To provide quality independent and objective advice on economic and public policy issues to the Government.
The overarching role of the NEFC is to provide advice to the government on intergovernmental financing.
The Commission is responsible for assessing and monitoring the economic and fiscal policies of the National Government, Provincial Government and Local Level Governments; advise and recommend to the National Executive Council, appropriate economic policies make recommendations to the National Executive Council and to the National Parliament on the financial arrangements and allocation of grants. It is also involved in the assessment of Provincial Government Reforms which focuses on reviewing the implementation of the Organic Law on Provincial government reforms and recommend areas for improvement and monitoring of Public Accounting Practices.
In other words, the NEFC is an adviser to Government. Its role is to recommend how to distribute the function grants amongst the Provinces and LLGs. The Treasurer then makes a determination of how the function grants will be distributed based on the advice provided by NEFC.
From a technical perspective, the NEFC works to understand the cost pressures each Province faces and their respective own-sourced revenues available to them. Using a legislated formula, the NEFC calculates each province and LLGs share. The NEFC follows a number of principles that it follows in making its recommendations:
- Funding should follow function. That is, the level of Government that is undertaking an activity should be the level that receives the funding.
- Own-source revenue should be used to fund service delivery. The NEFC calculates the needs of each province taking into account the amount of own-source revenue available to the province. It is assumed that the province uses their own-source revenue on recurrent costs, and therefore those provinces that have high revenues receive less function grants.
- Each Province should have an equitable share of funding that is sufficient to run their basic services.