Provinces, districts receive more funding, says Abel

DEPUTY Prime Minister and Treasurer Charles Abel has told Parliament that provinces and districts are now receiving more funding following the replacement of derivation grants as per the amendment to the Organic Law.
He presented to Parliament yesterday a detailed explanation of the status of derivation grants.
“The issue with the derivation grants was closed over 10 years ago when the Organic Law was amended and the provisions for the payment of these grants were repealed,” Abel said.
“But perhaps more importantly, the fairer system that replaced the derivation grants has actually resulted in much more money flowing into provinces.”
Abel said under the old system, the derivation grants averaged a total payment shared among the provinces of about K10.5 million each year between 1996 and 2008.
He said under the primary production function grants, that amount had almost tripled, with the average total payout in the order of K30 million per annum.
“The amendment to the Organic Law also introduced the basis for what is the current system of intergovernmental financing, which came into effect on Jan 1, 2009.
“It introduced the primary production functional grants among the suite of functional grants that we now have. Derivation grants were formerly conditional payments made from the national government to provincial governments under the Organic Law on Provincial Governments in 1977.”