Linking Processes of Linking Processes of Decentralization and Service Delivery Decentralization and Service Delivery with the Poverty Reduction Strategywith the Poverty Reduction Strategy

A Potential to Maximize SynergiesA Potential to Maximize Synergies

Presentation at theCourse for Senior Policy Staff in Donor and Governments on the

Effective Involvement in the Poverty Reduction Strategies6th – 9th June 2006

By

Richard Ssewakiryanga

Team Leader Uganda Participatory Poverty Assessment Process

Ministry of Finance, Planning and Economic Development P.O.Box 8147, Kampala, Uganda

Tel: 256-41 236205E-mail: Richard.Ssewakiryanga@finance.go.ug

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Decentralization Timeline

1986: First decentralization study 1992: Decentralization Secretariat established 1993: Resistance Councils Statute developed 1994/95 - 13 districts received block grants 1995/96 - 14 districts 1996/97 - 12 districts 1995: Promulgation of 1995 Constitution in

Uganda 1995 Enactment of Local Government Act

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The Structure of Decentralization

There are 6 types of LGs comprising: 1City 5 City divisions 79 District Councils by July 2006 900 Sub County Councils, 13 Municipal Councils, 92 Town Councils Administrative units are: 150 counties, 5225 parishes and 45,000

villages

LGs are body corporate, they develop, approve and execute their budget, implement their development plans, hire, manage and fire their staff and implement a broad range of policies

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Linking Decentralization to the PEAP

Decentralization is hypothetically intended to improve service delivery

In response to the political concerns the first PEAP by a taskforce identified a number of priority programme areas

The Poverty Action Fund was therefore set up in 1998 in response to the HIPC financing for poverty programmes and to protect poverty spending from in-year budgetary cuts

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Poverty Action Fund After the revision of the PEAP 1997 and the

introduction of HIPC, the volume of funding in the PAF grew

By FY 2000/01, the PAF accounted for 30% of the total Government budget, of which 75 % was transferred to the districts and PAF has increased from 98 bn in 1998/99 to 692 bn in 2002/03

The PAF was also supplementing Constitutional financial grants classified as Unconditional, Conditional and Equalisation Grants

The figures show the growth of the PAF and different volumes of LG grants…

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Sources of PAF funds 1997/8 to 2002/3

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24%

23%

17%

15%

75%

71%

71%

63%

1%7%

12%

21%

0%

0%

1%

1%

0% 10% 20% 30% 40% 50% 60% 70% 80%

Percentage

Unconditional Grants

Conditional Grants - Recurrent

Conditional Grants - Development

Equalisation

Gra

nts

Transfers from Central Government to Local Government (UGS. Bn)

1997/98 1998/99 1999/00 2000/01

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Transfers to LGs In 2005/6 the conditional grant had increased to

79% of revenues to LGs Local generated revenue has fallen to about 1%

with the abolition of Graduated tax Donor financing now makes up about 16% of

local revenue All this shows that LGs are becoming more

dependant to the central govt which is a major concern for the LGs

In the revision of the PEAP 2000 the LG did raised the following issues:…

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PRS & decentralisation:selected interventions

Increased discretion through the Fiscal Decentralization Strategy

Enhanced planning (HPPG)Decentralisation support Interventions e.g

LGDP IIReview LegislationExpedite process of restructuringEnhanced Monitoring and Evaluation

systems (LOGICS & LGFIAS)

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Lessons Learnt

Aligning political and administrative decentralisation is not a simple issue and it affects devt results at the local level

Increasing local revenue and fiscal autonomy of LGs is key to the success of PRS at the local level

In situations of scarce national resources, the role of donors is crucial

Decentralisation and poverty eradication works best when LGs as front line institutions are well equipped and fully supported

Discretionary funding to LGs can create poverty impacts

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Thank you for listening!