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Local governments face sh180b loss due to COVID-19 lockdown

By Pascal Kwesiga

Added 17th September 2020 10:06 PM

According to last year’s assessment, the local governments failed to meet their own revenue collection targets.

Local governments face sh180b loss due to COVID-19 lockdown

(Left-right) Government Chief Whip Ruth Nankabirwa interacts with Kampala state minister Benny Namugwanya, Magyezi and Minister for the Presidency Esther Mbayo, after a meeting on local governments at the Offi ce of the Prime Minister, Kampala on Tuesday. (Photo by Juliet Kasirye)

According to last year’s assessment, the local governments failed to meet their own revenue collection targets.

KAMPALA - Local governments should brace themselves for tough times because they could lose an estimated sh180b of local revenue to COVID-19, according to the government projections.

The local governments are already grappling with shrinking domestic revenue collections and a cut in the available limited resources will substantially impact their operations and service delivery.

According to the government performance review, the local governments' revenue mobilization performance target has persistently remained poor at 44% in 2019. It was recorded at 47% and 42% in 2017 and 2018, respectively.

According to last year's assessment, the local governments failed to meet their own revenue collection targets.

In 2018, 88% of the local governments met their revenue targets, but only 23% of them achieved the same last year.

In an updated assessment, the government said the COVID-19 pandemic has greatly affected local governments and are likely to lose sh180b in local revenue.

The assessment was presented on Tuesday by the state minister for Bunyoro affairs, Ernest Kiiza, at the government performance review meeting at the Office of the Prime Minister. The event was presided over by Prime Minister Ruhakana Rugunda.

The assessment, relying on predictions by the UN Capital Development Fund, noted that urban local governments that depend on their own resources would lose between 5% and 10% of the revenue to the pandemic.

The predictions are based on the perceived effects of closure of some markets and other businesses licensed by local governments, as well as restrictions on movement across the country in the first weeks of the outbreak of COVID-19 in March.

The restrictions have since been eased in most of the districts, but remain in place in some border districts.

Areas assessed

The local government sector, which includes the ministry, local government finance commission and local governments, was assessed on revenue mobilisation, human capital management, procurement and accountability, among others.

The proportion of local governments meeting minimum 65% staffing threshold for the 2019/20 fnancial year was at 56.4%, below the 60% target.

In addition, the critical technical staff positions filled at the local government level was rated at 52.2%, against the 60% target for the 2019/20 financial year.

The percentage number of local governments with all head of department positions fi led grew from 2% in 2017 to 8% last year.

The assessment was undertaken from October to December last year, covering 156 local governments, including 127 districts and 19 municipalities.

The 22 municipal councils — some now cities — were assessed earlier, under the Urban Support to Municipal Infrastructure Development project.

The seven districts that came into force in the 2019/2020 financial year were not assessed. They are Karenga, Kazo, Kitagwenda, Lusot, Madi-Okollo, Obongi and Rwampara.

Rugunda noted that the 2019/2020 assessment report shows a decrease in performance both outcome and output levels against the annual targets set by sectors, ministries, departments, agencies and local governments.

"At outcome level, performance across the 18 sectors decreased from 55% in 2018/2019 to 46% in 2019/2020. At output level, performance across government decreased from 55% to 49% over the same period," he added.

The Premier added that the Government still grapples with challenges of low absorption of loans and grants due to bureaucratic processes that delay the right of way for project execution, procurement delays and inadequate implementation capacity.

"These inefficiencies pose a big cost to government through increased commitment fees (penalties charged by creditors for low absorption of loans) and, generally, wastage of resources," Rugunda stated.

Local government minister Raphael Magyezi said the local governments would continue to perform dismally, as long as the finance ministry does not increase their annual budgetary allocations.

"How can you devolve 80% of the functions to local governments, but continue to give them barely 13% of the budget? Then 80% of their small budget goes to wages," he added.

The minister said all the new districts created in the recent past were demanded for by the people, and that the country should stop regarding them as cost centres, but growth engines.

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