By Moses Walubiri
Government will have to fork out sh42b if the mooted 25 new districts are to achieve 100% staff level, MPs on the Public Service and Local Government Committee have heard.
Highlighting the financial challenges local governments are grappling with, chairman of the Local Government Finance Commission (LGFC), Johnson Bitarabeho, said sh1.7b will be needed for each new district to recruit their staff.
In case financial constraints make it hard to raise sh1.7b for each district, a minimum sh1.2b will be required for each district to recruit at least 65% of their staff.
LGFC contends that districts whose staff levels dip below 65% are not viable because they struggle to achieve the principal goal of decentralization – bringing services closer to the people.
“We were not consulted about the creation of these districts because it’s a political decision. However, running them will not be cheap,” Bitarabeho told the committee chaired by Raphael Magyezi (Igara) on Friday.
Asked about how new districts will be funded, Bitarabeho said mother districts will have to share the same resources with new districts if government fails to dig deeper into its coffers to match the increased number of local governments.
In this case, if a district is divided into four, the mother district and the new districts will share the same budget. The new districts will only be given the mandatory sh100m startup capital.
Many local governments are struggling with financial challenges as they have limited resources to fund their activities in the wake of government’s decision to scrape Graduated Tax (GT) in 2004.
Government’s sh45b GT compensation fund has not been revised to match the inflationary pressure over time, a decision decried by Bitarabeho.
MPs have already told government to stay the creation of new districts until it can explain how it intends to fund them.
The LGFC is mandated to advise government on the most viable ways of funding local government systems.
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Sh42b for recruitment of staff in new districts