providers, including clinics, health centres and hospitals that are mostly operated on a cost-recovery basis, have sprung up to partly make up for the shortfall.<sup>2</sup> To improve performance of the public health system, a number of reforms, including decentralization, imposition of user charges, and finally abolition of such charges, have been undertaken, starting in 1989. Decentralization was expected to bring bout administrative and structural changes in the health delivery system with the goal of improving coverage and equity as well as technical and allocative efficiency.<sup>3</sup> To this end, efforts were initiated to restore the functional capacity of the health sector, reactivate disease control programs, and re-orient services to preventive and primary care rather than curative interventions.

First attempts to introduce user charges in 1990 met with opposition motivated by fears that such fees would preclude access to health services by the poor. However, given the limitations on public funds, the central government in 1993 actively promoted introduction of user fees by the already decentralized districts to improve delivery of health services. The level of fees was set at UShs500 for adults and UShs300 for children in rural areas and up to Ushs1,000 and Ushs500 for adults and children, respectively, in urban areas.<sup>4</sup> A recent comprehensive study of actual user fees shows that, as districts had considerable autonomy in setting fee levels, actual charges varied considerably, although they were consistently below comparable fees charged by private establishments (Lindelow et al., 2003). Case study evidence suggests that most of the fees were used to supplement staff salaries (Mwesigye 2002), implying a rather limited impact on revenue generation by health establishments.

Even though the law contained provisions to exempt the poor from payment of user fees, case study evidence shows that the inability of districts to compensate for such shortfalls from other sources made them very reluctant to implement such exemptions, implying that fees were assessed in a fairly uniform manner (Kapiriri et al. 2003). This led to repeated complaints that the fees excluded the poor who, for various reasons, did not have the cash to pay them (Kivumbi and Kintu, 2002). These complaints provided the basis for abolition of all user charges in the health sector, effective from March 2001, coinciding with the Presidential elections. To this date, it is not clear what the impact of this policy change has been, in terms of access to health services by the poor. Providing evidence that would allow such an assessment is one of the goals of this paper.

> 2 Currently, the Ministry of Health (MOH) estimates the total number of health service outlets in the country to be 1,738 facilities, of which 1,226 are government-owned/managed, 465 belong to NGOs and 47 belong to the private sector. The facilities include 104 hospitals (57 government, 44 NGO and 3 Private), 250 health centres (179 government, 68 NGO and 3 private), palliative care 2 (1 government, 1 NGO) and others (989 government, 352 NGO and 41 private), (Reinikka and Svensson, 2003; Republic of Uganda, 2001 and 1997).

> 3 Under the new arrangements, the district health system is used to deliver a package of health services to the population, while the MOH is responsible for policy formulation, standards and guidelines, overall supervision and monitoring (Republic of Uganda, 2000a and 2000b). 4 At the time when the changes were introduced, this was equivalent to about US $ 0.45 (the exchange rate fluctuating around USh1,000 to US$1). The revenue to be generated from such user fees was to be used to top-up staff salaries (50%), purchase drugs and supplies (30%), maintenance and repairs of facilities (10%), supervision, transport and outreach (10%), (MOH, 1997).

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