Does Decentralization Enhance Service Delivery and Poverty Reduction?

Does Decentralization Enhance Service Delivery and Poverty Reduction?

Studies in Fiscal Federalism and State–local Finance series

Edited by Ehtisham Ahmad and Giorgio Brosio

Does decentralization enhance service delivery and poverty reduction? Drawing on cutting edge research, expert contributors address this fundamental question facing policy-makers in developing as well as advanced countries. This timely book builds upon insights on the recent developments in the intergovernmental literature first outlined in the Handbook of Fiscal Federalism. New empirical evidence from across the globe is presented: policy-oriented chapters evaluate fiscal federalism with an emphasis on the effectiveness of decentralized service delivery, the decentralization process in different parts of the world is appraised, and specially commissioned research focuses on the political economy process and the outcomes of the decentralization process. The role of international agencies, as explicit donors, is examined in several chapters.

Chapter 8: Uganda: Managing More Effective Decentralization

Ehtisham Ahmad, Giorgio Brosio and Maria Gonzalez

Subjects: economics and finance, public finance


Ehtisham Ahmad, Giorgio Brosio and Maria Gonzalez* 1 INTRODUCTION The complex interplay between political economy and fiscal decentralization is clearly seen in the case of Uganda, which has engaged in an ambitious decentralization reform over the last 15 years. Partly designed as an element of the political agreement following the civil war, the process quickly became enmeshed with the country’s overarching povertyreduction strategy, and as a mechanism to improve service delivery, as advocated by bilateral and some multilateral donors. The program devolved responsibility for a large number of key public services to the local level, including primary education and health services, and with only few exceptions—such as security and defense. In 1994, as the major legislative initiatives were being formulated and expenditure functions delegated, the central government employees working in the local governments officially became local employees, and hence accountable to them. Subsequently, the size of the central government was reassessed in light of the shift of many functions from the center to the local authorities. While the staff were transferred from central to local control, the center retained important financing controls, as well as an ability to determine and require spending at the local level, resulting in unfunded mandates, as discussed further below. However, the devolution of functions was not paralleled by improved revenue generation capacity, nor by the ability to make significant resource allocation decisions at the local level. It is in this light that available assessments of service delivery in key social sectors have brought, at...

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