This article was written to show how decentralized services such as health do not match with adequate financial resources for Local Governments to deliver health services effectively in Uganda. The study reviews various writers on fiscal decentralization Programmes and high lights the problems affecting Uganda�s Health sector service delivery. The Main issues of concern regarding Fiscal decentralization and social economic development are tax jurisdiction, expenditure responsibilities and resource allocation. The study was conducted to assess the impact of Fiscal decentralization process on social economic development in Uganda and it focused on challenges affecting health sector and why such policy has failed to reduce poverty and inequality of the people of Uganda. The Study was based on the resource dependency theory by Ram Mudambi (2010), which posits that power is based on control of resources that are considered strategic within the organization and is often expressed in terms of budget and resource allocation.

The effects of citizens participation in planning and budgeting needs the access to resources which are in most cases controlled by the national governments. The article describes the structural and reforms in Uganda�s health Sector Services and it assess its performance. This article shows how participatory monitoring and evaluation is critical in financial accountability and how lack of multiplicity of financial resources still undermine planning and target setting in Uganda. The article discusses how abolition of graduated personal Tax left local governments with limited finances to deliver services. This reduced the autonomy of local governments and health care services in rural areas remain out of reach of the people and fiscal decentralization has not led to improved services. The article recommends the review of the fiscal decentralization Act to empower local governments in resource mobilization and in decision making regarding funds from the central government.