The LGFC is a constitutional body mandated to advise the President, on all matters concerning
financing of Local Governments (LGs). It ensures fair, equitable, and transparent fiscal
decentralization in Uganda by advising on revenue sharing, financial autonomy, and capacity
enhancement of LGs.

LGFC is established under Article 194 of the Constitution of the Republic of Uganda (1995)
and operationalized by the Local Government Finance Commission Act, Cap 139. It derives
its authority from these frameworks to function independently and provide fiscal advice to both
the central and local governments.

Key functions include:

• Advising on the formula for distributing grants to LGs.
• Evaluating fiscal performance and financing needs of LGs.
• Reviewing the financial autonomy and resource mobilization capacity of LGs.
• Monitoring and reporting on the financial flow to local governments.
• Advising on revenue harmonization between central and local governments.

LGFC uses a consultative, evidence-based process that includes:

•  Assessing the expenditure needs and revenue capacities of LGs.
• Using indicators such as population size, poverty levels, service delivery gaps, and
  geographic factors.
• Engaging stakeholders, including the Ministry of Finance, Office of the Prime Minister,
  Ministry of Local Government, and LG associations.

All Districts, Cities, Municipalities, Town Councils, and Sub-counties across Uganda benefit from LGFC’s recommendations, particularly in the allocation of unconditional, conditional, and
equalization grants.

LGFC conducts:

• Training workshops and technical backstopping.
• Research and policy guidance on fiscal decentralization.
• Development of manuals, templates, and tools for budgeting and planning.
• Collaborations with institutions like MoLG, MoFPED, and Uganda Local Government
  Association (ULGA).

The Equalization Grant is a constitutional grant aimed at supporting least developed LGs to
provide minimum public services. LGFC identifies eligible LGs based on development indices
(e.g., poverty rate, infrastructure deficit), and allocates funds accordingly using a formula
approved by Cabinet.

Stakeholders can engage via:

• Public consultations and budget dialogues.
• Accessing reports and data through LGFC’s official website. (https://lgfc.go.ug)
• Submitting inquiries, petitions, or feedback through LGFC’s contact channels.
•  Participating in research, capacity building, or development partner forums facilitated by
  LGFC.

LGFC is funded through:

• Government of Uganda budget allocations under the Ministry of Finance.
•  Development partner support for special programs (e.g., World Bank, UNDP).
•  Collaborations with regional and international agencies on fiscal decentralization.

LGFC adheres to:

• Annual reporting to Parliament and Ministry of Finance.
• External audits by the Office of the Auditor General.
• Open publication of grant formulas, allocations, and research findings.
•  Engagement with civil society, media, and academic institutions.

LGFC collaborates closely with:

•  MoFPED – on fiscal policy and grant allocations.
•  Ministry of Local Government – on local government operations and performance.
• National Planning Authority – on national development planning.
•  Office of the Prime Minister – on service delivery monitoring and reporting.

All official reports, research papers, and strategic documents are available on the LGFC
website: [Insert URL]. Physical copies can also be accessed at LGFC headquarters or through
official requests.

LGFC does not directly allocate funds but advises the central government on formulas and
criteria. If a district demonstrates higher needs or performance gaps, LGFC may recommend
adjustments through its annual reviews and consultations.