The Government will also dispatch internal auditors to local authorities, as well as provincial and metropolitan councils, every quarter to audit their financial records.

Reallocation of devolution funds will only be accepted to cater for natural disasters.

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