Fiscal decentralisation and effectiveness of Local Governments in Uganda

Abstract

Although fiscal decentralization has emerged as a focus of public sector reform in many less-developed nations, the substantial body of theory and research on public finance in developing countries includes little substantive work on the fiscal role and performance of local government. Against this background a study was undertaken to establish the extent to which fiscal decentralisation has impacted on the delivery of services in the Local Governments of Uganda. The specific objectives of the study included: to examine the fiscal decentralisation policy and practice in Uganda; to examine the effectiveness of Local Governments under decentralisation; and to establish the relationship between fiscal decentralisation and effectiveness of Local Governments. The design of the study was cross-sectional, qualitative and quantitative. It used interviewing of key informants, administration of a questionnaire and conducting Focus Group Discussions among selected interests groups as methods of investigation. The study found out that fiscal decentralisation policy and practice has enabled Local Governments to access more funds to deliver services to the citizenry. It also found out that Local Government effectiveness under decentralisation has improved over time. The study, however, noted that there were still eminent challenges to full realisation of fiscal decentralisation, which affected service delivery. These challenges included less flexibility on the conditional grants, less involvement of stakeholders in the planning and budgeting process, limited capacity of the Central Government officials to handle reports from the Local Governments as required by the law, to mention but a few. The study recommended that the overall criteria for allocation of funds to Local Governments should be reviewed to ensure that they are more poverty focused, that they enable the achievement of sector goals, and that there is better balance between discretionary and non-discretionary funding.