Uganda operates as a democratic republic and a unitary country, featuring a governance system that integrates both national and local governments. The Constitution of 1995 lays the groundwork for decentralization and local governments, further reinforced by the Local Government Act of 1997.
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. Therefore, although the country operates under a unitary system, it is highly decentralised politically.
The structure of local governments varies between urban and rural areas. In urban settings, there are city councils, municipal councils, division/town councils, ward councils, and cell councils. In rural areas, the subnational government structure includes district councils, sub-county councils, parish councils, and village councils.
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.
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.
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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.
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.
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).
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Evolution of the Number of Districts
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.
Over the past three decades, Uganda has witnessed a dramatic increase in the number of districts. From just 39 districts in 1991, the country now boasts over 135 districts, with more proposed. While decentralization was initially aimed at improving service delivery, enhancing political representation, and bringing government closer to the people, the rapid and sometimes politically-driven creation of new districts has sparked national concern.
Since 2005, the Ugandan government has been in the process of dividing districts into smaller units. Each district is further divided into counties and municipalities, and each county is further divided into sub-counties.
The regions of Uganda are known as Central, Western, Eastern, and Northern. These four regions are in turn divided into districts. The national government interacts directly with the districts, so regions do not have any definite role in administration.
Map of the regions of Uganda
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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.
Financial Aspects of Subnational Governance
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.
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.
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%.
In 2020, grants and subsidies remained by far the most important source of subnational revenue, reaching 96.5% of subnational government revenue.
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.
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.
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.
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.
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. 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.
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.
At this point, it is not more districts that Uganda needs - it is better, more functional, and better-funded ones.
The Economic and Political Cost of More Districts
While creating new districts may seem like a way to stimulate development and offer political recognition to local communities, it comes with significant economic and political costs.
High Administrative Burden
Every new district requires a full administrative structure: offices, district local governments, staff salaries, vehicles, and infrastructure. For a country with limited public resources and budgetary constraints, this represents a huge economic burden. Many districts operate without adequate funding, understaffed offices, and lack basic infrastructure to deliver even the most essential services.
Redundancy and Weak Capacity
In many cases, newly formed districts lack technical expertise and experienced leadership. Instead of improving service delivery, fragmentation spreads already limited resources even thinner. Some districts exist more on paper than in reality - with no functioning hospital, poor road access, and minimal educational infrastructure.
Politicization of District Creation
District creation in Uganda has also become a political tool. Some new districts are created to satisfy ethnic demands or reward political loyalty, rather than based on need or feasibility. This undermines national planning and fuels division, rather than promoting unity.
Why Better Districts Are More Important Than More Districts
Uganda’s real developmental need lies in improving the quality of governance and service delivery in existing districts. Here are some strategic steps that the government should consider:
Implement a Moratorium on New Districts
The government should pause the creation of new districts. This moratorium would allow for:
- Proper assessment of the current district system.
- Financial reallocation to underserved but existing districts.
- A shift from political appeasement to strategic governance.
Strengthen Existing Districts
Improving current districts should be the core of Uganda’s decentralization policy. This involves:
- Upgrading infrastructure: roads, administrative buildings, health centers, and schools.
- Improving human resources: recruiting, training, and retaining skilled civil servants.
- Enhancing funding: ensuring consistent and adequate budgets for local governments to operate effectively.
Strong districts will yield better public service delivery, improve citizen trust, and foster local economic growth.
Evaluate District Performance
There should be a nationwide performance review to determine:
- Which districts are delivering on their mandates?
- What factors contribute to well-performing districts?
- What challenges are hindering underperforming ones?
This data will be crucial for identifying best practices, allocating resources equitably, and addressing gaps in local governance.
Develop Clear, Transparent Criteria for New Districts
In the future, if new districts must be created, it should follow strict and transparent criteria, such as:
- Minimum population size to justify a new administrative unit.
- Economic viability: Is there a local revenue base to support administration?
- Geographical considerations: How far is the area from the nearest functioning district headquarters?
- Community cohesion: Can the new district foster unity rather than cause ethnic or political division?
District creation should be needs-based, not politics-based.
Encourage Regional Cooperation
Instead of dividing the country into smaller and smaller administrative units, Uganda should encourage regional collaboration across districts. Neighboring districts can pool resources, coordinate development plans, and share infrastructure like hospitals or industrial parks.
Regional cooperation can strengthen service delivery without the need for duplication, helping Uganda move toward a more integrated and sustainable development model.
Uganda stands at a crossroads in its decentralization journey. The drive to bring services closer to people is noble - but expansion without capacity is counterproductive. If not addressed, the trend of creating new, under-resourced districts may lead to economic strain, administrative inefficiency, and political fragmentation.
The solution isn’t to reverse decentralization - it’s to do it smarter.
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