PRS in Decentralized Contexts: Uganda Case Study

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PRS in Decentralized Contexts Uganda Case Study

• Kenneth Odero

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Introduction

• Uganda has pursued a Poverty Reduction Strategy
  (PRS) since 1997
  
• Poverty Eradication Action Plan (PEAP) 97
• Poverty Action Fund (PAF) 1998
• PEAP ? PRSP 2000
• Political and economic reforms beginning 1986
• The 1987 Resistance Council Statute
• The 1995 Constitution
• Local Government Act of 1997

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Decentralization trends

• Shifting responsibility from central to local
  government
  
• Capacity building
• Reforming central and local government public
  expenditure management processes
  
• Planning/budgeting
• Financial management
• Public procurement
• Monitoring evaluation

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Linkages in planning processes across levels of
Government

• Overarching role of the PEAP/PRSP
• Fiscal Decentralization Strategy (FDS)

FDS
PAF
PSR
PRSP
BFPs
MTEF
DDPs
LGA
Constitution
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The relationship between budgeting and planning
processes

• Initially, fiscal decentralization processes were
  not well adopted due to historical weaknesses in
  PEM at the sub-national level.
  
• Planning and budgeting are currently being
  integrated in the annual national planning and
  budgeting cycle through
  
• the use of MTEF
• PEM reforms

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Recurrent Transfer Budget
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Development Transfer Budget
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Local Government Planning and Budgeting Process
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Responsibilities of the Local Governments Budget
Committee

• Negotiation and agreement of allocation formulae
  and grant conditions between sector ministries
  and local governments
  
• Identification of issues for inclusion in the
  NBFP after analyzing the LGBFP
  
• Providing advice on, and acceptance or rejection
  of, amendments to conditional grant allocations
  within the RTBs
  
• Overseeing the performance of the Comprehensive
  Local Government Assessments
  
• Overseeing the coordination of Local Government
  Capacity Building by donors, central government
  and local governments and
  
• Overseeing the coordination of donor support to
  local governments and the decentralization
  process.

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Budget Consultations

• In late September, whilst the local government
  assessment is going on, the LGBC holds
  consultations with local governments to discuss
  
• Issues relating to implementation, sector
  policies and the budget cycle
  
• The RTB and DTB formats
• Allocation formulae for all grants and
• Percentage flexibility of conditional grant
  allocations to recurrent sector budgets and
  sector budget lines.

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Using fiscal instruments and policies for
alignment

• As already shown, Uganda uses a menu of fiscal
  instruments, including
  
• Conditional grants
• Unconditional grants
• Equalization grants
• Local Development Grant
• Development Transfer System
• Recurrent Transfer System

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Monitoring and evaluation

• ME systems are established at the local and at
  the national level.
  
• However, local government capacity for monitoring
  is stretched especially given the fact that some
  of their ME units were recently established.
  
• Central government level ME is stronger and can
  (legally) intervene in local government.
  
• In general, planning data exist through a number
  of household surveys conducted by the Central
  Bureau of Statistics.

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Conclusion

• Overall, Ugandas efforts at integrating poverty
  reduction into local planning and budgeting
  processes have been impressive. By instituting
  reforms in intergovernmental relations, the
  country has largely overcome its legacy of
  vertical and horizontal imbalances. However,
  other challenges still lie ahead. Despite these
  improvements, significant challenges remain in
  aligning local targets and outcomes with national
  priorities, and in building local capacity
  desperately needed to handle greater
  responsibilities of managing public service in a
  decentralized context.

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Lesson 1

• Integrating local and central government planning
  efforts is a slow process with no quick fixes,
  even in decentralized polities. Therefore,
  governments and donors should be prepared for the
  long haul. Embedding decentralization in a
  countrys laws provides a sound legal and policy
  framework for poverty reduction.

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Lesson 2

• Clearly defining responsibilities for each level
  of government to the lowest possible level,
  particularly if backed by resources and capacity
  to implement, has better prospect for improving
  the effectiveness in linking policies, plans and
  budgets.

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Lesson 3

• A clear, consistent and visible commitment at the
  highest level to decentralization, especially if
  backed by broad-based reforms, is relatively more
  likely to have a deeper, sustainable poverty
  reduction impact than say, a stop-go policy.

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Lesson 4

• Institutionally linking PRSP with the annual
  budget cycle and the MTEF is a good success
  strategy for poverty reduction.

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Lesson 5

• The number of instruments used in realizing
  fiscal transfer should be rationalized. Use of
  too many instruments can overload local
  government capacity and weaken service delivery
  and poverty reduction.

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Lesson 6

• Reviewing PRSPs and improving their content is
  just as important as the process used to
  developing them. Both process and content should
  be given equal weight and emphasise.

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Lesson 7

• It is probably useful, given the capacity
  limitations of local governments in most
  developing countries, to draw a fiscal
  decentralization strategy prior to
  implementation.

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Lesson 8

• While still weak and requiring improvement,
  Ugandas continuous monitoring and tracking of
  public expenditure goes a long way to ensure that
  the MTEF exercise not only look at planning and
  projecting expenditure, but also at efficient
  utilization of the resources.

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Lesson 9

• Ugandas monitoring of UPE is also transparent
  if any resources are released for schools, it is
  announced . . . and no funding is released until
  implementation timelines are met. It thus offers
  a "good practice" example in terms of how
  multiple stakeholders can co-manage and
  co-monitor interventions to reduce poverty.