THE REPUBLIC OF UGANDA
LOCAL GOVERNMENT FINANCE COMMISSION
The Experience of Uganda – Local Government’s Role
as a Partner in the Decentralization Process to
Strengthen Local Development
BY
MR. JOHNSON BITARABEHO
CHAIRMAN
LOCAL GOVERNMENT FINANCE COMMISSION
UGANDA
A Paper Presented to A Conference on Access to Development Funding for
Local Governments in Africa
Emperors Palace Hotel, Johannesburg, 15 – 17 September 2008
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The Experience of Uganda – Local Government’s Role as a Partner in the Decentralization
Process to Strengthen Local Development
1.0
Introduction
The decentralization process practiced in Uganda is based on devolution of powers, functions
and responsibilities to popularly elected local governments. The local governments have powers
to make and implement their own development plans; to make, approve and execute their own
budgets; to raise and use resources according to their own priorities; to appoint statutory
committees, Boards and Commissions; to make ordinances and bye-laws that are consistent with
the Constitution and other existing laws; to hire, manage and fire personnel; to manage their own
payroll; and to implement a broad range of decentralized services previously handled by the
centre.
This extensive devolution of powers is intended to improve service delivery by shifting
responsibility for policy implementation to the local beneficiaries themselves; to promote good
governance by placing emphasis on transparency and accountability in public sector
management; to develop, broaden and deepen political and administrative competence in the
management of public affairs; to democratize society by promoting inclusive, representative and
gender-sensitive decision-making; and to alleviate poverty through collaborative efforts between
central and local governments, donors, non-government organizations (NGOs), community
based organizations (CBOs), the private sector and other stakeholders.
The General Objective of the decentralization policy in Uganda is to fundamentally transform
society by empowering citizens to take charge of their development agenda in order to improve
their livelihoods. This is fundamentally geared towards poverty reduction through promotion of
production and related activities in order to raise people’s income and material well-being.
This paper while addressing the topic will highlight the legal framework, Revenues to Local
Governments, Participatory Planning and Budgeting, Local Economic Development Initiatives in
Uganda and Challenges.
2.0
The Legal Framework
The Decentralization Policy has a full chapter in the National Constitution (Chapter 11). There
is an Act of Parliament giving full effect to the decentralized functions. The legal framework
highlights the following:
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
Provides responsibilities and funding at various levels of Government. Funding includes
unconditional, conditional and equalization grants.

Local governments by their nature of being close to the people have the majority of
responsibilities that provide basic services to the people.

Central Government makes national policies while local governments translates those
policies into benefits to the communities e.g. policy on Universal Primary Education,
Policy on Primary health care, policy on prosperity for all etc.

Local Governments also have legislative powers to make by-laws and ordinances to
support their work in providing services where the national laws are not explicit on some
things. By-laws should however not be inconsistent with superior laws.

Sector ministries based on national policy objectives, develop standards of service
delivery and the local governments utilize the standards to provide services to the people.

Sector ministries Departments and agencies at the centre provide capacity building,
monitoring and evaluation of local governments.
Structure of Local Government System in Uganda
Local Governments in Uganda are composed of urban and rural councils. The figure below
demonstrates the structure of the system
City Council (1)
City Division Council (5)
District Council
(79)
Municipal Council
(13)
Municipal Division
Council (37)
Town Council
(98)
Sub County
Council (870)
Figure 1 The hierarchy and relationship of Local Governments in Uganda (September 2008)
It is important to note that all entities reflected on Figure1 are autonomous in financial matters.
Every local government is a body corporate with perpetual succession and a common seal. It has
a defined geographical jurisdiction, and has revenue raising powers to finance delivery of
services for its subjects.
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3.0
Revenues to Local Governments
Funding for local governments is provided for in the Constitution of the Republic of Uganda.
These include the following:
Unconditional grant; This is a block grant that funds decentralized services. It has both wages
and non-wage. This funding constitutes about 11% of Government transfers to local
governments.
Conditional Grants; This includes money to fund programs and projects agreed upon between
the Government and the local governments and are spent only for the purpose and in accordance
to the conditions agreed upon. This funding constitutes about 88% of Government funding to
local government. In this one there is a clear framework for negotiations between local
governments and Central Government sector ministries to agree on conditionalities that promote
effective implementation of programs.
Equalization Grant; This is a grant given to some local governments lagging behind national
average standards of particular services. This grant forms a very small percentage of about 0.5%
of total transfers. Currently it focuses on key services namely, education, roads, water, health
and agriculture extension.
When all the three types of grants are combined, they constitute 30% of the national budget. In
this FY, Government plans to transfer directly shs 1.15 trillion (US$ 700,000,000) directly to
local governments in form of grants.
The national budget1 is shs 3.889 trillion
(US$2,360,000,000) for FY 2008/09.
In this financial year’s budget, 78% of the grants to local governments are recurrent while 22%
are for development funding. About 30% of the development funding is discretional funding
locally called the local development grant (LDG). Also about 72% of the recurrent grants are
composed of wages and 28% are non wage.
4.0
Participatory Planning and Budgeting
With the implementation of the decentralization policy, deliberate effort was undertaken to
decentralize the decision making powers on the planning and budgeting process. To facilitate
this practice, the following were designed with the involvement of local government:
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This excludes interest, statutory payments and direct donor development projects.
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
Harmonized Participatory planning guidelines/manual. This manual facilitates bottom up
planning with key planning centers at the Village/Community level, Parish level with a
Parish Development Committee (PDC) as an institution in charge, sub-county level where
there is a technical planning committee and an Executive Committee. At the district level
there is a Technical Planning Committee. At every level of this structure there is both a
technical and political organ which work together to promote economic development.

Budgeting Manual which facilitates the budget formulation and execution processes. The
Manual was designed to specifically promote the decentralization objective of promoting
local government autonomy, widen decision making and ensure that local government
expenditures facilitate efforts to eradicate poverty in the country.

The participatory planning and budgeting provide a framework of reviews of performance
before plans for the next financial year are agreed upon. The reviews take place at all
levels. However, the key ones are those to roll over the local government development
plans and sectors at the centre which draw participants across all levels of Government.
This is done in recognition of the different stakeholders/partners in development.

Local governments provide periodic reports on their performance in terms of financial and
physical outputs. This provides inputs into the performance review and national
assessments.

In order to effectively facilitate harmony, understanding and appreciating each level of
government roles and responsibilities, when Government designed the Fiscal
Decentralization Strategy, two Committees were established. One committee is the Local
Government Budget Committee (LGBC) which overseas the budget formulation process
for local governments. The second one is the Local Government releases and Operations
committee (LGROC). This overseas the local government budget implementation process.
Both committees have representatives from the central government sectors and local
governments.

5.0
The Local Government Finance Commission also spearheaded the establishment of Local
Revenue Enhancement Coordinating Committee (LRECC). This committee handles issues
of local revenues which includes policy development and coordination, designing best
practices in revenue mobilization and addressing challenges in local revenue administration
and management.
Local Economic Development Initiatives in Uganda
Uganda is in the process of implementing Local economic development system to manage its
resources and to stimulate its economy. This initiative is planned to improve the economic and
tax bases in the local areas in the country. The plan is through a number of avenues such as:
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
Local development that involves improving the state of natural and built environments
(including basic infrastructure such as roads, electricity, water and waste removal);

Local enterprise development, which will stimulate economic growth in the rural areas in
Uganda. These enterprises include large, medium, small and micro enterprises in both the
agricultural and non-agricultural sectors;

Local economic governance that entails improving the economic performance of local
government in Uganda, based on better management, accountability and transparency.

Establishment of Local Economic Investment Committees. The major role of these
Committees are to identify local opportunities that they can market to investors from
within and outside the country. If there is need for land, they identify the land; notify the
Uganda Investment Authority at the centre especially if the land needs to be serviced with
utilities and infrastructure.

Establishment of Millennium Development Villages. These are still at trial level.
However, the objective to this initiative is to provide examples of what a community with
access to services looks like.

Promotion of Public Private Partnerships in provision of local government services. This
is evident in joint committees, contracting for infrastructure development and
maintenance.

Other tangible results of decentralization. Local Governments are the main actors in the
implementation of the millennium Development Goals. With the empowerment of the
communities through decentralization, there have been tangible results in a number of
development areas for example:
(i)
Education: With the introduction of Universal Primary Education (UPE), primary
school enrolment increased from 1.6 million in the year 2000 to 7 million in 2007.
(ii)
Water: Access to safe and clean water has increased in all districts with an average
increase from 45% in 2000 to about 63% for rural and 65% for urban local
governments in 2007.
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(iii)
Roads: These attract priority attention by the local governments in their budgets.
Local Governments are also responsible for the community and feeder roads while
Government is responsible for the main trunk roads and major inter districts roads.
(iv)
Infant Mortality has reduced from 505/100,000 in 2000 to 435/100,000 in 2006. A
survey to get this information is carried out every 5 years. Local governments are
also in charge of primary health care delivery.
(v)
Agriculture extension services which are the responsibility of local governments have
been reformed to promote services to farmers on high yielding and commercial
enterprises. This has been done through a Programme for Modernization of
Agriculture (PMA). This programme has key components of research, national
advisory services, agro processing and marketing.
(vi)
Gender promotion, in particular empowerment of women, youth and persons with
disability has become a reality with statutory representation in governance structures
at a minimum of 33%
(vii)
Poverty has reduced from about 45% in 2000 of people earning less than one dollar
per day to 31% in 2007.
6.0
Challenges

Low local revenues which constitutes about 5% of local government budgets. This poses
a challenge of operation and maintenance of investments.

Little discretional funding available to local governments. Most of the funds are
conditional grants and on sector basis which constitutes 88% despite the fact that there
are negotiations.

Improvement in service provision in some local governments has caused a tide of
advocating for new local government entities where they feel marginalized. At the start
of fiscal decentralization in 1993, the country had only 39 districts. This has increased to
80 by July 2007.

Besides funding for teachers and health sector workers whose wages central government
pays 100%, other staff structures in local governments are inadequately funded. This
financial year 62% of the cost of structures has been provided for . However, these
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structures were developed by the central government in consultation with local
governments.

Some Local Governments in the country can not attract and retain key staff to provide
basic services especially in education, water, health, roads etc.

Sometimes there have been tendencies by sector ministries to recentralize some staff.
Conclusion
Distinguished delegates, with the implementation of decentralization, Uganda has made major
strides towards providing basic services to the people despite challenges that emerge during the
implementation. The above picture is only a snapshot of our experiences as a country in the few
years we have been implementing the policy of decentralization. They are a testimony to the
efficacy of this policy in casting a positive change in governance and development at the local
level.
Local governments as units of government closest to the population have a vital role in providing
services in their areas of jurisdiction. In most of our developing countries, the local authorities
are the untapped potential of government to move faster on the development path. However, to
effectively have local government as partner in local development, they need to be provided with
adequate and predictable resources and capacities for provision and maintenance of these key
basic services.
The challenges of unfunded mandates and the tendency to recentralize some of the devolved
powers are phenomena that need to be given attention by all who value democracy and
development.
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