How decentralization policy was killed in 10 years

Is decentralization goal going offside?

A nearly-10-year steady cut in government funding to local governments since 2006 has crippled service delivery in districts and drawn indignation from a largely-hapless local leadership.

By 2006, government transfers to the districts accounted for about 25 percent of the national budget but they dropped every financial year to the current share of 12 percent.

“Government has transferred more responsibilities to local governments without the accompanying funding, which means that not so much can be done by the local governments,” says Vincent Ssemakula Ssettuba, a senior presidential advisor on political and local government issues.

Ssemakula is a former LC-V chairman for Rakai district, one of the pilots for the decentralization programme in 1993 before it was rolled out in the  country in 1998 with the enactment of the Local Governments Act in 1997.

“At the time, government funding was adequate because we would get operational funds for the day-to-day running of the district but because the money was so much, we used some of it to fund development projects in the district. That is how we were able to rehabilitate Kalisizo hospital,” Ssemakula said.

The story is different today, and year in, year out, the auditor general’s reports to Parliament have shined a bright light on the lack of funding and how it has led to understaffing and poor service delivery in the districts.

Although the budget allocated to local governments has increased over the years, its percentage compared to the entire national budget keeps dwindling and is far from the 38 percent and 45 percent share advocated by the districts under their umbrella association; Uganda Local Governments Association (ULGA).

A boy rests under a shade formerly used by Nakaseke district local government revenue collectors

The percentage share for local governments in the 2016/17 financial year fell by one percentage point from last year’s 13 percent. Of the 12 percent budgetary allocations to the districts, about 80 percent is tied to staff salaries, leaving the districts with a paltry 20 percent for services. The 2015 local governments scorecard released by the Advocates Coalition for Development and Environment (ACODE) and ULGA chronicles the poor service delivery in the districts.

The scorecard suggests that the quality of education has remained dreadful with a higher number of students unable to read and write while the dropout rates stand at 54 percent in general and more than 70 percent among girls. As for healthcare, the scorecard paints an even more appalling picture. It highlights issues of rampant drug stock-outs, absenteeism and understaffing. It attributes all these to underfunding.

“President Museveni is lately talking about his dream for Uganda to achieve a middle income status by 2020 but it will remain a dream unless more funds are given to local governments because that is where the services are,” Ssemakula told this writer in an interview.

“The roads that were opened when the districts still had money are now impassable, the schools and health centres are in bad shape and the districts are losing competent staff who are either joining the private sector or government institutions because it is where the money is,” Ssemakula added.

Former Mukono LC-V chairman Lukooya Mukoome in a recent interview said, the situation could get worse.

“No local government can provide more than 100 desks for schools or construct more than six boreholes, or equip more than two health centres with the current budget,” he said.

Kalangala’s LC-V chairman Willy Lugoloobi said given the funding gaps, his administration has decided to suspend some services.

“We are suspending health outreach services to our people living on the islands where there are no health facilities because we can’t afford the costs,” Lugoloobi said.

Of the 64 islands with people living on them, only 11 have health care facilities. That means that residents on the other 54 islands have been accessing health care services through the outreach programmes.


Under the Local Governments Act, the main sources of funds for the districts are the central government transfers – coming as conditional and unconditional grants, as well as local tax revenues. Perhaps the problem of underfunding would not be as dire if local governments were collecting considerable amounts of revenue.

The auditor general’s 2015 report found that districts are grappling with revenue deficits because about 24 percent of the projected revenue collection by the districts was not collected.

While the report attributes poor revenue collection to lack of revenue enumeration and assessment, and failure to supervise revenue collection, local government leaders do not agree. They say they have not collected substantial revenues because the central government left them without any reasonable sources of revenue.

“Graduated tax was the main source of revenue for local governments, but with its abolition, local governments have to depend more than 95 percent on funding from the central government,” said Lukooya.

This same view was shared by Wakiso LC-V chairman Matia Lwanga Bwanika during a recent induction workshop for DP flag bearers at the local government level in Masaka.

Graduated tax was abolished in the run-up to the 2006 general elections and government had promised annual compensation but the districts have never received it. Even the local services tax that the districts are meant to levy from salaried staff in their localities in place of graduated tax is almost paid by no one.

“When graduated tax was abolished, government was expected to find alternative sources of revenue for the districts but that has failed; instead, government has recentralized all the serious sources of revenue and the only thing left for the districts to get local revenue are the trading licenses,” Bwanika said.

Trucks stuck in Butaleja. Many roads have become impassable with dwindling budget support to districts

While districts maintain control over taxi parks, their revenue collections are dwindling owing to the politics of patronage that President Museveni plays with taxi owners and drivers. A case in point is the Masaka United Taxi Operators and Drivers Cooperative Society (MUTDOCS), which is embroiled in a row with the Masaka municipality leadership over debt arrears amounting to more than Shs 108m.

Though the municipality is threatening to terminate MUTDOCS’ contract to manage the taxi parks in Katwe-Butego division, it may not be easy, given the good relationship the taxi group enjoys with the ruling NRM party.

This confirms a fear amongst local government leaders that this source of revenue can also be abolished by the president like he did to the dues local governments used to collect from market vendors and boda boda cyclists.

Already, some civil society and political leaders are calling for the reintroduction of graduated tax to improve service delivery at the local level. However, Patrick Mutabwire, the permanent secretary at the ministry of Local Government, said the issue of revenue collection is a lot more complex.

“One can’t talk about increasing the tax base without considering the sources; the district leaders want to extract money from people in form of taxes without considering where that money comes from,” Mutabwire said.


A former local government technocrat who spoke anonymously told The Observer that the decentralization policy is off target.

“At the beginning, there were proper guidelines and policies…currently, local leaders no longer have the mandate to execute their plans,” the technocrat said.

In Lwanga Bwanika’s view, government is steadily recentralizing the powers that had been devolved to the districts. This same view is also shared by the leader of opposition in Parliament (LOP), Winfred Kiiza.

“I think decentralization has been let down because the essence of decentralization was to take the services nearer to the people but the current situation is that most of the money remains at the top and a little of it goes down,” Kiiza said.

Kiiza chaired the Local Governments Accounts committee in the 9th Parliament and is a former Kasese district councilor.

“A situation where local governments are operating at almost 50 percent capacity means that service delivery is affected to that level,” Kiiza said.

Former shadow minister for Local Government Betty Nambooze blames the current challenges on Museveni’s lack of political will.

“[President] Museveni has deliberately crippled local governments because decentralization had provided room for power sharing and he doesn’t want to share power with anyone,” Nambooze said.

“Otherwise, how does he expect local governments to perform with the meager handouts after recentralizing most revenue sources and abolishing others?” Nambooze wondered.

To some analysts, political interference from the centre, which is mainly about protecting political interests, has crippled the decentralization system. Although the Local Governments Act provides for the devolution of powers, functions and responsibilities to popularly-elected local governments, the centre has tightly held onto these powers.

“It [decentralization system] is steadily being centralized…while the districts previously would recruit the chief administrative officers (CAOs), that role was centralized and they are now appointed at the centre. So, what is left of decentralization?” Nambooze asked.

Nambooze’s assertions are confirmed by a recent survey by the World Bank that reported that the “discretion, autonomy and accountability of local governments had been eroded severally.”

“Government stubbornly refused to conduct LC-I elections and, in so doing, the local governments were cut off; they have no roots,” Nambooze said.

A paper titled; Institutional Challenges to Uganda’s Local Government also says centralization has re-emerged in favor of the central government, which exerts strong control over the decentralized local units.

This, the paper says, has killed local governments in Uganda. Michael Kiwanuka, the author of the paper, says 61 percent of people interviewed during the research said there is no clear balance between central direction and local choice.

“In some incidents, findings indicate that the ‘center-local’ relationship that is supposed to facilitate autonomy in service delivery has turned into a ‘superior-subordinate relationship’ and, in some worst cases, failing some local governments,” Kiwanuka’s paper partly reads.

The paper adds that politicians at the center have little wish to cede power to local governments, which limits democracy and autonomous decision-making at the local level.

“What the ordinary people wish to propose cannot be easily accommodated in the council meetings; the meetings in the end tend to be informative of government policy,” Kiwanuka noted.

This is against the spirit of decentralization, which according to the Local governments Act gives local governments powers to make and implement their own development plans; to make, approve and execute their own budgets; and to mobilize and expend resources according to their local priorities.
But Mutabwire says the role of local government is to adhere to national policies and, therefore, local governments cannot act independent of the centre.


Despite warnings from the donor community and ministry of Finance, Planning and Economic Development, in September last year, Parliament approved the creation of 23 more districts, bringing the total to 125 districts.

While the president has explained his push for new districts along the lines of taking services nearer to the people, many districts are still struggling to survive. According to Kiiza, the creation of new districts has increased the cost of administration without any serious impact on service delivery.

“Some of the money sent to the districts is computed based on the population of a given district; therefore, the money goes to the districts in form of conditional grants. Capitalization grants will remain the same because it will be shared between the chopped units,” Kiiza said.

“The new districts will create more jobs for some people but the money that goes down to the ordinary person in form of services may not necessarily come by.”

This Observer special report was produced with support from the Centre for Policy Analysis (Cepa)

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