Challenges of financing rural water supply services in the context of decentralisation in Uganda

The Government of Uganda has been vigorously pursuing the policy of Decentralisation since 1993. The type of decentralisation pursued is a mixture / hybrid of Devolution, Deconcentration and Delegation. In order to control inflation and maintain macro-economic stability, the Government of Uganda (GoU) is increasingly phasing out projects in favour of budget support. This means that all available financial resources from Donors/Development partners, and GoU are put in one ‘ basket’ and then every sector, including the water sector, has a budget ceiling in which to carry out all its activities. Furthermore, there is ‘No additionality’ to the sector ceiling even when extra donor grants are identified for support to the water sector. This paper questions the rationale of sector ceilings and highlights the inherent weaknesses of implementing such a broad policy shifts, especially as they relate to achievement of longterm sector targets and sustainability of the facilities constructed.