By Stephen Kasumba University of Essex

1. By Stephen Kasumba University of Essex Accounting for Local Government Reforms in Uganda: A Case Study of the Changes in the Budgetary Practices in Kampala District Presentation at MCA on 27th February 2009

2. Background to the Study • A range of institutional reforms in the public sector, especially in developing countries • Accounting reforms as major components of institutional reforms • Bridging the gaps between private and public • Importing “best practices” from North to South • Decentralisation of development and promotion of “good governance” Presentation at MCA on 27th February 2009

3. Motivation for the Study • Most accounting literature of developing countries is usually commissioned and sponsored by supranational agencies • Examined the changes in the budgetary practices in local governments • Macro dynamics and • Micro processes • involved in the adoption and implementation of the changes in the budgetary practices in local governments Presentation at MCA on 27th February 2009

4. Prior Studies • Changes in organisational practices in local governments are usually transported through: • Coercive pressures of supranational agencies (Tambulasi, 2007; Kholeif et al, 2007; Philoppidou et al, 2008) • Professionals and their networks (Robson et al, 2007; Tsamenyi et al, 2006) • Actions of national governments (Agbakoba and Ogbonna, 2004; Anessi-Pessina and Steccolini, 2005) Presentation at MCA on 27th February 2009

5. Prior Studies .... • Implementation of the changes in accounting practices affected by • Power struggles(Petersen, 1995, 2004) • Lack of trustamong organisational actors (Tambulasi, 2007; Nor-Aziah and Scapens, 2007) • Inadequate skills and knowledge(Agbakoba and Ogbonna, 2004; Nor-Aziah and Scapens, 2007) • Different expectations(Modell and Lee, 2001; Anessi-Pessina and Steccolini, 2005; Shapiro and Matson, 2008) Presentation at MCA on 27th February 2009

6. Prior Studies.... • Resistance to the changes in organisational practices (Nor-Aziah and Scapens, 2007; Tsamenyi et al, 2006; Manson et al, 2001) • Loose coupling of the changes in organisational practices (Kholeif et al, 2007; Nor-Aziah and Scapens, 2007; Lukka, 2007; Ezzamel et al, 2007) Presentation at MCA on 27th February 2009

7. Theoretical Insights • NIS concepts of diffusion and loose coupling • Acknowledged the limitations of NIS • Adopted the dialectical interpretation of loose coupling from Nor-Aziah and Scapens (2007) • Considered the power relations within and between the political and administrative structures Presentation at MCA on 27th February 2009

8. Theoretical Frameworks.... • Macro Dynamics • Coercive actions of supranational agencies (Uddin and Hopper, 2003; Kholeif et al, 2007) • Legitimising mechanisms of professionals and their networks (Robson et al, 2007; Greenwood et al, 2002) • Strategic intentions and actions of the national government (Anessi-Pessina and Steccolini, 2005) Presentation at MCA on 27th February 2009

9. Theoretical Frameworks.... • Micro Processes • Power Struggles (Covaleski and Dirsmith, 1988) • Mistrust (Morck and Steier, 2005; Mulgan and Muers, 2002 ) • Skills and Knowledge (Steiner, 2006) • Expectations (Callanan, 2005 ) • Tensions, Conflicts and Resistance to Changes in Budgetary Practices • Loose coupling as a process and outcome of social interactions Presentation at MCA on 27th February 2009

10. Methods and Design • Semi-Structured Interviews • Non-Participant Observations • Newspaper Clippings • Official Records Presentation at MCA on 27th February 2009

11. The Case Study • Kampala district has five divisions • 1.2 million people (2.5 million during day) • Political and administrative structures • Categories of funding • Grants from government • Local Revenue • Donor funding • Before reforms the district: • Received and implemented development plans and budgets from national government • Prepared budget reports for the national government Presentation at MCA on 27th February 2009

12. Nature of the Changes in the Budgetary Practices • Budget Formulation and Approval • MTEFs; Output-Oriented Budgeting • Participatory Approach • Budget Management and Controls • Budget Holding • Budget Revision • IFMS • Monitoring • Budget Reporting • Internal Decisions • Multiple Accountabilities Presentation at MCA on 27th February 2009

13. Findings I: Macro Dynamics Changes in Budgetary Practices in Local Governments Presentation at MCA on 27th February 2009

14. Macro Level Contradictions • Influence of National Government in Decision-Making at Local Levels • Authoritative Power Resources • Actions contradicting decentralisation, e.g. interferences in LG affairs • Allocative Power Resources • Conditional grants Presentation at MCA on 27th February 2009

15. Macro Level Contradictions.... • Example 1 • A private transport company (UTODA) which was contracted to manage the Kampala taxi parks, was well-connected with the Office of the President, and had accumulated arrears of about Shs. 2.3 billion. However, Kampala district officials could not terminate UTODA’s contract, in accordance with the Public Procurement and Disposals of Assets Act, 2003 (PPDA, 2003), due to interference from the Office of the President. (Source: The New Vision of 16th October, 2007) • Example 2 • Of the total grants of Shs. 27.36 billion from the national government to Kampala district for FY 2007/2008, the conditional grants were about Shs.18.82 billion (about 69%). (Source: Kampala District Annual Budget for 2007/2008) Presentation at MCA on 27th February 2009

16. Findings II: Micro Processes Technocrats Local Politicians Changes in Budgetary Practices in Kampala District Presentation at MCA on 27th February 2009

17. Intra-Organisational Factors • Implementation of the changes in the budgetary practices affected by: • Power Resources • Mistrust • Skills and Knowledge • Expectations Presentation at MCA on 27th February 2009

18. Local Politicians Vs. Technocrats Presentation at MCA on 27th February 2009

19. Local Politicians Vs. Technocrats • Tensions and Conflicts • One technocrat observed that: • “Politicians are a big headache to our operations. Due to their short tenure, they are interested in short-term achievements, rather than long-term strategies. When we advance technical guidance to them it seems like we stepping on their feet.” • One the other hand, one politician in the district hinted that: • “We planned for road construction but when it was passed on to the technical people for costing and budgeting they gave us outrageous figures which we could not believe. ..... We could not go by that. We went our own way; costed, budgeted the activity and identified a contractor to do it.” Presentation at MCA on 27th February 2009

20. Executive Vs. Non-Executive Politicians Presentation at MCA on 27th February 2009

21. Senior Vs. Subordinate Technocrats Presentation at MCA on 27th February 2009

22. Senior Vs. Subordinate Technocrats • One subordinate technocrat observed that: • “Mr Chairman, in this division, heads of department do not authorise any expenditure from their votes. It is the Finance Officer and Town Clerk who control the budget.” • On the other hand, a senior technocrat noted that: • “The major challenge in planning and budgeting is the lack of adequate funding. The division does not get all the money planned for and approved. Some “hard decisions” have to be taken” Presentation at MCA on 27th February 2009

23. Discussion Presentation at MCA on 27th February 2009

24. Layers of coercion • Coercive Level 1 • Supranational agencies, such as WB, Danida, DFID Using professionals Changes in organisational practices in local governments Stringent conditions for national governments to access development finance Enabling regulatory frameworks • Coercive Level 2 • National government Macro level contradictions Presentation at MCA on 27th February 2009

25. Intertwined nature of institutional pressures Normative Mimetic Coercion Strategic Legitimacy Changes in Organisational Practices Presentation at MCA on 27th February 2009

26. Macro contradictions and micro processes • Macro contradictions reproduced at the micro level • The structuring properties of the new budgetary rules, which were modulated by the active and reflexive human agents to serve their interests and expectations • Resistance to the changes in the budgetary practices caused by: • Power struggles • Mistrust • Insufficient skills and knowledge • Different expectations Presentation at MCA on 27th February 2009

27. Loose coupling • As strategy to portray compliance to the changes in budgetary practices • To gain access to grants from the national government Presentation at MCA on 27th February 2009

28. Conclusion • Interconnections of various institutional pressures • Macro level contradictions • “Good governance” conflicted with the implementation of “best practices”. • Too much political influence in the implementation of the changes in budgetary practices • New budgetary practices affected by: • Power struggles; mistrust; inadequate skills and knowledge; and different expectations • New budgetary practices were merely symbolic Presentation at MCA on 27th February 2009