In 1993,Uganda had one of the most ambitious decentralisation programmes amongst developing countries . Decentralisation was central to Uganda’s mode of governance as spelt out in her 1995 Constitution and as the 1997 Local Governments Act conferred. The process of decentralisation was at the heart Poverty Eradication Action Plan (PEAP), which set out the strategy through which the Government of Uganda (GoU) aimed to eradicate absolute Poverty by 2017. The PEAP was implemented through the Medium Term Expenditure Framework (MTEF). The GoU therefore, was a front runner in translating debt relief under the Highly Indebted Poor Country Initiative into increased financing for Poverty Reduction Programmes via the Poverty Action Fund (PAF). This combination of the PEAP/MTEF framework and the PAF resource transfer modalities gave donors sufficient confidence to provide a growing proportion of their aid as budget support.


As a result, over the past three years there has been an extraordinary rate of growth in social sector expenditure, with expenditures on PAF programmes growing from 17% to 34% of the Government of Uganda Budget. Due to Uganda’s Decentralisation Policy, this has meant a rapid increase in resource flows to local governments, and a corresponding increase in primary service provision. As PAF expenditures are tied to the achievement of PEAP Goals, the majority of the increase in transfer of resources has been via an increasing number of conditional grants.