UGANDA

Uganda is a democratic republic, and unitary country with a governance system comprising national and local governments. It is a presidential republic where the President serves as the head of the state and the head of government.

The Constitution (1995) provides for a system of decentralisation and local governments, which is further consolidated in the Local Government Act 1997 (Cap. 243). The structure of local governments differs between urban and rural settings. In urban settings, there are city councils, municipal councils, division/town councils, ward councils and cell councils. In rural settings, the subnational government structure includes district councils, sub-county councils, parish councils and village councils.

Local government elections for all lower-level governments are held every five years. Candidates are elected on a party ticket but independents are also allowed to contest. In addition to the universally elected councillors, two more councillors, at least one of whom must be a woman, are directly elected by members of their respective local organisations to represent youth, disabled and elderly groups. Elections to the lower levels of the local government structure are conducted by secret ballot (in parishes) and through lining up (in villages). In July 2018, the government organised elections for village councils for the first time in 17 years. The last election for district/city, municipality/city division, and sub-county/town councils was held in January 2021.

In order to achieve greater self-governance and a more responsive public sector, Uganda’s 1995 Constitution provided for an extensive system of local government. Schedule 2 of the Constitution provided the first clear distinction between central and local governments’ roles. Since 2005, the tendency in Uganda seems to be one of re-centralisation of powers and authority, as the central government has been more assertive over local affairs, while the administrative powers and financial resources of local governments have gradually eroded.

Despite a constitutional framework defining a strong, devolved local government system, there is a considerable gap between the de jure status of local governments in Uganda and the de facto degree to which local councils are able to control local affairs. Although local governments at the district level are corporate bodies with their own political leadership, their ability to plan and manage their own affairs is limited.

TERRITORIAL ORGANISATION
Municipal and sub-municipal levels [1]	INTERMEDIATE LEVEL	REGIONAL LEVEL	TOTAL NUMBER OF SNGs (2021)
135 districts 10 cities 31 municipalities The City of Kampala
Average municipal size: 315 455 inh. per district and city (w/o municipalities) · 232 943 inh. per urban local governments (cities and municipalities)
177			177

[1] Name and number of sub-municipal entities:
2 184 sub-counties
580 town councils
89 municipal divisions
20 city divisions
10 595 parishes
70 626 villages

OVERALL DESCRIPTION: According to the country’s Constitution under the national objectives and directive principles of State policy, “The State shall be guided by the principle of decentralisation and devolution of government functions and powers to the people at appropriate levels where they can best manage and direct their own affairs”. Therefore, although the country operates under a unitary system, it is highly decentralised politically. The total number of 177 subnational governments does not include lower-level local councils (LC3, LC2 and LC1), such as division, town, parish, and village, which are considered sub-municipal entities.

MUNICIPAL AND SUB-MUNICIPAL LEVELS: Ugandan territorial governance structure recognises five levels of local councils (LCs) below the national level (four in rural areas). The lowest level (LC 1) corresponds to villages (or in the case of towns or cities, to neighbourhoods). The highest level (LC5) corresponds to districts and cities. Intermediate subdivisions in rural areas include the parishes (LC2) and sub-counties (LC3). Urban areas have a somewhat different territorial governance structure including city (LC5), municipality (LC4) and town councils (LC3), in a structure that generally mirrors the rural system. For the purpose of this profile, LC5 is defined as the municipal level and LC4 and LC3 as the sub-municipal level.

An important legal distinction should be made between local government councils (corporate bodies empowered by the Local Government Act of 1997 where the council is the highest political authority in its area of jurisdiction) and administrative unit councils (where councils serve as political units to advise on planning and implementation of local services). For instance, in rural areas, only the district councils and the sub-counties are local government councils. In urban areas, city, municipal and town councils are local government councils. Municipalities report to districts in whose territory they are located. However, they are financially independent. Municipalities are vote holders and receive direct grants from the centre appropriated to them by parliament. In terms of planning, municipal council plans are supposed to be integrated in the district plans. They also share services of District Service Commission, District Land Board, Local Government Public Accounts Committee.

The City of Kampala has a special status under Kampala Capital City Act (2010) and is managed through the Kampala Capital City Authority (KCCA). KCCA has an elected council headed by a Lord mayor but enjoys a special status with the central government. The Lord mayor is elected by universal adult suffrage through a secret ballot. The latest election of the Kampala City Council took place in January 2021. Besides the Lord mayor, the KCCA has a ministry responsible for its administration (Ministry for Kampala and Metropolitan Affairs). The ministry mandate covers the metropolitan areas which includes other local government jurisdictions of both municipal councils and districts in the Greater Kampala Metropolitan Area inclusive of 15 municipalities.

In addition to the vertical fragmentation of the local government system, the structure of local governments in Uganda has become considerably more fragmented at the district level over the past 20 years as well. Uganda has moved from 39 original districts in 1993 to 45 in 1997, 80 in 2006, 127 in 2018 until reaching the 135 districts as of 2021.

The Uganda Vision 2040 and third National Development Plan for Uganda have recognised the need for regional and strategic cities beyond the capital to drive the urbanisation agenda. As part of this, the government of Uganda has created fifteen cities in the country, in addition to the capital city of Kampala. Effective 1 July 2020, 10 cities became operational. These are: Arua, Mbarara, Gulu, Jinja, Fort Portal, Mbale, Masaka, Lira, Soroti and Hoima. The remaining five cities are to become operational by July 2026 after general elections.

The Local Government Act of 1997 specifies the roles and responsibilities of local governments, separately for rural and urban local councils. Schedule 2 of the Act requires local governments to provide a broad range of basic services ranging from education to water provision and urban services. Furthermore, the Local Government Act specifies functions and services devolved to lower local government councils (i.e., the sub-county level in rural areas and town council and division councils in urban areas). In practice, however, the district level performs the bulk of service delivery responsibility over local services. This is partly due to the depth of fiscal decentralisation where lower local government functions are very inadequately funded. The central line ministries also often continue to be extensively involved in different aspects of local service delivery.

Main responsibility sectors and sub-sectors
SECTORS AND SUB-SECTORS	Municipal level (cities and districts)
1. General public services (administration)	Civil status registry; Statistical office; Public buildings and facilities
2. Public order and safety	Fire protection; Civil protection; Criminal justice
3. Economic affairs / transports	Agriculture, forests and fisheries; Local economic development/promotion; Tourism; District and community access roads; Public transport, public vehicle parking
4. Environment protection	Sanitation; Refuse collection and disposal; Cemeteries and crematoria; Slaughterhouses; Environmental protection; Consumer protection; Public parks, gardens and recreation grounds
5. Housing and community amenities	Town planning; Regional planning; Public lighting; Water supply (joint)
6. Health	Primary care (discretionary); Hospitals (discretionary); Health protection (discretionary)
7. Culture & Recreation	Theatres and concerts; Museums and libraries; Parks and open spaces; Sports and leisure facilities
8. Education	Pre-school (kindergarten and nursery); Primary and secondary education; Vocational and technical
9. Social Welfare	Family welfare services; Welfare homes; Social security

Scope of fiscal data: local councils

SNA 2008

Availability of fiscal data: High

Quality/reliability of fiscal data: Medium

GENERAL INTRODUCTION: The Constitution and the Local Government Act mandate local governments to collect revenue from a number of specified sources, formulate plans and approve budgets, allocate expenditure, and make investments in a wide range of services. The development budgets of local governments are invariably funded with conditional and equalisation grants, a large proportion of which comes from external donors. The share of public sector resources being transferred to local councils (i.e., funds appropriated by parliament for local government from the national budget) has stagnated over time at around 15% and reduced to 13.7% in fiscal year 2021/2022.

Initiatives continue to deepen and consolidate reforms in public financial management (PFM) in local governments that aim at further strengthening and sustaining accountability, transparency and efficiency in public expenditure management. The initiatives include: rollout of the integrated financial management systems (IFMS) in higher local governments and implementing other computerised financial management systems. In FY 2019/20, the IFMS was introduced in 47 districts and 7 municipal councils, bringing the total to 115 districts and 41 municipal councils (including the 10 new cities). The government of Uganda started implementing programme-based budgeting (PBB) replacing output-oriented budgeting in FY 2017/18. Under PBB, the main emphasis is on outputs and outcomes to assess achievement of strategic objectives. PBB was rolled out to local governments in FY 2018/19.

As of FY 2017/18, the central government introduced a new local government performance assessment system aligned with intergovernmental fiscal transfer reforms to increase the adequacy, improve equity and ensure efficiency of LG financing. The assessment for FY 2019/20 was conducted in 146 of the 175 LG votes (district and municipal local governments), of which 127 districts and 19 municipalities were operational as of July 2019. In addition to this, 22 municipalities were assessed under the World Bank Uganda Support to Municipal Infrastructure Development (USMID) programme. The 2019/20 assessment generally showed tremendous improvement in compliance to all accountability requirements compared to LGPA 2018/19. Specifically, 45 out of 146 (31%) subnational governments complied with all the six requirements, while 92 out of 146 (63%) local governments complied with five requirements. The assessment results were used to inform, among others: appointment of LG accounting officers for FY 2020/21, allocations of development grants for FY 2020/21, and the government annual performance report (GAPR) for FY2019/20. The results were also used to devise strategies for redress of identified areas of weakness at both local government and ministry, department and agencies (MDA) levels.

Subnational government expenditure by economic classification
2019	Dollars PPP / inhabitant	% GDP	% general government	% subnational government
Total expenditure	76	3.4%	16.3%	100.0%
Inc. current expenditure	68	3.0%	22.3%	88.9%
Compensation of employees	52	2.3%	55.1%	68.6%
Intermediate consumption	12	0.5%	10.3%	15.6%
Social expenditure	4	0.2%	97.8%	4.8%
Subsidies and current transfers	-	-	-	-
Financial charges	-	-	-	-
Others	-	-	-	-
Incl. capital expenditure	8	0.4%	5.2%	11.1%
Capital transfers	-	-	-	-
Direct investment (or GFCF)	8	0.4%	5.4%	11.1%

EXPENDITURE: In 2019, the total subnational government expenditure increased in nominal terms as compared to 2016 (by 1/3 against the baseline year of 2016, or from USD 57 to USD 76 PPP per inhabitant). However, the share of subnational expenditure in the total general government expenditure dropped slightly from 17.2% in 2016 to 16.3% in 2019. As in the previous years, subnational government expenditure was dominated by current expenditure, especially staff expenditure that amounted to 68% of total expenditure. The expenditure pattern demonstrates income inequality between the central government and local government employees. Although in 2019 local governments employed 1.5 times more civil servants (without teachers) than the central government, their wage bill was only 55% of the general government, implying a larger number of low paying jobs at the local level.

DIRECT INVESTMENT: Subnational expenditure is characterised by a low share of direct investment (investment in nonfinancial assets) at 11.1% of the total. This is higher than in 2016 (6.3%) but, as a percentage of GDP, the increase is insignificant. In 2019, the main area of capital investment was non-resident buildings (57.5%), such as roads and institutional buildings, which has been the trend for at least the past decade. The public-private partnership (PPP) framework is in place (the PPP Act was passed in 2015) but local PPPs are generally management arrangements whereby a private sector manages local government assets (e.g., markets) and remits an agreed share of revenues/flat payments to local governments. There are no examples of local build-operate-transfer-type PPPs.

Subnational government expenditure by functional classification
2019	Dollars PPP / inhabitant	% GDP	% general government	% subnational government
Total expenditure by economic function	60	2.6%	-	100.0%
1. General public services	14	0.6%	10.7%	23.1%
2. Defence	-	-	-	-
3. Security and public order	0.0	0.0%	0.5%	0.0%
4. Economic affairs/transports	7	0.3%	8.2%	12.6%
5. Environmental protection	1	0.0%	13.8%	0.8%
6. Housing and community amenities	3	0.1%	15.8%	4.5%
7. Health	9	0.4%	26.4%	14.7%
8. Recreation, culture and religion	0	0.0%	6.9%	0.1%
9. Education	26	1.2%	41.5%	43.8%
10. Social protection	0	0.0%	5.6%	0.5%

In 2019, education was the largest expenditure item at the subnational level, although its share dropped from 52.5% in 2016 to 41.5% in 2019. The share of general public services decreased by 6.2%, whereas health expenditure remained almost unchanged: 14.7% vs. 12.9% in 2016. Taken together, these three sectors accounted for about 85% of all subnational expenditure.

The share of expenditure in economic affairs/transport and housing/community affairs increased significantly, by 9.5% and 2.2%, respectively. Expenditures for environmental and social protection also increased, reflecting the government’s increased attention to social protection and local climate change adaptation and mitigation in the context of global climate change. Yet, even when taken together, both economic affairs and environmental protection account for just 1.3% of the total.

Subnational government revenue by category
2020	Dollars PPP / inhabitant	% GDP	% general government	% subnational government
Total revenue	68	3.0%	21.1%	100.0%
Tax revenue	1	0.0%	0.4%	1.5%
Grants and subsidies	66	2.9%	-	96.5%
Tariffs and fees	1	0.1%	-	2.1%
Income from assets	-	-	-	-
Other revenues	-	-	-	-

OVERALL DESCRIPTION: Subnational government revenues showed a steady growth between 2016 and 2020 by 13%, increasing from USD 60 to USD 68 PPP per inhabitant. However, 90% of this increase is explained by the increase in grants and subsidies rather than by improved own source revenue collection. The overall structure of subnational government revenues remained approximately the same, with heavy reliance on central government grants and subsidies at around 96% of the total. Subnational governments have few tax revenues. All taxes come into effect under authority of an act of parliament, which determines the base and tax rates. However, local governments both rural and urban have the power to determine the base and rates for non-tax revenues which are approved by respective councils. In both rural and urban subnational governments, revenue is collected by lower local governments but higher local governments also collect some revenues, particularly property tax and other residual fees like bid application fees. In addition, subnational governments received 3% of their total revenue from international organisations in the form of current grants.

A significant share of subnational revenue was indirectly provided by donors through grants to the central government, which were on-granted to local governments. In particular, in 2020 donors funded 48.0% of the budget for general public services, 31.7% for economic affairs, 4.6% for health, and 2.5% for education. Donor funding demonstrated an interesting trend related to the COVID-19 response: the share of donor support for general public services increased by 38.4% as various enforcement and protective measures were categorised under this function rather than under health. At the same time, the central government started implementing its Domestic Revenue Mobilisation Strategy (DRMS) for 2019/20 – 2023/24 in a bid to increase the proportion of expenditure financed using domestic revenue. A Local Revenue Mobilisation Strategy has also been designed focusing on reforming local taxes and fees regime and automation of administration and management processes.

TAX REVENUE: Subnational tax revenue remained unchanged as a share of the total subnational revenue in comparison to 2016, at 1.5%. Local governments in Uganda can levy taxes and receive non-tax revenue as provided in article 191 of the Constitution.

A typical revenue structure in Uganda is predominantly composed of direct taxes on personal income under a local service tax, wealth tax through property rates, taxes on consumption through user charges on services rendered, and production through permits, licenses, fees on agriculture produce and business levies. In the recent past, taxes on property and user levies have become more prominent than direct taxes on personal incomes and wealth. Locally raised revenue is, by law, shared between district councils (35%) and sub-county councils (65%) as well as between city and municipal councils (50%) and their divisions (50%).

In 2020, the three main sources of revenue included taxes on properties (16.7% of subnational tax revenue), taxes on goods and services (36.0%), and other taxes 47.2%. Multiple property rate exemptions (e.g., exemption of owner occupied residential and rural properties) as well as delays in property rate valuation, which makes it illegal for local governments to collect this tax, do not allow full realisation of the property tax collection. Subnational governments in Uganda did not demonstrate an improving trend towards fiscal sustainability although 2020 was admittedly a challenging year due to the breakout of the COVID-19 pandemic and strict national and local lockdowns.

GRANTS AND SUBSIDIES: In 2020, grants and subsidies remained by far the most important source of subnational revenue, reaching 96.5% of subnational government revenue. Subnational governments in Uganda benefit from seven sectoral grants: agriculture, works and transport, health, education, water and environment, social development and public sector management.

Sector grants include different combinations of conditional (wage and non-wage) and development grants. Development grants are designed for capital investments. The public sector management grant includes two unconditional grants: the district unconditional grant and the urban unconditional grant.

In addition, districts are entitled to the district discretionary development equalisation grant (DDEG). The allocation formula for the unconditional DDEG grant uses five criteria with differing weights for different local governments depending on their particular situation, namely: conflict (5-3%), constant (fixed allocation 10-5%), rural population/ urban population (30% for rural and 72% for urban), poverty headcount (50% for rural and 20% for urban), and land area (5% for rural and 0% for urban).

In 2020, conditional wage and non-wage recurrent grants made up 87.3% of total central government transfers, leaving 12.7% for capital investment. Unconditional and discretionary grants accounted for 10.0% of total central government transfers. Hence, limited fiscal space at the subnational level remained an issue that negatively impacted local governments’ autonomy and capacity to deliver an effective COVID-19 response.

OTHER REVENUE: The majority of local revenue (particularly in districts) is generated from fees and fines, making on average nearly half of the total local revenues. In 2020, the revenue from tariffs and fees remained at the same level as in 2016 (2% of subnational government revenue) and its per capita amount in USD PPP also remained the same. Administrative fees for the sale of goods and services amounted to 93% of the total other revenue. Local governments do not have legal discretion to change the prescribed licenses and fees to suit local economies (as per the Trade Licensing Act as amended in 2017) and in most cases no collection has been done.

Underutilisation of revenue from property and other assets remains a persistent challenge to local governments. Collectively, Ugandan local governments (without the major urban centres) own over half a billion USD in assets, ranging from equipment and machinery to public land and infrastructure. Property income made up only 7% of other revenue in 2020. The Local Government Finance Commission recommended in 2013 that rural local governments should introduce a property service tax (PST) by creating a by-law to assess all residential properties exempt under the rating Act. However, this proposal has not been enacted to date.

Subnational government fiscal rules and debt
2020	Dollars PPP / inh.	% GDP	% general government debt	% SNG debt	% SNG financial debt
Total outstanding debt (consolidated)	0.6	0.0%	0.0%	100.0%	-
Financial debt	-	-	-	-	-
Currency and deposits	-	-	-	-	-
Bonds / debt securities	-	-	-	-	-
Loans	-	-	-	-	-
Insurance pensions	0.2	-	-	31.7%	31.7%
Other accounts payable	0.4	-	-	68.3%	68.3%

FISCAL RULES: At the central government level, the government applies the Charter for Fiscal Responsibility whose objective is to anchor fiscal policy on maintaining fiscal and debt sustainability. At the local government level, fiscal rules require local governments to have a balanced budget and establish a maximum ceiling of 60% of own generated revenues for local government debt and guarantee loans. The accounting officer appointed by the secretary to the treasury (district chief administrative officer or town clerk) is ultimately responsible for financial administration of a local government unit. The accounting officer prepares and submits half-year and annual financial statements, the latter being audited on an annual basis by the Office of the Auditor General. The onset of the COVID-19 pandemic proved very challenging and severely disrupted efforts to meet the objective on the national fiscal balance. The global and domestic response measures have adversely affected the pace of economic activities and dented public finances resulting in higher fiscal deficits.

DEBT: Despite the significant widening of the national fiscal deficit, the public debt to GDP ratio in net present value is estimated at 40.8% of GDP for 2020, which is below the ceiling of 50% required in the Charter. Due to a constraining borrowing framework for subnational governments as well as the decreased level of economic activity during the COVID-19 lockdown, the increased level of national debt marginally reflected on the indebtedness of subnational governments (which is below 0.1% of the general government debt). Borrowing by local governments consists of short-term borrowing for goods and service received on credit, (because of the borrowing thresholds tied to annual own source revenue collection which is very low for most districts). There are no regulatory provisions for borrowing from capital markets. Subnational debt is distributed between two categories: other accounts payable, which include payments for goods and services delivered on credit (68.3%) and insurance pensions (31.7%).

According to the Local Government Act (Schedule VI), a local government council may raise loans by way of debenture, issue of bonds, or any other method, in amounts not exceeding 25% of the locally generated revenue provided that a local government council demonstrates ability to meet its statutory requirements. A cabinet proposal was prepared in 2020 to enhance the borrowing powers of local governments by establishing their annual repayment obligation at a maximum 35% of the total annual locally generated revenue of the previous year but no action has been taken to date. In addition, the proposal suggests establishment of a subnational pooled financing mechanism to facilitate the access of local governments to capital markets. The Public Finance Management Act of 2015 allows the minister of finance to guarantee the repayment of the principal money and the payment of interest and other charges on a loan raised within or outside Uganda by a local government council, subject to the approval of parliament.

Currently, no debt and borrowing market exists for local governments. The depth and capitalisation of Ugandan markets are low and there is no regulation on local government shares or bonds. The upside of this situation is that Ugandan local governments have no market loans or debts; their indebtedness consists of outstanding payments to providers of goods and services.

TERRITORIAL MANAGEMENT OF THE CRISIS: As part of the response mechanisms to contain and manage the COVID-19 crisis, in April 2020 the government of Uganda (GoU) instituted national and subnational COVID-19 Task Forces to implement COVID-19 containment measures and manage recovery. The presidential directives on COVID-19 recognised local governments as essential to specific operations along with healthcare and security, though with lean structure and limited capacity. The district taskforces (DTFs) aided the local governments to contain COVID-19 and implement GoU COVID-19 containment. The DTFs were involved in case management, surveillance, health promotion, resource mobilisation and enforcement of control measures as well as continued delivery of basic services.

Withal the response was heavily centralised, with little discretion allowed to local governments. Despite the provisions of the Disaster Preparedness and Management Policy (2011) that appoint the district chairperson as the chairperson of the district emergency taskforce, the COVID-19 guidelines provided to the local governments gave this responsibility to the resident district commissioners reporting directly to the president. The central government played the major role in providing regular information and updates about COVID-19, especially in the first three months after the country went into a lockdown. Also, the central government played a key role in facilitating the activities of the DTFs in the different local governments by extending financing, equipment and technical support. The local governments’ response was heavily regulated by directives and instructions issued by the central government ministries and agencies, such as the Ministry of Finance, Planning and Economic Development (MoFPED), the Ministry of Local Government, the minister for presidency, the office of the prime minister, UPDF and others, often with little to no coordination between them.

Local governments responded fast to activate institutional infrastructure to respond to COVID-19. Committees and sub-committees were formed at the district, municipality, town council, sub-county and village levels in all districts to contain the spread of COVID-19. These committees were mainly formed along with the existing local government structure. The major sub-committees included: security, surveillance and burial committees which were mainly composed of the health technical team. Despite different districts having different subcommittees, the risk communication committee, psychosocial support, case management and testing committees, and logistics committee were more prominent.

EMERGENCY MEASURES TO COPE WITH THE CRISIS AT THE DIFFERENT LEVELS OF GOVERNMENT: The emergency measures of local governments had a limited scope due to a constrained fiscal space. It focused primarily on epidemic prevention and health issues through increased monitoring, community outreach and mobilisation to curb the infection spread as well as provision of transport for referral patients. In particular, local governments performed the following activities:

Support to the continuity of service delivery at health facilities including providing transport for health workers to and from their duty stations; Provision of requirements to meet the SOPs at all government offices and for all service delivery essential staff; Monitoring, spot checks, disinfection and equipment of service delivery facilities (including local markets) in compliance with COVID-19 protocols to ensure continuity of service; community social mobilisation and support to enforcement of COVID-19 preventive measures among the population - this included surveillance and responding to alerts for contact tracing, collection of samples for onward transmission to the Uganda Virus Research Institute (UVRI); provision of transport to support referral of patients for non-COVID-19 related essential healthcare services; Identification of beneficiaries and support to central government distribution of food assistance.

IMPACTS OF THE CRISIS ON SUBNATIONAL GOVERNMENT FINANCE: Overall, the COVID-19 crisis did not have any tangible impact on subnational finance in FY 2019/20. In nominal terms, total subnational revenue increased by 3% compared to FY 2018/19. Considering the annual inflation of 3.8% in 2020, this implies unchanged revenue in real terms. At the same time, this increase was smaller than during the previous years (8% in 2017/19 and 26% in 2018/19). Similarly, the tax revenue growth has decelerated to 5% compared to 30% in 2017/18 and 12% in 2018/19. The parliament allocated UGX 165 million (~USD 124 000 PPP) in the supplementary budget to local governments in April 2020 to finance COVID-19 response activities, including the functioning of the district taskforces. While this was welcomed by local governments, there were concerns about the irregular and late disbursements of these funds.

Some changes were recorded on the expenditure side as compared to 2018/19: expenditure for economic affairs reduced due to the decreased economic activity and restrictions on movement of personnel due to COVID-19 protocol while health expenditure increased. The system of intergovernmental transfers continued functioning (although not without its regular challenges, such as late disbursement of funds). Major PFM reforms at the subnational level also continued.

ECONOMIC AND SOCIAL STIMULUS PLANS: The government of Uganda announced the economic stimulus package to be implemented during financial year 2020/21 in the medium term in order to boost economic growth and lead the economy out of the projected economic slowdown resulting from the COVID-19 crisis and institution of containment measures. The economic stimulus package will be implemented through three major institutions: Uganda Development Bank (UDB); Uganda Development Corporation (UDC); Microfinance Support Centre (MSC) to support citizens and MSMEs that were out of business or need to improve liquidity. The GoU allocated approximately UGX 1.277 billion (~USD 960 million PPP) towards the recapitalisation of UDB, UDC, and MSC to improve the availability of investment finance and the cash-flows of MSMEs and other manufacturing firms. International finance institutions and donors like the World Bank, International Monetary Fund, European Union and African Development Bank have contributed funds to support the government set in place measures to ensure provision of relief to businesses that have been most affected by the pandemic and to foster economic recovery, amongst others.

Echoing the trend towards centralisation of COVID-19 response and recovery, economic and social stimulus plans have been designed at the central level, with very little involvement of local governments. No local recovery plans have been developed due to the limited fiscal space and competencies at the local level. This is a missed opportunity as local governments have not been able to realise their potentially significant capacity to contribute to local recovery and development following the COVID-19 crisis.