A critical review of central-local relations in Uganda

Introduction

Decentralisation is a conceptual framework used to address central-local relations and it entails the transfer of planning, decision making and administrative authority from the central to local government.

There are several forms of decentralisation discussed in the literature, mainly deconcentration and devolution (Okidi and Guloba, 2006). With deconcentration, the central government transfers responsibilities and functions to local levels for implementation by representatives or employees of the centre. Regarding devolution, the central government transfers to local governments the power to plan, budget, mobilise resources and implement development programmes.

In the case of Uganda[1], the focus of this post, the ongoing process of decentralisation has started in the mid-1980s. At the time, the National Resistance Movement (NRM) of the current President Yoweri Kaguta Museveni was combating the regime of Milton Obote[2]. The NRM has, during its guerrilla warfare, used some form of decentralised structure in the shape of resistance councils (Steiner, 2006), which were meant to resist the then incumbent government. These councils were renamed local councils after the resistance came to power in 1986 and, were used to maintain social order and peace as well as secure democracy thereafter.

It is generally accepted in the literature that behind this embryonic form of decentralised governance, the political strategy of the new regime was to install a new and revolutionary concept of democracy: democracy that is participatory, grass-roots based, and popular (Steiner 2006; Okidi and Guloba, 2006). Uganda, thus, does not fall in the widely accepted assumption that in Sub-Saharan Africa, decentralisation was advocated by donors and development agencies. Nevertheless, development agencies such as the World Bank[3] have become important in their support to decentralisation in Uganda.

–          Structure and responsibilities of central and local government in Uganda

Following what was noted earlier, once the NRM has consolidated its power at the central level, it started scaling up the local council system in the early 1990s and transformed it into a mechanism for political, administrative and fiscal decentralisation (Okidi and Guloba, 2006). The scale up process was officially launched in 1992 through the presidential policy statement, followed directly by the Local Government Statue of 1993 which was later enshrined in the 1995 Constitution. This legal work was finally consolidated and elaborated in the 1997 Local Government Act (LGA) (Steffensen, Tidemand and Sswenkambo, 2004). The LGA contains a number of articles relevant to the local governments’ system (administrative and political structure), and also expenditure and revenue assignments. Uganda is thus characterised by a comprehensive decentralisation reform based on devolution of authority to elected local government (LG) councils and an elaborate multi-tier LG system.

The LG system is formed by exactly a five-tier pyramidal structure which consists of the village, parish, sub-county, county, and district in rural areas; and the village, ward or parish, municipal division, town or city division, municipality and city in urban areas. According to Steiner (2006, p.7), the city and the district are the highest LG levels, while city division, municipality, municipal division, town, and sub-county are considered as lower LG levels. All the rest are classified as administrative units. Higher and lower LGs are, unlike the administrative units, corporate bodies with perpetual succession and a common seal, and can sue or be sued in their corporate names (Shah, 2006).

The political organ at all local levels is the council, whose members are elected in regular elections. Each elected councillor either represents specific electoral area or interest group such as women, youth, and disabled persons.

Regarding the administrative organs of both higher and lower LGs, these are comprised of administrative officers and technical planning committees whom are in charge respectively of accounting and coordination as well as monitoring of the implementation of sectoral plans.

In terms of division of labour, the Chairman (also elected) of the LG council is the political head of the jurisdiction and the Administrative Officer is the executive head – the accounting officer. The central government is represented at the local level by the Resident District Commissioner. Local councils conduct their business through standing committees such as District service Commission for personnel matters, Tender Board for procurement functions, and Local Government Accounts Committee for financial accountability (Okidi and Guloba, 2006).

So, what about the assignment of responsibilities to those different local levels? Overall, the LG system is based on the principles of subsidiarity and integration without subordination. Based on this principle, the Local Government Act stated that LGs and administrative units are in charge of those functions and services which the respective higher levels are less able and appropriate to fulfil (Steiner, 2006). The central government has retained responsibilities such as security, national planning, immigration, foreign affairs, and the elaboration of national guidelines for sectoral policy (Okidi and Guloba, 2006; Steiner, 2006). Other responsibilities are given to line ministries, the Ministry of Local Government, and the inspector general of government, as well as the resident district commissioner. These responsibilities concern the issuing of regulations, policies and advice, benchmarking standards, and the provision of supervisory and inspectorate services to LGs (Okidi and Guloba, 2006; Shah, 2006).

LGs thus deliver public goods and services and manage facilities, namely all education (except higher education), all health services (except referral hospitals), water services, street lighting, ambulance services, fire brigades, the provision of agricultural ancillary field services, and the control of soil erosion (Steiner, 2006).

–          Fiscal relationships between the different levels of government

The 1995 Constitution and the Local Government Act of 1997 describe in detail the system for funding local government’s service delivery.  More precisely, Article 1993 and the Seventh Schedule of the 1995 Constitution and Article 84 of the 1997 Local Government Act specify three types of grant from central to LG, namely Unconditional Grants (UCGs), Conditional Grants (CGs), and Equalisation Grants (EGs) (Government of Uganda, 2001).

–          UCGs are defined as the minimum grant to be paid to LGs to run decentralised services. The grant is calculated on the basis of the size of the payroll of the administrative staff (58 percent), population (36 percent) and area (6 percent). This calculation is subsequent to a first allocation of fixed amount to each LG for basic costs (150 million of Ugandan Shilling) and some minor historical transfer items accounting for 10 to 15 percent of the total (Shah, 2006).

–          CGs consists of money transfers from central government to LGs designed to finance programmes agreed upon between the two entities. The money transferred can only be expended for the purposes for which it was made and in accordance with the conditions agreed upon (Shah, 2006).

–          EGs are money to be paid to LGs for giving subsidies or making special provisions for the least developed districts and shall be based on the degree to which a local government unit is lagging behind the national average standard for a particular service (Constitution of Uganda, 1995). According to the Government of Uganda (2001, p.17), EG allocation is calculated on the basis of household expenditure data, as a proxy of revenue capacity, and population-size, child-population and length of road-network, to proxy expenditure needs.

The first group of LGs received an unconditional grant in 1995/6 and since then, the system has gradually expanded to include all three types of grants, and development grants. Development Grants[4] (DGs) apply to grants for investment expenditures, mainly fixed capital investment and associated recurrent costs. They are composed of discretionary non-sectoral grants and earmarked grants covering education, health, water, roads, and agriculture (Shah, 2006). LGs qualify to access these grants once they have achieved specific minimum governance criteria. These criteria include: a) development planning capacity, b) financial management capacity, c) technical capability, and d) programme specific condition such as the requirement to co-finance the development funds received with 10 percent contribution in cash (Government of Uganda, 2001).

This intergovernmental transfer system has made LGs heavily and increasingly dependent on transfers from the central government. Indeed, these transfers accounted for nearly 90 percent in 2004/05, of which 80 percent were conditional and thus predetermined for a particular purpose. These sectoral transfers were linked to the Poverty Eradication Action Plan (PEAP) which was launched in 1997/98. This PEAP, which is determined by line ministries, is the Ugandan national strategy for poverty reduction[5]. The poverty priority areas[6] are primary education, primary health care, rural road rehabilitation and maintenance, agricultural extension, and water and sanitation (Steiner, 2006).

LGs are also able to raise own-source revenues[7] funds through user fees and charges, which include local hotel tax, local service tax. And tourist licence fees. They are also allowed impose property tax including rent on commercial buildings and land, as well as land search and registration fees. Other tax sources come from local markets in the form of trade activities such as slaughter fees or the transportation of wood (Jean, Lee, and others, 2010).

–          Effectiveness and efficiency of the present structure

Uganda’s structural design of decentralisation framework appears to be quite intricate. In practice, while the administrative units are regarded as supporting their upper structures, the higher LG levels are assigned the most important responsibilities, with the possibility to delegate some of them to the lower government tiers. The responsibilities in question, however, are not well known and well demarcated. Furthermore, no strong vertical oversight mechanisms can legally be imposed between the different LG levels (Ahmad, Brosio and Gonzalez, 2006).

Regarding the political organs, the executive bodies at the lower LG levels are vulnerable to local pressures because they have often been monopolised by interest groups contrary to their mission, which is to ensure a more direct system of accountability of the local affairs by the voters (Ahmad, Brosio and Gonzalez, 2006).

There has also been resistance against decentralisation at the centre. This resistance mainly came from the administrative structures of line ministries, as they were supposed to give up part of their discretion to the benefit of LGs. Having said this, a Decentralisation Secretariat existed, within the Ministry of Local Government until it was shut in July 2004, with the objective of pushing the reform through and relating it to other policies and reform programmes. This Secretariat, during its existence, has not been able to resolve the difficulties in line ministries regarding their roles and functions in a decentralised system. For this reason, administrative structures of line ministries, to this day, continue to resist as there is no clear cut definition regarding their roles and functions vis-à-vis LGs (Steiner, 2006).

With regard to the expenditure assignments, LGs have the responsibility of delivering basic services that affect their communities more directly, making local-level financial requirements very high. Yet, decentralised services were not systematically costed, thus devolving new functions without adequate compensation of their costs. LGs have always complained about this inadequacy event though intergovernmental transfers have continued to increase incrementally (Steiner, 2006).

In this sense, the local governments’ share of execution of total government expenditure per sector was about 37 percent in 2004/05, with LGs assuming the responsibility for 75 percent of the resources assigned to education, 62 percent of those assigned to the health sector, and about half of the budget for water services. Adding to this inadequacy, the central government predefines the allocation decisions of the bulk of the funds being transferred to the LGs, weakening the degree of accountability of the local authorities to the beneficiaries of such services (Ahmad, Brosio, and Gonzalez, 2006).

In the case of development expenditures, the detailed conditional grant system has also weakened the build up of horizontal accountability between the LGs and their constituencies, putting into question the effectiveness of the central supervision (Ahmad, Brosio, and Gonzalez, 2006).

Uganda has also remained unambitious with regard to local revenue-generation[8]. This is apparently due to the design of the own-revenue raising instruments available to the LGs. Indeed, the number of local revenue instruments available is limited (see above). Furthermore, LGs have not been given the ability to modify neither the bases nor the rates of the available own-revenue sources (Ahmad, Brosio and Gonzalez, 2006).

In addition to this, there are several issues relating to capacity and corruption which rend the own-revenue sources suboptimal, namely collusion between tax collectors and taxpayers, lack of administrative capacity at the local level, political manipulation, and reluctance among the population to pay tax due to arbitrary, regressive and sometimes forceful collection practices (Ahmad, Brosio, and Gonzalez, 2006).

–          Recommendation and Conclusion

Although the Ugandan decentralisation reform is exceptional, there are still some challenging issues which need to be tackled. Firstly, monopolisation by interest groups of the executive bodies of lower LGs should be limited. Because of a lack of understanding at the grassroots level of what decentralisation is in the Ugandan country-side, people do not know what their rules are vis-à-vis their councillors and administrators, giving an opportunity to those who are at the active leadership positions to take control of the executive bodies (Saito, 2000). People at the grassroots level should be informed more thoroughly about the decentralisation system, and their rights to monitor and hold their executive bodies accountable.

Secondly, the various stakeholders involved in the decentralisation process have had varying views about it, according to the level at which they are active. For instance, Ugandan administrative structures of line ministries viewed decentralisation negatively and still continue to resist it. For this reason, shutting down the Decentralisation Secretariat was a mistake in my opinion. It should be reinstated with complete independency from the Ministry of Local Government[9].

Thirdly, LGs are constrained in the flexible allocations of the conditional funds which represent 80 percent of total intergovernmental transfers, and basically only administer them. This has created a risk of reduced ownership and efficiency in LG service provision. To limit this risk, the government of Uganda should find the right balance between the need of central control and monitoring of the achievements of national targets, and the autonomy of LGs for the sake of democratisation plus efficiency and downward accountability. In this sense, a better delineation of areas to be covered by unconditional and conditional grants should also be pursued.

Finally, LGs own-source revenues base should be expanded. In fact, there is an inadequacy between the tasks assigned to LGs and their own-revenue source base. The central government can reduce this inadequacy by:

–          Reviewing the LG tax legislation and expanding the number of instruments available to them,

–          Improving local tax administration and enforcement capacity,

–          Improving information base for tax collection (land, property), and

–          Combating corruption and political manipulation.

In conclusion, Ugandan decentralisation process has started quickly and with strong political commitment from the top. The objectives were to transfer real power to LGs by establishing decentralisation as the guiding principle of all levels of government, achieve good governance and bring political and administrative control over services to the point where they are actually delivered, and allocate adequate resources for the provision of the devolved services. This was a long-term project, and a couple of decades later, the process is still ongoing.

Bibliography

1)      Ahmad, Brosio and Gongalez, 2006. “Uganda: Managing More Effective Decentralization” [Online], IMF, available from: http://www.imf.org/external/pubind.htm [Accessed 04/12/2011].

2)      Government of Uganda, 2001. “Fiscal Decentralisation in Uganda. The Way Forward” [Online], Government of Uganda, available from: http://www.lgfc.go.ug/publications.php [Accessed 20/11/2011].

3)      Government of Uganda, 1995. “Constitution of the Republic of Uganda” [Online], Government of Uganda, available from: http://www.ugandaembassy.com/Constitution_of_Uganda.pdf [Accessed 04/12/2012].

4)      Jean, Lee and Authors, 2010. “Local Government Fiscal Discretion in Uganda” [Online], MDP Eastern and Southern Africa, available from: http://www.mdpafrica.org.zw/ [Accessed 20/11/2011].

5)      Okidi and Guloba, 2006. “Decentralization and Development: Emerging Issues from Uganda’s Experience” [Online], Economic Policy Research Centre, available from: http://ageconsearch.umn.edu/bitstream/93810/2/op31.pdf [Accessed 20/11/2011].

6)      Saito Fumihiko, 2000. “Decentralisation in Uganda: Challenges for the 21st Century” [Online], Ryukoku University (Japan), available from: http://www.world.ryukoku.ac.jp/~fumis96/docs/ics2000.pdf [Accessed 04/12/2011].

7)      Shah Anwar, 2006. “Local Governance in Developing Countries” [Online], The World Bank, available from: http://www.worldbank.org/reference/ [Accessed 19/11/2011].

8)      Steffensen, Tidemand and Ssawankambo, 2004. “A Comparative Analysis of Decentralisation in Kenya, Tanzania and Uganda” [Online], the World Bank, available from: http://www.worldbank.org/reference/ [Accessed 19/11/2011].

9)      Steiner Susan, 2006. “Decentralisation in Uganda: Exploring the Constraints for Poverty reduction” [Online], German Institute of Global and Area Studies, available from: http://repec.giga-hamburg.de/pdf/giga_06_wp31_steiner.pdf [Accessed 20/11/2011].

10)  Turner Mark, 1999. “Central-Local Relations: Themes and Issues”. In: CeFiMs, 2011. Decentralisation & Local governance. London: CeFiMs, 1-12.


[1]Uganda’s government system is characterised by a non-party political electoral system at all levels of government.

[2] Prime Minister of Uganda from 1962 to 1966 and President of Uganda from 1966 to 1971, then again from 1980 to 1985.

[3] The World Bank support includes policy and implementation support, funding, and capacity building.

[4] Devolution of development assignments is based on the Local Government Development Programme (LGDP), and its predecessor the District Development Project (DDP) which was initiated in 1995.

[5] The objective is to reduce the poverty headcount to 10 percent by 2017.

[6] The funds allocated to these areas are channelled through LGs, assigning them with the responsibility to execute a growing share of expenditures tracked under the PEAP.

[7] LGs have also the right to borrow from national sources, but they, for most of them, do not make use of it. They also receive donations from donors, but these are channelled to the central government, which then transfers it as intergovernmental grants downwards (Steiner, 2006).

[8] Borrowing has been limited to 25 percent of locally generated revenue, and is subject to central government conditions and approval. This has eliminated LGs ability to access additional resources to finance service delivery based on local needs, even though it may have limited moral hazard and fiscally irresponsible behaviour on the side of LGs.

[9] The Secretariat was first shut because it was assumed that its technical capacity had been built in the MoLG, making it obsolete.

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