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Op-Ed: Does creation of new districts improve service delivery?

September 25, 2012

Martin Onyach-Olaa; Senior Urban Specialist, The World Bank Daily Monitor

Lately, there has been a lot of debate regarding the proposed creation of 25 new districts through a motion that has already been tabled to parliament. If it goes through it will increase the number of districts in Uganda from the current 111 (excluding Kampala City) to 136 Districts.

The rationale given is that creation of new districts leads to improved service delivery. To assess whether this is true or not one needs to look at three factors: (i) scarce (limited) resources, (ii) opportunity cost – allocation efficiency, and (iii) use of factors of production (land, labor and capital) to produce goods and services. If land is assumed constant, then service delivery can only be improved based on how labor and capital are allocated and used by government. One would intuitively argue that if government spends more on administrative costs, the opportunity cost will be less service delivery. Such a decision would therefore result into inefficient resource allocation, lead to inappropriate combination of labor and capital, and less or poor quality goods and services.

It is argued that government spends approximately UGX2 billion per annum in wages and salaries alone to finance a new district. Put in context, this amount of money could cater for an increase in salaries of 10,000 teachers from UGX200,000 to UGX400,000 per month. It could also pave at least 4 kilometers of roads per year. When this is projected against 25 districts, we are talking of UGX50 billion per annum in wages and salaries alone. The opportunity cost is therefore huge.

Creating a district by itself therefore, unless it is accompanied by adequate staffing (labor) and capital for investment and associated operating costs, will not lead to improved service delivery. As a result of the proliferation of new districts, up to 58 percent of local government positions are not filled, and there’s a non-wage recurrent cost shortfall (gap) of UGX627 billion per annum. It is estimated that primary education and primary health care have annual recurrent funding gaps of UGX65 billion and UGX18 billion respectively.

Advocates of creation of new districts argue that some new districts have exhibited much better performance than their mother districts. This is a simplistic argument because when a new district is created it shares staff, revenue base, and transfers from central government on a pro-rata basis with the parent district. Depending on how this sharing is done, one of the districts is bound to lose. Today some districts have staffing levels as low as 9 percent of the established posts. New districts also bring the added burden for central government line ministries to perform their functions of inspection, supervision, monitoring, mentoring and training to ensure that sector service delivery standards are maintained.

So why does government continue to create new districts which may not improve service delivery? The answer seems in understanding the political economy of decentralization. Creation of new districts comes with new political machinery: constituencies for parliamentary seats, town councils staff, Resident District Commissioners and their deputies, etc. which further diverts resources from financing service delivery.

Article 179 of Uganda’s Constitution provides for the alteration of the boundaries of lower local government units and creation of new units based on the necessity for effective administration and the need to bring services closer to the people. This Article seems to have been misused in creating new districts. Previously, districts were created using a rigorous process involving six core steps but most importantly including a study on the justification, pre-requisite (structure, density of population, revenue base, etc) and economic viability of the request. It was against this logical study that districts were created. Today, districts have been created either on the floor of Parliament, at political rallies, or through negotiations between a few ‘powerful’ individuals. The result is the current state of affairs highlighted above.

Given the above scenario, Government needs to consider a number of policy options if it wants to improve service delivery. Some, which deserves further debates, are the following:

a)      Financing of service delivery – The need to approach the financing of service delivery holistically taking into consideration the need for skilled manpower and adequate financing for both capital and working capital. This should be accompanied with improved working environment (incentives).

b)      Creation of new districts – The need for Parliament, in the medium term, to put a moratorium on creation of new districts until they are satisfied that the current local governments are adequately staffed and financed to provide improved services. In future, how new districts should be created following a rigorous procedure.

c)      Establishing Regional Local Governments – The need to ensure that the Regional local governments are more service delivery focus and not another administrative layer in the governance structure.

d)      Strengthening the roles of citizens in service delivery – The need to review the tension between the “welfare policy approach” and the roles of citizens in an economic environment of inadequate resources and low own source revenue. Local governments are currently raising, from own source revenue, only 3 percent of their budgets. The abolition of graduated tax and parent-teacher association contributions and any form of contribution from the citizens at service delivery units (health and education), seems to have disempowered citizens from demanding for quality services. In a sense, although the policies are popular, they have disenfranchised citizens in having a say in service delivery and holding public officials accountable.

e)      Intergovernmental fiscal architecture – The need to review the current intergovernmental fiscal architecture in order to achieve improvement in service delivery. Under the decentralized policy framework, local governments need to have fiscal autonomy either through own source revenue or adequate discretionary transfer from central government (not conditional grants). The current fiscal architecture seems to be in variance with this.

From above, that act of creating new districts by itself, unless it is accompanied with a number of other things, may not translate into improved service delivery. At a given point in time, Uganda as a country has limited human and financial resources. The quality of service delivered will depend on how frugal the state is and how these scares resources are allocated. There seems therefore an urgent need to have an open debate on improvement of service delivery from a non-partisan and apolitical manner.