Factors Responsible for Financial Distress in Local Government of Uganda Case Study: Kotido District Local Governement

Abstract

The study examined the factors responsible for financial distress in local government of Uganda. It was carried out in Kotido district local government, Kotido District. The purpose of the study was to evaluate the factors that may have led to financial distress of local government in Uganda. The concept of factors responsible was limited to revenue sources, investment and planning while financial distress was limited to failure to pay debts, wrong priorities and cost effectiveness. The study employed a case study research design which involved an intensive analysis of the research variables. The study used a sample size of 44 respondents which comprised of employees from finance department and other inter-related department heads. Purposive and convenience sampling techniques were used to select the respondents. The respondents were issued with self-administered questionnaires which had only close ended questions. The study found out that one of the major factors that led to financial distress in local government was inadequate revenue sources that could only generate little percentage that was not covering the district budget for the whole financial year. The study then concludes that factors responsible have either significantly positive or negative effect on financial distress of local government in Uganda and therefore, suggests that more studies should be conducted in the inter-related topic so that the local government can financially be independent other than relying on the grants from the central government and donations.

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