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									UNITED NATIONS CAPITAL DEVELOPMENT FUND

    UGANDA PROJECT CONCEPT PAPER


  UGA/01/C01: Support to Local Governance




               October 2001
                                      Table of Contents

                                                                                    Pages

Introduction ……………………………………………………………………………..….,..                                       4

1. BACKGROUND ANALYSES ………………………………………………………….,..                                       4

     1.1. Poverty & Economic Policy ………………………………………………….,……                             4
          1.1.1. Economic Growth & Policy in Uganda …………………………….,……..                   4
          1.1.2. Economic Policy …………………………..………………………….,……..                           5

     1.2 Decentralization ……………………………………………………………………                                    5
         1.2.1. Decentralization: Overall policy and institutional framework…………., ..   5
         1.2.2. Implementation issues and policy perspectives……………….……….,..             5
                1.2.2.1. The District Development Project (DDP) ………………………               7
                1.2.2.2. Issues arising from implementing decentralization…………….        10
         1.2.3. Sector-wide decentralization and national agencies….……….,………...         15
         1.2.4. Donor support for decentralization……………………………….,…………                    18
                1.2.4.1. Overview………………………….…………………………………                               18
                1.2.4.2. Bilateral donors…………….…….………………………………. ..                      19
                1.2.4.3. Multilateral donors…………….…….……………………………..                      19
         1.2.5. Challenges and risks…………………………………………….,………. …..                         21
                1.2.5.1. Challenges for decentralization in Uganda……………………….            21
                1.2.5.2. Risks…………..…………….…….………………………………. …                            21

2.       THEMATIC ANALYSES ……………………………………………………………… 22

         2.1.   Social development issues ………………………………………………… 22

         (1)    Marginalized Groups and Minorities in the Development Process …….… 22
         (2)    Gender issues in development ………………………………………………. 22

         2.2.   National and local capacities …………………………………………….. 23
                2.2.1. National level institutions ………………………………………………23
                2.2.2. Local level institutions ………………………………………………… 25
                2.2.3. NGOs and Community Based Organizations ……………………… 25

         2.3.   Existing Monitoring and Evaluation Systems …………………………… 26

3.       PROGRAMMING STRATEGY AND OPTIONS ……………………………………. 27

         3.1.   Some Background Considerations ……………………………………….. 27
                3.1.1. Introduction …………………………………………………………… 27
                3.1.2. Factors determining the proosed programme focus …………….. 28

4.       INSTITUTIONAL DEVELOPMENT AND CAPACITY BUILDING:
         THEMATIC STRATEGY AREAS …………………………………………………….. 30

         4.1    Rationale and overview of strategy ………………………………………. 30


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      4.2.    The Thematic Strategy Areas ……………………………………………… 32
              4.2.1. Building more effective participatory planning & budgeting ……….. 32
              4.2.2. Ensuring more effective local financial management and audit ….. 38
              4.2.3. Enhancing local revenue mobilization ………………………………. 41
              4.2.4. Strengthening local administration of justice ……………………….. 47
              4.2.5. Enhancing the rorle of wormen’s councils ………………………… 51

5.    PRIORITIZATION OF THEMATIC AREAS ………………………………………… 55

6.    GEOGRAPHIC FOCUS AND SCALE OF OPERATIONS ………………………... 56

7.    STRATEGY FOR POLICY IMPACT AND REPLICATION ……………………….. 58

      7.1.    Policy Impact ………………………………………………………………….. 58

      7.2.    Replication ……………………………………………………………………… 58

8.    PARTNERSHIP STRATEGY…………………………………………………………… 59

      8.1.    UNDP ……………………………………………………………………………. 59

      8.2.    OTHER DONOR AGENCIES …………………………………………………. 60

      8.3.    OTHER PARTNERS …………………………………………………………… 60

9.    PROGRAMME COSTS AND FUNDING ……………………………………………                                  60

10.   INSTITUTIONAL ARRANGEMENTS FOR IMPLEMENTATION ………………… 61

      10.1    Management and Monitoring ………………………………………………. 61

      10.2.   The Steering Committee …………………………………………………….. 62

      10.3.   Project Technical Committee (Programme Technical Committee) ….. 62

11.   SUSTAINABILITY AND THE EXIT STRATEGY ……………………………………. 62

12.   OVERALL RISKS ………………………………………………………………….                                       63

Annex 1:      Donor support for decentralization (tables)




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INTRODUCTION

UNCDF’s current major project in Uganda, the District Development Project (DDP), is due to
draw to a close in 2002. This Project Concept Paper (PCP) sets out to explore further
programming opportunities in the field of local governance for UNCDF in Uganda. In doing so,
this PCP has focussed on building upon and reinforcing some of the achievements of DDP as
well as on identifying issues and areas that were not explicitly addressed by DDP.


1.      BACKGROUND ANALYSES

This section of the PCP provides a broad analysis of poverty, economic policy and of the overall
decentralization process in Uganda, including a brief discussion of sector-wide decentralization.
It addresses the specific achievements of DDP, and the issues which have been raised. It also
examines current donor-funded programmes and activities that are related to decentralization.

1.1.    POVERTY & ECONOMIC POLICY

1.1.1   Economic Growth & Poverty in Uganda

Macro-economic data suggest that Uganda has been a success story in Africa, with sustained
annual GDP growth rates of 7% in the 1990s, although growth in 2000-01 dropped to an
estimated 5 percent due to adverse weather and deteriorating terms of trade. Inflation, which
was rampant in the 1980s, has been contained.

There has been much debate on the extent to which this growth has translated into poverty
reduction. This concern led to the Uganda Participatory Poverty Assessment Project (UPPAP)
which reported widespread perceptions of worsening poverty.

However, the evidence1 on income/consumption poverty from detailed household surveys
somewhat belies these perceptions and does suggest real progress in poverty reduction in the
1990s. Thus while in 1992, some 56% of national households fell below an absolute poverty
line, by 1998 this had fallen – steadily - to 44%. This progress holds for urban and rural areas,
and for all regions. But, despite this overall progress, several comments are in order:

     Poverty incidence is still much higher in rural areas (appr 50% incidence) than in urban
     areas (appr 18% incidence);
     Poverty incidence is much higher in the North (still 60% incidence) and East than in the
     Centre (30% incidence);
     While many households moved out of poverty, it may still be the case that smaller numbers
     fell into poverty, or became even poorer below the poverty line.

Data on public service consumption poverty is less clear. There has certainly been progress
made in access to primary education as a result of the major policy focus on Universal Primary
Education in the 1990s, although there are suggestions that the quality may have suffered.
While there is no reliable overall data, primary enrolment increased 65% between 1990 and

1
 See Simon Appleton: “Changes in Poverty & Inequality” in Uganda’s Recovery: the Role of Farms,
Firms, & Government, ed Reinikka and Collier, Kampala, 2001.

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1997; sample data suggest annual increases in enrolment of around 10% since 1992. Again,
there are very large differences in access: Northern and rural areas are still highly underserved
by primary education services; and income poor households everywhere use relatively less
primary education services.

Data on primary health access is less reliable still. After the collapse of the public health
system in the 1970s, following 1986 major effort was placed on reconstructing the network of
facilities. Studies suggest that as of 1995 some 49% of the population (and 48% married
women) were within 5 kms of a health unit offering basic curative, preventive or prenatal care;
but again, wide rural/urban and North/Centre disparities prevail. HIV/AIDS is of course a major
health problem, with appr 1 million infected, and cumulative AIDS deaths around 2 million – a
staggering 10% of the current population.

Finally, access to law and order – an aspect of public service consumption poverty often
neglected by outsiders but keenly felt by the poor – remains a problem in many areas,
especially in the North.

1.1.2   Economic Policy

Macro-economic policy and management, and policy on poverty reduction, is now recognised to
be on a sound footing in Uganda, and has been widely praised. Several policy instruments are
worth highlighting:

Overall Planning & Budgeting. Uganda has been a pioneer in developing the Medium-Term
Expenditure Framework (MTEF). MTEF is in essence a rolling 3 year frame for negotiating and
setting sector targets and budget allocations in light of domestic and external financing ceilings.
These are then translated into the Annual Budget allocations voted by Parliament.

Poverty Eradication Action Plan (PEAP). The PEAP also constitutes a framework within
which priority “poverty-reducing” sub-sectors have been highlighted. These include
infrastructure such as rural roads, water supply, schools and hospitals and social services such
as primary education and health. MTEF negotiations are conducted with reference to the
PEAP.

Poverty Action Fund. Uganda has been faced with a serious debt problem. In order to reduce
the country’s external debt burden, and in view of its sound macroeconomic reform record,
Uganda was the first country to be declared eligible to benefit from the Heavily Indebted Poor
Countries (HIPC) Initiative (in April 1998), ensuring some US$700 million (in nominal terms) in
debt relief, of which about 50 percent was from the World Bank. This initiative led to the
establishment of the PAF, financed both by HIPC debt relief, but also by Government and by
other donors. PAF funds are targeted on PEAP sectors.

1.2.    DECENTRALISATION

1.2.1   Decentralisation: Overall policy and institutional framework2

Uganda has one of the most ambitious and radical decentralization policies in sub-Saharan
Africa. Building upon a long tradition of local government structures in Uganda, the Presidential

2
 for a descriptive overview of decentralisation in Uganda see “Country Profile: Uganda”, Commonwealth
Local Government Forum, 2001 (www.clgf.org.uk).

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Policy Statement of 1992 formalised and articulated the Government’s political commitment to
decentralization. This commitment was strengthened and maintained through the provisions of
the 1995 Constitution, which clearly spell out that the State “.. is to be guided by the principle of
decentralisation and devolution of governmental functions and powers..” (Section II (iii)).

The 1997 Local Governments Act (LGA) provides the more detailed legislative framework for
decentralization in Uganda. The LGA both defines the structure of local governments and
specifies their respective responsibilities and powers, as well as those of central government. In
terms of structure, local government in Uganda is made up of Districts (LC5 – Local Council 5),
Counties (LC4), Sub-counties (LC3), parishes (LC2) and villages (LC1). Uganda currently has
56 Districts, more than 150 Counties, nearly 1,000 sub-counties, some 4,000 parishes and over
43,000 villages.

Because they are the only corporate bodies within the Ugandan local government system in
rural areas, Districts and sub-counties are by far the most prominent local government units.
The administrative heads of Districts are their Chief Administrative Officers (CAOs); for sub-
counties, it is the sub-county chief who provides administrative leadership. Districts have an
average population of around 370,000, but vary considerably in demographic size; sub-counties
average around 25,000 people.

Substantial powers, functions, and responsibilities are devolved to local governments by the
LGA. Local governments have the power to make and implement development plans based on
locally determined priorities. They have the power to make, approve and execute their own
budgets; to raise and utilize resources according to individual priorities after making legally
mandated disbursements. Similarly, local governments can make ordinances and by laws which
are consistent with the constitution and other existing laws, ordinances and by laws. In addition,
local governments are mandated to hire, manage, and fire personnel. They manage their own
payroll and separate personnel systems.

The second schedule of the LGA sets out the respective spheres of responsibility of central and
local governments. In general, local government is responsible for direct service delivery within
a wide range of sectors (including secondary and primary education, health services below the
level of referral hospitals, agricultural extension services). Central government’s mandate,
according to the LGA, is to provide policy guidance and technical support to local governments,
as well as to develop nation-wide policies and plans.

Both the Constitution and the LGA include provisions for local government finance. Firstly, local
governments are able to raise and retain their own taxes. Secondly, they are able to benefit
from central-local fiscal transfers of three types: unconditional grants, conditional grants and
equalisation grants (intended to even out socio-economic disparities between Districts). In
addition, the detailed modalities of local government financial management are specified in the
Local Government Finance and Accounting Regulations (LGFAR) of 1998.

1.2.2. Implementation issues and policy perspectives

Since 1995, the Government – with considerable support from a range of donor partners – has
vigorously acted in order to implement its decentralization policy. This section of the PCP
examines some of the issues that have arisen from implementation and then goes on to look at
emerging policy trends. A necessary prelude to this, however, is a short description and
discussion of DDP, which was explicitly established by MOLG – with UNCDF/UNDP support –
as a pilot for the implementation of LGA.

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1.2.2.1.          The District Development Project (DDP)

In 1995, GoU reached agreement with IDA and UNCDF to pilot devolution of discretionary
development budget-support to 5 Districts3 through the District Development Project (DDP).
This was designed to test the anticipated Local Governments Act and create a “policy
experiment” for developing procedures for decentralised planning, financing and service
delivery. The experience of the DDP has formed the basis for the design of the Local
Government Development Programme (LGDP) – funded by the World Bank – which is now
devolving development funds through the Local Development Grant (LDG) and Capacity
Building Grant (CBG) to 31 Districts and 13 municipalities.

(1)       DDP financing facility

Although preceded by an extended formulation phase, DDP became fully operational in 1997-
98, when the first funds were disbursed to the Districts and sub-counties. Through DDP’s
financing facility, non-earmarked capital budget funds are made available to local governments
on the following bases:

          total allocations for Districts are calculated on the basis of population size and area,
          along with a weighting for school enrolment rates and child mortality. Under LGDP,
          which has been a direct “descendant” of DDP, this calculation has been simplified to
          include only population size and area;

          allocations to Districts are then divided up amongst the various tiers of local government,
          Districts retaining 35% of the total allocation, the remaining 65% being passed on to sub-
          counties. Sub-county allocations are, in turn, divided up, with 30% of the total sub-county
          allocation being passed on to parishes as an indicative planning figure (which is
          managed by the sub-county);

          access to DDP funds is dependent upon LGs meeting certain minimum conditions.
          These minimum conditions include:

          -   development planning capacity (e.g. availability of a council-approved District
              Development Plan and functional planning committees.)
          -   financial management (e.g. proper maintenance of accounts, adherence to
              procurement regulations.)
          -   technical capability (e.g. capacity to supervise engineering works)
          -   programme specific conditions (e.g. 10% co-financing)

          Districts which do not meet the minimum access criteria can still benefit from the
          Capacity Building Grant (a separate funding-line under DDP) in order to assist them to
          qualify for development funding in the future.

          The following table summarises minimum condition assessment results for the 5 Districts
          since FY 1998-99:




3
    the Districts covered by DDP are Arua, Jinja, Kabale, Mukono and Kotido.

                                                     7
Table 1: Minimum condition assessments

FY               District LGs                     Sub-county LGs
                 Met              Not met         Met            Not met
1998-1999        5                0               61             34
1999-2000        2                3               72             32
2000-2001        5                0               72             32

LGs’ allocations from DDP have been increased or decreased in subsequent years,
depending on their performance. Those that perform well against specified performance
criteria receive an increase in their allocations in subsequent years (an additional 20%),
whilst those, which perform poorly, have their investment funds reduced by 20%.
Performance assessments are carried out annually. For sub-counties and parishes this
is done by the District; for the Districts, the assessment process is done by a MOLG
team. The criteria by which LG performance is measured include the following:

-    the extent to which the quality of development plans has been improved;
-    allocation of development expenditure in accordance with National Priority
     Programme Areas directly related to poverty reduction;
-    the extent to which mentorship has been provided to lower level tiers of local
     government;
-    timely accountability and implementation track record;
-    the existence of capacity-building efforts;
-    staff functional capacity;
-    tendering capacity and performance;
-    the existence of monitoring reports;
-    respect for co-financing commitments.

The following table summarises the results of annual performance-based assessments
in the 5 Districts covered by DDP:

Table 2: Performance assessments

FY          District LGs                        Sub-county LGs
            Rewarded Static          Sanctioned Rewarded Static            Sanctioned
1999-       3            0           2          52         10              22
2000
2000-       1            1           3            36           26          42
2001

annual budget allocations to LGs have not been earmarked and their use has largely
been discretionary (within the limits defined by Schedule II part 2 of the LGA). However,
LGs are not permitted to use DDP allocations for security purposes. LGs can choose to
fund activities outside of the National Priority Programme Areas (such as council
buildings) but if expenditure on such items exceeds 20% of their annual allocation, they
are sanctioned in the form of a decreased allocation in subsequent years. The
investment menu is mainly capital items, but some recurrent expenditure is permitted as
long as it is directly related to investments and does not exceed 20% of the total annual
budget. In addition, LGs have been able to use their DDP block grants to finance



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       investment planning (technical studies, etc.), provided that such expenditure is less than
       10% of the total annual allocation.

Both internal and external assessments of DDP’s financing facility have concluded that it has
effectively combined building good local governance with the implementation of development
investments. A recent study of fiscal decentralization in Uganda concluded that “DDP-LGDP
uses the availability of development finance to incentivise capacity building and strengthen local
governance through the mechanisms of access and performance conditionalities with
associated rewards and penalties. The DDP-LGDP methodology has clear benefits in terms of
community involvement, sustainability and governance building”4.

(2)    DDP capacity and institution building

DDP’s funding facility has tried to create an institutional framework within which there are real
incentives for LGs to sustain and improve their service delivery functions. In addition, DDP has
also undertaken a range of other activities aimed at building up and strengthening the capacity
of LGs to respond to these incentives and at establishing planning procedures..

In terms of planning procedures and methods at the District level, DDP has not developed
specific guidelines. The national guides for district development planning (issued by the
Decentralisation Secretariat since 1996) and the technical guidelines from line ministries are
used. However, since investment planning at sub-county level was a new concept in 1997, an
"Investment Planning guide for Sub-counties and lower Level councils" was specially produced.
This manual was subsequently issued in May 1998 by the MOLG as the national planning guide
for sub-counties.

A major innovation of DDP has been to establish a Capacity Building Fund (CBF), to which LGs
are able to gain access to funds for training. Most training exercises undertaken within the
framework of DDP have been focussed on the following areas:

       financial management and compliance with the Local Government Financial and
       Accounting Regulations (LGFAR) of 1998;
       District and sub-county planning;
       writing plans;
       record keeping;
       conducting meetings;
       procurement procedures;
       sensitisation on the LGA and LGFAR;
       structure and operation of council committees;
       contractor requirements.

As a result of these capacity-building activities, as well as a good deal of mentoring by all
concerned, all pilot Districts have a three-year rolling plan with a budget. The sub-counties have
investment plans duly completed under DDP guidance, based on the sub-county investment
planning guide. There are also increasing signs of LGs undertaking appraisal of their investment
proposals.


4
 see “Fiscal Decentralization in Uganda: the Way Forward”, Government of Uganda/Donor sub-group on
Decentralization, January 2001.

                                                9
In terms of LG procurement and implementation, there also appear to have been improvements,
both on the client/LG side and on the supply/contractor side, both of which have benefited from
DDP-sponsored training. Operations and maintenance issues have also been addressed
through DDP, resulting in the establishment of a range of project management committees to
oversee sustained maintenance of investments.

(3)      LG investments

Through DDP, a total of just over $ 8.5 million has been disbursed by LGs in the 5 pilot Districts,
the vast majority of which has been used to finance capital investments. The following table
provides a summary of LG expenditure by sector:

Table 3: Use of DDP funds by LGs (1998-2000)

Sector            Allocation         Examples
Education         43.7%                    Class room construction
                                           Teachers’ houses
                                           Desks and furniture
                                           School libraries
Roads             14.8%                    Opening of feeder roads
                                           Culverts
Health            27.7%                    Construction of health units at parish and
                                           sub-county level
                                           Mattresses, beds and furniture for health
                                           units
                                           Staff housing
Water             8.5%                     Gravity flow schemes
                                           Protected springs
                                           Borehole rehabilitation
                                           Rain water harvesting for institutions
Production        4.1%                     Cattle markets
                                           Improved seeds/crops for multiplication
                                           Improved livestock for multiplication
Other             1.2%                     Sub-county office blocks
                                           Cash safes for sub-counties

It is clear from this table that DDP funds are largely being used by LGs to finance investments in
sectors identified as being national priorities – education, health. water, roads and, to a lesser
extent, agricultural production.

1.2.2.2.        Issues arising from implementing decentralization

(1)      Decentralized financing

DDP has provided valuable lessons in the field of decentralized finance, of which the most
obvious have been:

         funds can effectively be transferred to sub-counties and used to finance local
         development plans;


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       building conditionalities (such as minimum conditions and performance measures) into
       fiscal transfers promotes good governance and improves service delivery by local
       government;
       discretionary block grants allocated to LGs can be and are used in ways that address
       poverty reduction issues.

As a result, DDP’s model for development budget financing of Local Governments has become
the national model. This has been demonstrated in a number of ways:

       the Local Government Development Programme (LGDP), funded by the World Bank
       (and with a budget of roughly $ 80 million) has been almost entirely based on the
       modalities tested out and piloted by DDP. LGDP, for which the responsibility for
       implementation lies with the same MOLG-based PMU as DDP, aims to cover all Districts
       and sub-counties in Uganda. LGDP therefore represents a significant scaling up of the
       principles underlying DDP’s financing facility and an acceptance of their appropriateness
       for the funding of LGs.

       DDP/LGDP minimum conditions and performance criteria have been adopted nation-
       wide for all donor-funded programmes supporting local government. DDP/LGDP
       procedures, methodology and strategy have been adopted by Irish Aid in 3 districts,
       Dutch Aid in 9 districts, European Union in the Northern districts, Belgian Bilateral Aid in
       2 out of 3 districts, Belgian Survival Fund/IFAD in 3 districts, DfID, and USAID’s
       community based strategy in 2 out of 6 districts.

       the recent Fiscal Decentralization Study (FDS), funded by the Donor sub-group on
       Decentralization and mandated to find ways of rationalising fiscal transfers to LGs, has
       endorsed a Development Transfer System (DTS) for capital budget support to local
       authorities. The DTS is specifically and explicitly modelled according to the same
       principles that underlie DDP’s financing facility – and, indeed, FDS proposes that the
       DTS be managed by the DDDP/LGDP PMU based in the MOLG. If the FDS proposals –
       currently being considered by Cabinet and Parliament – are accepted, the DTS will
       represent a further confirmation of DDP’s financing modalities at the national level. It
       should be noted that the proposed Recurrent Budget Transfer System (RTS), for
       consolidating recurrent expenditure grants, is proving much more controversial.

       another decentralization policy initiative is a Study to define Modalities for the Proposed
       PMA (Plan for the Modernization of Agriculture) “Non-Sectoral Conditional Grant”. The
       study was commissioned for the Ministries of Finance and Agriculture, and funded by a
       consortium of donors. It examined centre-local funding mechanisms for supporting the
       modernization of agriculture, which is a key productive sector to poverty eradication. The
       study recommended that the PMA Grant Facility be assimilated as a window within the
       DDP/LGDP fund transfer mechanism, using the same minimum conditions and
       performance measures. It is to provide additional resources for rural productive
       activities, and to be allocated entirely to sub-counties and parishes (on the same 70:30
       ratio pioneered under DDP).

There is, then, considerable evidence to indicate that the financing system pioneered through
DDP has gained widespread acceptance by both national authorities and donor agencies.
Emerging issues are therefore principally linked to national capacity to scale up DDP modalities



                                               11
and to “downstream” LG capacity to handle increased flows of capital budget assistance (which
will be examined below).

(2)       Local government revenue mobilization

Although DDP’s financing facility, through its LG 10% co-funding conditionality, indirectly
addresses the issue of LG revenue mobilization, it remains clear that little has been done by
DDP to directly strengthen and improve local revenue collection. It is equally clear that local
revenue mobilization is a crucial issue, in terms of (i) ensuring a degree (however limited) of LG
financial autonomy; (ii) increasing the extent to which LGs are held accountable by local
constituents for the use and management of financial resources; and (iii) being able to
complement externally-derived flows of fiscal resources.

Although data is poor, the evidence from national surveys and other studies is that local
revenue is on a declining trend. All local councils are having problems with revenue mobilization
for a number of reasons, the most important of which are:

          the intrinsic limitations placed on local revenue mobilization by the existing LG tax base;
          inherently weak resource bases in some rural areas;
          serious inefficiencies and deficiencies in the tax and revenue collection systems;
          a lack of political will (on the part of locally elected authorities) to ensure collection
          discipline;
          an unwillingness to pay taxes;
          (perhaps most importantly) poor accountability in many LGs, which does little to increase
          people’s willingness to pay taxes.

Local revenue mobilization thus remains (as elsewhere in sub-Saharan Africa) an outstanding
issue within the overall policy of decentralization in Uganda. This has been recognised by the
Government and by some donors. The Local Government Finance Commission (LGFC) has
embarked on revenue mobilization initiatives through commissioning studies on various aspects
of revenue collection. With support from DfID and the World Bank, it has commissioned policy
studies on Local Revenue Enhancement, a Framework for Monitoring Local Government
Revenue, the Equalization Grant, Centre-Local Revenue Sharing, and Local Council sharing of
local revenues. In addition, LGDP has been structured to support both LGFC and local
authorities in improving local tax policy and local tax administration.

(3)       Financial management and control

Although DDP has done much to strengthen the financial management capacity of district
councils5, the capacity to ensure adequate financial management and auditing remains
insufficient for most local governments. Some Districts still rely on manual financial
management systems. Most sub-counties have little in the way of modern financial
management systems. Sub-county systems are all still manual. The sub-counties have only one
sub-accountant who is usually overwhelmed by his/her workload and not fully trained to handle
the complexities of financial management at that level. There is negligible financial management
capacity at the village level as there is no government officer at that level. The situation is
relatively better at the District council level but there are also some serious gaps at that level. In
general, the greatest capacity constraints exist at the lower levels of the LG system, and are

5
    it was through DDP support that district councils had audited accounts for the first time.

                                                       12
particularly significant at the sub-county level, precisely because sub-counties are corporate
bodies.

Such problems are compounded by other factors:

       inadequate levels of supervision of the sub-counties, parishes and villages by the
       Districts, partly due to the autonomy issue but also due to lack of resources to facilitate
       the supervision;
       unclear definition of roles/tasks of politicians and technical staff of the councils has
       created some suspicions and friction between the two, thus undermining effective
       financial management and auditing; and
       unattractive council pay structures and inadequate motivation undermines the
       commitment of both the politicians and officials to strict principles of financial
       management and auditing.

Internal Audit Departments are new in local government and their capacity to carry out thorough
auditing is still weak. There are still some problems with the preparation of audited accounts. By
July 2001, some DDP-supported Districts had yet to submit their 1999/2001 audited accounts.
The Auditor General’s Office is too under staffed to provide comprehensive auditing; its
Regional Offices are especially under-staffed and under-resourced. There are more than 1,500
districts and sub-counties to be audited. In order to cope with the large volume of auditing local
governments accounts, the Auditor General's Office has increased its staff in the local
government section and the Office is being made autonomous. The Office can hire private
auditors to assist local governments to prepare their accounts. However, there are only a limited
number of private audit firms, and the high cost of contracting them is a constraint. The need to
computerize financial management, to establish regular and adequate auditing and to train staff,
especially at the sub-county level, is quite evident.

These issues are likely to become increasingly critical as and when central-local fiscal transfers
are increased: ie as capital and recurrent budgets are increasingly devolved, as is expected.
The proposed reform of fiscal transfer systems is also likely to raise the stakes, by increasing
the extent to which LGs will need to provide better financial management and accounting.
Finally, any efforts to improve local revenue mobilization also have implications for LG financial
management and control. Unless financial management and control mechanisms are improved,
LGs are likely to have considerable problems in ensuring upward and downward accountability.

There is a clear recognition of such issues in Uganda by both Government and donor agencies.
Indeed, perceived inadequacies in LG financial management and control mechanisms have
often been used as pretexts for not devolving funds to local councils. There have nonetheless
been and are initiatives aimed at improving the situation. The LGFAR of 1998, for example,
were drafted by MOLG (with DANIDA assistance) to provide a regulatory framework for LG
financial management and control.

DfID also has an important decentralization Support Programme with a component on Local
Council Accountability. It is aimed at improving local government performance on the three
accountabilities of local councils—to constituencies, between the executive and political leaders,
and between levels of local government. The other component of the DfID programme is
concerned with Local Government Finance Management and Internal Audit and is aimed at
improving financial management and internal audit performance in LGs. The activities of this
component include reviewing LGFAR, the new Public Finance Act, and the Local Government
Internal Audit Manual, with the aim of bringing them in line with the Local Governments Act.

                                               13
Furthermore, the component will deliver on-the-job financial management and internal audit
training for local government staff in every district, municipality and sub-county in Uganda.

Finally, the proposals for integrating the PMA’s NSCG into the LGDP/DTS system also include
accompanying measures for building up District-level capacity to provide mentoring, support
and supervision to sub-counties and for strengthening sub-county capacities to manage
increased capital budgets.

(4)    LG planning and budgeting processes

This is an area that received much support in the DDP pilot districts. The Planning Department,
Finance department, Planning Committee, Technical Planning Committee, Finance Planning
Committee, Investment Planning Committee, and Project Management Committee at both sub-
county and district levels, were the focus of DDP intervention. Guidelines on Development
Planning for Local Governments, Investment Planning for Sub-Counties and Lower Level
Councils, and Planning, Allocation and Investment Management System were produced to
enhance the quality of planning, investment decisions, procurement procedures and overall
service delivery. The achievements have been considerable.

However, despite all these guidelines there are still some gaps with participatory planning and
budgeting, some of which have been highlighted by internal and external reviews of DDP. The
study upon which proposals for the PMA NSCG are based also noted a number of lacunae with
the planning system developed within the framework of DDP and LGDP. In general, there
appears to be insufficient community input from village/parish councils to sub-county/district
councils, inadequate women's voice and input into the planning process, insufficient integration
of gender issues, and inadequate attention paid to investment in productive opportunities.
Problems have thus been identified in the procedures and institutional arrangements for
planning and budgeting.

DDP experience (and that of similar programmes) has demonstrated a wide range of problems
currently experienced by local governments with regard to participatory planning and budgeting.
These problems include:

       insufficient resources with which to undertake the necessary planning steps. This has
       inevitably led to delays in the entire planning process, to “short cuts” being taken, and to
       largely limiting the planning process to members of LG Executive Committees;
       (as a result) there has not been enough input into the planning process at the sub-
       county and district levels from community and marginal groups at the village and parish
       levels. This has been compounded by problems related to the mobilisation of
       community-based participation;
       in almost all local governments, there has been a relative lack of women’s voice and
       input to plans and too little attention given to gender issues/implications;
       inadequate planning capacity of staff at lower levels especially at the village, parish and
       sub-county levels;
       inadequate data management at all levels making it difficult for planners to make
       informed decisions;
       inadequate feedback which undermines participation;
       limited capacity of local governments to carry out a thorough analysis of cross sectoral
       linkages, gender issues, the environment, poverty and integration;
       inadequate attention paid to investment in productive opportunities;


                                               14
          inadequate integration of sub-county and District council plans which can be attributed to
          the autonomy issue and a lack of skills to undertake integrated planning; and
          inadequate monitoring and evaluation of the plan and budget implementation which
          relates to resource shortages and capacity issues.

There are particular concerns with the way in which women’s involvement in the planning
process has remained weak. The reasons for this are many and include: the inappropriate
timing of meetings, cultural factors which inhibit women's contribution to discussions (especially
in remote rural areas where there are fewer educated women), and the ineffectiveness and
socio-political marginalisation of many women’s representational bodies at local levels. Gender
issues, although a clear priority at the national level in Kampala, remain largely peripheral to the
majority of LG planning authorities. As a result, there must be some doubt as to the extent to
which women’s concerns and preoccupations are genuinely taken into account by current LG
planning processes and procedures.

Trying to improve the extent to which LG planning and budgeting processes in Uganda are
participatory and integrated is thus an emerging issue. This is obviously an important concern in
that the greater the degree of “popular” participation (and thus “inclusion”) in the local planning
process, the more likely it is to identify and prioritise “pro-poor” investments and activities. The
converse holds true. Given that there are likely to be increasing flows of relatively discretionary
grants to LGs (under PMA and DTS arrangements, as well as through existing DDP and LGDP
financing facilities), intended to contribute to poverty reduction, there is a heightened need to
improve the quality of LG planning and budgeting processes. Although minimum conditions and
performance measures – as conditionalities for decentralized finance – can be “tightened” to
further incentivise participatory planning/budgeting, there are good grounds for arguing for
other, complementary, ways of increasing local community involvement and influence over LG
planning systems.

Such issues are gradually being addressed in a number of ways. UNICEF for example, has
been experimenting with participatory approaches at the parish level. There is also a wealth of
experience with intensive participatory methodologies in Uganda, principally within the NGO
community. The proposals for the PMA NSCG also include recommendations for strengthening
the extent to which LG planning is participatory. The challenge in all this is to foster cost
effective, inexpensive, sustainable and pragmatic approaches to participatory planning.

(5)       Wider local governance issues

A precondition for good governance at all levels is the existence of a functioning, accessible,
and independent judicial system, which serves to provide citizens with the right of recourse, to
settle disputes, and to ensure “the rule of law”. In addition, and although more orthodox
conceptions of poverty tend to concentrate on its more material dimensions, more sophisticated
analyses6 point to less “tangible” dimensions, such as powerlessness and the deprivation of
human rights. Establishing adequate local justice, then, needs to be seen as a component of
local governance, as well as a way of addressing the more qualitative issues linked to poverty.


1.2.3. Sector-wide decentralization and national agencies



6
    such as the Uganda Participatory Poverty Assessment Project.

                                                   15
The Ministry of Local Government (through its Decentralization Secretariat and the Programme
Management Unit for DDP/LGDP) is central to the overall implementation and management of
Uganda’s decentralization policy. It provides leadership to all the other branches of central
government and the local governments. In addition to the MOLG, there are other central
ministries, departments, offices and commissions that play important roles in the development
and refinement of decentralization policy. The functions of the different sector
ministries/institutions are to define/refine and implement specific sector policies, and to support
local governments to implement the provisions of the 1997 Local Government Act. The key
ministries are described and discussed below.

(1)    Ministry of Finance

The Ministry of Finance is central to the implementation and management of the
decentralization policy in that it is responsible for the overall management of the budget and the
allocation of financial resources for decentralization. It manages the system of
intergovernmental fiscal transfers and is central in the determination of conditional and
unconditional grants for local governments. Although local governments and the Uganda Local
Authorities Association have expressed some reservations about conditional grants (which tend
to limit local planning and determination of local priorities), the Ministry of Finance sees them as
a way of increasing local government accountability.

       The Ministry further oversees all the donor programmes and initiatives and ensures that
they reflect the priorities of the Government of Uganda. Trends with regard to basket funding
and budget support are managed by the Ministry.

(2)    Ministry of Education

The Education Strategic Investment Plan (1998 - 2003) is the cornerstone of Uganda's short
and medium term education policy. The Universal Primary Education Policy of 1997 is part of
this strategy and has attracted considerable donor support. The devolution of responsibility for
primary and secondary education to the District councils has been completed. However, the
Ministry still retains responsibility for policy issues, monitoring, evaluation, training of teachers,
etc. In practice, most of the funds going to the District Councils are in the form of conditional
grants (through the Poverty Action Fund – PAF) that in most cases by-pass the Councils and go
directly to the schools. The Ministry has some reservations about the capacity of local councils
to account for the funds being transferred to the districts. However, the importance of education
in the decentralization process and in poverty eradication initiatives is demonstrated by the fact
that over 40% of DDP capital budget grants in the pilot Districts have been used to support
educational projects – mostly the building and rehabilitation of community schools.

(3)    Ministry of Agriculture

The Ministry of Agriculture is the driving force for the Plan for Modernization of Agriculture (PMA),
which is a holistic, strategic framework for eradicating poverty through multi-sectoral interventions
in productive sectors in the rural areas. PMA is part of the broader strategy contained in the
Poverty Eradication Action Plan (PEAP) of1997. It has six key priority areas:

       institutional reforms, policy formulation and provision of regulatory services;
       advisory services for subsistence farmers;
       research and outreach;


                                                  16
       capacity building for micro financial services;
       implementation of the Land Act and integration of environmental issues into the PMA; and
       provision of agricultural education.

PMA's focus is on building technical capacities at the sub-county and other lower levels of
government, which are seen as essential for the overall improvement of the living standards of the
poor. The National Agriculture Advisory Service focuses on the role of the sub-county in promoting
the PMA, which will be the focus for the planning process, for resource management and
contracting.

PMA is in line with the deepening of decentralization in participatory planning and budgeting and
the devolution of development budget support (based on the DDP model). However, there is need
to harmonize the participatory approaches advocated by UNICEF (parish development
committees), UNDP (participatory development management), and UNCDF (participatory planning
and budgeting).

(4)    Ministry of Health

Like the Ministries of Education and Agriculture, the Ministry of Health has operations extending to
the District and sub-county levels. There are District hospitals, clinics and health centres operating
at these levels. The responsibility for managing these institutions has been devolved to local
governments. However, overall policy issues, monitoring and evaluation, as well as the training of
nurses remain the responsibility of the Ministry. Donors have supported the construction of clinics
and health centres aimed at poverty eradication in various districts. A proportion of DDP funds has
been used to construct clinics/health centres.

(5)    Ministry of Justice

The Ministry of Justice is also involved in the decentralization policy through its judicial reform
programme. The programme includes a support component for the reform of the local council
courts. A Draft Local Council Courts Bill (2001) to upgrade local council courts at the sub-county
level to Magistrate Court Grade II has been tabled before Parliament for discussion and approval.
Once approved, the main focus of reform efforts will be the sub-county local courts. The objective
is to strengthen the institutional and human resources capacity of local council courts so that they
can administer justice in a professional manner and promote good governance.

(6)    Local Government Finance Commission (LGFC)

The LGFC’s principal mandate is to advise the President on matters concerning the distribution
of revenue between central and local government. LGFC has led the introduction of the
Equalisation Grant and is anxious to ensure that transfer mechanisms promote equality
amongst districts. Increasing local revenue is a key LGFC goal. LGFC argues that fiscally
sound LG depends on healthy local revenues to counter-balance a growing dependency on
transfers. As mentioned earlier, and in line with its concerns about a degree of LG fiscal
autonomy, LGFC has commissioned a number of studies to examine local revenues and taxes.

(7)    Auditor General's Office (AGO)

The AGO is a service institution. Its principal function within the framework of decentralization is to
audit the financial accounts of local governments. There are over 1,500 audit units, including
District councils and sub-county councils. As mentioned earlier, AGO is under-resourced at the

                                                  17
moment. Despite the substantial increase in conditional grants to sub-county and District councils,
increased allocations of funds to AGO for audits have been limited and insufficient. LGDP,
however, has provided increased resources to AGO for auditing in the Districts it supports.

(8)     Final remarks

Although considerable progress has been made to decentralize the main line ministries, sectoral
decentralization in Uganda remains partial. Moreover, sector-wide policies often continue to be
drawn up without reference to other sectors, thus resulting in sometimes contradictory outcomes7.
The main challenge with sectoral decentralization is that there is no holistic approach to
decentralization.

1.2.4. Donor support for decentralization

1.2.4.1.        Overview

Through a range of integrated development projects, the Government of Uganda/Ministry of
Local Government (MOLG) has been able to attract several donors to support capital
development and capacity building projects in several Districts. The projects’ focus has been on
(i) infrastructure development in the areas of water, feeder roads, primary health care, universal
primary education, and agriculture, and (ii) capacity building of district council officials and other
community based organizations. The MOLG coordinates the design of these projects and
donors choose particular districts where they want to operate.

The Donor sub-group on Decentralization, led by the Irish, has remained active as a forum for
dialoguing with Government on a wide range of issues relating to decentralization and support
to local governments. It has been instrumental in gaining multi-donor support for capital
development and capacity building projects in the various Districts. Coordinated donor support
made it possible for the two important studies on Fiscal Decentralization and the Modalities for
the PMA to be under-taken.

However, there has been concern among the donor group about the need for effective
coordination and harmonization of the various donor approaches to supporting decentralization
and local government. In this regard, the Ministry of Local Government is expected to take the
leadership role. The other donor concern has been the need to mainstream the activities of the
Decentralization Secretariat and the Programme Management Unit to avoid the development of
parallel structures. This is important in that it calls for the mainstreaming of the activities of the
two institutions into the Ministry's programmes.

Several donors, plus Government, have indicated their policy intentions to move into budget
support while supporting sound expenditure priorities and improving financial management.
Calls are being made for a basket funding approach to supporting decentralization and local
government. The Ministry of Finance, Planning and Economic Development prefers PRSC as
the appropriate method for budget support since it allows a critical mass of funds that can
facilitate the implementation of Poverty Eradication Action Plan (PEAP).

A summary of donor-funded interventions is included in Annex 1 of this document. It provides a
brief description, by donor, of where assistance is being provided (specific Districts, nationwide),

7
 national forestry and environmental protection policy, for example, stand in marked contrast to the
decentralized approach embodied in PMA.

                                                   18
the sectoral focus of assistance, approximate levels of assistance, and the period for which it is
being provided. There are clearly many donors involved (in a variety of Districts and addressing
a range of issues) and significant amounts of assistance being provided.

1.2.4.2.       Bilateral donors

Various bilateral donors provide direct support at District level: Danida, Netherlands, IrishAid,
Belgium, USAID, Austria.       Most such District level assistance is focussed either on direct
provision of infrastructure and public services or on capacity-building among LGs.

However, some bilateral agencies are also involved in supporting wider institutional
development and tackling general governance issues. DfID, for example, is providing
substantial assistance for public service reform, for AGO, for improving financial accountability
and local tax mobilisation, and will be supporting MLG itself. Danida has been supporting the
Decentralisation Secretariat, as well as Local Justice reform, and Local Government Auditing
through OAG.


1.2.4.3.       Multilateral donors

(1)    The World Bank

       The World Bank is financing the Local Government Development Programme (LGDP)
covering 40 districts and 13 municipalities. The LGDP is scheduled to be completed in 2003. A
Review is scheduled for early 2002 to determine the follow up. At present it seems that the
Bank will maintain development budget support to LGs through annual PSRCs, but this may be
supplemented by further capacity building (the need for which is a concern expressed in
various quarters).

The Bank is also preparing a programme – to be co-funded by the Rockefeller Foundation – to
provide support to Makerere University and other national training institutions, to help them
better assist decentralisation.

Finally, it is noted that the Bank is also preparing a Social Fund-type project to finance small
community investments in Northern Uganda. The apparent inconsistency between this project
and the Bank-supported LGDP has been noted with concern in several quarters.

(2)    UNICEF

        UNICEF has 80% of its technical support going to the Districts in the areas of health,
education, water and sanitation, etc. The technical support is given through Regional and
District Implementation Teams operating in the Northern, Central and Western Regions of the
country. The Teams work with Parish Development Committees (PDCs), which have become
an important entry point to community support at the parish level. There are over 2,000 PDCs
in the country. The PDC concept may prove useful in any efforts to improve participation in the
LG planning process.

(3)    UNDP




                                               19
   UNDP is quite active in supporting governance. It signed a Programme Support Document
(PSD) on Good Governance for Poverty Eradication on 12 July 2001 with the Government of
Uganda. At the central Government level the programme will provide support for:

       developing a long-term strategic vision and plan and a capacity building programme for
       Parliament;
       strengthening the capacities of UHRC (Uganda Human Rights Commission) and its
       partners to develop and implement strategies for human rights education,
       communication and mainstreaming of human rights in development activities;
       strengthening the capacities of the Ministry of Gender, Labour and Social Development
       (MGLSD) to develop and implement strategies for advancing gender and social equity
       in the country;
       strengthening the capacities of the Office of the Inspector General of Government and
       Directorate of Ethics and Integrity, Office of the President, to enhance transparency and
       accountability of government and to develop and implement a national strategy for
       promoting ethics and integrity in all sectors of governance;
       strengthening the capacities of the Decentralization Secretariat, MOLG to promote
       participatory development management in local governments.

At the District level, PSD will build the capacity of the local governments to undertake
participatory development management (PDM). At the community level, the programme will
empower village and parish councils to draw up their own development plans and have them
rolled into sub-county – and subsequently into District – plans.

The Ministry of Finance, Planning and Economic Development is the executing agent of this
PSD. The implementing agents include MOLG, MGLSD, MEI, the National Assembly, UHRC,
Inspector General of Government, NGOs and District Councils. The European Union is willing
to cooperate with UNDP in the area of governance through the provision of US$60-70 million.

There is clearly some overlap between DDP (and any likely future UNCDF projects) and PSD
at the District level, where both are trying to establish participatory planning methodologies.
This will need to be clarified in order to avoid conceptual and operational confusion, as well as
to avoid unnecessary duplication.

UNDP also has an interest in enhancing the capacity of local council courts in the performance
of their judicial functions as key players in the administration of justice in Uganda. The Support
to Local Council Courts Project, which would be implemented through the MOLG, was intended
to build the capacity of local council courts in record keeping; and strengthening coordination
mechanisms relevant to local council courts. Though the project has been halted, it had been
allocated a budget of US$735,300.

(4)   United Nations Volunteers

United Nations Volunteers (UNV) is in the process of finalizing a project document on Support
to Promoting Human Rights and Equity in Uganda. The project, due to start in early 2002, has a
duration of 24 months. It will be implemented in selected Districts. UNDP is a cooperating
partner in the project. Through the use of volunteers, UNV will work with communities and
institutions in the selected Districts in promoting community awareness, para-legal training,
popular human rights education, advocacy, and networking, paying special attention to areas
affected by conflict. The project has a component on capacity building for local council courts.


                                               20
(5)    European Union

The EU has recently approved projects to support District infrastructure delivery capacity in the
North, incl. the Karamoja Region.

1.2.5. Challenges and risks

1.2.5.1.         Challenges for decentralization in Uganda

In the immediate future, a number of major challenges for decentralization in Uganda can be
identified:

       the need to ensure that existing decentralized local government structures, systems and
       procedures are consolidated;
       the need to ensure that the proposed fiscal decentralization strategy becomes a reality;
       the need to enlarge the economic/revenue base of local governments and strengthen
       their revenue mobilization mechanisms;
       the need to mainstream gender concerns into the planning process, to strengthen
       participatory planning and to develop skills in preparing integrated district development
       plans and budgets;
       the coordination of donor support aimed at moving towards a funding basket at the local
       government level;
       the need to treat capacity building for local governments as a continuous process given
       the high turnover of councillors and council staff;
       a clear definition of the roles of the various players in the decentralization programme;
       and
       developing a holistic approach to decentralization among sector ministries.

1.2.5.2.     Risks

    The subject of risks and potential is discussed in detail for each of the proposed thematic
areas and also in Section 12 on overall risks for the next UNCDF programme. However, three
risks are worth mentioning here.

           the first risk is the unpredictable nature of donor support and policies which can change
           rapidly and thus cause disruption to the gains made under decentralization. Donor
           support/policies therefore need to be carefully managed so that if and when support is
           withdrawn, any gains made will be sustained;

           the second risk is that both the Decentralization Secretariat and the Programme
           Management Unit which have spearheaded the decentralization process are temporary,
           donor-funded bodies. At the moment, the withdrawal of donor support will seriously
           undermine their capacity to fulfil essential functions. Their functions must therefore
           sooner or later be mainstreamed within Ministry of Local Government activities so that
           decentralization does not continue to be viewed in a “project” context;



                                                  21
        thirdly, a related risk derives from the problem of inter-Ministerial coordination on issues
        of decentralisation policy. While the MLG and its Decentralisation Secretariat are
        supposed to play a coordinating role, this is inherently problematic, for simple
        institutional reasons that have nothing to do with the capacities of these bodies. For
        real coordination – eg on approaches to local planning - a Forum, such as an Inter-
        Ministerial Committee for Decentralisation, is neded where senior staff from the various
        ministries can come together, debate and compromise, and come to binding
        resolutions, or at least to proposals which could then be ratified by Cabinet. Ad hoc
        committees have been formed – eg the recent taskforce on fiscal decentralisation – but
        there is need for a more permanent body. For lack of such a venue, all too easily local
        governments will be faced with, for example, differing prescriptions on local planning
        and financing, emanating from MLG, from Min Finance, from Min Agriculture.


2.     THEMATIC ANALYSES

A number of particular themes provide further contextual background to the options presented
and discussed in this paper.

2.1.   Social development issues

(1)    Marginalized Groups and Minorities in the Development Process

Marginalized groups include the youth, people living with disability and women. Although
women are a marginalized group, they are not a minority group. Women constitute over 51% of
Uganda’s total population (1991 Population Census). They are discussed separately below
under social, economic, and cultural aspects of gender in participation.

Although there is a Youth Council that is mandated to take care of matters that affect the youth,
its contribution to local government decision-making process is minimal. The youth and people
living with disability have very little input into the planning and resource allocation process of
local governments. Their influence on decisions to allocate resources is minimal. The
institutions representing the youth and people living with disability are weak in terms of financial
resources and trained personnel to effectively articulate the issues/concerns at the District
council and sub-county levels where investment/resource allocation decisions are taken.

Whilst there has been an increase of resources going to local governments, particularly to the
sub-county councils, there are no funds specifically earmarked to support special
programmes/development activities that benefit the youth and people living with disability. The
various policies introduced to eradicate poverty have not had adequate noticeable impact in
terms of promoting increased participation by the traditionally marginalized groups in matters
that affect their economic and social welfare. The marginalized groups lack adequate control of
the resource allocation process and the means of production. Hence, they have remained on
the periphery of the development process.

(2)    Gender issues in development

Women’s participation in the planning and budgeting process in local governments and the
subject of gender mainstreaming have already been touched upon in an earlier section of this
paper. There are clearly a number of ways in which women have limited access to the local


                                                22
development process. In summary, the main obstacles that inhibit effective women’s
participation in local government development process include:

       the planning, budgeting and resource allocation process is still male-dominated and not
       adequately gender sensitive;
       general reluctance by the communities to participate in meetings that have no
       direct/immediate benefit to them;
       inappropriate timing of meetings which does not take into account women’s schedule of
       activities;
       cultural factors such as the low status accorded to women, especially in rural areas, which
       muzzle women’s contribution to any discussions;
       weak and ineffective women’s representative institutions (Ministry of Gender, Women’s
       Councils, Department of Community Services, and women councillors) that find it difficult to
       ensure that women’s concerns/issues are incorporated into local planning and budgeting
       process as well as resource allocation mechanisms;
       the high rate of illiteracy among women (especially rural women). In 1990, nearly 60% of
       women in Uganda were illiterate; the rate for some Districts is higher than the national rate.

The above obstacles undermine pro-poor public expenditure that benefits women. Gender
concerns/issues are not effectively incorporated into local council development plans and
activities. The weakness of women’s representative institutions has resulted in a low degree of
influence by women over the allocation of public resources in their favour. Thus women have
limited access to the control of means of production and capital, particularly women farmers in
the rural areas. Control of the means of production and capital (especially business credit) has
predominantly remained in the hands of men, thus creating an almost perpetual women poverty
syndrome. Women are particularly disadvantaged in that the majority are uneducated, do not
own property to act as collateral to secure business credit and cannot save due to lack of
control over household income. Indeed, illiteracy among rural women has largely contributed to
limiting their participation in the local government development process. It has further
contributed to the existing wide gap between men and women regarding access to and control
over productive resources, education and employment opportunities, and inadequate access to
judicial remedy.

Fortunately, there is a strong national policy framework and high-level political commitment to
the mainstreaming of gender issues and consensus into the development agenda in Uganda.
This is most clearly articulated in the National Gender Policy (1997). The National Action Plan
for Women emphasises the need for equal opportunities for men and women, equal rights and
affirmative action to close gender gaps. However, much remains to be done in terms of
transforming political commitment into concrete and enduring patterns of behaviour and
structures of opportunity. There is still a limited level of awareness about the importance of
mainstreaming gender in development by all stakeholders: beneficiary communities, political
and administrative officials and civil society organisations.

2.2.     National and local capacities

The institutional capacity to implement local development programmes needs to be seen at both
the national and local levels, as well within the NGO sector.

2.2.1. National level institutions



                                                  23
The following national institutions are involved in assisting local governments to carry out their
development programmes and management responsibilities.

Through its Decentralization Secretariat, MOLG is responsible for policy setting, overall
monitoring and evaluation of the performance of local governments, and for strategic thinking for
decentralization.

It is also responsible for ensuring that the activities of other sectoral ministries/departments are
in harmony with the Local Government Act and for facilitating the effective operation of local
governments. However, this coordinating role of the Secretariat is inherently problematic in the
absence of a Forum such as an Inter-Ministerial Committee for Decentralisation where the
various ministries could come together, debate and compromise.

The Project Management Unit (PMU) within the Decentralization Secretariat, has been the
implementing arm of the MOLG for DDP/LGDP. It has been responsible for the overall planning,
managing and monitoring of project/programme activities, interacting with district stakeholders,
contracting consultants, organizing training and workshops, and liasing with other national
departments and other partners. It has gained considerable respect within the donor community
in Uganda. In line with the increased responsibilities it would be expected to shoulder as a result
of providing overall management for the DTS and PMA’s NSCG fund flows, it has been strongly
recommended that the PMU’s staffing be increased, that its status be raised (by having the
PMU coordinator report directly to the Permanent Secretary of MOLG) and that it becomes
mainstreamed within the institutional architecture of MOLG.

The Ministry of Finance has been central to the implementation and management of the
decentralization policy. It manages the budget and the allocation of financial resources for
decentralization. It manages the system of intergovernmental fiscal transfers and plays a key
role in the determination of conditional and unconditional grants for local governments. Its
approval of the proposed fiscal decentralization strategy is essential for its acceptance and
approval by the Government. It retains a strong preference for ensuring as much accountability
as possible on the part of LGs, sometimes to the detriment of local level autonomy and
discretion.

The Local Government Finance Commission (LGFC), is a Constitutionally-mandated body
which reports directly to the President, and ensures high-level strategic thinking about local
government finance. It has, as has already been mentioned, commissioned several studies and
appears to be an effective policy instrument.

The Auditor General’s Office (AGO) is a service institution for local governments. As has
already been noted, its capacity to provide auditing services to all LGs is relatively limited.
However, direct support from donors such as DfID as well as more “indirect”” support from
LGDP and other donor-funded decentralization programmes should partially compensate for
existing capacity shortfalls in the future.

The Uganda Local Authorities Association (ULAA) is the umbrella organization of all local
authorities in Uganda. It is the national spokesperson for local authorities. For example, it has
expressed some reservations on behalf of local authorities about conditional grants, which tend
to limit local planning and the determination of local priorities. It is an appropriate forum for
discussing, debating and disseminating pilot experiences and results.



                                                24
In general, and despite some capacity gaps here and there at the national level (e.g. Auditor
General’s Office), there is sufficient capacity at this level to mange the decentralization process
and the development programmes of local governments.

2.2.2. Local level institutions

The Project Technical Committee (PTC), with membership drawn from the Decentralization
Secretariat, the Project Management Unit, and the participating DDP pilot districts, has played a
major role in the planning and monitoring of programme activities, and in providing essential
feedback and exchange on lessons learnt in implementing DDP. This forum – which brings
together important district and Central Government stakeholders every three months is an open
– has proved a lively and effective forum for debating policy-related issues and operational
challenges. It has gained a lot of credibility and respect at the national level.

The District Councils involved in DDP have gained considerable capacity in planning, budgeting,
financial management, resource allocation, contracting, procurement, infrastructure
development and service delivery. Government personnel have been deployed at the district
level. Through offering training and exchange programme, the DDP capacity building fund has
strengthened the staff capacities of the Planning Departments, Finance Departments, Internal
Audit Departments, Engineering Departments, Technical Planning Committees, Investment
Planning Committees, and Project Management Committees which have been its focus
institutions. Within the DDP pilot districts there now exists a network of trained and highly
sensitised stakeholders who are keen to pursue the implementation of local governance
capacity building related activities.

However, at the sub-county, parish and village levels, the capacity to plan, to budget, to manage
finances, to strategically allocate limited resources, etc. remains weak. It is weakest at the
parish and village levels where there are no Government officers, and which were also not the
focus of DDP capacity building efforts.

Despite some impressive gains made by capacity building in the District councils (due to DDP/
LGDP and other donor capacity building initiatives), there are still some weaknesses in
participatory planning and budgeting, financial management and auditing, revenue mobilization,
and gender mainstreaming at that level. If the DDP/LGDP model of decentralized service
delivery leading to poverty reduction is to be effective, sustained and replicated, these
weaknesses need to be addressed. There is therefore need for more capacity building support
to District councils to enable them to effectively manage their development programmes and to
support sub-counties, parishes and villages. It is at these levels where the impact on poverty
can most be felt, but where capacity is weakest. Enhancing capacity at these lower levels
greatly contributes to poverty reduction through wise decision-making in resource allocation and
improved service delivery.

2.2.3. NGOs and Community Based Organizations

There are two types of NGOs: foreign NGOs and local NGOs. Both have experience in working
with communities at the local level. They tend to have a fairly sound knowledge of the local
environment. The difference between foreign and local NGOs is that the former are better
resourced, whereas the later often have inadequate funding. Local NGOs ask for funding from
District Councils to support their activities.



                                                25
Unease is expressed by Local Governments at the role of some of the foreign NGOs, who, it is
claimed, have not helped much to promote cooperation and integrated planning at the local
level. Although they have the expertise and are well suited to working at the local level, they
tend to work independently at both the District and sub-county levels and are reluctant to
disclose their funds. There are no guidelines for NGO involvement at the sub-county level.
Officials interviewed felt that NGOs should operate within the sub-county and District planning
framework and that their meetings should be synchronized with local government meetings.
NGO activities should be harmonized with council activities. Cases where NGOs enter into
agreement with central government and come to operate in a District without the knowledge of
district/sub-county officials are common and work against integrated planning.

There are also several community-based organizations (CBOs) – such as church-based
organisations, women’s clubs, youth clubs, elders’ assemblies – operating at the local level
whose capacity is not fully understood. There is a need for a study to better understand these
institutions, their roles in rural society, their strengths and weaknesses, and how they can be
harnessed to contribute to poverty reduction initiatives.

Foreign NGOs, local NGOs, and CBOs could play an important role in the development
activities of local governments if they can be properly harnessed and coordinated.

2.3.   Existing Monitoring and Evaluation Systems

The PMU has established a Monitoring and Evaluation System (M&E) in accordance with the
institutional requirements of the Local Government Act. To provide guidance to local
governments on the use of this system, PMU has developed an M&E Manual of Procedures
Guidance. This manual complements the annual assessments of the compliance of minimum
conditions and the performance of local governments. However, several shortcomings have
been observed in the existing M&E.

       it focuses on generating information for access to funds and accountability of fund
       utilization which is a limited coverage;
       it is not performance oriented in terms of service delivery;
       it does not provide measurable indicators for assessing the impact of local government
       investment/policy decisions on poverty;
       it does not provide a clear distinction on the objectives of M&E activities at the different
       levels of local governments and the expected outputs are missing from the system;
       the high number of local actors and/or committees with monitoring responsibility
       increases the likelihood of losing accurate and reliable information and of delays in its
       timely collection and submission;
       access to information is difficult due to constraints in data gathering, processing,
       storage and retrieval; which in turn has made it difficult to document, package and
       distribute lessons learnt from the DDP testing experiences.

Suggestions have been put forward to strengthen the existing M&E system so that it generates
a comprehensive set of high quality information for decision-making and sharing the lessons
learnt from DDP. These suggestions include:

        a common agreement among stakeholders on what is to be tracked in terms of the
        required information;
        identifying the key areas of information needs for the primary stakeholders;


                                               26
          assigning responsibility to each stakeholder for data collection, analysis and capturing
          as paramount to a demand driven M&E system;
          developing core indicators for assessing poverty and policy impact and the required
          data for effective assessment;
          making M&E system participatory by involving relevant stakeholders from local to
          central government levels; and
          packaging of the lessons learnt during the first phase of DDP implementation and
          disseminating the packages to interested parties, especially given the fact that Uganda
          is becoming a popular destination for those countries embarking on decentralization
          programmes that want to gain first hand experience.

UNCDF is in the process of developing a corporate MIS software for M&E at its Headquarters in
New York. Uganda has been selected as one of the pilot countries for testing out the software.
A UNCDF M&E Technical Advisor was in Uganda in July 2001 for trial runs of the MIS
software. There are still many hurdles to overcome in the operationalization and refinement of
the system. If proven successful, the proposed MIS software would considerably strengthen the
existing M&E system.


3.       PROGRAMMING STRATEGY AND OPTIONS

3.1      SOME BACKGROUND CONSIDERATIONS

         3.1.1.   INTRODUCTION

The foregoing sections outlined various issues and conclusions which have a bearing on future
UNCDF programme strategy in Uganda. Some of these emerge from evaluation and analysis
of the strengths and weaknesses of the DDP, while others emerge from analysis of a wider set
of “policy-relevant” local governance issues.

To Exit or to Remain?

A first question is simply whether UNCDF should embark on programming further support or
not. It can be argued that DDP has been eminently successful, and has achieved widely
recognised impact in the Districts and, upstream, at the level of Policy Impact and Replication.
Why not then exit, objectives achieved? The argument takes on added weight given the
currently limited programming resources of UNCDF.

But on the other hand, there are compelling reasons for UNCDF to remain in Uganda:

      The areas for potential upstream Policy Impact are not static, but evolving. There are new
      areas to be addressed which were scarcely on the agenda 3 years ago, e.g. as
      consequence of more recent policy decisions resulting in greatly increased flow of funds to
      sub-Counties, or of the recent attention to sub-County planning approaches.

      The challenges for downstream institutional development and capacity building are likewise
      evolving in areas not only of decentralised service provision, but in more-or-less related
      fields of local governance: financial management, revenue mobilisation, justice
      administration and women’s empowerment in local public affairs.



                                                27
   UNCDF still retains important comparative advantages as a donor partner in Uganda: the
   DDP experience has gained for UNCDF considerable credibility in central government, in
   local government, and with other donors; and DDP itself offers an excellent platform on
   which to build, to address the emerging upstream and downstream challenges noted above.

   Lastly, continued UNCDF partnership with the Ugandan Government and more sustained
   support to its decentralisation policy brings broader corporate benefits to UNCDF itself, as
   an agency focussed on promoting Local Governance: Uganda remains a pioneer in
   democratic decentralisation and UNCDF continued partnership and engagement there
   offers great scope for joint learning, exchange and advocacy, in ways which will also
   continue to benefit UNCDF programmes in other countries.

Put simply, further commitment of modest resources can yield a more than commensurate
return.

On this basis then, the programming implications which emerge can be grouped under two
headings, as follows:

Deepening Current Strategy:

To date, under DDP/LGDP the main strategy for improving local governance has been through
attention to developing systems for improved planning, financing and delivery of basic
infrastructure and services.     It is generally recognized that the achievements have been
considerable, but more can and needs to be done. Various areas emerged within this model
which need adjustment, refinement or development if this approach is to be effective and to
serve as a solid basis for sound policy development.

Widening Current Strategy:

There are other aspects of local governance (not strictly related to basic infrastructure and
service provision) and hitherto excluded from UNCDF programme activities in Uganda. The
persistence of the problems noted in these areas will undermine the effectiveness and
sustainability of the DDP model. Conversely, success in these areas will not only reinforce
effective provision of basic infrastructure and services, but will also constitute progress to
improved local governance in its own right.

A wide range of possible thematic areas was identified under both these headings.
Consequently, it is important to spell out the various factors which shape the strategy proposed
and which have led to defining the thematic options to be recommended.


       3.1.2. FACTORS DETERMINING THE PROPOSED PROGRAMME FOCUS

The proposed future UNCDF programme strategy for the period 2002-2005 has been based on
the issues emerging from the Background Analysis outlined above, and on the following
“determining factors”.

Building on DDP: Capitalizing on Achievements and Learning Lessons

In devising the future programme a major concern is to build on DDP. There are several angles
to this:

                                              28
Addressing Weaknesses of DDP
 A number of problem areas have been identified in the procedures and institutional
arrangements for planning, budgeting, financial management and auditing etc. If the DDP/LGDP
model for decentralized service provision is to be effective, sustained, and replicated, these
problems need to be resolved.

Capitalizing on Achievements
At the same time, DDP has created a strong organizational and institutional platform on which to
build further local governance activities:

   Within the pilot districts there is now a network of trained and highly sensitized stakeholders
   who are keen to pursue implementation of local governance-related activities;
   The Project Technical Committee, which brings together key District and central government
   stakeholders every quarter, has proven to be a very open, lively and effective forum for
   debating policy-relevant issues, and one which has gained considerable credibility at
   national level;
   The Programme Management Unit within the Decentralization Secretariat of MoLG has
   proven to be a very effective structure for planning and managing programme activities. It
   has gained considerable respect within the donor community in Uganda; and
   More generally, UNCDF – through its support to the design and implementation of DDP –
   has gained considerable stature both with government, and particularly MoLG, and amongst
   the group of donors who are concerned to promote decentralization in Uganda.

These assets mean that there are mechanisms and channels of communication already in
place through which future programme activities can exert influence on government and other
donors.

Resource Availability

Programme strategy has also been designed in light of the funding available from UNCDF and
of the possibilities of some form of co-financing from other partners. Two factors come into
play:

Investment versus Institutional Development.
The bulk of UNCDF funds under DDP were allocated to Investment Funds (LDF block grants),
with only some 20% to supporting technical assistance. However, the level of funds which are
now available from UNCDF is very modest – as compared to the very considerable volume of
funds from other partners now available to support decentralization in Uganda. On balance,
these will be more usefully allocated to complementary institutional development and
capacity building activities in support of improved local governance, rather than adding these
to the rapidly expanding pool of donor resources (LGDP and others) allocated to the Block
Grant Investment Pool.

Structure of the Proposed Programme.
At the same time, and because of the limited funds available from UNCDF’s own core
resources, the programme has been structured with a view to opening opportunities for “co-
financing” – in one form or another – by other partners. A modular approach is therefore
proposed whereby each of the thematic areas retains considerable flexibility, in terms of both
the scale of operations and the geographic spread. This enables activities in each area to be


                                               29
later tailored to fit with whatever “co-financing” interest emerges from further consultation with
partners.



Problems Amenable to Solution

The programme proposes to address issues whose underlying problems are amenable to
solution within the context of an externally supported, time-bound and limited programme.
Clearly then the proposed programme does not attempt to address those problems of local
governance which are rooted in such “systemic” factors as illiteracy, cultural values and/or the
non-party structure of the political system in Uganda.

Scope for Policy Impact

Future programme activities must aim not only to achieve impact on poverty and local
governance in the geographic area of operations, but must also have potential to influence the
development of national policy for good local governance.

This in turn means that proposals have been conceived so as to be building on the current
policy, legislative and regulatory framework for decentralization and local governance in
Uganda.

Opportunities for Partnership and Replication

Similarly, given the very limited funds and the necessarily small scale of future UNCDF
operations in Uganda, the programme must seek partnerships. There are two reasons for this:

Firstly, small-scale piloting is only worthwhile if it aims to promote innovations that can be
adopted on a wider scale by other partners. Success means leveraging much greater
resources for replication.
Secondly, and separately, the complexity and ramifications of the local governance areas
proposed are such that a small UNCDF programme could not alone achieve significant impact
on policy. Success also means cooperating with partner agencies with congruent policy
development concerns.

The programme proposal has therefore been designed so as to embody linkages with the
country strategies and programme goals of key donor partners.

4.    INSTITUTIONAL DEVELOPMENT AND CAPACITY BUILDING: THEMATIC
      STRATEGY AREAS

4.1     RATIONALE AND OVERVIEW OF STRATEGY

The underlying strategy is to support good local governance in Uganda – with a special focus
on the Sub-County level. The rationale for this is as follows:

Poverty Reduction: Exploiting the Potential of the Sub-County…

Improved provision of and access to basic public services is a central part of poverty reduction
strategy in Uganda. It is the main plank of the national Poverty Eradication Action Plan (PEAP).

                                               30
The Sub-County level has emerged as the key administrative level for decentralized provision
of these services in Uganda. The Local Government Act of 1997 already set the stage for this.
Sub-Counties are now poised to be given even greater resource management responsibilities
as LGDP takes off, fiscal decentralization policy evolves, as the Plan for Modernization of
Agriculture is implemented, etc.

The Sub-County level is also the level of corporate local government with the greatest
potential8 for realizing the expected benefits from decentralization of these primary services,
and for matching supply with local demand. This arises by virtue of its much greater proximity
and accessibility to the rural public than the District level (the population of a Sub-County is
typically some 25,000 persons, while that of a District may be over 500,000).

… by Addressing Constraints

But, as the analysis in the foregoing sections has revealed, there is a series of mutually
reinforcing constraints undermining this role, and which need to be addressed. They include:

   Inadequacies of various sorts in the local participatory planning and budgeting
   procedures – these undermine both the “pro-poor effectiveness” of local service delivery
   and local accountability, and breed mistrust and apathy;
   Inadequacies in arrangements for financial management and audit – these undermine the
   efficiency of local service delivery and, again, undermine trust and breed suspicion of local
   government;
   Inadequacies in arrangements for local revenue mobilization – which limit the resources
   available for local service delivery, weaken pressures for local accountability, and breed
   mistrust;
   Inadequacies in the institutions and procedures for dispensing local justice – which
   compromise access to redress and dispute resolution, problems affecting especially the
   poor, and which also compounds many of the other problems of local accountability
   mentioned; and
   Inadequate treatment of gender issues and, especially, inadequate mechanisms to ensure
   women’s voice in local public affairs – this, again, undermines the pro-poor effectiveness
   of local service delivery, maintains marginalization of half the population, and, again, breeds
   mistrust and apathy.

There is thus a set of inter-related constraints which – if not addressed – will continue to
undermine the role of Sub-County local governments in poverty reduction. More generally, the
constraints will continue to undermine good local governance and so, ultimately, the credibility
of decentralization in Uganda.

Overview of Proposals

On the basis of the foregoing analysis and considerations, the following thematic areas are
proposed for UNCDF strategic support to local governance in Uganda for the period 2002-2005



1. This also emerges from a recent empirical study of primary health and education delivery by local
government in Uganda conducted by the University of Maryland.


                                                31
   1.   Consolidating DDP: Building More Effective Participatory Planning and Budgeting
   2.   Ensuring More Effective Local Financial Management and Audit
   3.   Enhancing Local Revenue Mobilization
   4.   Strengthening Local Administration of Justice
   5.   Enhancing the Role of Women’s Councils

The first of the thematic areas falls into the category of deepening and consolidating DDP. The
other four, though related, fall into the widening category. These areas share common elements
with an underlying theme of strengthening local governance (especially at the sub-county level).
They address mutually linked problems and supporting areas. They do so in a way that
reinforces statutory provisions. They relate to areas where policy-relevant piloting seems
important and micro-policy/practice needs developing. Finally, the areas identified present
scope for donor collaboration and partnership.

The structure of each of these thematic areas below is intended to provide an informed basis for
review and appraisal of the strategies implicit in them. The discussion below therefore focuses
in each case on:

   background to the thematic area,
   justification for including the area,
   the problems to be addressed,
   the overall objective in addressing the problem,
   expected outputs;
   activities to be undertaken to address the problem,
   scope for policy impact and replication at national level,
   the partnership opportunities, and
   the risks/potential.


4.2.    THE THEMATIC STRATEGY AREAS

        4.2.1. BUILDING MORE EFFECTIVE PARTICIPATORY PLANNING & BUDGETING

Background to the Thematic Area

In general, local government planning process starts from the village level where the
community brainstorms on its wish list of projects. The Village Chairman calls for the meeting.
Minutes are prepared and submitted to the Parish Council. At the Parish level submissions from
all the villages are prioritized on the basis of the representativeness of the project and the cost
involved. From the Parish the prioritized list goes to the sub-county where submissions from all
the villages are further prioritized for funding consideration and implementation. However, in
practice the village level is ignored in most cases because of the cost involved in bringing the
communities together. Village planning is practically not there. Some rudimentary planning
takes place at the Parish level. The planning skills at the Village and Parish levels are very
weak. There are no planners at these levels and there is only one planner per district. The
information base is very weak. Systematic planning starts at the sub-county level. Real
planning takes place at the District level but it is done with scanty information.


                                               32
Participatory planning should involve all communities at the village and parish levels in terms
of project ideas and input to the process. However, in practice participatory planning is proving
difficult for a number of reasons. The culture of top down planning still lingers on in some
cases. The absence of a strong community based management information system (CBMIS) is
a major constraint to participatory planning. The communities are reluctant to attend meetings
with no visible direct benefit to them. The practice by politicians to pay people to attend
meetings has raised expectations of payment for all meetings. The communities seem to be
suffering from participation fatigue due to several village, parish, sub-county, district, donor and
political meetings they have to attend. It was pointed out that if the meeting was to discuss
issues that directly affect the well being of the communities, the attendance/participation was
high. A lot needs to be done in terms of sensitizing the communities on the value of the
meetings/participation.

Apart from problems with participatory planning, women's participation in the planning
process is still very weak. The reasons for this include inappropriate timing of meetings.
Women are preoccupied with such survival matters as fetching wood and water, preparing food
and taking care of the children. There are also cultural factors which inhibit women's
contribution to the discussions, especially in remote rural areas where there are fewer educated
women. The Ministry of Gender, Women's Councils, the Departments of Community Services,
and women councilors which are supposed to champion women's participation in the planning
process are weak and ineffective to ensure that women's concerns are incorporated into the
village, parish, sub-county and district planning processes on a lasting basis.

All local governments are experiencing difficulties with integrated planning and budgeting.
The Local Government Act of 1997 makes town councils, municipality councils, sub-county
councils and district councils independent bodies with the authority to do their own planning.
This means that an integrated plan for the district has to be on a voluntary basis. The district
councils do not have the power to demand submission of plans by the other councils in their
territory for purposes of preparing an integrated district development plan. The autonomy of
councils makes integrated planning difficult (especially where human relations are bad) but not
impossible. There is no clear definition of roles and relationships between the district council
and other local government councils.

Efforts to enhance participatory planning include the UNICEF programme supporting Parish
Development Committees, and the CBMIS initiative. Some districts have experimented with
separate women and men meetings to encourage women' participation in discussions, which
defeats the purpose of gender mainstreaming.

The available personnel is not adequately equipped with skills in integrated planning and
budgeting. There is no qualified person at the village and parish level. At the sub-county there
is only one sub-accountant. The officials interviewed expressed the need for one planner at the
sub-county level and two planners at the district level with expertise in integrated planning and
budgeting. To facilitate integrated planning and budgeting, the concept of a funding basket
must be introduce. All donors operating in a district/sub-county put their funds into a common
basket for allocation as determined by the district/sub-county priorities. For this to happen the
sub-county should be viewed as a geographical planning unit with its own technical planning
team with skills in integrated planning.

Municipality and town councils have some special planning and budgeting, financial
management and auditing problems, as well as general capacity building problems. They
were not eligible for support under DDP. They have both a residential and non-residential

                                                33
population to plan for. People come form the countryside during the day to market their goods
and services and also to seek goods and services from the urban areas. Town/municipality
councils need planning procedures that would enable them to link their planning with their
hinterlands. They need capacity in planning and budgeting (particularly physical planning), in
revenue mobilization, and financial management and auditing.

Justification for Including the Thematic Area

Throughout the consultations, there was unanimity among the stakeholders on the need for
UNCDF to continue supporting participatory planning and budgeting as part of the deepening
and consolidation process. The arguments for this are as follows.

The first argument is the need to build on DDP's experience. DDP's strategy for improving
local governance has focussed on developing systems for improved planning, financing and
delivery of basic infrastructure and services by working through the Departments of Planning,
Finance, Auditing and Engineering. In addition, DDP has worked through the District Technical
Planning, Investment Planning and Project Management Committees. In these initiatives, efforts
have been made to promote participatory planning and budgeting. The achievements have
been considerable. However, problems have been identified in the procedures and institutional
arrangements for planning, budgeting, financial management and auditing, etc. These problems
need to be resolved in the next programme if the DDP model for decentralized service provision
is to be effective, sustained, replicated and consolidated on a lasting basis.

 The second argument is based on the envisaged large amounts of funds that would be
transferred from the central government to local governments under the proposed fiscal
decentralization strategy; and also the anticipated increase in donor funds flowing to the
districts, especially to the sub-county level. The need for improved planning systems and
procedures and improved resource allocation mechanisms, given this situation, cannot be
overemphasized. Both the Government and donors need to be reassured that the capacity to
properly plan and budget for such large amounts of funds is there at the local government level;
particularly at the sub-county level which is the focal point for poverty reduction.

The third argument is that there are still several uncompleted UNCDF supported projects. It
will take about a year for these on going projects to be successfully completed. It would not
make sense to have these projects abruptly terminated. It would not create a good image for
UNCDF to be associated with abandoning uncompleted projects having gained such good
reputation with DDP. The proposed one year extension also gives time for the projects to be
finalized.

The fourth argument is that there are some institutional capacity building areas that are so
critical that they should continue to be supported for consolidation to be effective. Participatory
planning and budgeting as well as financial management and auditing are among these areas.
Planning is a mandatory function of local governments and a prerequisite of any development.
However, planning without the participation of the people becomes top down. One of the
objectives of the 1997 Local Government Act is to ensure democratic participation in and control
of decision-making by the people concerned. Therefore, effective participation in the planning
process is important in that it ensures comprehensive decision-making and it solicits
contributions from all stakeholders. It enhances the ownership of the services delivered and it
results in realistic budgeting, avoiding the wish lists. It promotes transparency, in terms of the
resources available and how they are allocated and used.


                                                34
The fifth argument is that an effective planning and budgeting, and auditing system for local
governments greatly contributes to effective local government accountability. If the
communities have participated in the planning and budgeting process, they have knowledge
about what services/projects are to be accomplished and how much money is available, they
can be in a strong position to hold local politicians and technical personnel as well as other
service providers (NGOs) accountable for their performance.

The sixth argument is that the Government of Uganda is taking planning seriously. The
Government would like to see local and central government planning integrated and
harmonized. A Draft Bill on the establishment of the National Planning Authority has been
tabled before Parliament for discussion and approval. There are no problems envisaged in its
approval. UNCDF will therefore be building on Uganda's legislative and regulatory framework.

Finally, UNDP and UNICEF are experimenting with participatory development management
(PDM) and parish development committees (PDC) respectively. UNCDF could take
advantage of the results of these experiments and utilize them to strengthen participatory
planning and budgeting. Some form of partnership could be worked out.

Indeed, improved planning and budgeting systems and procedures as well as strengthened
financial management and auditing systems and procedures would greatly contribute to
attracting other donor funds, given the fact that there would be no other UNCDF capital
development funding after the extension period. The systems and procedures would ensure that
both donor and Government funds are accounted for properly.

Problems to be Addressed

The DDP experience (and many other programmes) has demonstrated a wide range of
problems currently experienced by local governments, with regard to participatory planning and
budgeting. These problems include:

   Inadequate funds to undertake the necessary planning steps which has led to delays in the
   entire planning process, skipping of some steps, and limiting the planning process to only
   members of the Executive Committee;
   Because of the above point, inadequate community and marginalized groups' input from the
   village and parish levels to the planning process at the sub-county and district levels;
   In all local governments, inadequate women’s voice and input to plans and little attention
   given to gender issues/implications;
   Inadequate planning capacity of staff at lower levels especially at the village, parish and
   sub-county levels;
   Inadequate data management at all levels making it difficult for planners to make informed
   decisions;
    Inadequate feedback which undermines participation;
   Inadequate capacity of local governments to carry out a thorough analysis of cross sectoral
   linkages, gender issues, the environment, poverty and integration;
   Inadequate attention given to investment in productive opportunities;
   Inadequate integration of sub-county, town council, municipal council and district council
   plans which relates to the autonomy issue and lack of skills to undertake integrated
   planning; and

                                             35
   Inadequate monitoring and evaluation of the plan and budget implementation which relates
   to inadequate resources and capacity.

All the above inadequacies undermine local trust and accountability, the quality of service
delivery, and general pro-poor effectiveness of public expenditure.

Overall Objective

The overall objective is to consolidate DDP planning, budgeting and service delivery procedures
and to build more effective and accountable participatory planning and budgeting mechanisms
for local government so that they can effectively utilize funds allocated to them and deliver high
quality service to eradicate poverty.

Expected Project Outputs

The following are the expected project outputs from implementing this thematic area.:
   enhanced participatory planning and budgeting systems, guidelines and procedures;
   improved quality of plans that are linked with budgets;
   enhanced input from women and other marginalized groups into the planning process;
   improved skills capacity to prepare integrated district plans;
   improved/prudent budget management, i.e., spend according to work plans;
   improved capacity in cross-sectoral, gender, poverty and environmental analysis;
   improved data management from village, parish, county to district level; and
   improved capacity in monitoring and evaluation.

Activities to be Undertaken to Address the Problems

The proposed activities to address the problems in order to achieve the desired objectives and
expected outputs are as follows:

   Conducting studies on service delivery and research on poverty;
   Devising, introducing and testing mechanisms for promoting district integrated planning and
   linking planning and budgeting;
   Devising, introducing and testing mechanisms for promoting greater community
   participation/involvement in the planning process at village, parish and sub-county levels;
   the representation of women and marginalized groups in the planning process be assessed
   as a minimum condition;
   District Technical Planning Committees and Sub-County Technical Planning Committees to
   be required to co-opt the executives women's councils, marginalized groups and NGOs in
   the planning meetings as a condition;
   Devising, introducing and testing mechanisms to link the work of Technical Planning
   Committees and the Budget Desk;
   Devising, introducing and testing guidelines, mechanisms and other tools for gender,
   poverty, environmental analysis and sectoral integration;
   Devising, introducing and testing planning procedures for town/municipal councils to enable
   them to undertake effective physical planning that incorporates hinterland planning;



                                               36
   Strengthening data base for planning by incorporating UNICEF supported Community
   Based Management Information Systems (CBMIS) into the planning process in local
   government;
   Monitoring, debating, and disseminating lessons; and
   Revising and testing Minimum Conditions/Performance Measurement tools for sub-counties
   (and extend to parish level) to encourage adoption of improved planning procedures.

Scope for Policy Impact and Replication

The scope for piloting and policy impact and replication is quite high. The various problem areas
in participatory planning and budgeting that have emerged from implementing DDP need
adjustment, refinement and development if the gains of the DDP model are to be consolidated.
It would be UNCDF's continued support in an area that is considered essential/critical by the
stakeholders. The institutional framework for planning exists at the district and sub-county
levels. Motivated and sensitized officials are in place. The objective is to put in place effective
mechanisms for participatory planning and budgeting.

There is great potential for the results to feed into guidelines and training materials used by
MoLG (and other bodies) for local planning, with national effect. The institutional framework for
replication exists all over the country and it can be up-scaled within the LGDP framework and
other district support programmes.

Partnership Opportunities

Opportunities for partnership with other donors supporting participatory planning and budgeting
exist. UNDP is planning to support “Participatory Development Management” to strengthen
Village/Parish/sub-County interaction in local planning, in selected districts as a component of
its Governance Programme. This, if designed appropriately, could be integrated with and
complement the present proposal, making optimum use of funds from both sources. UNDP also
plans a Poverty Analysis and Monitoring Project to be implemented through the Economics
Department of Makerere University which could similarly complement this proposal.

UNICEF is involved in strengthening Parish Development Committees as a good entry point at
the parish level. The World Bank and various other bilateral donors are supporting participatory
planning and budgeting through LGDP and other District support projects. Makerere Institute of
Social Research (MISR) has a Rockefeller/Ford Foundation Grant to carry out research in
support of decentralization. Uganda Management Institute also does some training for local
government but it is not a donor. UNCDF could take advantage of the UNDP Poverty Analysis
and Monitoring Project, and the Rockefeller/Ford Foundation research grant to build its
database on the impact of various productive policy initiatives on poverty reduction.

Risks/Potential

The risks in supporting this area in the next programme include:
   Lack of sectoral coordination which might impede up-scaling of experiences gained jin
   deepening participatory planning and budgeting;
   Resistance from local government staff to change their familiar top down approach to
   planning and budgeting;
   Different donor approaches to planning may impede a common approach to planning;


                                                37
       4.2.2. ENSURING MORE EFFECTIVE LOCAL FINANCIAL MANAGEMENT AND
              AUDIT

Background to the Thematic Area

DDP has done a commendable job in building the financial management capacity of district
councils. It was through DDP support that district councils had audited accounts for the first time
in their history. However, the capacity to do a thorough job in financial management and
auditing is very inadequate for most local governments. Some districts are still on manual
financial management system. Most sub-counties do not have much to talk about in terms of
modern financial management systems. The systems are all still manual. The sub-counties
visited have only one sub-accountant who is overwhelmed and not fully trained to handle the
complexities of financial management at that level. There is ver little financial management
capacity at the village level as there is no government officer at that level. The situation is
relatively better at the district council level but there are also some serious gaps at that level.

Internal Audit Departments are new in local government and their capacity to carry out thorough
auditing is still weak. There are still some problems with the preparation of audited accounts. By
July 2001 some DDP districts had not yet submitted their 1999/2001 audited accounts. The
Auditor General’s Office is under staffed to do a comprehensive job in auditing. There are more
than 1,500 districts and sub-counties to be audited. In order to cope with the large volume of
auditing local governments accounts, the Auditor General's Office has increased its staff in the
local government section and the Office is being made autonomous. The Office can hire private
auditors to assist local governments to prepare their accounts. However, there is a limited
number of private audit firms, and the high cost of contracting them is prohibitive. The need to
computerize financial management, auditing and to train staff, especially at the sub-county level,
is quite evident.

Justification for Including the Thematic Area

UNCDF support for local government financial management and auditing is justified on the
following reasons:

First, the prospect of large amounts of money that will be transferred from central
government to local governments under the proposed fiscal decentralization strategy,
DDP/LGDP, PMA and other donor programmes raises serious questions about the capacity of
local governments to effectively manage such transfers. Inadequate mechanisms for financial
management and auditing open the door for corrupt practices which undermine poverty
reduction efforts. In some cases, both Government and donors insist on proper auditing of
accounts and even use lack of capacity to account for large transfers to deny revenue to local
governments. There is therefore a compelling need to strengthen local government financial
management and auditing mechanisms to ensure that such funds are properly accounted for.

Second, the diverse sources of local government revenue (e.g. graduated tax, property tax,
market dues, trading licenses, hawkers licenses, birth and marriage certificates fees, butchery
permits, etc) and the number of Central Government grants (26) emphasize the need to provide
local governments with effective mechanisms to manage their finances.

Third, the capacity to audit local government accounts at both district councils and the
Auditor General's Office is weak. Although the Auditor General’s Office is responsible for
auditing local government accounts, its capacity is very limited. The Regional Offices are

                                                38
inadequately resourced and under staffed. The July 27 Stakeholders Consultative Workshop
participants felt that it would make sense for UNCDF to intervene at this level and strengthen
the Regional Offices in consultation with the Auditor General’s Officer. However, UNCDF is not
in the business of strengthening national institutions. What UNCDF could do is to develop
mechanisms that can facilitate the external audit of sub-county accounts given the fact that the
Auditor General’s Office does not have the capacity to carry out this function.

Fourth at the Stakeholders Consultative Workshop of July 27, the participants acknowledged
the importance of strengthening local government accountability but admitted that it is a
subject that could be incorporated into financial management and auditing. Strong financial
management and audit mechanisms can guarantee local government accountability and
transparency, especially where money is involved.

UNCDF is aware that DfID has a decentralization Support Programme with a component on
Local Council Accountability. It is aimed at improving local government performance on the
three accountabilities of local councils—to constituencies, between the executive and political
leaders, and between levels of local government; as well as promoting greater gender
awareness in local government practices. The other component is on Local Government
Finance Management and Internal Audit aimed at improving financial management and internal
audit performance in local governments. The activities of this component include reviewing
Local Government Financial and Accounting Regulations, the new Public Finance Act, and
Local Government Internal Audit Manual to bring them in line with the Local Government Act.
Furthermore, the component will deliver on-the-job financial management and internal audit
training for local government staff in every district, municipality and sub-county in Uganda.

However, this is short-term training lasting three days spread over a period of 12 to 18 months.
This is different from the kind of UNCDF proposed intervention aimed at experimenting with new
mechanisms aimed at building long lasting financial management and internal audit capacity for
local governments in Uganda. During the project formulation phase UNCDF will consult with
DfID to get a feel of the extent of its support and identify areas of potential partnership
opportunities. UNCDF has a comparative advantage in that it is already working in the pilot
districts and the institutional framework at the district level is in place.

Finally, by supporting financial management and internal audit in the next programme, UNCDF
would be contributing to the effective operationalization of the Government’s fiscal
decentralization strategy.

Problems to be Addressed

Despite the compelling reasons for including financial management and auditing in the next
UNCDF programme, there are some serious problems in local governments which can be
summarized as follows:

   Weak financial management capacities, especially at the parish and sub-county levels;
   Prospect of greatly increased central transfers to sub-counties under DDP/LGDP, PMA and
   other programmes create a new set of financial management and auditing problems;
   Limited capacity at the Auditor General's Office to audit over 1,500 disstricit and sub-count
   accounts annually;
   Limited number of qualified private audit firms, and the costs of sub-contracting them is very
   high for most local governments;


                                              39
   Weak involvement of the civil society in the management of council affairs. Hence, whatever
   exists in the form of checks and balances in financial management is very weak;
   Inadequate supervision of the sub-counties, parishes and villages by the district council,
   partly due to the autonomy issue but also due to lack of resources to facilitate the
   supervision;
   Unclear definition of roles/tasks between the politicians and technical staff of the councils
   has created some suspicions and friction between the two thus undermining effective
   financial management and auditing; and
   Unattractive council pay structures and inadequate motivation undermines the commitment
   of both the politicians and officials to strict principles of financial management and auditing.

The above problems all risk undermining financial accountability of local government, especially
at the sub-county level where the structure and caliber of personnel is considered inappropriate.
This definitely erodes local trust and compromises both Government fiscal decentralization
policy and donor willingness to support decentralization.

Overall Objectives

The overall objective is to enhance financial management and auditing in local government.

Expected Project Outputs
   improved financial management and accounting skills for local governments;
   district/sub-county books of accounts professionally audited on a regular basis; and
   improved quality of auditing in the Internal Audit Departments of district/sub-county councils.

Activities to be Undertaken to Address the Problems

The possible activities to address the above problems would include the following:

   Strengthening the human resources capacity of Internal Audit Departments through training;
   Training political and technical personnel in local government on their roles to avoid conflict
   over responsibility for financial matters;
   Clarifying and strengthening the role and capacity of the District Public Accounts
   Committees;
   Devising systems, guidelines and procedures to act as reference materials for the different
   actors/operators involved in financial management so that there is no conflict;
   Exploring the possibility of District Council Internal Audit Departments playing the role of
   External Auditor to sub-county councils to lighten the burden on the Auditor General's Office;
   and
   Overseeing, monitoring, and drawing lessons as to the feasibility of replication throughout
   the country.

Scope for Policy Impact and Replication

Piloting the area is very feasible especially in internal auditing. In addition to addressing the real
problems discussed above, internal auditing is a new area for local governments. Local
governments need assistance in terms of strengthening their capacities to handle auditing at
their respective levels.


                                                 40
The potential for policy impact and replication is there in that, if proven, this strategy can have
impact on the Auditor General's Office and the Inspector General of Government as bodies with
oversight on local governments. It can lead to the restructuring of, and can be implemented
nationwide by all Departments of Internal Audit in the districts with support from various donors.
It may also feed into the revised regulatory or statutory framework for Local Government
Financial and Accounting Regulations, the new Public Finance Act, and Local Government
Internal Audit Manual. The MoLG, Local Government Finance Commission, Auditor General’s
Office and the Inspector General of Government would have an interest in replicating the
results.

Partnership Opportunities

Partnerships opportunities exist in the sense that donors like the World Bank, DANIDA, DfID are
supporting financial management and accounting. DfID’s Decentralization Support Programme
and its component on financial management and internal audit would have something to share
with UNCDF in this respect. The Irish and Netherlands governments, as well as the European
Union, etc have programmes supporting capacity building in the area of financial management.


Risks/Potential

This area has more potentials than risks. This is an area where there has not been much donor
interest and support.

However, there are three potential risks. First, since the stakeholders will not only be the MoLG
and its councils, but also include the Auditor General’s Office and the Inspector General of
Government, there could be problems in developing a common understanding of the issues
addressed among the stakeholders. Second, there could be lack of adequate staff with training
in financial management and auditing. Thirdly, there could be serious problems in attracting and
retaining the trained staff since local government pay conditions are not that attractive
compared to public enterprises and the private sector.


       4.2.3. ENHANCING LOCAL REVENUE MOBILIZATION

Background to the Thematic Area

All councils are having problems with revenue mobilization for a number of reasons.

First, in the decentralization programme local governments were not empowered with
adequate tax base. Common sources of local government revenue include graduated tax,
property tax which most local governments are unable to collect, rental tax which no council is
collecting, market dues, trading licenses, hawkers licenses, birth and marriage certificates,
sugar cane and coffee tax (Jinja), bicycle registration, beer brewing permits, and butchery
permits. These sources of revenue are low yielding compared to central government sources of
revenue such as tax on imported goods, tax on goods manufactured locally and income tax.
The argument was that local governments did not have the capacity to design tax structures, to
collect tax and to properly account for the money. Furthermore, it was argued that natural
resources were not evenly distributed throughout the districts. Hence, the need for Central


                                                41
Government to control all high yielding sources of taxes, to collect the tax, and to distribute it to
all districts on the basis of need.

Secondly, is the unwillingness to pay tax. The presence of government in some villages is
very remote. The villagers do not see what the tax money they are paying is being used for. For
urban dwellers they do not see the link between the tax they pay and the services delivered.
There appears to be a general lack of education among the tax payers on the value of paying
tax.

Thirdly, there is a multiplicity of taxes such as income tax, graduated tax, VAT, estate duty,
stamp duty, property tax which are not deductible before other taxes are paid. This causes
confusion among the tax payers.

 Fourth, the lack of effective mechanisms to collect taxes on the part of local governments
compound the other problems. Most district councils are collecting below 50% of the expected
revenue. For example, in the past financial year Jinja collected 50%, Mukono collected 22%,
and Kabale 47-50%. The availability of DDP capital development funds has led some councils
to relax their revenue collection efforts.

The overall result from the above problems is that some councils (Arua, Jinja, Mukono) have
salary arrears due to inadequate revenue mobilization. Service delivery and developmental
projects suffer because development funds are diverted to pay salaries. Some DDP districts
are experiencing difficulties in raising the 10% co-financing required by the project.

In addition to the problems of local government revenue mobilization in general, it is worth
discussing graduated tax and property tax in particular as the two have the potential for piloting
and replication.

Graduated Tax (GT)

Of all the local government taxes, graduated tax is the most difficult and politically sensitive to
collect. The reasons why it is difficult to collect are many. They include:
    Absence of qualified tax assessors especially at the village and parish level;
    Timid tax collectors who are the parish and sub-county chiefs dwelling in the same area and
    afraid of repercussions if they coerce people to pay tax;
     Arbitrary and politically determined assessment bands (UShs3000 the lowest for the
    unemployed, then 8000, 13000, 18000, 23000, up to 100000) have not helped much;
     Government policy is that taxpayers should not be harassed. The majority of the taxpayers
    claiming to be poor take advantage of the political sentiments and prefer to pay the lowest.
    The genuinely poor are in the informal sector with no fixed/known place of abode and thus
    difficult to locate.
    Late issuing of tax receipts and absence of accurate/up-to-date household registers;
    Rich business people do not want to pay GT on the argument that they are already paying
    other taxes. Taxpayers do not make the distinction between central and local government
    taxes; and
    Administratively, GT is costly to collect. Most GT is paid by the civil servants because it is
    collected from the source.



                                                 42
Suggestions to improve the collection of GT include:

   Shortening the tendering process so that tax receipts can be printed early enough;
   Payment in installments rather than paying all the amount at once and some rebate for
   early payment;
   Reduction of tax assessment bands, accurate grade assessment and up to date tax
   registers;
   Sensitizing the tax payers on the value of tax and training parish chairmen in tax collection;
    Reward in the form of projects and bicycles for those parishes that pay first; and
   Setting up a District Revenue Authority and privatizing tax collection.

Property Tax

Because of the difficulties in collecting GT, property tax seems to offer an attractive alternative
as a source of revenue for local governments. The 1979 Local Government (Rating) Decree
provides for the assessment of properties in urban areas. This Decree empowers urban
councils to collect direct property rates. Unfortunately, there is no such a decree for the rural
areas.

Property tax has a very high potential as a source of revenue for urban councils. It is not as
politically sensitive as the graduated tax. It is more of a technical issue and is easy to collect
once the technicalities are in place.

However, there are numerous problems with property tax collection. The problems are as
follows:

    The current law empowers the Chief Government Valuer (CGV) to value all properties in the
    country. Although the CGV can delegate these powers, he is currently located in the
    Ministry of Lands, Water and Environment and not in the Ministry of Local Government
    (MoLG).
    The 1979 Local Government (Rating) Decree splits property assessment from
    administration. Assessment is done by the CGV and administration is done by urban
    authorities. This pauses coordination problems between the Ministry of Lands and the
    MoLG. The decree cannot be enforced effectively. Fortunately, the MoLG is working on a
    legislation to decentralize property rates valuation to local government.
   The CGV's Office is under-staffed. It has less than five property valuers for the whole
   country. The solution would be to delegate the valuation responsibility to local authorities so
   that they can hire private sector property valuers to do the work for them. However, with only
   14 registered property valuers in the whole of Uganda trained under the World Bank First
   Urban Project, and with only 3 or 4 of them in valuing property rates, local authorities would
   have to rely on hiring external valuers. The cost of hiring is prohibitive.
   Municipalities and town councils do not have valuation roles (VR) and where they exist, they
   are outdated. Very few properties are on the VR. The VRs are supposed to be up-dated
   every 5 years. Of the 15 VRs for KCC, over 80% of them are over ten years old. None of the
   VRs have been recently supplemented to take into account additional properties and
   fluctuations in rental charges. The implication is that urban councils are collecting rates/rent
   below market value.


                                               43
   Property tax is based on a sound physical planning system which enables zoning, clear road
   network, location, identification, description, and assessment of properties. District,
   municipality and town councils do not currently engage in systematic physical planning.
   Houses are being built without much reference to planning requirements. The fact that the
   Constitution gives the ownership of land to the people of Uganda has created some
   complications for physical planning. Some people take this to mean that they have no
   obligation on systematic land management which is the responsibility of local authorities.
   Tax payers are ignorant of the value of property tax, hence their unwillingness to pay. Both
   the local authorities and tax payers must be educated on the value of property tax. It should
   apply to both urban and rural areas.

Suggestions put forward to improve the revenue base of local governments               include the
following:

    Using local authorities as local agents for the Central Government to collect taxes on its
    behalf and, in return, they get a commission. Very few districts would benefit from this
    arrangement especially where property tax is concerned, as some of the towns have no
    property worth taxing;
    Local authorities should focus their revenue collection efforts on utility based taxes, such as
    tax for refuse collection, and tax for road construction and repair. It is the best because
    people can link their tax to services provided;
    In the interest of decentralization, the power to assess and to administer property should be
    vested in the MoLG and not Ministry of Lands and the power to value property should be
    decentralized to individual local authorities;
    Establishing a capacity building programme managed by the MoLG for property valuers and
    tax collectors so that each local authority has at least one trained property valuer, one
    trained tax collector and one trained physical planner;
    Developing an objective graduated and property tax assessment criteria to improve revenue
    collection;
    Revising the present inter governmental fiscal relations; and
    Harmonizing the Local Government Act of 1997 and the Land Act of 1998 so that the two
    complement one another on matters of decentralization.

Justification for Including the Thematic Area

There are four main justifications for including revenue mobilization in the next UNCDF
programme.

First revenue collection is the most important activity for the long-term success of
decentralization and local government. The current increased donor support for the
decentralization programme is not going to last forever. At some point, donor fatigue will set in
and local governments will have to rely on their own efforts to mobilize revenue to fund their
service delivery obligations. The ability to raise own local revenue is the most assured long-term
source of revenue for local governments. A strong revenue base is the best guarantee for the
autonomy/independence of local government. It will provide the necessary resources to finance
development plans, which is a mandated role of local governments.




                                               44
Second, improving local revenue mobilization also improves local accountability as the
taxpayers become interested in knowing what the money is used for.

Third, the proposal to decentralize property tax assessment and administration provides
UNCDF with an opportunity to build on a desired government policy. By including revenue
mobilization in its next programme, UNCDF would be feeding into and supporting work already
in progress.

Fourth, the Local Government Finance Commission (LGFC) has embarked on revenue
mobilization initiatives through commissioning studies on various aspects of revenue collection.
DfID has financed one of the studies on Local Revenue Enhancement commissioned by LGFC.
World Bank financed a Study on Framework for Monitoring Local Government Revenue
commissioned by LGFC. The LGFC has produced a Fiscal Decentralization Strategy Paper
which has been tabled before Parliament for discussion and approval. UNCDF will therefore be
piloting the operationalization of the Fiscal Decentralization Policy as it did in operationalizing
the 1997 Local Government Act during DDP. Fiscal decentralization is an area of utmost policy
importance to the Government of Uganda. UNCDF will therefore be contributing to building and
strengthening mechanisms and institutions, that is, laying down the rules of the game in
revenue mobilization.

Problems to be Addressed

Despite its importance, the area of revenue mobilization has numerous problems that impede
the effective collection of revenue by local governments. These problems can be summarized
as follows:

   Imbalance in tax assignments between central and local governments. High yielding
   sources of revenue (tax on imported goods, tax on domestic produced goods, income tax)
   are assigned to Central Government. Low yielding sources of revenue (market dues,
   graduated tax, property tax, trading licenses, hawkers licenses, et.) are assigned to local
   governments. This imbalance has resulted in small and weak fiscal resource base for local
   governments and the center providing the bulk of local government financial resources;
   Generally poor fiscal collection performance, especially Graduated tax which is due to
   inadequacy of local tax registers, asset enumeration and assessment procedures, rigidity
   and complexity of bands, etc.;
   Unwillingness to pay by taxpayers due to mistrust (because of non-transparent tax
   administration), weak link between tax paid and services delivered, and rigidity of collection
   timetable (in addition of course to local poverty);
   Absence of systematic and coordinated physical planning, absence of or outdated valuation
   roles, inadequate skilled personnel to do property assessment;
   Political statements calling for the reduction/abolition of GT and non harassment of tax
   payers have handcuffed local councils and also encouraged the unwillingness to pay tax;
   Weak deterrent mechanisms to punish defaulters and no incentives for early payment; and
   Although there is a policy forthcoming to decentralize property tax assessment/collection,
   there are no procedures in place yet.

All the above problems reduce local tax revenues, compromising local council capacity to meet
co-financing commitments (for DDP/LGDP and other fiscal transfers), and weakening local
accountability.



                                                45
Overall Objective

The overall objective is to enhance the capacity of local governments to mobilize local revenue.

Expected Project Outputs

           improved revenue collection performance;
           improved asset enumeration and assessment procedures;
           simplified procedures, guidelines and mechanisms for keeping household database,
           tax registers and tax receipts;
           skilled personnel in physical planning, property assessment and tax collection; and
           public awareness on the value of paying tax.

Activities to be Undertaken to Address the Problems

The activities that could be undertaken for enhancing local revenue mobilization include the
following:

   Devising and testing improved and simplified procedures, guidelines and mechanisms for:
   creating and maintaining household and property database, for asset enumeration, for
   assessment, printing tax receipt tickets, and tax collection;
   pursuing defaulters and for encouraging prompt payment; and
   ensuring availability of information to taxpayers on the system.
   Sensitizing taxpayers on the value of taxes and their obligation to pay;
   Experimenting with utility based taxes, such as, refuse collection tax, road maintenance tax,
   etc. and indirect taxes (VAT, hotels, market);
   Initiating a capacity building programme for property valuers, tax collectors and physical
   planners for the benefit of municipal and town councils;
   Carrying out research studies on the various forms of local taxes and piloting some of the
   recommendations where necessary; and
   Supporting exchange and debate between local councils (through Uganda Local Authorities
   Association) on experiences and best practices on tax assessment and collection.


Scope for Policy Impact and Replication

The feasibility for pilot projects in local revenue mobilization (especially in graduated tax and
property tax) is good. Measures and suggestions to enhance local revenue mobilization can be
piloted in both DDP and non-DDP districts for control purposes. However, the property tax
would be more feasible in municipal and town councils than in rural district councils because of
the availability of property to value and assess. It is more technical and will not raise much
political controversy.

Enhancing local revenue mobilization is an area with a lot of scope for policy impact. The timing
is right. Local governments are not familiar with fiscal decentralization strategy and the
surrounding issues. A project that would assist local governments to take advantage of the


                                               46
recommendations of fiscal decentralization and enhance their revenue mobilization capacity
would be welcome.

Partnership Opportunities

The partnership opportunities in revenue collection are immense. Local Government Finance
Commission (LGFC) has embarked on revenue mobilization initiatives through commissioning
studies on various aspects of revenue collection. DfID has financed one of the studies on Local
Revenue Enhancement commissioned by LGFC. World Bank financed a Study on Framework
for Monitoring Local Government Revenue commissioned by LGFC. However, LGFC has no
money to implement recommendations of the studies but they will be a very important partner to
work with. If a workable revenue mobilization system was developed from UNCDF pilot project,
both Government and some donors (DfID and World Bank) would be interested in supporting its
replication in all or some of the district councils. Replication is important because of the need to
enhance the revenue collection capacity of local governments. Furthermore, the Uganda Local
Authorities Association would provide an appropriate platform for sharing experiences and
disseminating best practices. The Uganda Revenue Authority would also have an interest in
revenue collection at the local government level as some of the strategies impact on Central
Government sources of revenue.

Risks/Potential

One obvious risk is trying to pilot with too many sources of revenue which may become
cumbersome and unmanageable. The strategy would be to focus on developing mechanisms
for enhancing local revenue collection and not so much on the individual taxes. However,
graduated tax and property tax would merit some individual focus.

The other risk is that revenue mobilization is an area that can be politically charged and
manipulated. If that happens it can be difficult to undertake pilot experiments.

The policy impact potential is high in that successful local revenue collection mechanisms that
encourage people to pay tax also increase revenue for local government and can be replicated
in other districts, towns and municipalities as well. Given the decrease in local government
resources, mechanisms that enhance revenue collection and make politicians subject their
political interests to district development interests should encourage donor support.

       4.2.4   STRENGTHENING LOCAL ADMINISTRATION OF JUSTICE

Background to the Thematic Area

The National Resistance Movement Committees, established when the current Government
came into power to handle justice matters at the local level, have been transformed into local
council courts which are still a new phenomenon and not yet fully institutionalized. Despite that,
local council courts are very popular with the local communities because of their accessibility to
the people. They deal with familiar cases and apply familiar laws and they are quick in
dispensing popular justice. Their fees are affordable. They administer substantive justice as
they see it. In most cases, their decisions are accepted because of being on the ground. These
courts handle the bulk of petty complaints, which would otherwise clog the formal court system.

However, because of the problems (discussed below) experienced by the local council courts,
the Government of Uganda has embarked on a programme to reform the local council courts,

                                                47
within the overall judicial reform programme. The Draft Local Council Courts Bill, 2001 which
encompasses the reform of local council courts has been completed and would soon be tabled
before Parliament for discussion and approval. The aim is to upgrade local council courts at the
sub-county level to Magistrate Court Grade II. They would become standing courts with
prominent and permanent office bearers who are literate to work as judges. The present
Magistrate Court Grade II courts would be professionalized to become Grade I and staffed with
people holding degrees in law. The Draft Bill makes the sub-county the center of legal activities.
Sub-county council courts would be the focus of both government and donor support in terms
of institutional strengthening and human resources capacity building.

Despite the good intentions of the draft bill to reform the local council courts, it should be
remembered that the Local Government Act (1997) stipulates that a local council shall have no
power to make any law relating to the establishment or administration of courts or to the
exercise of judicial power. There is, therefore, need to ensure that there is no conflict between
the Local Government Act and the Draft Local Council Courts Bill. The two should be
harmonized.

Justification for Including the Thematic Area

The reasons justifying the inclusion of the administration of local justice in the next UNCDF
programme include the following:

First, the strengthening of local council courts is part of the overall judicial reform programme.
Since there is local council courts reform programme under the overall Judicial Reform Bill,
UNCDF would be supporting a government reform programme, building on existing
legislation and operationalizing the proposed reforms. UNCDF would pilot the implementation of
the reforms at the sub-county level in a few selected districts. Since reforming the local council
courts is a government programme, there is high potential that a working model would be
replicated at the national level.

Second, a programme to improve local justice system is important, not only because it supports
a government reform programme to take high quality justice to the majority of the rural people
who are often denied justice, but also, because a solid system of justice is one mechanism for
enhancing local government accountability.

Third, there is stakeholder interest in this area. The stakeholders who attended the
Consultative Workshop of July 27 strongly felt that without a strong justice system in place at
the local government level, disregard of the rule of law and rampant corruption become the
order of the day. Corruption undermines the country's poverty eradication initiatives and efforts
to the detriment of the poor.

The stakeholders argued that there could be no development without justice. Lack of justice
impacts negatively on all sectors of economic activities. Justice sets the rules and laws that
govern the behavior of the society. It sets the institutions that try and punish those who do not
abide by the accepted rules and laws of society, that settle disputes, and that check on violation
of human rights.

Fourth, strengthening local council courts that administer local justice is in line with the
constitutional requirement that a person shall be entitled to a fair, and public hearing before
an independent and impartial court or tribunal established by law.


                                               48
Problems to be Addressed

Despite the importance of strengthening local administration of justice, the setting up of local
council courts is facing some serious problems. These problems are summarized below.

   The transformation of the National Resistance Movement courts into local council courts has
   not been that easy. In some cases, there is still some lack of confidence in local council
   courts by the communities because of lack of formality in their manner of doing business.
   They lack visibility. They have no formal offices where they conduct business.
   The institutional structures of local council courts are weak;
   Record keeping is poor, that is, no records or reports of cases kept at village, parish and
   sub-county levels. This makes appeals very difficult;
   Local council court officials are political councilors and are not knowledgeable about their
   statutory jurisdiction, not conversant with legal matters, human rights issues, etc. They are
   not competent enough to handle different types of cases;
   Local council courts are accused of not being gender sensitive;
   The absence of court reference materials makes it difficult for the court officials to update
   themselves on their legal knowledge;
   Local council courts are accused of lacking impartiality because they have been politicized;
   There is conflict between common law and customary law; and
   There is a high turn over of local councilors (who are the office bearers) at lower levels of
   local government.

All these problems greatly reduce access – especially by the rural poor, and by women – to
judicial remedy for key problems underlying poverty and insecurity such as land disputes,
matrimonial problems, rape, paternity disputes, petty theft, etc.

Overall Objective

The overall objective is to strengthen local administration of justice by enhancing the capacity of
local council courts.

Expected Project Outputs
   institutionalized/standing structures of local council courts in sub-counties;
   effective Magistrate Court Grade II at the sub-counties;
   professional local council courts capable of effectively handling cases in their jurisdiction;
   local council office bearers trained in litigation, record keeping, human rights, powers and
   functions of local courts, gender and legal matters; and
   operations of local council courts systematized.

Activities to be Undertaken to Address the Problem

In order to accomplish the expected outputs, the following activities would be under-taken:

       Devising procedures and guidelines for conducting local court business and
       professionalizing the local council court system;




                                                49
       Training office bearers in the operation of local council courts, territorial jurisdiction of
       local council courts, legal jurisdiction, powers of local council courts, principles of natural
       justice, records keeping, remedies; appeals; etc;
       Mainstreaming gender issues into the local council court system;
       Retooling the physical facilities of local courts;
       Ensuring wider public knowledge of the local council court system;
       Ensuring periodic reports from sub-county local council courts to district council courts
       for record keeping in case of appeals;
       Developing a library of reference materials so that local council court office bearers keep
       abreast of developments in the legal profession;
       Overseeing and monitoring implementation, and drawing lessons as to feasibility of
       replication in other districts and implications for revising the statutory framework.

Scope for Policy Impact and Replication

The feasibility is quite high for a pilot project in the institutionalization and capacity building of
local council courts. The Government of Uganda has embarked on judicial reform through the
Ministry of Justice and a programme to reform the local council courts is under way as
contained in the Local Council Courts Bill, 2001. UNCDF will be contributing to good local
governance by developing an effective institutional legal framework for local council courts,
operationalizing the      modalities of local council courts, capacity building, and overall
improvement in the administration of local justice in Uganda.

The policy impact and potential for replication is also high in that the programme to reform the
local council courts is a national programme. If UNCDF developed a workable local council
court system the Ministry of Justice would adopt it and implement it nation-wide in all the
districts. On the whole, the administration of local justice poses another opportunity for UNCDF
to pilot with something new whose results would be replicated at the national level in all local
governments.

Partnership Opportunities

The area of judicial reform has attracted a lot of donor interest and support. DANIDA is
supporting judicial reform and professionalization of the magistrate court system. DfID is
supporting the reform of commercial courts. Austria and other EU countries are pooling their
resources together into a common basket to support law and order reforms, i.e., judiciary,
Director of Public Prosecution, prisons, police, ethics and integrity. The Irish would support a
Government programme of reforming the local council courts. UNV is supporting a human rights
and equity project effective 2002. There is a component on strengthening the capacity of local
council courts. They have expressed an interest in working together with UNCDF in this area. If
a workable system was developed, these donors would be interested in supporting its
replication nation-wide.

Risks/Potential

There are more potentials than risks in piloting in this area. UNCDF would be operationalizing
the judicial reform programme at the local government level. The Local Government Act and the
Land Act would be harmonized during this operationalization. UNCDF would have the
opportunity to define the roles of the local council courts and the Elders Courts. How do the two
court systems relate to one another?


                                                 50
The major risk is that judicial reforms are generally a slow process when it comes to effecting
the changes. Initial high expectations can fade away.

The other risk in this area is resistance from the present local council court office bearers who
might resist the introduction of Magistrate Court Grade II at the sub-county level for fear of
loosing their status and power.

Finally, justice administration is a new area for UNCDF for which it currently does not
have expertise on board to handle. It will have to initially rely on hired expertise which
can be costly given UNCDF’s limited financial resources.

         4.2.5. ENHANCING THE ROLE OF WOMEN’S COUNCILS

Background to the Thematic Area

The theme on participatory planning and budgeting briefly discussed the status of women’s
participation in the planning process. Enhancing gender mainstreaming discusses in some
detail those factors inhibiting women's full participation in the budgeting and planning process of
local governments as well as the development process. Although the Ministry of Gender (MoG)
has worked with line ministries on gender issues, it has not been able to effectively penetrate
local governments. Out of the 56 districts in the country, MoG has so far worked with only 15
districts in mainstreaming gender in their development plans. In these districts MoG has
sensitized councilors on gender issues and worked with technical departments to incorporate
gender issues in their plans. However, in the process gender issues just fade out. Gender
mainstreaming does not get the attention it deserves. The problem is that MoG lacks adequate
resources in terms of skilled human capacity and finance to undertake serious gender
mainstreaming work. As a result MoG is unable to do effective monitoring and evaluation.
Gender is not adequately incorporated into technical department plans. Gender issues are
confined mainly to the Department of Community Services which is also inadequately funded
and poorly/inadequately staffed. The gender person in the Department is side tracked in the
planning process.

Women's Councils, women councilors (elected) and the Department of Community Services
are the institutions that should be contributing greatly to gender mainstreaming. However, the
Women's Councils, which are a statutory body mandated to be the women's voice on gender
issues and a parallel structure to the district councils, are very weak. They are supposed to
receive women's concerns and feed them into the planning process and mobilize women for
active participation in the development process. Unfortunately, they are ineffective. They are
under-funded and they lack the critical planning skills. They are not a match for the district
councils which are politically powerful and relatively speaking well resourced. The meager
subvention Women's Councils get from the Government is planned for at the National
Secretariat. They have lost steam. They are not visible. Both Government and donor support
seem to be low keyed. The women councilors appear to have a different agenda and are at
times in conflict with Women's Councils. Morale for the Women's Councils office bearers is low
as there is no motivational reward for their work.

Effective gender mainstreaming requires that all the three institutions be strengthened if they
are to play an important part in mainstreaming gender issues in the planning and budgeting



                                                51
process at all levels of local government. They form a convenient entry point for gender
mainstreaming.

Justification for Including the Thematic Area

The justification for treating gender mainstreaming as a separate thematic area lies in the fact
that over 51% of Uganda's population are women. They provide over 80% of the agricultural
labor force and account for about 80% of food production. Agriculture plays a central role in
Uganda's economy as it contributes 49% of the gross domestic product and 99% of exports.
Despite the important role played by women in the national economy, they are still at the
periphery in the decision making process.

The Constitution of Uganda (1995) states that The State shall recognize the significant role that
women play in society. The State shall take all necessary steps to involve the people in the
formulation and implementation of development plans which affect them. In addition two of the
objectives of the Local Government Act (1997) aim at ensuring democratic participation in and
control of decision making by the people concerned; and establishing a democratic, political and
gender sensitive administrative set-up in local governments. This is not yet fully achieved in
local governments. Women's concerns are inadequately incorporated into the development
process. Their participation in the planning, implementation and monitoring of development
projects is still weak.

Poverty affects women more than men. Because of the high rate of illiteracy among women
(60% in 1990), they are less exposed to economic opportunities than men. When addressing
issues of poverty it therefore makes sense that they are viewed in the context of gender. There
is need to carry out policy research on how the various policy instruments and strategies
targeted at improving service delivery and the productive sector have impacted on poverty in as
far as it affects women. UNCDF should liaise with UNDP and Makerere Institute of Social
Research who are involved in a Poverty Analysis and Monitoring Project at the local
government level in the context of decentralization. There is need to come up with a poverty
analysis, monitoring and evaluation system, guidelines and procedures that can be used by
local governments in assessing themselves on how well they are doing in addressing poverty.

The Programme Management Unit has commissioned a Study on Gender Mainstreaming in
local government. Consultants are working on the assignment. The results of the study should
form a major input to the design of the Gender Mainstreaming module in the programme
document for next UNCDF programme.

Problems to be Addressed

The problems inhibiting gender mainstreaming and accurate poverty assessment, particularly in
local governments, are quite many. They include the following.

   Failure by the Ministry of Gender to effectively market gender in local governments;
   Lack of appreciation of the contribution made by women in the development process;
   Serious weaknesses of the institutions that are mandated to mainstream gender issues into
   all sectors of the economy (women's councils, department of community service, elected
   women councilors);
   Different pieces of legislation have created uncoordinated, parallel Women’s Councils and
   District Council organizational structures;


                                               52
   Lack of awareness about the role of Women's Councils by both the Women's Councils
   themselves and local governments; hence Women's Councils are inactive on gender issues;
   Women Councils are not aware about local government operations;
   Insufficient interaction between Women Councils and Local Councils in planning and service
   delivery;
   Local council planning does not adequately incorporate women’s concerns and address
   gender issues;
   Local justice administration also inadequately addresses women’s concerns and gender
   issues;
   Conflict of roles between women councilors and representatives of Women Councils; and
   Mistrust rather than cooperation between women councilors and Women's Councils.

The cumulative effect of all the above problems is that gender concerns are not adequately
incorporated into local council development activities and into the local council justice system.
The potential for Women's Councils in influencing allocation of public resources in favor of
women is inadequately fulfilled.

Overall Objective

The overall objective in this area is to enhance gender mainstreaming in local governments so
that women can play a meaningful role in the development process as provided for in the
Constitution.

Expected Project Outputs

   increased awareness among local councils and women's representative institutions about
   the contribution women can make in the development process;
   enhanced involvement of Women's Councils in the decision-making process and gender
   mainstreaming;
   conditions that make it mandatory for Women's Councils to be represented in local council
   planning committees;
   cooperation and trust between women councilors and Women Councils; and between
   District Councils and Women’s Councils; and
   reliable database on poverty as it affects women in local governments.

Activities to be Undertaken to Address the Problems

The activities to address the problems articulated above and to achieve the desired objective
and outputs are as follows:

   Mounting sensitization/awareness/appreciation workshops/meetings for councilors and
   council officials on the role of women in the development process;
   Clear definition of the role of Women's Councils in relation to local councils;
   Devising and testing improved and simplified procedures and guidelines for:
   enhancing the capacity of Women Councils at lower levels to input ideas and proposals to
   local planning process;
   ensuring that Women’s Councils are involved in the local council planning, budgeting and
   decision-making processes; and
   equipping Women’s Councils with planning skills and techniques to mobilize resources.


                                               53
   Involving Women’s Councils in the monitoring of local development activities, service
   provision, and contractors;
   Introducing inter local government/Women's Councils programmes to break parallelism;
   Conducting research on poverty in local governments leading to the development of
   simplified procedures and guidelines for assessing, monitoring and evaluating the impact of
   poverty at the local government level; and
   Supporting exchange programme between local councils to share experiences and best
   practices.

Scope for Policy Impact and Replication

The feasibility of mainstreaming gender issues in all sectors of the economy in local
governments using Women's Councils (WCs) as the conduit is quite high given the fact that
WCs are a statutory body. They provide a legally constituted structure from the village to the
national level which is funded by Government, though inadequately. Non-Governmental
Organizations use the WCs to implement their activities at the local level. Therefore,
mechanisms to enhance the capacity of Women Councils can be piloted in both DDP and non-
DDP districts for control purposes.

Policy impact potential exists in that the performance and effectiveness of Women’s Councils is
of concern to the Government. Ministry of Gender is positive about adopting lessons and
experiences that strengthen Women’s Councils and enhance gender mainstreaming into local
governments.

There is potential to diffuse guidelines and best practices through the MoLG/Decentralization
Secretariat and the Uganda Local Authorities Association throughout all local government
districts.

Partnership Opportunities

Various donor agencies, including DANIDA, IFAD and Irish Aid, place a high priority on
gender/women. They are looking for ways to promote this agenda at the local level. Although
there is donor interest in gender issues there are not many donors supporting the Women's
Councils. Strong Women’s Councils could attract donor support as a potential entry point to
address women’s issues and concerns within the context of decentralization and poverty
alleviation.

The Local Government Development Programme is spearheading more inclusive and gender
awareness programmes. The Irish Aid programme in Kumi District is experimenting with
community participatory planning. The Center for Basic Research with assistance from the Ford
Foundation is embarking on an extensive programme of information gathering and
dissemination in districts to boost knowledge and capacity of local officials and communities.
This programme could be built upon in the pilot districts to enhance Women's Council access to
information.

The Ministry for Gender Programme on Capacity Building for Women could provide a strong
base for strengthening Women’s Councils after the pilot phase. If workable, the mechanisms for
strengthening Women's Councils could be replicated throughout other districts.




                                              54
Risks/Potential

The 1998/1999 reviews criticized DDP for being gender insensitive. From a corporate
perspective, UNCDF should therefore have an interest in enhancing gender mainstreaming and
strengthening Women's Councils. Although donors have an interest in gender issues, their
support to Women's Councils is low. Government enthusiasm in Women's Councils appears to
have run out of steam. There is marked difference between affirmative action statements and
the reality on the ground regarding gender, especially in rural areas. The potential for enhancing
the gender mainstreaming in local government is there, but whether UNCDF can get sufficient
support from other donors to strengthen Women's Councils is something else. The Government
is aware that Women's Councils are there and that they are weak in terms of performing their
role but the will to provide them with sufficient resources is limited.


5.      PRIORITIZATION OF THEMATIC AREAS

The Mission Team was concerned about prioritizing the identified five thematic areas. The
Team therefore developed the following criteria to guide it in ranking:

     UNCDF corporate comparative advantage: the extent to which UNCDF and/or the current
     project team possesses expertise in the thematic area, and/or to which it builds on DDP
     lessons or accomplishments to date in Uganda;

     Scope for Innovation: the extent to which the thematic area may generate innovations which
     feed into and enrich UNCDF policy development in the are of local governance;

     Scope for policy impact/replication: the extent to which the outputs of the proposed activities
     may have wider echo and leverage, whether in national policy (law, regulation, procedures,
     systems, standards) or through replication by other funding agencies;

     Scope for exerting poverty impact: the extent to which the outputs of the proposed activities
     will directly contribute to poverty reduction and improved local welfare;

     Stakeholders’ views: the apparent importance attached to the proposed activities by the
     various stakeholders consulted (PTC, stakeholder workshop participants, and others
     consulted by the mission);

     Feasibility of the proposal: the “robustness” of the risk-assumptions underlying the proposed
     activities (e.g. as regards reliance on the success of complementary programmes, on
     intrusion of political factors, on the time horizon for achieving outputs, etc.).

The Table below provides a relative score (high-medium-low) for each thematic proposal
against each of these criteria, and an overall ordinal ranking derived from the aggregate ratings.




                                                 55
                   UNCDF   Scope    for   Scope     for   Scope    for   Stakeholder   Feasibility   Ordinal
THEMATIC           Comp    Innovation     Leverage        Direct         Priority                    Rank
AREA               Adv                    thro’ Policy    Poverty
                                          Impact     &    Reduction
                                          Replication     &    Welfare
                                                          Impact
Part. Planning &   High    High           High            High           High          High          1
Budgeting
Fin. Mgmt &        Med     Med            High            Low            Med           Med           3
Audit
Local Revenue      Med     High           High            Med            High          Med           2
Enhancement
Local Justice      Low     High           Med             High           Med           Med           3

Women’s            High    High           Med             Med            Med           Med           3
Councils



What emerges is that:

           Consolidating work on Participatory planning and budgeting is clear first ranked
           proposal, being superior on all counts, whatever weighting of the criteria;
           Supporting Local Revenue Enhancement is the clear second ranked proposal,
           whatever weighting of the criteria;
           The other three proposals tie at third place, since to rank them requires explicit
           weighting of the criteria.

Given that the modest costs of all the proposals may allow UNCDF to fund more than the first
two, decisions about which of the latter three are to be funded merit further discussion,
especially in light of the scope for partnership and co-funding by other donors – which is yet to
be ascertained (discussions in the course of the mission suggested that each of the proposals
has this potential).


6.         GEOGRAPHIC FOCUS AND SCALE OF OPERATIONS

An underlying element of future strategy is to build on achievements of DDP. This then has
implications for the geographic focus of future activities. In order to continue collaboration with
the same District governments and stakeholders who have already been trained and sensitized
and in order to maintain the PTC as forum for lesson learning and advocacy, the next
programme proposes to implement thematic activities in as many of the existing Districts as is
feasible.

 However, this does not mean continued “full coverage”. Kotido District will be excluded. Firstly,
the persistence of insecurity in the area will undermine any attempt at institutional development
and policy testing of the sort proposed. Secondly, the Karamoja Region is poised to receive
very substantial funding from the EU which would overshadow and distract from these activities,
especially given the weak capacity of the District administration there.

In other Districts, coverage will not necessarily extend to all areas or sub-Counties for all
thematic activities. The following are proposals for the geographic strategy of each component:

Building More Effective Participatory Planning and Budgeting. This component is best
undertaken across all sub-Counties in all DDP Districts (except Kotido), given the “systemic”

                                                          56
nature of the bottom up planning/budgeting linkages being further developed and the fact that it
builds so directly on DDP activities to date.

Ensuring More Effective Local Financial Management and Audit. This component needs to
be implemented in all sub-Counties of 2 or 3 selected DDP Districts, given the “systemic” nature
of the District/sub-County audit relationship being tested.

Enhancing Local Revenue Mobilization. This component can be implemented in selected
sub-Counties and Town Councils, since these are the key levels for collection and
administration of local taxes and since there is no particular “systemic” linkage involved above
the sub-County level which requires full District-wide coverage. Given the keen local interest in
this issue (as expressed e.g. at PTC meetings) it is proposed that all DDP Districts (except
Kotido) be covered.

Strengthening Local Administration of Justice. This component can be implemented in
selected sub-Counties in 2 or 3 selected Districts, since there is no particular “systemic” linkage
involved above the sub-County level (the main linkages being between Local Council 1-2-3
courts) which requires full District-wide coverage.

Enhancing the Role of Women’s Councils. Again, this component too can be implemented
in selected selected sub-Counties in 2 or 3 selected Districts, since there is no particular
“systemic” linkage involved above the sub-County level (the main linkages being between Local
Council 1-2-3 courts) which requires full District-wide coverage.

Clearly it is also desirable to extend geographic coverage of all these thematic components to
areas outside the DDP Districts, both to gain the greatest possible experience in other local
institutional and socio-economic contexts and to constitute a “control”. The extent to which this
is possible will depend on whether “co-financing” is forthcoming from other partners.
SUMMARY OF PROPOSED GEOGRAPHIC FOCUS

PROGRAMME COMPONENT                DISTRICTS                              COVERAGE                WITHIN
                                                                          DISTRICTS
Building      More     Effective   All DDP Districts (except Kotido) -    All sub-Counties
Participatory   Planning    and    and other Districts if partner co-
Budgeting                          financing is available.
Ensuring More Effective Local      2 or 3 selected DDP Districts - and    All sub-Counties
Financial Management and           other Districts if partner co-
Audit                              financing is available.
Enhancing      Local   Revenue     All DDP Districts (except Kotido) -    Selected sub-Counties & Town
Mobilization                       and other Districts if partner co-     Councils
                                   financing is available.
Strengthening             Local    2 or 3 selected DDP Districts          Selected sub-Counties
Administration of Justice          - and other Districts if partner co-
                                   financing is available.
Enhancing Role of Women’s          2 or 3 selected DDP Districts          Selected sub-Counties
Councils                           - and other Districts if partner co-
                                   financing available




                                                       57
7. STRATEGY FOR POLICY IMPACT AND REPLICATION

7.1.   POLICY IMPACT

DDP is recognized as having already achieved significant impact on decentralization policy in
Uganda. It has helped pilot implementation of the 1997 Local Government Act by focusing
resources and responsibilities on the sub-County level. It has developed a range of innovative
procedures for planning, financing, capacity building etc. which have been adopted as national
standards. It has laid the way for policy on fiscal devolution; etc..

These successes are of course in part due to the energy and dedication of those people at
central and local levels who have been charged with implementing DDP. But they have also
been the result of a careful attempt from the outset of DDP:

   (a) to work in close partnership with national and local stakeholders and ensure that they
       drove the design and implementation process; and
   (b) to cast the design of DDP so as to ensure consistency with the national framework of
       decentralization policy, legislation and accompanying regulations, and with the local
       institutional setup.

The future programme capitalizes on these lessons, as follows:

   The local governance concerns identified have been done so through close consultation
   with and feedback from local stakeholders (at the PTC, the stakeholder workshop, etc) and
   through careful consultation with Ministry of Local Government and other central
   stakeholders.
   Further, the strategies proposed to address these problems have all been based on the
   current legislative and regulatory framework, while also aiming to improve this framework, in
   each case.
   The project formulation process will further develop the policy-based design of these
   proposals, and identify more specific aspects of the legal, regulatory and
   procedural/normative framework which programme activities will aim to address.
   There will be further and more detailed consultation with stakeholders in each
   thematic area to ensure that policy concerns are properly defined and addressed.
   In the course of implementation, national policy “forums” will be used to air and debate the
   policy implications of lessons learned from each component, although the appropriate forum
   and its institutional hosting will vary in each case.

7.2.   REPLICATION

DDP has similarly had considerable success by way of replication, through LGDP and several
bilateral projects. This has been due both to close consultation with the World Bank and
bilaterals from the outset, whose interest in supporting the statutory framework for
decentralization has grown over the past few years, and the fact that DDP was seen to be an
approach anchored in national policy and local institutions, and had the buy in of national policy-
makers and stakeholders at all levels.

Clearly, successful replication of the proposed programme requires that the strategy is seen to
be addressing key concerns of local governance, and to be doing so in ways which are



                                                58
consistent with national policy, and that it is also supportive of the country strategy goals of the
donor agencies themselves.

Again, building on these lessons, the strategy to encourage replication by other donor agencies
has been and will continue to be:

      To maintain close consultation with the principal donor agencies in defining and developing
      the programme: Irish Aid (Chair of the Donor Group for Decentralization), DfID, DANIDA, the
      Netherlands, Austria, Belgium, USAID, the European Union and the World Bank.

      Ensuring that the thematic areas of the programme are supportive of programme goals of
      these donors – both in the general area of decentralization, but also in related areas of
      governance, such as improved financial management and accountability, access to justice,
      etc..   The specific donors active in these different areas have been identified under
      discussion of the Thematic proposals further above.

      Inviting Representatives of these agencies to key events in the next steps of programme
      formulation, and to comment on this Programme Concept Paper and subsequent project
      documentation.

      It is also hoped that UNCDF will be able to take part in forthcoming programming exercises
      of other donors – e.g. the DANIDA programming mission in November 2001.

8.       PARTNERSHIP STRATEGY

A recurrent issue in both the Thematic, Geographic and Policy Impact and Replication
Strategies presented above is the question of Partnerships.   Clearly, to the extent that
Partnership means the encouragement of Replication then much of this strategy is covered in
the proposals above.

But there are other aspects to Partnership which go beyond Replication. These are:

8.1      UNDP

UNDP remains the principal partner of UNCDF in Uganda, and is the main ally in promoting
dialogue on the policy issues of local governance and decentralization, in addition to providing
the essential administrative and logistic support to project implementation.          Scope for
programmatic collaboration has been identified between the Thematic Component Building
More Effective Participatory Planning and Budgeting and the Participatory Development
Management component of the new PSD for Governance, which is concerned to develop more
participatory planning procedures linking Parish and sub-County. Here the onus on ensuring
effective collaboration now lies with the MoLG, which has been entrusted by Ministry of Finance
with developing a specific work plan and budget.

There is also the Poverty Analysis and Monitoring Project recently approved by UNDP.
Here the onus on ensuring effective collaboration lies with the MoLG, and with Ministry of
Finance and MISR who have been entrusted with developing a specific work plan and budget.




                                                59
8.2    OTHER DONOR AGENCIES

While it is hoped to secure some co-financing from donor partners for the activities proposed,
there are other forms of collaboration which will be essential.

In all the thematic areas proposed, a key dimension will be to encourage debate, dissemination
and adoption of policy-relevant lessons upstream. These are areas where UNCDF is ill-
equipped to intervene alone.      Consequently “upstream” collaboration of this sort will be
promoted with individual agencies in thematic areas as follows:

Building More Effective Participatory Planning and Budgeting with The World Bank, DfID,
DANIDA, Irish Aid, the Netherlands, UNDP, UNICEF.

Ensuring More Effective Local Financial Management and Audit with The World Bank,
DfID, DANIDA.

Enhancing Local Revenue Mobilization with              DfID, DANIDA, The World Bank, EU,
Netherlands Government.

Strengthening Local Administration of Justice with DANIDA, UNV/UNDP, EU, Austria.

Enhancing Role of Women’s Councils with DANIDA, IFAD, Irish Aid, etc.


8.3.   OTHER PARTNERS

UNCDF will also seek to widen the range of partners in-country. A major concern will be to
bring national research/training institutions into the upstream “lesson learning and
dissemination” activities, both to ensure that these activities are done effectively and that key
national institutions are encouraged to grapple more directly with real issues of decentralization
policy development and implementation.

To this end it is hoped to develop partnership with Makerere University, MISR, and Uganda
Management Institute. In this regard, UNCDF will also further pursue discussions with
Rockefeller Foundation and the World Bank on collaboration in this area.


9.     PROGRAMME COSTS AND FUNDING

As noted above, the proposed programme has several distinct components, and is modular in
approach. The Table below thus sets out the indicative costs for undertaking a minimum core
set of activities under each component – in the local areas as indicated above under
Geographic Strategy – and upstream.

However, activities in each of these components could be expanded in modular fashion if co-
financing (or parallel funding) is secured. Expansion could be both geographic (to other
Districts and sub-Counties) or could consist in reinforcing “upstream” activities (capacity
building, policy studies, workshops and seminars, etc.). It was not thought useful to estimate
the costs of such expansion for the time being.


                                               60
THEMATIC AREA                                                      INDICATIVE COST
                                                                   US dollars

Building More Effective Planning & Budgeting                       1,500,000

Ensuring More Effective Local Financial Management and Audit       250,000

Enhancing Local Revenue Mobilization                               500,000

Strengthening Local Administration of Justice                      750,000

Enhancing Role of Women’s Councils                                 500,000

UNCDF Programme Administration:                                    500,000
Missions, Overhead, etc.
TOTAL                                                              4,000,000




Several points need to be stressed:

      First, the costs outlined are indicative;
      Second, clearly the sum total exceeds UNCDF funding availability and so prioritizing is
      necessary (see Section earlier);
      Third, there is as yet some uncertainty as to whether UNDP funding for the “PDM
      Component” ($ 600,000) can be integrated to co-finance, with UNCDF, a single programme
      aimed at building up a viable local participatory planning approach. This will largely depend
      on Ministry of Local Government ability to respond and coordinate use of these resources.


10.      INSTITUTIONAL ARRANGEMENTS FOR IMPLEMENTATION

10.1.    MANAGEMENT AND MONITORING

To date the DDP has been managed, planned and monitored by the Programme Management
Unit (PMU) within MoLG/Decentralization Secretariat (DS). This has worked effectively, and as
far as possible it would be expeditious for the PMU to continue to be responsible for overall
planning and monitoring of programme activities, liaising with Districts, contracting consultants,
organizing training, liaising with other national government departments and other partners.
However, for the future programme two sorts of strategy issues must be addressed:

      Firstly, both DS and PMU are temporary bodies, whose functions must sooner or later be
      mainstreamed within MoLG. Consequently, a timetable must be established to ensure that
      arrangements are made for incorporation of management and monitoring activities within
      MoLG over the life of the programme.

      Secondly, the proposed programme covers several thematic policy areas (e.g. Local Council
      Court system) which do not fall directly within the mandate of MoLG. It will therefore be
      important to devise mechanisms to ensure that other national stakeholders (e.g. Ministry of
      Justice) are adequately involved from the outset.

Since PMU core costs are covered for the time being through LGDP the programme will only
fund those “incremental” costs incurred by the additional burden of managing the proposed
activities.

                                                        61
10.2.   THE STEERING COMMITTEE

The DDP Project Steering Committee has not to date been active, and many of its functions
have been assumed by the Project Technical Committee (PTC). However, the key emphasis of
the future programme is on the generation of policy-relevant lessons in several thematic areas
and this upstream function therefore needs to be addressed. It is especially important to ensure
that Ministry of Finance is more fully involved in discussions of project strategy and lessons.

10.3    PROJECT TECHNICAL COMMITTEE (PROGRAMME TECHNICAL
        COMMITTEE)

If all the five thematic areas are implemented, the present Project Technical Committee forms a
convenient forum for both national and district local stakeholders affected by the programme
activities. New stakeholders will be added to the present membership. The new stakeholders
will include Ministry of Finance, Uganda Revenue Authority, Local Government Finance
Commission, Ministry of Justice, Ministry of Gender, and additional Districts to the original DDP
districts. The expanded PTC will continue to play a major role in the planning and monitoring of
programme activities, and in providing feedback and exchange on lessons learnt. The name
might have to change from Project Technical Committee to Programme Technical Committee.

If programme activities are funded in additional Districts by other partners, stakeholders from
these Districts will also be invited to join the PTC.

11.     SUSTAINABILITY AND THE EXIT STRATEGY

Problems of sustainability and exit strategy are addressed as follows:

           Generally, and as under DDP, the programme aims to work with and through
           existing, statutory local government bodies, institutions and procedures, rather than
           creating new, parallel structures. This is a major element in ensuring sustainability.

           In order to ensure the permanence of the various innovations to be introduced,
           attention will be paid to:

                  Ensuring that as far as possible these are incorporated into the Minimum
                  Condition mechanisms for local government funding, thus constituting a
                  strong incentive for their continued adoption;
                  Ensuring training, information and communication on the rationale and
                  application of these procedures, not only to local government officials but to
                  wider civil society.

           Similarly, at national level, attention will be paid to ensuring that policy, legislative
           and regulatory frameworks are adapted to support the more permanent and
           widespread adoption of the innovations tested.

           Finally, in partnership with MoLG and other partners, the programme will develop a
           strategy to ensure that the functions associated with promoting these activities will be
           internalized within MoLG and within such bodies as Makerere University, Uganda
           Management Institute, etc.


                                                62
12.    OVERALL RISKS

There are at least four potential risks to the inclusion of the five thematic areas in the next
UNCDF programme for the period 2002 - 2005.

First, the programme is coming at a time when UNCDF's own core resources/funds are limited.
The proposed modular approach is intended to open opportunities for partnership and co-
financing with other donors. Given the fact that donors generally prefer to do things that bring
credit directly to themselves and also given different donor policies/approaches, it may prove
difficult to secure partnership with other donors to the extent desired. In which case some of the
modules might have to be dropped in the next programme. UNCDF should therefore decide
which of the five thematic areas it will finance from its own resources and which ones are for
partnership funding.

Second, UNCDF does not have expertise on board in one of the new areas, that is,
administration of local justice (local council courts). This means that UNCDF has to rely on
hiring expertise, which may turn out to be expensive given the limited resources. If a donor
partner with expertise in the area is identified and is willing to co-finance the area, there is the
danger that, UNCDF may not have control over the donor policies, that expertise and
consequently lose control over the module. Serious consideration should be given as to whether
this area should not be handled by UNDP.

Third, there should be total agreement on why UNCDF should continue to stay in Uganda after
implementing such a successful pilot project (DDP) and gaining the respect of both Government
and other donors. Hunting for partnership opportunities to continue staying in Uganda given the
limited resources puts UNCDF in a beggar's position, and also an awkward position having
gained so much credit from the DDP model. If there is no success in securing partners, UNCDF
might have to scale down the modules to two or three in line with its available funds.

Fourth, there should also be agreement at the management level on what the focus of the next
programme should be. Is it poverty eradication or enhancing local governance through capacity
building or both? This agreement is necessary for the effective implementation of the next
programme.

The above risks should be seriously addressed and any inconsistencies ironed out prior to the
formulation of the programme document.




                                                63
ANNEX

STRENGTHENING LOCAL GOVERNANCE

SUMMARY OF PROPOSED THEMATIC AREAS



1. BUILDING MORE EFFECTIVE PARTICIPATORY PLANNING & BUDGETING

2. ENSURING MORE EFFECTIVE LOCAL FINANCIAL MANAGEMENT & AUDIT

3. ENHANCING LOCAL REVENUE MOBILISATION

4. STRENGTHENING LOCAL ADMINISTRATION OF JUSTICE

5. ENHANCING THE ROLE OF WOMEN’S COUNCILS




                                  64
1. BUILDING MORE EFFECTIVE PARTICIPATORY PLANNING & BUDGETING

PROBLEM(S) TO ADDRESS

DDP experience (and many other programmes) raises the following problems in local
planning/budgeting:
    Inadequate community/LC1 & LC2 input to LC3/5 plans
    Inadequate womens’ voice and input to plans & inadequate attention to gender
    issues/implications
    Inadequate attention to investment in productive opportunities
    Inadequate attention to poverty analysis/impact monitoring
    Inadequate cross-sectoral problem analysis & integration
    Inadequate integration of planning with (development & recurrent) budgeting
    Unclear linkages between the plans of autonomous sub-County, Town, Municipal and
    District Councils
All of which undermine local trust & accountability, service delivery quality, and general pro-poor
effectiveness of decentralised public expenditure.


STRATEGY & ILLUSTRATIVE ACTIVITIES TO ADDRESS PROBLEM(S)

   Devise, introduce and test procedures for greater community, LC1/LC2 and womens’
   involvement in LC3/5 planning & budgeting (e.g. building on UNICEF Parish Development
   Cttee experience, on Womens’ Councils, on other relevant donor/NGO experience, etc.).
   Devise, introduce & test improved guidelines, checklists and other tools for gender, poverty
   and production activities (building on PMU consultancy work already underway), and for
   greater cross-sectoral integration of plans.
   Devise, introduce & test mechanisms to link work of TPCs and the Budget Desk.
   Monitor; disseminate & debate lessons.
   Revise and test Minimum Condition/Performance Measure tools for LC3s to encourage
   adoption of these improved planning/budgeting procedures.

PILOT SCOPE FOR POLICY IMPACT AND/OR DONOR REPLICATION OF THE STRATEGY

If/when proven effective these guidelines, procedures and arrangements may have:
    Potential feed into guidelines & training materials used by MLG/DS (and other bodies) for
    local planning, for adoption (albeit with local adaptation) in all Districts/sub-Counties.
    Potential upscale within LGDP and other district support programmes.

PARTNERSHIP OPPORTUNITIES

   UNDP: (a) PDM component of Governance PSD and (b) Poverty Analysis & Monitoring
   project;
   UNICEF: Parish Dev Cttee programme;
   World Bank & various other bilaterals: LGDP and other donor District support projects
   Research/training Institutions: UMI; Makerere/MISR (Rockefeller/Ford).

OTHER ISSUES & QUESTIONS TO BE ADDRESSED


                                                65
   Status of and links with PMA LC3 planning approaches?
   Implications of streamlining Conditional Grant system?
   Linking changes in local planning/budgeting to Results Oriented Management & Output-
   Oriented Budgeting?
   How to create a National Forum where many different local planning/budgeting strategies
   can be disussed and common approach secured?

2. ENSURING MORE EFFECTIVE LOCAL FINANCIAL MANAGEMENT & AUDIT
   PROBLEM(S) TO ADDRESS & RATIONALE

    Generally, weak local financial management capacities esp at LC3 level;
    Prospect of greatly increased central transfers to LC3s under DDP/LGDP, PMA and other
    programmes;
    Limited capacity of Office of Auditor General to audit over 1000 local government accounts
    annually;
    Limited number of qualified private audit firms, and the high costs of s/contracting them.
All of which undermine financial accountability of esp LC3s, create general mistrust in them, and
reinforce Central Government concern in proceeding with fiscal decentralisation policy goals
and also the concern of donors, who insist on audited accounts as condition for funding LC3s.

STRATEGY & ILLUSTRATIVE ACTIVITIES TO ADDRESS PROBLEM(S)

   Devise procedures, guidelines, training materials whereby District Internal Auditors act as
   External Auditors for LC3s;
   Oversee and monitor, and draw lessons as to feasibility and workload, etc..

PILOT SCOPE FOR POLICY IMPACT AND/OR DONOR REPLICATION OF THE STRATEGY

   If proven, this strategy can be adopted by OAG, and implemented nationwide by all Districts,
   with support from various donors.
   It may also feed into revised regulatory or statutory framework for LC Finance, Accounting &
   Audit.

PARTNERSHIP OPPORTUNITIES

   World Bank, Danida, DfID, etc … programmes supporting Financial Management,
   Acountability, etc.
   Irish, Netherlands, EU, etc programmes supporting District capacity building.

OTHER ISSUES & QUESTIONS TO BE ADDRESSED

   OAG policy position on this issue?
   Legal feasibility & implications of LC5 Internal Auditors assuming an external audit role for
   LC3s?
   Staff & Workload implications?




                                               66
3. ENHANCING LOCAL REVENUE MOBILISATION PROBLEM(S) TO ADDRESS &
    RATIONALE

    Generally, weak fiscal resource base for LCs due to low yielding revenue sources such as
    graduated tax and property tax while high yielding sources are kept at the center, thus
    excessive local reliance on transfers from the Centre;
    Generally poor local revenue collection performance esp G-tax: itself due to inadequacy of
    local tax registers, asset enumeration and assessment procedures, rigidity and complexity of
    bands, etc.;
    Unwillingness to pay by taxpayers due to mistrust (because of non-transparent tax
    administration), weak tax/service correspondence, and rigidity of collection timetable (in
    addition of course to local poverty);
    Inadequate mechanisms to pursue defaulters and no incentives for early payment;
    Policy forthcoming to decentralise property tax assessment/collection but no capacity or
    simplified procedures in place for local property valuation;
All of this reduces local tax revenues, compromising LC capacity to meet co-financing
commitments (for DDP/LGDP and other fiscal transfers), undermines ability to operate and
maintain investments for service delivery, and weakens local accountability.

STRATEGY & ILLUSTRATIVE ACTIVITIES TO ADDRESS PROBLEM(S)

Devise and test improved and simplified procedures and guidelines for:
   creating and maintaining household and property database, for asset enumeration, for
   assessment, printing tax receipt tickets, and collection;
   for pursuing defaulters and for encouraging prompt payment; and
   for ensuring availability of information to taxpayers on the system.
Support exchange and debate between LCs (and through ULAA) on experiences and best
practices.
PILOT SCOPE FOR POLICY IMPACT AND/OR DONOR REPLICATION OF THE STRATEGY

  Lessons on better practice would feed directly into LGFC strategy for local revenue
  enhancement and could be disseminated and adopted through both MLG/DS and ULAA to
  all Districts.
  A revenue collection system that encourages people to pay tax also increases revenue for
  local government and can be replicated in other districts as well.
  Given the decrease in local government resources, a system that enhances revenue
  collection and make politicians subject their political interests to district development
  interests should encourage donor support.
PARTNERSHIP OPPORTUNITIES

   Local Government Finance Commission (LGFC): spearheading revenue mobilization
   initiatives.
   DFID: as follow up to Study on Local Revenue Enhancement commissioned by LGFC and
   to complement Financial Accountability Project.
   World Bank financed Study on Framework for Monitoring Local Government Revenue
   commissioned by LGFC.
   Other donors: Exchange with experiences on LRM in respective District projects;
   If a workable revenue mobilization system was developed from UNCDF pilot project, other
   donors might be interested in supporting its replication in all or some of the district councils.

                                                67
OTHER ISSUES & QUESTIONS TO BE ADDRESSED

     Status of legislation to decentralise property tax collection?
     Flexibility to experiment with G-tax collection procedures within the law?
     What National Forum to exchange experience?


4.    STRENGTHENING LOCAL ADMINISTRATION OF JUSTICE PROBLEM(S) TO
       ADDRESS & RATIONALE

    Statutory framework for local justice administration currently in flux and unclear;
    Weak local council courts institutional structures and low public awareness;
    Local council court officials not knowledgeable about their statutory jurisdiction, not
    conversant with legal matters, human rights issues, etc;
    Local council court system not gender sensitive;
    Absence of court reference materials, poor record keeping, etc..
All of this greatly reduces access – especially by the rural poor, and by women – to judicial
remedy for key problems underlying poverty and insecurity such as land disputes, matrimonial
problems, rape, paternity disputes, petty theft, etc..
STRATEGY, NATURE & SCOPE OF ACTIVITIES TO ADDRESS PROBLEM(S)

   Devise procedures and guidelines for conducting local court business and professionalizing
   the local council court system;
   Train office bearers in the operation of local council courts, territorial jurisdiction of local
   courts, legal jurisdiction, powers of local courts, principles of natural justice, record keeping,
   remedies; appeals; etc; Main stream gender issues into the local council court system;
   Minor “retooling” of physical facililities of local courts;
   Ensure wider public knowledge of the local court system;
   Oversee and monitor implementation, and draw lessons as to feasibility of replication in
   other districts and implications for revising the statutory framework.
PILOT SCOPE FOR POLICY IMPACT AND/OR DONOR REPLICATION OF THE STRATEGY

  The Government of Uganda has embarked on judicial reform through the Ministry of Justice,
  & a program to reform the local council courts is under way.
  UNCDF will be contributing to the development of an effective institutional framework for
  local council courts, effective operational modalities, capacity building, and overall
  improvement in the administration of local justice in Uganda.
  If proven, this strategy can be adopted by Ministry of Justice, and implemented nationwide
  by all Districts.
PARTNERSHIP OPPORTUNITIES

     DANIDA (heavily involved in judicial reform and professionalization of the magistrate court
     system);
     DFID (involved in the reform of commercial courts);
     Austria & other EU countries (pooling resources to support law & order reforms, i.e.,
     judiciary, DPP, prisons, police, ethics & integrity);
     If a workable system is developed, these donors might be interested in supporting its
     replication nationwide.

                                                 68
OTHER ISSUES & QUESTIONS TO BE ADDRESSED

Future evolution of statutory framework? Noting that:
   Land Act of 1998 stripped local councils of their powers to handle land disputes within
   customary framework. Concept of land boards & land tribunals at LI, LII, LIII, and LV levels
   was abolished.
   Instead Regional Land Boards for land distribution and District Tribunals for settling land
   disputes were proposed.




                                              69
6. ENHANCING THE ROLE OF WOMEN’S COUNCILS

PROBLEM (S) TO ADDRESS & RATIONALE

    Legislation has created uncoordinated, parallel Women’s Council and Local Council
    structures;
    Insufficient interaction between Women’s Councils and LCs in planning and service delivery;
    LC planning does not adequately incorporate women’s concerns and address gender
    issues;
    Local justice administration also inadequately addresses women’s concerns and gender
    issues;
    Conflict of roles between women councilors and representatives of Women Councils;
Therefore, (a) gender concerns not effectively incorporated into local council development
activities and into the local justice system (b) lower WCs’ potential for influencing allocation of
public resources is not fulfilled and (c) there is mistrust rather than cooperation betrween LCs
and WCs.
STRATEGY & ILLUSTRATIVE ACTIVITIES TO ADDRESS PROBLEM(S)

Devise and test improved and simplified procedures and guidelines for:
   Enhancing the capacity of Women’s Councils at lower levels to input ideas and proposals to
   local planning proess;
   Ensure that Women’s Councils are involved in the LC Planning and budgeting process;
   Equipping women’s councils with planning skills and techniques to mobilize resources,
   oversee the performance of service providers and contractors, etc;
   Involving Women’s Councils in monitoring of local development activities, service providers
   and contractors;
   Support exchange program between WCs and with LCs on experiences and best practices.
PILOT SCOPE FOR POLICY IMPACT AND/OR DONOR REPLICATION OF THE STRATEGY

  Procedures and guidelines to enhance the capacity of women councils can be piloted in
  both DDP and non-DDP districts for control purposes.
  Policy impact potential exists in that the performance and effectiveness of Women’s councils
  is of concern to the government. Ministry of Gender, Youth and Community is positive
  about adopting lessons and experiences that strengthen Women’s Councils.
  Potential to diffuse guidelines and practise through MLG/DS and ULAA.
  Given donor interest in gender issues, strong Women’s Councils could attract donor support
  as a potential entry point to address women’s issues and concerns within the context of
  decentralization and poverty alleviation.
PARTNERSHIP OPPORTUNITIES

   Various donor agencies place high priority on Gender/Women and are looking for ways to
   promote this agenda at local level;
   Local Government Development Program spearheading more inclusive and gender
   awareness programs.
   Irish Aid program in Kumi district on community participatory planning
   Centre for Basic Research (CBR) with assistance of the Ford Foundation is embarking on
   extensive program on information gathering and dissemination in districts to boost



                                                70
      knowledge and capacity of local officials and communities. This program could be built upon
      in the pilot districts to enhance women council access to information.
      Ministry for Gender, Youth, and Community Development program on capacity building for
      women would provide a strong base for strengthening women’s councils after the pilot
      phase.
      If workable, the system for strengthening women councils could be replicated throughout
      other districts.

ANNEX: REFERENCE DOCUMENTS

1.       UNDP/UNCDF: District Development Project (Pilot) Document, 1997.
2.       UNCDF: Programme Review Mission Report, 30 July-12 August 2000.
3.       UNCDF: Programme Review Mission Report, 1-7 April 2001.
4.       UNCDF/UNDP: District Development Project-Pilot and Kotido District Development
         Project, Mid Term Evaluation, January-February 2001
5.       UNCDF/UNDP: District Development Project-Pilot, Evaluation Review, November 10-
         December 11, 1999, Final Report.
6.       UNCDF/UNDP: District Development Project-Pilot, Evaluation Review, 17 November -
         20 December 1998.
7.       UNDP: Programme of the Government of Uganda, Programme Support Document on
         Good Governance, 2001 - 2005.
8.       UNDP: Project Document on Support to Local Council Courts, 2000.
9.       Government of Uganda: Local Council Courts Bill, 2000.
10.      UNDP and Government of Uganda: Policy Analysis and poverty Monitoring Project.
11.      UNICEF: Guidelines for Formation of Parish Development Committees.
12.      Ministry of Local Government: Decentralization in Uganda: An Agenda for the Years
         2001 - 2005, May 25, 2001.
13.      Government of Uganda: Fiscal Decentralization in Uganda; The Way Forward, Final
         Report, January 2001.
14.      Government of Uganda/Local Government Finance Commission: Revenue Sharing
         Study, November 2000.
15.      Ministry of Local Government/Donor Coordinating Office: Projects Coordinated by DCO,
         2001.
16.      Constitution of the Republic of Uganda, 1995.
17.       The Local Governments Act, 1997.
18.      The Land Act, 1998.




                                                71
ANNEX:        LIST OF PEOPLE CONSULTED

GOVERNMENT MINISTRIES

Ministry of Local Government
Permanent Secretary

Decentralization Secretariat
Edward A. Mugabi/Director
Innocent N. Mulindwa/Chief of Division, Training and Staff Development
Francis X.K. Wagaba/Chief of Division, Investment and Development Planning

Programme Management Unit
Martin Onyach-Olaa/Coordinator

Donor Coordinating Office
Benjamin Kamumanya/Donor Coordination Officer

Ministry of Finance, Economic Planning and Development
L.K. Kiiza/Commissioner of Taxes

Ministry of Water, Lands and Environment
Eddie Nsamba-Gayiiya/Ag Chief Government Valuer
Charles Okolong/ Senior Government Valuation Officer

Ministry of Jusstice
His Worship Stephen Musota/Chief Registrar, High Court of Uganda

Ministry of Gender, Labour and Social Development
Elizabeth Kyasiimire/Commissioner/gender, Culture, and Comm. Development
Maggie Mabweijano/Assistant Commissioner
Ida Kigonya/Principal Women in Development Officer/Training

Local Government Finance Commission
Dick Odur/Director

Uganda Revenue Authority
Feddy B. Mwerinde/Commissioner/Internal Revenue Department

COUNCILS

Kabale District Council
All Senior Officials who attended the PTC Meeting of July 18-18, 2001

Hamurwa Sub-county
R. Muhigwa/Sub-county Chief
Other Officials

Kamganguzi Sub-county
Sub-county Accountant


                                              72
Jinja District Council
S. F. Muvumba/Chairman
James Isanga/Vice Chairman
Binima Kamur-Kamur/District Speaker
Isiko Kawamguzi/Secretary for Health and Works
Sarah Nampala/Deputy Speaker
Betty Bamugoloza/General Secretary and Gender Secretary
Benan Moses Kigenyi/Clerk to Council
Edward Galabuzi/Deputy Chief Administrative Officer
Wekia/Chief Internal Audit Officer
District Education Officer

Mafubira Sub-county
Richard Gulume/Chairman
Jalia Kitto/Vice Chairperson
George Sungwa/Secretary for Security
Thomas Musumba/Administrative Officer

Mukono District Council
Solomon Ssonko/District Planner

Mukono Town Council
Muyanja J. Ssenyonga/Mayor
Joseph Kimbo/Town Clerk
Dan Kawesi/Assistant Town Clerk
Josiah Serunjodi/Town engineer
James Mayaja/Budget Officer

DONORS

UNDP
Daouda Toure/Resident Representative
Dan Temu/Deputy Resident Representative
Ngila Mwase/Economic Advisor

UNICEF
Grace Ekuda/Programme Officer (Planning)

UNCDF
Annet Mpabulungi/Programme Analyst

WORL BANK
Robert Blake/Country Programme Manager

DfID
Tim Williams/Governance Advisor

EUROPEAN COMMISSION
Jean Marc-Ruiz/ an official

AUSTRIAN DEVELOPMENT COOPERATION

                                           73
Jaap Blom/ an official

BELGIAN EMBASSY
Kalders Jos/ Head of Development Section

IRELAND EMBASSY
Frank Ryan/Public Sector Management Specialist

ROYA DANISH EMBASSY
Berit Basse/First Secretary
Daniel Iga/Programme Officer

THE NETHERLANDS EMBASSY
Rein Koelstra/First Secretary

WORKSHOPS
1.  The 14th Project Technical Committee Meeting, 17-18 July 2001, Kabale District Head-
    quarters.
    --Attended by over 50 participants.

2.     Stakeholders Consultative Workshop, 27 July 2001, Equatoria Hotel, Kampala
       Attended by over 30 participants.

CONSULTANTS

Peter Wanyande/UNV/Human Rights and Equity Project
Maria G. K. Mayiga/UNV/Human Rights and Equity Project
Peter Omurangi/PMU/Gender Mainstreaming
Stella Mukasa/Nordic Consulting Group/Local Council Courts




                                            74
                              Summary of Donors Supporting Decentralization and Governance in uganda




      Donor              District (s)                                Focus                                   Project Cost            Durat



                                                Construction of Health centers, primary schools,
                                                dormitory at Kisoro Primary Teachers College.


Austrian Government     Kisoro District         Construction of feeder roads                                US$ 2.5 Million      Renewed u
                                                Supporting adult literacy classes
                                                Providing loans to poultry and piggery farmers etc..




                                                Rehabilitation of rural feeder roads.
Ireland Government     Kabale District          Construction of administration block.                       US$6.3 million       Renewed u
                                                Construction of primary school and provision of
                                                furniture.
                                                Renovation of Kagadi Hospital.




                                                Constructin of primary school blocks
                                                Provision of water facilities
                                                                                                            Irish Dollars 2.9
     Irish Aid          Kumi District           Training of various cadre of staff and district leaders           million            Upto 2
                                                Training in participatory planning



                                                Studies undertaken in basic primary education, food        Irish Dollars 2.25
     Irish Aid         Kiboga District          security, water and sanitation, health                           million             Upto 2




                        Uganda Local                                                                      Uganda Shillings 3.1
     DANIDA             Government              Multi sectoral and covers support to various districts          billion              Upto 2
                      Development Fund
                                 Summary of Donors Supporting Decentralization and Governance in uganda




        Donor                    District (s)                                     Focus                              Project Cost        Durat



                                                                 To improve the quality of health, education,
  Belgian Government           Kasese District                   infrastructure, school facilities, planning and    BEF 208 million     Up to
                                                                 and management capacity.                           (US$ 5.6 million)
                                                                 Project to start in September 2001.

                                                                 The New Netherlands Support Programme
                         Arua, Nebbi, Moyo,                      (Phase II) with the following components:
Netherlands Government   Adjumani, Lira, Soroti,                                                                    NLG 31,315,000      2002 to
                         Katakwi, Yumbe Ka                 - Budget support to the nine districts;
                                                           - Technical assistance for capacity building;
                                                           - Support to NGOs in West Nile.
                                                           - Support to Auditor General to commission the
                                                             auditing of accounts for the 9 districts.

                                                        Household Agricultural Support Programme (HASP)
                                                                 Managerial and technical support to household
  Danish Government      Kabarole, Bundibugyo                    projects.                                          DDK 32.5 million    1998 to
                                                                 Provision of credit and small one time grants
       DANIDA            Rakai, Masaka, Pallisa,                 to
                         Tororo, Moyo                           household projects.
                                                                 Adaptation and introduction of improved
                                                                 agricultural
                                                                technology.


                                                   EDF/Micro Projects Programme (MPP)
                                                            Aims to improve the livelihood of more
   European Union        Moyo, Arua, Yumbe, Nebbi,          marginalised                                            ECU 20 million       Upto 2
                         Kotido, Moroto, Nakapiripit,           people and communities by reducing poverty.
                                                                  Emphasis on construction of physical facilities
                         Bundibugyo, Kasese                       to
                                                                support primary education, health, water and
                         Kabarole, Kamwenge,                    sanitation.
                                                                  Support capacity building of local and
                         Kyenjonjo, Rukungiri                     authorities
                                                                and communities to develop and maintain these
                                                                facilities.
                   Summary of Donors Supporting Decentralization and Governance in uganda




 Donor             District (s)                                   Focus                              Project Cost    Durat




                                        District Development Support Programme
                                                   Raise household and rural incomes through
                                                   support to traditional cash crops (coffee and
                                                   bananas).

                                                  Provide clean water, sanitary facilities and
                                                  primary
IFAD/BSF     Hoima, Kibale, Kabarole              Health care.                                      US$ 20,644,000   6 yea


                                                  Improve food security through production
                                                  support
                                                 to women
                                                  Enhance local governance.
                                                  Provide savings and credit services to
                                                  Women's Groups and Community Based
                                                  Credit Associations.


                                                  Construct and maintain feeder roads.
                                                  Capacity building for district administrations.


                                        Area Based Agricultural Modernization Programme
           Kisoro, Kabale, Kukingiri,   (AAMP).
           Ntungamo, Mbarara,                     Aims at increasing incomes of the rural poor
IFAD/ADB   Bushengi, Kasese,                      communities through supporting agricultural       US$ 26 Million   6 yea
                                                  commercialization, developing rural
                                        infrastructure
                                                  (roads and livestock infrastructure) and
           Bundibugyo, Kabarole         community
           Sembabule                             development activities.
                 Summary of Donors Supporting Decentralization and Governance in uganda




Donor            District (s)                                       Focus                          Project Cost     Durat




                 Nationwide              Public service reform programme                           US$ 4,846,527   1997 -




                   National              Support to the Office of the Auditor General, Phase II.   US$ 1,404,399   1998 -
 UK


                 Nationwide              Decentralization Support Programme DFID.                  US$ 4,410,100   2001 -




                   Various               Financial Accountability Programme (DFID).                US$ 296,000     2000 -




        Arua, Mbale, Rakai               Decentralization and human demand assessment from         US$ 2,000,000   2000 -
        Mbarara, Kampala                 the perspective of the district.
USA


        Gulu, Kamuli with                IPC/USAID Uganda Decentralization Project.                US$ 3,200,000   1999 -
        possibility of additional 6
        districts for the next 3 years
                      Summary of Donors Supporting Decentralization and Governance in uganda




  Donor               District (s)                               Focus                         Project Cost     Durat




                 Makerere University   Legal Research and Legal Education at the Law
                                       Development Center, Faculty of Law-Makerere
                                       University.


             Parliamentary Commission Parliamentary Commission (training, library, equipment
                                       and financing legal education in the USA for female
                                       lawyers).




                      Nationwide       Policy analysis capacity building.                      US$ 7,000,000   1994 -




             Jinja, Kotido, Kabale,    District Development Project.                           US$ 9,256,500   1998 -
             Mukono, Arua




UNDP/UNCDF   Kalanga, Nebbi, Hoima,    Support to Local Council Courts.                        US$ 373,350     2001 -
             Mpigi, Kisoro, Apac,
             Pallisa, Bugiri




                      Nationwide       UNDP/Government Second Country Cooperation              US$ 3,300,000   2001 -
                                       Framework for Uganda




                        Kotido         Kotido District Development Project.                    US$ 2,693,493   1999 -
                     Summary of Donors Supporting Decentralization and Governance in uganda




  Donor              District (s)                                 Focus                         Project Cost     Durat




                     Nationwide           Institutional Capacity Building Programme - IDA      US$ 12,740,000   1995 -
World Bank


                     Nationwide           Instional Support for External Aid Management ADF.   US$ 1,911,000    1998 -




             Adjumani, Apac, Bugiri,      Local Government Development Programme - IDA.        US$ 80,700,000   1999 -
             Bundibugyo, Bushenyi,
             Gulu, Iganga, Kabarole,
             Kabale, Kalangala, Kamuli,
             Kapchorwa, Katakwi,
             Kiboga,
             Kitgum, Kumi, Luwero,
             Mbale, Moroto, Moyo,
             Mpigi.
             Mubende, Nakasongola,
             Nebbi, Mtungamo, Pallisa,
             Rukingiri, Sembabule,
             Tororo, Pader, Kyenjojo,
             Mayuge, Kamwenge,
             Kanungu, Nakapiripit,
             Wakiso, Sironko and
             Kebramaido, and all the
             13 municipalities.


                     Nationwide           Public Service Reform Programme - IDA.               US$ 39,000,000   1997 -




                       Various            Second Economic and Financial Management.            US$ 34,040,000   2000 -

								
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