Decentralization and Poverty Reduction: Part of the Problem or Part of the Solution? A Comparative Analysis of Rwanda and Uganda Decentralization and Poverty Reduction Programs

The benefits of decentralized service delivery can depend on the point of capture by the elite groups and on the level and nature of population inequality. However, if there is elite capture and the interests of the local political elites are not aligned with those of the poor, decentralization may work against the well-being of the poor. Similarly, in circumstances with pronounced inequality in local relations of power and authority, decentralization, and in particular the decentralization of poverty programs in such context will worsen inequality. In this paper, we attempt to present a survey of empirical evidence accessible on the link between fiscal decentralization and poverty reduction between Uganda and Rwanda. Through this, the research focuses on the measures of revenues and expenditures in different sectors under decentralization between the two countries. In addition to revenues and expenditures, the paper investigates the poverty profiles between Uganda and Rwanda this is done through analyzing poverty levels before and after these countries adopted decentralization programs. On the other hand, there has been a consequence of having over stretched financial capacity of revenues and expenditures. The expenditures surpassed the revenues leading to the huge gap between revenues and expenditures in Rwanda with high poverty head counts in provinces. On the other side, poverty in Uganda decreased significantly in both urban and rural areas. Poverty head count index declined from 59.7 percent to 41.8 percent in 2002/2003. However, the reduction in poverty has mainly been attributed to the achievements in implementing the pro- poor policies and strong public spending in the country's key social sectors and independence in revenue collections under fiscal decentralization.