“NATIONAL WELFARE OR LOCAL WELFARE?” THE FISCAL DECENTRALIZATION PARADOX IN UGANDA.

By

 Michael Kiwanuka
Doctoral Student College of Local Administration and Graduate School, Khon Kaen University

kiwanuka48@gmail.com Website: http://cola.kku.ac.th

Abstract

With the blowing wave for decentralization in developing countries, the biggest bulk of public service delivery is increasingly being devolved to local governments. These Countries are in the same breath adopting and enhancing fiscal decentralisation as a strategy to support devolved powers and responsibilities.  Fiscal decentralization is now seen as part of a reform agenda of many nations to strengthen their regional and local governments to meet the challenges of the 21^st Century. Indeed fiscal decentralization is being supported by the World Bank, USAID, Regional Development Banks and many others, as an integral part of economic development in developing and transitional economies. Fiscal decentralization requires central government to cede some fiscal resources and revenue-generating powers to the lower layers of governments that will effectively tap the benefits of efficiency and governance in local service delivery.

Abstract

With the blowing wave for decentralization in developing countries, the biggest bulk of public service delivery is increasingly being devolved to local governments. These Countries are in the same breath adopting and enhancing fiscal decentralisation as a strategy to support devolved powers and responsibilities.  Fiscal decentralization is now seen as part of a reform agenda of many nations to strengthen their regional and local governments to meet the challenges of the 21^st Century. Indeed fiscal decentralization is being supported by the World Bank, USAID, Regional Development Banks and many others, as an integral part of economic development in developing and transitional economies. Fiscal decentralization requires central government to cede some fiscal resources and revenue-generating powers to the lower layers of governments that will effectively tap the benefits of efficiency and governance in local service delivery.

Despite the general hype, theory and rhetoric about fiscal decentralization, it has not yet emerged as the groundswell economic development strategy that many expected. There is a paradox in determining an appropriate fiscal decentralization framework that can enable central government achieve national goals and at the same time giving local government the necessary discretion to expend local services. This is a dilemma of defining the tradeoff between central government redistribution interests and local government spending discretion. Although central and local governments have common public welfare interests in fiscal decentralization, these interests are moving in parallel line with hardly an intersection.

The study explores the paradox within the context of Uganda’s fiscal decentralization and draws attention to the emerging issues that still calls for attention in order to consolidate the country’s strong decentralization system

Key words: decentralization, fiscal decentralization, paradox, national welfare, local welfare & Uganda