KDSP II Grant Mechanisms
KDSPII grants will be awarded at two levels
     a. level 1 grants: institutional strengthening grant
     b. level 2 grants: service delivery and investment grant

Institutional Strengthening Grant (Level 1 Grant)
Level 1 Grant is designed to support the county government to undertake core institutional reforms, finance and capacity-building activities that will strengthen its ability to access the Level 2 Grant.
As a requirement, the county government of Bungoma has included kshs 37,500,000 for the use of the Level 1 Grant in the 2024/25 budget. To access it in the first year, the county government has:
     a) established the programme core governance structure, CPSC, CPTC and CPIU
     b) Signed a Participation Agreement providing for, among others, publishing of budget and expenditure data and
     c) Prepared and approved work plans, cash plans, and budgets consistent with the agreed methodology and standards.
In subsequent years, counties will, in addition to (a) and (b), need to
     d) attain a Qualified or unqualified audit opinion (with time-bound action plans for addressing qualifications),
     e) Reports on implementation progress and use of Program funds, and
     f) ensure timely release of KDSP II funds from the County Revenue Fund to the Special Purpose Account

Service Delivery and Investment Grant (Level 2 Grant)
Level 2 Grant is aimed at financing for investments in county infrastructure and service delivery. The chosen investments must be aligned with the CIDP and CADP. to access the grant, the county government will be required to have planned and budgeted for the use of the Level 2 Grant before accessing it. In addition, the county government will need to meet the following minimum conditions:
     a) Has prepared a work plan and budget for use of the investment grant in the next fiscal year
     b) Has disclosed stock of pending bills
     c) Has disclosed OSR collection
     d) Has established a county SPMU
     e) Has (i) developed implementation plans for HR and skills audit.
                 (ii) Developed implementation plans for special payroll audits; and
                 (iii) Published staffing levels aligned with approved structures and staff establishment
     f) Has screened proposed infrastructure investments (which will also include feasibility studies and E&S screening for proposed investments
     g) Has trained gender officers aligned with approved training programs 
     h) Has established County Program Implementation Unit

CRITERIA FOR AWARDING LEVEL 2 GRANTS
The Level 2 Grant will be allocated based on both the achievement of the minimum conditions and the county’s scores in the performance measures. These performance measures reflect the three KRAs and the seven DLIs for the Level 2 Grant. The relative score of a county (that is, its score as compared to the score of others) will be considered to determine the size of the allocation for each DLI.
For each DLI (DLIs 3–7), 50 percent of the Level 2 Grant envelope will be divided among counties that met that respective DLI result using the CRA formula (that is, the equitable shares). The other 50 percent is allocated based on the scores against the performance measures pertaining to each respective DLI result area, weighted with the CRA formula. Therefore, meeting a DLI result will give counties access to the base allocation, which can be further enhanced by above-average performance against the related performance measures. The performance measures and scoring guidelines are provided in annex 3.

The investment grant for a county is the sum of what it is allocated under DLIs 3–7. The allocation for the Level 2 Grant is as follows:
     • DLI 3: US$500,000 for each county that has increased its OSR by at least 5 percent annually, over and above the rate of inflation
     • DLI 4: US$550,000 for each county that has prepared and is implementing an action plan to reduce the stock of pending bills and maintain it at minimal levels
     • DLI 5: US$700,000 for each county that has integrated its HR records, authorized staff establishment and payroll, and uploaded cleaned payrolls in the HRMIS
     • DLI 6: US$350,000 for each county that is enhancing accountability for results through an integrated performance management framework
     • DLI 7: US$400,000 for each county with a PIM dashboard with citizen feedback mechanisms.