Consulting Services for Preparation of a “Policy Options Paper” For the “Municipal Incentive Fund”

Oct 3, 2020

Description of Project:

The “Policy Options Paper” for the Municipal Incentive Fund for Afghanistan will build on Chapter 16 of the Municipal Law and will support both IDLG and the Government of Afghanistan to better articulate the provisions of the said law. The outcome will also include a comprehensive framework for its implementation.

Description of actual services provided by your staff within the assignment:

  • Review the legal and institutional provisions for establishing the MIF by IDLG under Chapter 16 of the Municipal Law,
  • Assess the current legal framework for performance-based financing of municipalities in Afghanistan,
  • Identify any legal, regulatory or policy limitations that might hamper municipal financing through an MIF approach,
  • Recommend a set of criteria for evaluating the MIF in terms of simplicity, transparency and allocative efficiency,
  • Conduct institutional assessments of the 5 PCC municipalities under the CIP to identify appropriate performance indicators to be used for the MIF,
  • Assess the potential governance role of concerned national, regional and local institutions under a future MIF,
  • Recommend the governance and administrative structure of the performance-based municipal financing and roles and responsibilities of each institution,
  • Will explore both potential sources and level of funding that could be allocated on an annual basis by the Ministry of Finance (MoF) to the MIF,
  • Assess the resulting institutional implications and capacity to manage the MIF,
  • Assess mechanisms for assigning a discretionary budget for performance based municipal financing,
  • Recommend the best decision-making criteria and formulas for assigning a discretionary budget without complicating the intergovernmental fiscal transfer program,
  • Attempt at classifying Afghan municipalities based on their current development activities, need for the development, their income level, population and remoteness,
  • Review both the comprehensiveness and relevance of project application requirements under the provisions of Chapter 16 of the Municipal Law of Afghanistan and will design an appropriate template to be used by IDLG,
  • Identify and articulate the specific social objectives to be achieved by local government under Chapter 16 of the Municipal Law and propose appropriate indicators and KPis to assess progress by municipalities towards political, social and economic objective,
  • Define the metrics for measuring municipal operational performance under the above objectives and will formulate KPI to capture project impacts and prepare both the relevant template and description needed for the IDLG Annual Report as stipulated in Chapter 16 of the Municipal Law of Afghanistan,
  • Propose policy options in line with the findings of aforementioned reviews.,

Final policy options paper is to be translated in one of the local languages as a prerequisite.


Finance & Risk




Ministry of Urban Development and Land, Islamic Republic of Afghanistan, World Bank