The Effects of Central Government Transfers on Local Revenue Collection by Urban Local Governments in Uganda: A Case of Selected Municipal Councils

Yeko Mwanga; Fred Maniragaba; Paulino Ariho

doi:doi:10.11648/j.ijber.20200905.16

| Peer-Reviewed

The Effects of Central Government Transfers on Local Revenue Collection by Urban Local Governments in Uganda: A Case of Selected Municipal Councils

Yeko Mwanga, Fred Maniragaba, Paulino Ariho

Published in International Journal of Business and Economics Research (Volume 9, Issue 5)

Received: 10 August 2020 Accepted: 22 August 2020 Published: 24 September 2020

Views: Downloads:

Download PDF

Share This Article

Twitter
Linked In
Facebook

Abstract

Government of Uganda is undertaking reforms to improve on the funding levels and modalities of local governments but is faced with a limited budget to fund both the central government and decentralized functions. Less is known about the effect of central government transfers to local revenue collection especially in the context of decentralization in Uganda. We assessed the effects of central government transfers on local revenue generation by municipalities in Uganda by analyzing the trends of central government transfers and locally generated revenues by the municipal councils and assessing the effects of central government transfers on own local revenue generation. Our study focused on municipalities that have been in existence since introduction of decentralization policy and some of these have recently been upgraded into cities. Time series data covering the selected municipalities were obtained from the Local Government Finance Commission. The dataset comprised of locally generated revenue and central government transfers for 13 old municipal councils. The data was in Excel and it had to be exported to E-Views statistical software for further analysis using the fixed effects regression model. Our findings indicate that over the period 2002 to 2017, both central government grants and local revenue generation grew exponentially. We find that increased central government grants contributed to a decline in locally generated revenue and this partly attributable to too much reliance of the local governments on central grants. The results showed that the lagged total central government grants had a significant negative effect on the locally generated revenue. Government should factor in the allocation formula for central government grants to the local revenue performance to serve as an incentive for the municipal councils to raise own local revenue.

Published in	International Journal of Business and Economics Research (Volume 9, Issue 5)
DOI	10.11648/j.ijber.20200905.16
Page(s)	335-341
Creative Commons	This is an Open Access article, distributed under the terms of the Creative Commons Attribution 4.0 International License (http://creativecommons.org/licenses/by/4.0/), which permits unrestricted use, distribution and reproduction in any medium or format, provided the original work is properly cited.
Copyright	Copyright © The Author(s), 2020. Published by Science Publishing Group

Keywords

Central Government Transfers, Locally Generated Revenue, Urban Local Governments, Fixed Effects Regression

References

[1]	Klugman J. Decentralisation: A Survey of Literature from a Human Development Perspective. SSRN Electron J 2013.
[2]	United Nations Development Programme. Human Development Report: New Dimension of Human Security. 1994.
[3]	Crook RC. Decentralisation and poverty reduction in Africa: the politics of local-central relations. Public Adm Dev 2003; 23: 77–88.
[4]	Bahl R. "Intergovernmental Transfers in Developing and Transition Countries: Principles and Practice. Washington DC: 2000.
[5]	Sanoh A. Rainfall shocks, local revenues, and intergovernmental transfer in mali. World Dev 2015; 66: 359–70.
[6]	Lewis B. Local government capital spending in Indonesia: Impact of intergovernmental fiscal transfers. Public Budg Financ 2013; 33: 76–94.
[7]	Shar A. Theory and Practice of Intergovernmental Transfers. Reforming China’s Public Finances 1995: 215–34.
[8]	Shah A. The New Fiscal Federalism in Brazil 1991; 124.
[9]	Gomes RC, Alfinito S, Albuquerque PHM. Analyzing local government financial performance: evidence from Brazilian municipalities 2005-2008. Rev Adm Contemp 2013; 17: 704–19.
[10]	Fjeldstad O-HH, Semboja J. Dilemmas of Fiscal Decentralisation: A Study of Local Government Taxation in Tanzania. Forum Dev Stud 2000; 27: 7–41.
[11]	Masaki T. The impact of intergovernmental transfers on local revenue generation in Sub-Saharan Africa: Evidence from Tanzania. World Dev 2018; 106: 173–86.
[12]	Brun E-F, Sanogo T. Effect of central transfers on municipalities’ own revenue mobilization: Do conflict and local revenue management matter? 2017.
[13]	Caldeiraa E, Rota-graziosi G. The crowding-in effect of simple unconditional central grants on local own-source revenue: The case of Benin. J Afr Econ 2014; 23: 361–87.
[14]	Wang Q, Shen C, Zou H. Local government tax effort in China : an analysis of provincial tax performance. Banq Données Doc REGARDS 2009.
[15]	Mogues T, Benin S. Do External Grants to District Governments Discourage Own Revenue Generation? A Look at Local Public Finance Dynamics in Ghana. World Dev 2012; 40: 1054–67.
[16]	Government of Uganda. Local Government Act 1997. Kampala, Uganda: 1997.
[17]	The Auditor General. Financing of Local Governments in Ugnada Through Central Government Granta and Local Government Revenues. Kampala, Uganda: 2016.
[18]	Nakayi R. Local governance in Uganda 2018: 1–38.
[19]	Luwemba W. The creation of new cities is a smart move. The New Vision 2020.

Cite This Article

Plain Text BibTeX RIS

APA Style

Yeko Mwanga, Fred Maniragaba, Paulino Ariho. (2020). The Effects of Central Government Transfers on Local Revenue Collection by Urban Local Governments in Uganda: A Case of Selected Municipal Councils. International Journal of Business and Economics Research, 9(5), 335-341. https://doi.org/10.11648/j.ijber.20200905.16

Copy | Download

ACS Style

Yeko Mwanga; Fred Maniragaba; Paulino Ariho. The Effects of Central Government Transfers on Local Revenue Collection by Urban Local Governments in Uganda: A Case of Selected Municipal Councils. Int. J. Bus. Econ. Res. 2020, 9(5), 335-341. doi: 10.11648/j.ijber.20200905.16

Copy | Download

AMA Style

Yeko Mwanga, Fred Maniragaba, Paulino Ariho. The Effects of Central Government Transfers on Local Revenue Collection by Urban Local Governments in Uganda: A Case of Selected Municipal Councils. Int J Bus Econ Res. 2020;9(5):335-341. doi: 10.11648/j.ijber.20200905.16

Copy | Download

@article{10.11648/j.ijber.20200905.16,
  author = {Yeko Mwanga and Fred Maniragaba and Paulino Ariho},
  title = {The Effects of Central Government Transfers on Local Revenue Collection by Urban Local Governments in Uganda: A Case of Selected Municipal Councils},
  journal = {International Journal of Business and Economics Research},
  volume = {9},
  number = {5},
  pages = {335-341},
  doi = {10.11648/j.ijber.20200905.16},
  url = {https://doi.org/10.11648/j.ijber.20200905.16},
  eprint = {https://article.sciencepublishinggroup.com/pdf/10.11648.j.ijber.20200905.16},
  abstract = {Government of Uganda is undertaking reforms to improve on the funding levels and modalities of local governments but is faced with a limited budget to fund both the central government and decentralized functions. Less is known about the effect of central government transfers to local revenue collection especially in the context of decentralization in Uganda. We assessed the effects of central government transfers on local revenue generation by municipalities in Uganda by analyzing the trends of central government transfers and locally generated revenues by the municipal councils and assessing the effects of central government transfers on own local revenue generation. Our study focused on municipalities that have been in existence since introduction of decentralization policy and some of these have recently been upgraded into cities. Time series data covering the selected municipalities were obtained from the Local Government Finance Commission. The dataset comprised of locally generated revenue and central government transfers for 13 old municipal councils. The data was in Excel and it had to be exported to E-Views statistical software for further analysis using the fixed effects regression model. Our findings indicate that over the period 2002 to 2017, both central government grants and local revenue generation grew exponentially. We find that increased central government grants contributed to a decline in locally generated revenue and this partly attributable to too much reliance of the local governments on central grants. The results showed that the lagged total central government grants had a significant negative effect on the locally generated revenue. Government should factor in the allocation formula for central government grants to the local revenue performance to serve as an incentive for the municipal councils to raise own local revenue.},
 year = {2020}
}

Copy | Download

TY  - JOUR
T1  - The Effects of Central Government Transfers on Local Revenue Collection by Urban Local Governments in Uganda: A Case of Selected Municipal Councils
AU  - Yeko Mwanga
AU  - Fred Maniragaba
AU  - Paulino Ariho
Y1  - 2020/09/24
PY  - 2020
N1  - https://doi.org/10.11648/j.ijber.20200905.16
DO  - 10.11648/j.ijber.20200905.16
T2  - International Journal of Business and Economics Research
JF  - International Journal of Business and Economics Research
JO  - International Journal of Business and Economics Research
SP  - 335
EP  - 341
PB  - Science Publishing Group
SN  - 2328-756X
UR  - https://doi.org/10.11648/j.ijber.20200905.16
AB  - Government of Uganda is undertaking reforms to improve on the funding levels and modalities of local governments but is faced with a limited budget to fund both the central government and decentralized functions. Less is known about the effect of central government transfers to local revenue collection especially in the context of decentralization in Uganda. We assessed the effects of central government transfers on local revenue generation by municipalities in Uganda by analyzing the trends of central government transfers and locally generated revenues by the municipal councils and assessing the effects of central government transfers on own local revenue generation. Our study focused on municipalities that have been in existence since introduction of decentralization policy and some of these have recently been upgraded into cities. Time series data covering the selected municipalities were obtained from the Local Government Finance Commission. The dataset comprised of locally generated revenue and central government transfers for 13 old municipal councils. The data was in Excel and it had to be exported to E-Views statistical software for further analysis using the fixed effects regression model. Our findings indicate that over the period 2002 to 2017, both central government grants and local revenue generation grew exponentially. We find that increased central government grants contributed to a decline in locally generated revenue and this partly attributable to too much reliance of the local governments on central grants. The results showed that the lagged total central government grants had a significant negative effect on the locally generated revenue. Government should factor in the allocation formula for central government grants to the local revenue performance to serve as an incentive for the municipal councils to raise own local revenue.
VL  - 9
IS  - 5
ER  -

Copy | Download

Author Information

Yeko Mwanga

School of Statistics and Planning, College of Business and Management Sciences, Makerere University, Kampala, Uganda
Fred Maniragaba

School of Statistics and Planning, College of Business and Management Sciences, Makerere University, Kampala, Uganda
Paulino Ariho

Department of Sociology and Social Administration, Kyambogo University, Kampala, Uganda

Download PDF

Sections

Plain Text BibTeX RIS

APA Style

Yeko Mwanga, Fred Maniragaba, Paulino Ariho. (2020). The Effects of Central Government Transfers on Local Revenue Collection by Urban Local Governments in Uganda: A Case of Selected Municipal Councils. International Journal of Business and Economics Research, 9(5), 335-341. https://doi.org/10.11648/j.ijber.20200905.16

Copy | Download

ACS Style

Yeko Mwanga; Fred Maniragaba; Paulino Ariho. The Effects of Central Government Transfers on Local Revenue Collection by Urban Local Governments in Uganda: A Case of Selected Municipal Councils. Int. J. Bus. Econ. Res. 2020, 9(5), 335-341. doi: 10.11648/j.ijber.20200905.16

Copy | Download

AMA Style

Yeko Mwanga, Fred Maniragaba, Paulino Ariho. The Effects of Central Government Transfers on Local Revenue Collection by Urban Local Governments in Uganda: A Case of Selected Municipal Councils. Int J Bus Econ Res. 2020;9(5):335-341. doi: 10.11648/j.ijber.20200905.16

Copy | Download

@article{10.11648/j.ijber.20200905.16,
  author = {Yeko Mwanga and Fred Maniragaba and Paulino Ariho},
  title = {The Effects of Central Government Transfers on Local Revenue Collection by Urban Local Governments in Uganda: A Case of Selected Municipal Councils},
  journal = {International Journal of Business and Economics Research},
  volume = {9},
  number = {5},
  pages = {335-341},
  doi = {10.11648/j.ijber.20200905.16},
  url = {https://doi.org/10.11648/j.ijber.20200905.16},
  eprint = {https://article.sciencepublishinggroup.com/pdf/10.11648.j.ijber.20200905.16},
  abstract = {Government of Uganda is undertaking reforms to improve on the funding levels and modalities of local governments but is faced with a limited budget to fund both the central government and decentralized functions. Less is known about the effect of central government transfers to local revenue collection especially in the context of decentralization in Uganda. We assessed the effects of central government transfers on local revenue generation by municipalities in Uganda by analyzing the trends of central government transfers and locally generated revenues by the municipal councils and assessing the effects of central government transfers on own local revenue generation. Our study focused on municipalities that have been in existence since introduction of decentralization policy and some of these have recently been upgraded into cities. Time series data covering the selected municipalities were obtained from the Local Government Finance Commission. The dataset comprised of locally generated revenue and central government transfers for 13 old municipal councils. The data was in Excel and it had to be exported to E-Views statistical software for further analysis using the fixed effects regression model. Our findings indicate that over the period 2002 to 2017, both central government grants and local revenue generation grew exponentially. We find that increased central government grants contributed to a decline in locally generated revenue and this partly attributable to too much reliance of the local governments on central grants. The results showed that the lagged total central government grants had a significant negative effect on the locally generated revenue. Government should factor in the allocation formula for central government grants to the local revenue performance to serve as an incentive for the municipal councils to raise own local revenue.},
 year = {2020}
}

Copy | Download

TY  - JOUR
T1  - The Effects of Central Government Transfers on Local Revenue Collection by Urban Local Governments in Uganda: A Case of Selected Municipal Councils
AU  - Yeko Mwanga
AU  - Fred Maniragaba
AU  - Paulino Ariho
Y1  - 2020/09/24
PY  - 2020
N1  - https://doi.org/10.11648/j.ijber.20200905.16
DO  - 10.11648/j.ijber.20200905.16
T2  - International Journal of Business and Economics Research
JF  - International Journal of Business and Economics Research
JO  - International Journal of Business and Economics Research
SP  - 335
EP  - 341
PB  - Science Publishing Group
SN  - 2328-756X
UR  - https://doi.org/10.11648/j.ijber.20200905.16
AB  - Government of Uganda is undertaking reforms to improve on the funding levels and modalities of local governments but is faced with a limited budget to fund both the central government and decentralized functions. Less is known about the effect of central government transfers to local revenue collection especially in the context of decentralization in Uganda. We assessed the effects of central government transfers on local revenue generation by municipalities in Uganda by analyzing the trends of central government transfers and locally generated revenues by the municipal councils and assessing the effects of central government transfers on own local revenue generation. Our study focused on municipalities that have been in existence since introduction of decentralization policy and some of these have recently been upgraded into cities. Time series data covering the selected municipalities were obtained from the Local Government Finance Commission. The dataset comprised of locally generated revenue and central government transfers for 13 old municipal councils. The data was in Excel and it had to be exported to E-Views statistical software for further analysis using the fixed effects regression model. Our findings indicate that over the period 2002 to 2017, both central government grants and local revenue generation grew exponentially. We find that increased central government grants contributed to a decline in locally generated revenue and this partly attributable to too much reliance of the local governments on central grants. The results showed that the lagged total central government grants had a significant negative effect on the locally generated revenue. Government should factor in the allocation formula for central government grants to the local revenue performance to serve as an incentive for the municipal councils to raise own local revenue.
VL  - 9
IS  - 5
ER  -

Copy | Download