KAMPALA. Local governments across the country are increasingly choosing to spend huge sums of locally generated revenue in what appears to be an attempt to fight off a bid by the Ministry of Finance to control the funds.
Previously, local governments determined how and when the funds should be used but that came to an end at the beginning of the financial year with the coming into force of several reforms to the Public Finance Management Act.
Reforms to the Act bar local governments from spending locally generated revenue without approval from the office of the Accountant General.
Under that law local governments are required to first bank all the revenue collected, but an official attached to Entebbe Municipality who preferred not to be named revealed that the municipality has opted not to spend most of the money.
“There has been an increasing inclination to spend at the source, which is illegal. Not all the money is being banked. Actually very little is being banked, which is unfortunately going to distort budgets,” he revealed.
Under the new reforms, local governments have to send requests with their work plans before they are allowed to spend.
Local governments are also required to submit their budgets for approval and uploading on the Integrated Financial Management System, requirements which the secretary general of the Uganda Local Governments’ Association (ULGA), Ms Gertrude Rose Gamwera, says is contrary to the law.
“ If you say that money should be sent to a common fund from which it can only be drawn after submission of work plans and a request then you have taken over the planning function of the local government,” she says.
Previously controls had been limited to conditional and unconditional grants, delegated funds and project funds, each with a controlling desk and corresponding officers to vet and approve requests to spend, but a desk has since been created to handle local revenue.
“The controls present challenges in meeting the needs of the people. Government usually sends money and says this is for water or schools. This 3 or 5 per cent that we collect is the only one we use to provide what the people want,” Ms Gamwera argues.
The Minister of Finance, Mr Matia Kasaija, declined to talk to Saturday Monitor about this particular matter and the spokesperson of the Ministry, Mr Jim Mugunga, was unavailable, but an official of the Ministry defended the introduction of the reforms saying they are aimed at streamlining financial transactions so that the centre knows how much local governments are collecting and how much they are spending.
By Daily Monitor