BriefOverview ofRevenue and Expenditures

Local Government Organization and Finance: Uganda 101

the decentralized system.They include the MoLG,the Ministry ofPublic Service (MoPS),the Ministry ofFinance Planning and Economic Development (MoFPED),and line ministries.The line ministries are responsible for ensuring implementation ofnational policies and adherence to performance standards on behalfoflocal governments,inspection,monitoring, technical advice,support,supervision,and training (LGA,section 97).

Links between the Layers ofGovernment Overall,the local government system is based on the principles ofsubsidiarity and integration without subordination.Every local government may,subject to the provisions ofthe constitution,enjoy or suffer anything that may be done,enjoyed,or suffered by a corporate body (LGA,section 7).Each local government therefore has the right and obligation to formulate,approve,and execute its budgets and plans,provided that the budgets are balanced (LGA, section 78).However,the comprehensive and integrated development plan prepared by the district is supposed to incorporate plans oflower local governments,and those governments are expected to prepare plans incorporating the plans oflower councils in their jurisdiction (LGA,section 36).The district is also supposed to mentor and support the lower local governments.

Reforms ofthe Local Government Structure

In 2001,the number ofdistricts increased from 45 to 56.In financial year (FY) 2003/04,six new town councils were formed,increasing the number ofurban authorities to 69.Some local governments are not viable—they are too small in terms ofpopulation and local revenue potential.Hence,they have become overly reliant on central government transfers,which are greatly earmarked, thereby affecting their autonomy.The establishment ofnew local governments has sometimes not been based on a thorough analysis oftheir economic sustainability—their ability to generate sufficient revenues and ensure administrative and political capacity to run council affairs efficiently.However,a more fundamental reform ofthe entire system ofadministration and structures is under consideration—namely,the introduction ofa regional tier of government between the central government and the district level.

BriefOverview ofRevenue and Expenditures

Fiscal decentralization is enshrined in the constitution of1995 and in the LGA,which describes in detail the system for funding local governments’