Ugandan decentralization efforts of the1990s represented an unusually authentic and powerful localgovernment reform, compared to similar efforts pursued inmany other low-income countries. However, over time thechanging interests of the central agencies, dissatisfactionwith service outcomes, and the overall dynamics of thecountry's governance resulted in the adoption of anumber of re-centralizing policies. The objective of thisreport is to take stock of the fiscal and institutionalarrangements for service delivery by local governments inthe context of district proliferation and in view of recenttrends in national public finance, as well as to identifypolicy options that could facilitate improved servicedelivery. The report finds that, while districtproliferation has not had any major effect on publicfinances so far, it may have serious adverse effects in thefuture if the institutional structures and fundingmechanisms of district governments are not adjusted to thenew realities. Its effect on public expenditure has beenrather small since an increasing number of positions indistrict governments remain vacant, and because a recentbout of inflation has eroded their wage bills. Furthermore,at present the average population of a district is roughlyequivalent to that of similar jurisdictions in othercountries. The report concludes with a number ofinstitutional and fiscal proposals designed to reduce thisrisk and to improve value-for-money in service delivery moregenerally. If Uganda manages to use district proliferationas an opportunity to implement these changes, the resultingfiscal savings and improvements in value-for-money wouldmake it much easier to cover the costs of that process.
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