While Uganda has a long history of decentralized service delivery, and has instituted Local Economic Development (LED) as an additional mandate for local governments (LGs), there has been less progress in operationalizing the concept and practically implementing it across LGs in Uganda. In addition to their basic service delivery functions enshrined in the Local Governments Act of 1997, since 2006 LGs are also mandated by various policy documents to play a role in wealth creation, and increasing citizens’ income levels. While the Government of Uganda (GoU)’s LED Policy does outline the strategic intervention areas that LGs should implement, there is still considerable confusion among LG staff as to what this entails on a day to day basis and there has been limited progress in implementation. At the request of the MoLG, the World Bank, therefore, commissioned this assignment in support of the Government of Uganda (GoU's) efforts to improve the capacities of LGs for promoting LED. The study focused on assessing three localities (Jinja Municipality, and Arua and Nwoya Districts), both in terms of their local economic potentials and enabling environment for business, as well as in terms of the institutional and policy context for promoting LED. The study used quantitative methodologies, to identify promising economic sectors in the three localities, as well as qualitative methodologies to identify the main constraints that those sectors currently face.