The Democratic Governance Support Programme (DGSP)

Local Authority Transfer Fund (LATF)

The Local Authority Transfer Fund (LATF) was established in 1999 through the LATF Act No. 8 of 1998, with the objective of improving service delivery, improving financial management, and reducing the outstanding debt of local authorities (LAs). LATF, which comprises 5% of the national income tax collection in any year, currently makes up approximately 24% of local authority revenues. At least 7% of the total fund is shared equally among the country's 175 local authorities; 60% of the fund is disbursed according to the relative population size of the local authorities. The balance is shared out based on the relative urban population densities. LATF monies are combined with local authority revenues to implement local priorities. An advisory committee comprising the private sector, the Ministry of Finance, the Permanent Secretary Ministry of Local Government, and the Kenya Local Government Reform Programme’s secretariat, guides LATF operations. LATF annual reports and other disbursement information are disseminated through newspaper advertisements. 60% of LATF allocations is released based on LAs meeting set requirements. The remaining 40% is released based on LAs performance measured through LASDAP and other indicators. Budgeted LATF allocations are gazetted but no disbursement is made unless LAs meet the requirements.