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.
