(1)The President shall, for each financial year, cause to be presented to Parliament proposals of money to be paid out of the Consolidated Fund as—

(2)An 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 the Constitution.

(3)A conditional grant shall consist of money given to local governments to finance programmes agreed upon between the Government and the local governments and shall be expended for the purposes for which it was made and in accordance with the conditions agreed upon.

(4)An 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)The local government councils shall indicate how conditional and equalisation grants obtained from the Government are to be passed on to local government councils with a smaller jurisdiction or lower councils.

(6)The Government shall remit conditional, unconditional and equalisation grants direct to district, city, city division, municipal and town councils.