Grants to local governments.

(1) The President shall for each financial year, in accordance with this Constitution, cause to be presented to Parliament proposals as to the monies to be paid out of the Consolidated Fund as— (a) unconditional grant in accordance with clause (2) of this article; (b) conditional grant in accordance with clause (3) of this article; (c) equalisation grant in accordance with clause (4) of this article. (2) Unconditional grant is the minimum grant that shall be paid to local governments to run decentralised services and shall be calculated in the manner specified in the Seventh Schedule to this Constitution. (3) Conditional grant shall consist of monies given to local governments to finance programmes agreed upon between the Government and the local governments and shall be expended only for the purposes for which it was made and in accordance with the conditions agreed upon. (4) Equalisation grant is the money to be paid to local governments for giving subsidies or making special provisions for the least developed districts and shall be based on the degree to which a local government unit is lagging behind the national average standard for a particular service. (5) District councils shall be obliged to indicate how conditional and equalisation grants obtained from the Government are to be passed onto the lower levels of local government. (6) The proposals made under clause (1) of this article shall be made at the same time as the estimates of revenue and expenditure under article 155 of this Constitution and shall state the sums of monies that are to be paid to each local government. (7) The proposals made under this article shall form part of the Appropriation Act as provided for in article 156 of this Constitution.