Financing local governments in Uganda: the case of Abim district

This study is about how local government finance influences implementation of development projects in Uganda. Uganda‘s decentralisation policy dates back to independence Constitution of 1962. The current decentralisation was launched by his Excellency the President of the Republic of Uganda, Kaguta Museveni in 1992. Since then, Uganda embraced decentralisation as the main engine for transforming the economy and wellbeing of citizens. Under decentralisation, Powers to plan, mobilise resources, make decisions and implement projects have been devolved to LGs. The policy was expected to contribute to development by empowering people and institutions at every level of society. To support powers given to LGs, fiscal decentralisation strategy (FDS) was designed as a means of increasing discretionary powers given to LGs, increase participation in decision making to make LGs more transparent and account-able for their expenditures, providing direct financial incentives to LGs to boost local revenue to ensure that revenue contributes meaningfully to local development. This paper focuses on financing LGs and argues that, the state of local development service provision in Health, Water, Education and Roads in rural LGs have continued to worsen below decentralisation expectations. This paper has also argued that, only slight improvement has been registered but many planned projects have not been implemented, completed in time, abandoned by contractors due to insufficient finances from CG, declining locally raised revenues, poorly designed fiscal policies and Donor fund inflexible requirements to support decentralisation policy. This paper has also provided fiscal policy reflections and argues that, unless fiscal constraints are addressed, Uganda‘s decentralisation will continue to be referred to and stay in literatures as a concept rather than a practice given its failure to address service gaps for which it was expected and the poor will continue to be vulnerable to shocks of constrained livelihoods. -- Relevance to Development Studies -- This study is relevant to development studies considering the fact that there are many development challenges facing developing countries today. Decentralisation policy adopted by Uganda as the main vehicle for transforming society needs to be guided by strong fiscal and social policies that suits local conditions for effective local governance. To reduce poverty in developing countries attention has to be paid to satisfactory policies, guidelines and strategies with concerted effort from local community who are directly affected by shocks of livelihoods. There should be adequate revenues both raised locally and transferred from CG with clear cut policies, roles and responsibilities for effective implementation of local development projects.