FEATURE STORY

Creditworthiness Academy Provides Financial Management Training to Uganda’s Urban Government Representatives

May 13, 2015

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City Creditworthiness Academy participants received a certificate of completion at the end of a recent five-day intensive training program on financial management performance.


STORY HIGHLIGHTS
  • With support from the World Bank, the Ministry of Lands, Housing and Urban Development organized a City Creditworthiness Academy, a five-day intensive training for about 30 local governments to improve their financial management performance
  • As Uganda prepares to embark on its urbanization process, it presents an opportunity to build the capacities of local governments on matters of financial management
  • While Uganda’s urban local governments are growing quickly, they often have difficulty accessing the financing needed for a sustainable, resilient infrastructure

ENTEBBE, May 13, 2015 – About 30 local government representatives participated in a recent creditworthiness academy which provided training on how to improve their financial management performance.

The City Creditworthiness Academy, a five-day intensive program, which included workshops on how to prepare capital investment plans, debt management and best practices on generating their own source revenue. Town clerks, chief financial officers, representatives from 22 secondary cities and the five best performing Town Councils attended the training.

Hon. Sam Engola, State Minister for Housing, said that most of Uganda’s Urban Authorities experience financial challenges that limit their capacity to serve the urban dwellers.

“Such challenges arise out of their inability to tap potential sources of revenue,” Engola said while officiating the academy. “Over-dependence on central government subventions, the lack of capacity to collect and manage revenue, and inadequate controls/safeguards and accountability leading to misuse of public funds.”

Currently, municipalities in Uganda obtain their revenue from two principal sources which include, own source revenue which is less than 10% and Central Government Transfers, which contribute 90%. A subsidiary source of revenue is donations. As Uganda’s cities are experiencing rapid growth, local authorities are in need of ways to innovatively explore and tap revenues from all possible revenue sources, both internally and externally, rather than depend on Central Government funding.

Ms. Christina Malmberg Calvo, World Bank Country Manager for Uganda, lauded government efforts towards increasing own source revenue among urban local governments.

“Experiences from the support so far provided by the World Bank and other partners has demonstrated that Uganda urban local governments have the potential to increase their own source revenue generation,” she noted. “However, in order to achieve this, urban local governments need to improve on a number of areas along the revenue chain, namely: revenue data base, tax assessments, billing, collection, enforcement and tax education.”

At the end of the 5-day training, participants had a lively discussion about the national issues that need to be addressed for cities to move forward, and identified several key areas for action and dialogue with central government authorities. They agreed that the key enabling environment issues, in no specific order, included the legal framework for own source revenue collection, the ability to hire and set appropriate salaries above the national cap, access to financing, local level development planning, and the legal framework for Public Private Partnerships (PPPs).

Participants also agreed that it was important to provide input on the pending national PPP regulations in order to ensure that small scale PPPs, most often used by secondary cities, had an appropriate regulatory foundation and possibly a dedicated support unit within the Ministry of Finance.

The Academy is born out of the long-term collaboration between the World Bank and the Public Private Infrastructure Advisory Facility (PPIAF).

In addition to own source revenue, participants also discussed untapped opportunities for alternative financing from the private sector for infrastructure investments. According to the National Social Security Fund, they have significant resources (hundreds of millions of USD) that could be directed to creditworthy local projects. The largest investment fund in Uganda, NSSF is interested in portfolio expansion and diversity, and of course security. 

 


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City Creditworthiness Academy participants received a certificate of completion at the end of a recent five-day intensive training program on financial management performance.



Jackson Mugizi, economic planner from Ishaka District, said the five-day training was extremely useful because it equipped him with the knowledge to enable him come up with an action plan which will put his municipality on a right path to becoming creditworthy.

 “I have a better understanding and appreciation of the linkages between creditworthiness and strong financial performance and management,” he said. “I am also able to identify potential areas for follow-up that might require technical assistance.”

In terms of specific action areas, city representatives agreed that they required additional capacity building and updated technology to expand own source revenue collections. They also agreed that a national study of the employment market could be a good first step to have the necessary information to engage the Ministry of Public Services.

The Kampala Capital City Authority (KCCA) offered to share their experience in updating their financial management, which includes a unified management information system. City representatives agreed that some project finance feasibility studies would help them consider long-term financing that may include bonds.

The World Bank is currently supporting Kampala Capital City Authority (KCCA) with a $175 million credit under the secondKampala Institutional and Infrastructure Development Project (KIIDP) and the 14 municipal local governments with a $150 million credit under the Uganda Support to Municipal Infrastructure Development (USMID) Program for Results. Parallel to these support, the World Bank in collaboration with Cities Alliance and the Public Private Infrastructure Advisory Facility (PPIAF), is also providing support to Uganda urban sector in the following areas:

  • Support to five Municipal Local Governments under “Transforming Settlements for the Urban Poor in Uganda” (TSUPU)
  • Capacity building to five municipal Local Governments with focus on increase in own source revenue generation, increased institutional capacity in fiduciary (financial and procurement) management, and increased transparency and accountability
  • Support to 14 municipalities to develop their Municipal Development Strategies (MDS)
  • Support to 14 municipalities under Future Cities Africa initiative

However, the above supports are not adequate to address all the investment needs of these participating urban local governments.





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