Giving Compass' Take:
- James Ladi Williams and Matthew Eldridge explain the role development partners can play in facilitating efficient subnational government resource mobilization.
- How can development partners help local governments adapt to changing needs, realities, and opportunities?
- Read about why local governments need equitable federal relief.
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Kampala, the capital and largest city in Uganda, had a revenue problem. With a narrow tax base and a lacking collection system, the city faced a low revenue ceiling that collections still labored to meet.
But in 2011, the Kampala Capital City Authority sought to change this outlook by instituting reforms to improve its tax administration and increase local revenues as a result. These reforms aimed to build an accurate record of taxpayers, improve the effectiveness of billing and collection, and increase citizens’ motivation to pay taxes by creating simple and transparent payment platforms. In just four years, the city doubled local revenues.
Kampala’s experience highlights the difficulties of subnational domestic resource mobilization (DRM) that many local governments face worldwide, but it also demonstrates opportunities for development partners to support local reform efforts. Our new report explores these difficulties and identifies policies and practices that subnational governments and development partners can pursue.
Subnational domestic resource mobilization (DRM) refers to the process by which funds are raised and spent by district, municipal, and state governments. Subnational governments fund their operations and services through a range of revenue sources, including intergovernmental transfers, such as grants and subsidies, and own-source revenues, such as taxes and other charges subnational governments have the autonomy and discretion to collect and use.
Efficiently mobilizing domestic resources can help sustainably advance development priorities while strengthening governance and accountability structures. In countries experiencing the twin forces of rapid urbanization and decentralization reforms, improving subnational DRM is critical to maintaining and expanding access to basic services.
Read the full article about global development efforts by James Ladi Williams and Matthew Eldridge at Urban Institute.