The Minister of State for Finance, Planning and Economic Development Amos Lugoloobi has urged local governments to use the current five-year political term to improve revenue collection and strengthen their capacity to finance services.
“The leaders of our local governments took office in May, and the 12th parliament was sworn in the same month. We have the same five years ahead of us, and they end in the year the Fourth National Development Plan has set as its target year for local revenue. We begin this term together, and we will be judged on it together,” Lugoloobi said.
He was speaking during the first-ever Local Government Own Source Revenue Conference 2026, organised by the Local Government Finance Commission at Hotel Africana in Kampala.
According to figures presented at the conference, local governments collected Shs442.64 billion in own-source revenue in the last financial year, representing about five per cent of their total spending. The amount is equivalent to just 0.18 per cent of Uganda’s gross domestic product (GDP), compared with an East African average of approximately 1.27 per cent.
Lugoloobi said the Constitution provides for decentralisation and empowers local governments to raise revenue to support service delivery, adding that Parliament has a responsibility to provide the necessary legal framework and hold public institutions accountable.
“The Constitution does not treat decentralisation as a favour from the centre. Article 176 makes it a principle of the State. Articles 191 and 194 give local governments the power to raise revenue and charge the Commission before us with advising on how,” he said.
He challenged local leaders to look beyond central government transfers and exploit revenue opportunities in property rates, business licences, market dues and other legally recognised sources.
Revenue grows, but collection gaps persist
Presenting the commission’s performance assessment, its chairperson, Isaac Musumba, said local revenue had more than doubled over the past three years, partly due to automation and other revenue-enhancement measures.
He reported that property rates performed at 171 per cent of their projected target in the last financial year, making them the largest single source of local government revenue.
“Property rates performed at 171 per cent last financial year, and this is the biggest source. The Commission is putting a lot of emphasis on it because it is a very sustainable revenue source,” Musumba said.
However, he noted that significant revenue remained uncollected because of weak enforcement, incomplete taxpayer registers, unrealistic revenue projections and continued reliance on manual collection methods.
Musumba said 83 of the country’s 176 local governments had not collected any property rates, while only a fraction of the potential revenue from market dues was being realised.
He also identified gaps in Local Service Tax collection, saying some employers and categories of eligible taxpayers were not adequately captured in local government revenue registers.
The commission estimates that local governments could collect as much as Shs1 trillion annually if existing revenue opportunities were fully exploited. However, collections currently stand at about 44 per cent of that target.
Lugoloobi said the gap between assessed revenue and actual collections must be addressed, noting that Shs306 billion was assessed through the Integrated Revenue Administration System (IRAS) during the last financial year, but only Shs208 billion was collected.
“The collection has not yet followed. We stand at 44 per cent of that target. This conference is about closing the gap,” he said.
He also criticised political interference in revenue enforcement, urging elected leaders to allow revenue officers to perform their duties without undue pressure.
“When a chairperson, a mayor or a member of Parliament stops a revenue officer from collecting what the law provides, we are not protecting the voter. We are deciding that the health centre does without drugs, that the road stays impassable, and that the garbage stays in the market,” Lugoloobi said.
Both officials credited the Integrated Revenue Administration System with improving revenue administration and accountability.
Lugoloobi said the system had been rolled out across all 176 local governments and registered more than 3.1 million taxpayers.
He cited Gulu City, which collected 108 per cent of its revenue budget in the last financial year, and Mbarara City, whose collections reportedly rose from Shs2.4 billion to Shs10.76 billion after adopting the system.
Musumba said the commission would prioritise reliable taxpayer data, automation, taxpayer sensitisation, stronger enforcement and the expansion of the tax base.
He also called for closer coordination among the Ministry of Local Government, the Accountant General, local government associations and other public institutions to ensure that revenue reforms are implemented consistently.
The Fourth National Development Plan targets Shs805 billion in annual local government own-source revenue by the 2029/30 financial year.
Lugoloobi said achieving that target would require sustained annual growth of approximately 16 per cent over the coming years.
He urged local governments to connect revenue collection to visible improvements in roads, markets, health facilities and other public services, arguing that residents are more likely to comply when they can see how their contributions benefit their communities.