This report looks at transition from central to federal responsibilities for health and education in Nepal and Indonesia. Federalism is a complex process and it was outside of the scope of this review to investigate the extent to which it has been developed in these countries and the nature of its functioning. Challenges identified in the literature on transition to federalism and decentralisation include ensuring equitable distribution of finances and resources across states, slow transfer of power and lack of coordination between government levels, lack of capacity at local levels and incoherence in capacity building, ensuring continuity of medical supplies and continuity of health services during transition, and training local level health personnel in procurement. This report also notes some recommendation from experience on transition to decentralisation, including the need to put a clear legislative framework, to make a slowly phased transition is needed to allow for changes and adjustments, to consider conditional grants to ensure that health is not de-prioritised in a federal system.FCDO (Foreign, Commonwealth and Development Office)