Ministry of Local Government

Forging Local Economic Safety Nets: Uganda’s Road from Independence

Fifty years after independence in 1962, Uganda has braved many significant governance and economic challenges. With a young, fragile economy and democracy at the advent of independence, Uganda set out with a promise of hope to its citizens. The economy of Uganda had great potential, however previous political instability and erratic economic management produced a record of persistent economic decline that left Uganda among the world’s poorest and least-developed countries.

H.E. Gen. Yoweri, Kaguta Museveni, President of the Republic of Uganda

H.E. Gen. Yoweri, Kaguta Museveni, President of the Republic of Uganda

The 1990s were characterised by strong economic growth, along with changes in the country’s governance structures at sub-national level. In 1992, Uganda adopted decentralisation as the main mode of governance. This was later to be buttressed in the Constitution (1995) and the Local Governments Act (1997). The policy devolved powers and functional responsibilities over decision-making and service delivery to popularly elected local governments.

However, a Joint Review of Decentralisation held in 2004 revealed the serious limitations between economic policies and the benefits of the decentralisation policy. The major criticism at the time was the inability of the Government to exploit the comprehensive decentralised governance structures for more pro-poor economic development. As a result of this policy interrogation, a new and sixth objective on Decentralisation was agreed: ‘To Promote Local Economic Development (LED) in Order to Enhance People’s Incomes’.

‘The purpose of local economic development (LED) is to build up the economic capacity of a local area to improve its economic future and the quality of life for all. It is a process by which public, business and non-governmental sector partners work collectively to create better conditions for economic growth and employment generation.’

Source: World Bank

Local Governments in Uganda are continuously building networks with a variety of public and private agencies to plan, budget and implement custom-designed policies and projects geared at increasing the economic well-being of the respective communities.

The Hon. Adolf Mwesige, Minister of Local Government

The Hon. Adolf Mwesige, Minister of Local Government

Local Governments play an LED promotional role in terms of providing the right economic infrastructure, governance framework and through stimulating business development services. On the other hand, individual communities and areas within a given local government are also encouraged to adopt specific LED strategies to improve their economic competitiveness. As such, communities will continually improve their investment climate and business enabling environment and ultimately improve individual and taxable household incomes.

A number of best practices are merging and they include:

  • Ensuring that the local investment climate is functional for local SMEs
  • Encouraging the formation of new enterprises and attracting external investment
  • Investing in hard and soft infrastructure
  • Supporting the growth of particular clusters of businesses
  • Engaging in conscious regeneration of conflict afflicted northern Uganda
  • Targeting special interest and disadvantaged groups The Decentralisation Policy, therefore, offers great opportunity not only to tackle poverty at household level but also to widen the tax base of the local governments. This enables them to finance service delivery and to be more accountable to their constituents.