Uganda continues to create new administrative units despite the lack of resources to finance their operations. At the start of the 2019/2020 financial year, 7 new districts, namely Karega, Rwampara, Obongi, Kalaki, Madi-Okollo, Kitagwenda and Kazo became operational. This increased the total number of districts to 134. In addition, 352 town councils (TCs) and 364 sub-counties were created during the past 3 years. Much as the creation of new administrative units is motivated by necessity to improve service delivery and governance, these changes have a significant impact on the national budget. The Ministry of Finance was been unequivocal in re-stating that the country lacks the resources to operationalize these new administrative units. Nonetheless, a question remains whether the government can afford to create new local governments (LGs), especially as we move towards an electioneering period.
The operationalization of new LGs has pre-requisites such as office structures, staff and other administrative resources that are vital for daily operations. These come with a hefty price tag that can only increase public expenditure. Through established guidelines, Ministry of Local Government makes a budget allocation of UGX 1 billion as a start-up fund for each new district, and an additional UGX. 100 million to a new town council created to host the district headquarters. This makes a total of UGX 7.7 billion, required as start-up for the aforementioned new 7 districts and their corresponding TCs. At the request of a district, an additional budget allocation of UGX 50 million can be provided to create a new TC. These funds are required for setting up administration units. To date, it is reported some of the new administrative units have not received any funding for start-up activities.
Besides the start-up funds, the administrative units require operational funds to enable them implement their mandate as stipulated in the Local Government Act 1997. Some of the responsibilities under their mandate include service delivery, governance and administration. The implementation of the aforementioned responsibilities cannot be achieved with utilization of local revenue, which is usually a small proportion of the total revenue requirement. Supplementary budget support through grants (conditional and unconditional) from the Central Government (CG) to the LGs is necessary.
Government tried to bypass the additional funding burden by instructing the mother districts to share the Indicative Planning Figures (IPFs) by at least 50% with the new districts created in the FY 2017/18. However, this could not materialize in most mother districts because the IPFs were small in the first instance, hence insufficient for sharing. The CG had no option but to make a separate budget allocation for the new districts in the subsequent years.
For example, the FY 2019/20 Ministerial Policy Statement for the Office of the President states that an additional UGX 6.6 billion is required to cater for the supplementary overheads resulting from districts created in FY 2016/17, FY 2017/18, and FY 2018/19. These required resources will ultimately increase the strain on the country’s budget.
Similarly, an increase in the aggregate recurrent wage and non-wage grants necessary to maintain both the new and old LGs is inevitable. The Mid Term Expenditure Framework (MTEF) for 2018/19- 2023/24 estimates that the recurrent wage and non-wage allocations will grow from UGX 4.2 trillion to UGX 5.6 trillion, and UGX 7.6 trillion to UGX 18.7 trillion respectively during the period.
Additionally, new administrative units require a political representation, which necessitates holding elections. The Parliament of Uganda reports that the districts operationalized in 2018/19, such as Kikuube, Bugweri, Kwania Kapelebyong, Kasanda, and Nabilatuk, had their respective elections delayed due to limited funds.
Beyond the costs of holding by-elections, the cost of public administration e.g. through appointing RDCs is also exorbitant. Business Focus reports that the Office of the President required that in FY 2018/19, UGX 2.7 billion be apportioned for the appointment of RDCs in 10 districts operationalized in FY 2016/17 and FY 2017/18. However, the estimated cost of constructing an RDC’s office is reported to be UGX 0.7 billion. Incase offices cannot be not constructed, funding for renting office space is provided for, in the event that District Local Governments cannot provide accommodation. Furthermore, procurement of vehicles for the RDCs in the new administrative units has major cost implications.
This, therefore, calls into question the ability of the Uganda Government to adequately fund the operationalization of the new districts given rising public expenditures and sustained budget deficit. This expenditure burden is projected to worsen given the short term requirements to finance the upcoming elections. Based on precedents observed in previous elections cycles, there may be forced cuts in LGs budgets in both FY 2020/21 and FY 2021/22 (immediately after the election). Moreover, it is also that new lower local governments will be created as part of the forthcoming electioneering cycle, notwithstanding the limited public funds available. Ultimately, this may translate into poor service delivery in the newly created units, which undermines the original objection of their formation.