Decentralisation was one of the major reforms in the 1990s in Uganda, geared towards improving democratic governance and service delivery. However, districts have had variable performance, especially in providing primary education through public schools. In this article, I ask what explains the difference in local governments’ performance across two districts that were given similar powers and share a similar history. I explore this through in-depth interviews in the two districts and find that local governments are severely constrained in their performance by a lack of funds, which, along with development priorities, are controlled by the central government. Within this scenario, variable performance is explained to a great extent by the presence of donors and investments by the private sector, but that these funds are attracted to areas where greater capacity exists. While this improves education performance, it can contribute to growing inequality in educational attainment across districts.