Development grants
For various reasons, the decentralization of development assignments (and
related grants) started late in the process of fiscal decentralization, but it has
been stepped up in recent years. Development grants have increased from
1 percent of total transfers in 1997/98 to 25 percent in budget 2003/04.Total
development grants amount to US$4 per capita. The discretionary nonsectoral
development grants account for 37.3 percent of development grants
and 9.5 percent of all grants to the local governments (Steffensen,Tidemand,
and Ssewankambo 2004, annex 4.10). The remaining development grants
cover education (the school facility grant), health, water, roads, and agriculture
(table 3.5).
Table 3.5 shows that, in the increasing share of the development grants
in the total transfers to local governments, nonsectoral discretionary development
grants are gradually gaining in relative importance, together with
the earmarked funding of agriculture activities. This trend indicates an
increased fiscal decentralization, but a decentralization that has hitherto not
been matched by increased flexibility in recurrent grants (which have been
increasingly earmarked and sectoral).
Sector development grants are typically earmarked for development
investments within the sectors. Nonsectoral grants have interesting