Local Governments still challenged with limited revenues

By Pauline Apolot

Uganda’s decentralisation policy is premised on the view that Local Governments are better placed than the central government to identify and respond to the needs of local communities.

It is the beneficiaries of social services who are best suited to set local priorities and to hold local officials accountable in the use of public resources. The Government has worked diligently to put in place suitable structures and systems to set and refine the legal and institutional framework to build the implementation capacity at central and local government levels.

The concept of decentralisation is for Local Governments to provide basic public services such as Primary Education, Primary Health Care, water and sanitation, feeder roads and agriculture. Some significant achievements have been realised although there has been reversal over the past few years hindering service delivery and value for money.

This has been as a result of near elimination of local revenue base which was as a result of the elimination of the graduated tax in 2005, which had provided local governments with discretionary expenditures which were very crucial in the provision of service delivery. This has made local governments to become more dependent on non- discretionary central governments transfers which contribute to over 77% of the total revenue to the local governments and making it difficult for local governments to account to local citizens.

The alternative revenue collection avenues that central government introduced like; the market dues, local service tax, hotel tax, Land based revenues include property rates and ground rents etc have had a big challenge in collection by most local governments.

For example, the collection of market dues has been hampered with a number of factors which include among others; most markets are not gazetted and are located on land that does not belong to the councils/municipals, illegal markets operating a long side gazetted markets especially in the urban councils/ municipals reducing on the number of market vendors, access to most markets due to poor road network, poor infrastructure in the markets, permanent stalls which are not fenced hence insecurity in terms of theft in the markets and bad weather which affects the open-air markets functionality, among others.

Apart from the lack of revenue base for most local governments, there has been reduction in transfers from the central government to local governments. This has made local government to increase spending of the proportion of resources on non-discretionary transfers i.e. on wages and salaries. This is further made worse with the increasing creation of new districts which were meant to bring service delivery closer to the communities but in reality, the creation of new districts has increased on public expenditure and further reducing the amount of funds available for service delivery.

For Uganda to effectively implement the decentralisation policy, the central government should; support local governments in estimating the reserve prices for their revenues by using guidelines developed for establishing revenue potential, this can increase revenues collected. Secondly, Central Government should wholly transfer all powers of decision making and implementation to lower administrative levels to improve efficiency and effectiveness in service delivery. This should involve the de-concentration, delegation and devolution. This will empower the citizens since it will give them a significant say in the decision making processes and local priority setting and hence holding duty bearers  accountable.

The writer works with Uganda Debt Network