Document of The World Bank FOR OFFICIAL USE ONLY Report No. 54187-UG INTERNATIONAL DEVELOPMENT ASSOCIATION INTERNATIONAL FINANCE CORPORATION AND MULTILATERAL INVESTMENT GUARANTEE AGENCY COUNTRY ASSISTANCE STRATEGY FOR THE REPUBLIC OF UGANDA FOR THE PERIOD FY 2011-2015 April 27, 2010 International Development Association Eastern Africa Country Cluster 1, AFCE1 Africa Region International Finance Corporation Sub-Saharan Africa Department Multilateral Investment Guarantee Agency This document has a restricted distribution and may be used by recipients only in the performance of their official duties. Its contents may not otherwise be disclosed without World Bank authorization. Last Country Assistance Strategy: December 14, 2005 (Report No. 34310-UG) CURRENCY EQUIVALENTS (as of April 22, 2010) Currency Unit = Uganda Shilling US$1.00 = 2,068 ABBREVIATIONS AND ACRONYMS AAA Analytical and Advisory Activities GAAP Governance and Anticorruption Action AF Additional Financing Plan AfDB African Development Bank GAC Governance and Anti-Corruption AIDS Acquired Immune Deficiency GAVI Global Alliance for Vaccines and Syndrome Immunizations APL Adaptable Program Loan GDP Gross Domestic Product ATAAS Agriculture Technology and GEF Global Environmental Facility Agribusiness Advisory Services Project GFDRR Global Facility for Disaster Reduction CAADP Comprehensive African Agriculture and Recovery Development Plan GPF Governance Partnership Facility CAE Country Assistance Evaluation GPOBA Global Partnership for Output-Based CAS Country Assistance Strategy Aid CEM Country Economic Memorandum GTZ German Agency for Technical COMESA Common Market for Eastern and Cooperation Southern Africa HIPC Heavily Indebted Poor Countries CPIA Country Policy and Institutional (Initiative) Assessment HIV Human Immunodeficiency Virus CPPR Country Portfolio Performance Review IBRD International Bank for Reconstruction CRW Crisis Response Window and Development DAC Development Assistance Committee ICR Implementation Completion Report DANIDA Danish International Development ICT Information and Communications Agency Technology DFID Department for International IDA International Development Association Development (United Kingdom) IDF Institutional Development Fund DP Development Partner IDP Internally Displaced Person DPG Development Partners’ Group IEG Independent Evaluation Group DPL Development Policy Loan IFAD International Fund for Agricultural DPO Development Policy Operation Development DRC Democratic Republic of Congo IFC International Finance Corporation DSA Debt Sustainability Analysis IMF International Monetary Fund DSIP Development Strategy and Investment IP Implementation Progress Plan IPCC Intergovernmental Panel on Climate DTM Data Tracking Mechanism Change EAAPP East Africa Agricultural Productivity JAF Joint Assessment Framework Project JBSF Joint Budget Support Framework EAC East African Community JICA Japan International Cooperation Agency EC European Community JSAN Joint Staff Advisory Note EITI Extractive Industries Transparency KfW Kreditanstalt für Wiederaufbau Initiative (Reconstruction Credit Institute) EPDF Education Program Development Fund KIDDP Karamoja Integrated Disarmament and ESW Economic and Sector Work Development Plan EU European Union KIIDP Kampala Institutional and Infrastructure FM Financial Management Development Project FSAP Financial Sector Assessment Program LDPG Local Development Partners’ Group FTI Fast Track Initiative LRA Lord’s Resistance Army FY Fiscal Year M&E Monitoring and Evaluation MAAIF Ministry of Agriculture, Animal PPP Public-Private Partnership Industry and Fisheries PRG Partial Risk Guarantee (IDA) MDGs Millennium Development Goals PRGF Poverty Reduction and Growth Facility MDRI Multilateral Debt Relief Initiative PRSC Poverty Reduction Strategy Credit MDTF Multi-donor Trust Fund PRSP Poverty Reduction Strategy Paper MIGA Multilateral Investment Guarantee PSA Production Sharing Agreement Agency PSIA Poverty and Social Impact Analysis MoFPED Ministry of Finance, Planning and RVR Rift Valley Railways Economic Development SADC South African Development NAADS National Agricultural Advisory Services Community Project SDR Special Drawing Right NDP National Development Plan SIDA Swedish International Development NGO Non-Governmental Organization Cooperation Agency NORAD Norwegian Agency for Development SIP Small Investor Program Cooperation SME Small- and Medium-scale Enterprise NRM National Resistance Movement SSA Sub-Saharan Africa NWSC National Water and Sewerage SWAp Sector-Wide Approach Corporation SWG Sector Working Group OBA Output-Based Aid TA Technical Assistance ODA Official Development Assistance TSDP Transport Sector Development Project UBOS Uganda Bureau of Statistics OECD Organization for Economic Cooperation UJAS Uganda Joint Assistance Strategy and Development UK United Kingdom PDO Project Development Objective UN United Nations PEAP Poverty Eradication Action Plan UNICEF United Nations Children’s Fund PEFA Public Expenditure and Financial UPE Universal Primary Education Accountability UPPET Universal Post-Primary Education and PEPFAR President’s Emergency Program for Training AIDS Relief US United States PER Public Expenditure Review USAID United States Agency for International PFA Prosperity for All program Development PFM Public Financial Management WBI World Bank Institute PMI President’s Malaria Initiative WSP Water and Sanitation Program PPIAF Public-Private Infrastructure Advisory Facility IDA IFC MIGA Vice President Obiageli Katryn Ezekwesili Thierry Tanoh Izumi Kobayashi Director John Murray McIntire Jean Philippe Prosper Frank J. Lysy Task Team Leader Kundhavi Kadiresan / Dan Kasirye Thomas A. Vis Kathryn Funk COUNTRY ASSISTANCE STRATEGY FOR THE REPUBLIC OF UGANDA Table of Contents Executive Summary ................................................................................................................... i  I. Country Context .....................................................................................................................1  A. Political and Governance Context ....................................................................................1  B. Economic Developments and Prospects ...........................................................................2  Poverty, Human Development, and Demography .............................................................4  Medium-Term Prospects ...................................................................................................6  Debt Sustainability...........................................................................................................10  C. Key Development Challenges .........................................................................................10  II. Government Program and Development Partner Support ..................................................12  A. Uganda’s Poverty Reduction Strategy ............................................................................12  NDP Objectives 1 and 2: Income, Equity, and Employment ..........................................13  NDP Objective 4: Economic Infrastructure .....................................................................13  NDP Objectives 3 and 5: Human Capital Development and Access to Social Services .14  NDP Objective 6: Science, Technology, Innovation, and ICT ........................................14  NDP Objective 7: Good Governance, Defense, and Security .........................................14  NDP Objective 8: Promote Sustainable Population, Environment, Natural Resources ..15  B. Development Partner Support .........................................................................................15  III. Implementation of the Uganda Joint Assistance Strategy and Lessons Learned...............17  IDA, Trust Funds, and Analytical and Advisory Activities ............................................18  The International Finance Corporation ............................................................................19  Multilateral Investment Guarantee Agency .....................................................................20  Lessons Learned ..............................................................................................................20  IV. The World Bank Group Assistance Strategy .....................................................................21  A. The Framework for World Bank Engagement in Uganda ..............................................21  B. IDA Resources ................................................................................................................23  C. CAS Outcomes and the Proposed Program of Support ..................................................23  CAS Instruments ..............................................................................................................23  D. Strategic Objective One: Promote Inclusive and Sustainable Economic Growth ..........27  CAS Outcome 1.1: Improved conditions for private sector growth ................................27  CAS Outcome 1.2: Improved interconnectivity for regional integration ........................28  CAS Outcome 1.3: Increased productivity and commercialization of agriculture ..........29  CAS Outcome 1.4: Increased sustainability of natural resource management ................30  E. Strategic Objective Two: Enhance Public Infrastructure ................................................32  CAS Outcome 2.1: Increased access to electricity ..........................................................32  CAS Outcome 2.2: Improved access to and quality of roads ..........................................34  CAS Outcome 2.3: Increased access to and quality of water and sanitation services .....35  CAS Outcome 2.4: Improved management and delivery of urban services ....................36  F. Strategic Objective Three: Promote Human Capital Development.................................37  CAS Outcome 3.1: Improved access to and quality of education ...................................37  CAS Outcome 3.2: Strengthened health care delivery ....................................................38  G. Strategic Objective Four: Good Governance and Value for Money..............................39  CAS Outcome 4.1: Strengthened management of financial and human resources .........39  H. Strengthening Aid Effectiveness ....................................................................................40  I. Implementing and Monitoring the Country Assistance Strategy .....................................41  V. Risks and Mitigation ...........................................................................................................43  Boxes: Box 1: Uganda’s Prospects for Achieving the Millennium Development Goals by 2015 ........5  Box 2: Decentralization in Uganda............................................................................................7  Box 3: Development of Oil Resources in Uganda.....................................................................9  Box 4: Gender Inequality in Uganda .......................................................................................13  Box 5: Uganda Joint Country Assistance Evaluation, 2001-2007...........................................17  Box 6: Client Survey ...............................................................................................................18  Box 7: A New Joint Budget Support Framework ....................................................................27  Box 8: Climate Change in Uganda ..........................................................................................32  Tables: Table 1: Key Macroeconomic Indicators, Uganda, FY 2005–2014. .........................................3  Table 2: Proposed Analytical and Advisory Activities, FY10 and FY11-15 ..........................25  Table 3: Proposed IDA Financing, FY10 and FY11-FY15 .....................................................26  Annexes: Annex 1: Uganda Country Assistance Strategy Results Matrix ..............................................45  Annex 2: Uganda at a Glance ..................................................................................................53  Annex 3: Key Economic Indicators .........................................................................................56  Annex 4: Key Social Indicators ...............................................................................................58  Annex 5: Key Exposure Indicators ..........................................................................................59  Annex 6: Oil in Uganda ...........................................................................................................60  Annex 7: Youth Employment in Uganda ................................................................................73  Annex 8: Operations Portfolio (IBRD/IDA and Grants) .........................................................75  Annex 9: Selected Indicators of Bank Portfolio Performance and Management ....................76  Annex 10: Trust Fund Portfolio ...............................................................................................77  Annex 11: CPPR Action Plan ..................................................................................................78  Annex 12: IFC Investment Program ........................................................................................82  Annex 13: CAS Consultations .................................................................................................83  Annex 14: Governance Risk Assessment Matrix: Opportunities, Gaps, Planned Actions ......84  Annex 15: Summary of Non-Lending Services .......................................................................86  Annex 16: IDA Summary Program (FY11-FY15) ..................................................................87  Annex 17: IDA Lending by Objective.....................................................................................88  Annex 18: Division of Labor with Development Partners ......................................................89  Annex 19: CAS Completion Report ........................................................................................90  Map of Uganda: IBRD No. 33504R3 EXECUTIVE SUMMARY i. Political Developments. The National Resistance Movement, headed by Yoweri Museveni, took power in 1986, bringing about a period of political and economic renewal. Northern Uganda, however, suffered from two decades of war, until the Lord’s Resistance Army was pushed out of Uganda in 2005. Uganda has progressed towards multi-party democracy. President Museveni is likely to seek a fourth term in March 2011. ii. Economic Developments. Uganda has a record of prudent macroeconomic management and structural reform. Despite various exogenous shocks, annual GDP growth averaged 7 percent in the 1990s, and accelerated to over 8 percent from 2001 to 2008. Due to high population growth, real GDP growth per capita averaged only 3.4 percent over the 1990s, and just over 4 percent over the 2000s. iii. Poverty, Human Development, and Demography. The poverty rate fell from 57 percent in FY93 to 31 percent in FY06, although there is substantial and growing urban-rural and regional inequality. Uganda may reach at least two of the eight Millennium Development Goals by 2015—the country is close to halving poverty and addressing gender inequality, and has made progress towards many others. iv. Economic Prospects. Due partly to the global economic crisis, growth slowed in FY09 and is expected to remain below potential in FY10-11. Beyond the crisis, GDP growth is expected to remain robust, averaging about 7 percent from FY12 to FY14. Oil production will change Uganda’s economic outlook, but full-scale production is unlikely to begin before 2016. v. Development Challenges. To sustain high growth and structurally transform the economy, Uganda needs to address infrastructure bottlenecks, increase agricultural productivity and value addition, reintegrate northern Uganda, manage urbanization, and strengthen its human capital base. A rapidly growing population creates challenges for employment and service delivery. An overarching challenge is to improve governance and value for money, thereby enhancing service delivery and infrastructure investments, and to build a clear and transparent institutional framework to ensure that future oil revenues benefit the entire population. vi. Government Strategy. In February 2010, Uganda’s Cabinet approved a National Development Plan (NDP) covering FY11-15. The NDP’s main theme is Growth, Employment and Socio-Economic Transformation for Prosperity. The plan broadens the country’s development strategy from poverty reduction to structural transformation to raise growth and living standards. vii. Implementation of the World Bank’s Uganda Joint Assistance Strategy (UJAS). Executive Directors discussed the UJAS, the first joint multi-donor strategy of its kind, in January 2006. The UJAS Completion Report rates Bank achievements under the UJAS as moderately satisfactory. Lessons identified by the UJAS Completion Report and incorporated into the Country Assistance Strategy (CAS) are: (i) focus on fewer outcomes and ensure a clear results framework; (ii) strengthen support to improve governance and help the government identify and track governance indicators to guide governance interventions; (iii) link Poverty Reduction Support Credit reforms to sector strategies supported by sector operations; (iv) focus on developing on-the-ground mechanisms to improve aid coordination and alignment with national priorities, rather than on joint strategic documents; and (v) at project design stage, anticipate possible delays in credit effectiveness due to Uganda’s lengthy approval process. viii. CAS Objectives and Results. The World Bank Group’s Country Assistance Strategy (CAS), aligned with Uganda’s NDP, will support structural transformation of the economy. It provides a framework for World Bank Group support for five years (FY11-15). The CAS focuses on four strategic objectives and eleven outcomes: Promote Inclusive and Sustainable Economic Growth. There are four outcomes: (i) improved conditions for private sector growth; (ii) improved interconnectivity for regional integration; (iii) increased productivity and commercialization of agriculture; and (iv) increased efficiency and sustainability of natural resource management. Enhance Public Infrastructure. There are four outcomes: (i) increased access to electricity; (ii) improved access to and quality of roads; (iii) increased access to and quality of water and sanitation services; and (iv) improved management and delivery of urban services. Strengthen Human Capital Development. There are two outcomes: (i) improved access to and quality of primary and post-primary education; and (ii) strengthened health care delivery. Cross-cutting: Improve Good Governance and Value for Money. There is one outcome: strengthened accountability and efficiency of public financial and human resource management. ix. Proposed CAS Program. IDA resources under the FY011-15 CAS are estimated at about SDR1.3 billion (US$1.97 billion equivalent). Development policy operations are expected to account for about one-third of annual IDA financing, as was the case during UJAS implementation. The Bank will prepare a CAS Progress Report in FY13, or earlier if required, to update and adjust the CAS program as needed. x. Partnership. Development partners (DPs) in Uganda continue to seek ways to further improve aid effectiveness. Recognizing the limitations of collective documents such as the UJAS, DPs are focusing on basket funds, sector-wide approaches, and new coordination mechanisms, such as the Joint Budget Support Framework. The Bank chairs the Local Development Partners’ Group, the apex DP forum in Uganda. xi. Risks. Risks for CAS implementation include the upcoming presidential and parliamentary elections; weak governance, especially in the context of future oil wealth; and exogenous risks, such as weather, international prices, natural disasters, and insecurity in neighboring countries. To mitigate risks, the CAS addresses inclusive growth and regional integration; energy and transport (the binding constraints for growth); human development; and governance and value for money. ii COUNTRY ASSISTANCE STRATEGY FOR THE REPUBLIC OF UGANDA I. COUNTRY CONTEXT A. Political and Governance Context 1. Uganda has the typical characteristics of a “bottom billion” country. It is landlocked and, until recently, resource scarce, and neighboring countries are poor and many are prone to conflict. Uganda is also ethnically diverse, which increases a country’s risk of divisions and conflict.1 2. Following independence in 1962, the country experienced relative political and economic stability until a 1971 military coup by Idi Amin Dada. Violence and mismanagement reduced the country to a failed state with a collapsed economy. Political and economic turmoil continued from 1979 to 1985, with successive coups and a disputed election in 1980 that led to armed rebellions across the country. 3. The National Resistance Movement (NRM), led by Yoweri Museveni, took power in 1986, beginning a sustained period of economic and political renewal. During its first decade in power, the NRM focused on reconstructing the economy and establishing legitimate government. The government advanced pro-market reforms and political liberalization. Despite being landlocked and resource scarce, Uganda became one of the fastest growing countries in Africa. Donor assistance in support of reform grew to 52 percent of the annual budget in the early 1990s. 4. Northern Uganda is now secure; but it missed out on two decades of growth and poverty reduction. The Lord’s Resistance Army (LRA) waged a brutal war that displaced 1.86 million people and resulted in about 10,000 deaths. There have been no major security incidents since 2006; economic activity is now resuming and most internally displaced people (about 1.3 million) have returned to their villages. Pushed out of Uganda, the LRA now operates in the remote border area between Southern Sudan, northeastern Democratic Republic of Congo (DRC), and the Central African Republic. LRA leader Joseph Kony remains at large despite a 2005 International Criminal Court warrant for his arrest on 33 charges, including crimes against humanity. 5. There has been political stability and progress towards multi-party democracy. Uganda has not yet, however, experienced a change of power through elections. Following the promulgation of the 1995 constitution, non-party elections took place in 1996, providing President Museveni with his first elected term after ten years in office. He was reelected in 2001. Constitutional amendments approved by referendum in July 2005 introduced multi-partyism. At the same time the Uganda Parliament voted to lift presidential term limits. Multi-party elections were held in 2006; and President Museveni’s NRM Party won the election with 59 percent of the vote. President Museveni is expected to seek a fourth term in March 2011. 6. There is a perception of increasing corruption at all levels. Despite a strong anti- corruption legal framework, Uganda has struggled to translate its anti-corruption laws into practice. There have been four high-level corruption cases during the last two years, none of which has been 1 The 1995 Constitution of Uganda recognizes 56 indigenous peoples. However, according to the 2008 “State of Uganda's Population Report,” about 70 percent of the country's 29.6 million people are from the eight largest tribes: Baganda (south) with 17.3 percent; Banyankole (west) with 9.8 percent; Basoga (east) with 8.6 percent; Bakiga (west) with 7.0 percent; Iteso (east) with 6.4 pecent; Langi (north) with 6.1 percent; Acholi (north) with 4.7 percent; and Bagisu (east) with 4.6 percent. fully resolved so far. Local public opinion polls indicate that petty corruption is widespread and increasing. In addition, Uganda suffers from pervasive “quiet corruption”—the failure of public servants to deliver goods or services paid for by governments—such as unchecked teacher and health worker absenteeism.2 The perception of deteriorating governance is tarnishing Uganda’s image as a development model. 7. The recent discovery of oil brings both development opportunities and challenges. Global experience demonstrates that natural resource wealth in the context of poverty and weak institutions increases the probability of corruption, patronage, instability, and conflict. Whether Uganda’s oil is a blessing or curse depends largely on the establishment of an institutional framework that ensures fair and equitable distribution of resource rents and appropriate consideration of economic, social, and environmental issues. B. Economic Developments and Prospects Economic Developments 8. Over the past two decades, Uganda has established a strong record of prudent macroeconomic management and structural reform. Uganda was one of the first Sub-Saharan Africa (SSA) countries to embark on liberalization and pro-market policies in the late 1980s. Uganda was also one of the first SSA countries to adopt a policy of decentralization. Through the 1990s, the government maintained a stable macroeconomic environment and continued to undertake private- sector oriented reforms. 9. By 2006, Uganda had graduated into a mature reformer.3 Annual gross domestic product (GDP) growth rates averaged 7 percent in the 1990s and accelerated to more than 8 percent over the seven years to 2007/08. However, due to rapid population growth, real GDP growth per capita averaged only 3.4 percent in the 1990s and around 4 percent in the 2000s. (See Table 1; additional economic data can be found in Annexes 2 and 3.) 10. Macroeconomic stability and sound policies have helped sustain growth despite exogenous shocks. Conflicts in neighboring DRC and Southern Sudan constrained regional trade. Post-election unrest in Kenya in December 2007 resulted in temporary closure of the main trading route to Mombasa, underscoring Uganda’s vulnerability as a landlocked country. Uganda has also endured droughts, a severe energy crisis, and surges in food and oil prices. 11. Private investment and exports have been important drivers of growth; both almost trebled in real terms between FY01 and FY08. Private investments were mainly driven by construction of commercial and residential property. The rise in exports was led by fish, tourism, and oil re-exports (and, to a lesser extent, flowers, tobacco, and maize), rather than the traditional exports of coffee, tea, and cotton. Primary agricultural commodities still account for more than 50 percent of exports, and exports of food staples to the DRC, Kenya, Rwanda, and Southern Sudan have increased in recent years. 2 A 2010 World Bank report titled "Silent and Lethal: How quiet corruption undermines Africa's development efforts" contends that one of the main reasons behind Africa’s lagging economic development is poor service delivery resulting from quiet corruption. Quiet corruption is less visible than big-time corruption but occurs across a much wider set of transactions directly affecting a large number of beneficiaries and very often has deep long-term consequences on households, farms, and firms. 3 In 2006, Uganda graduated to an International Monetary Fund non-lending Policy Support Instrument. -2- Table 1: Key Macroeconomic Indicators, Uganda, FY 2005–2014. Indicator FY05 FY06 FY07 FY08 FY09 FY10 FY11 FY12 FY13 FY14 ---------------------Actual--------------------- Est. --------------Projected-------------- Population (millions) 28.7 29.7 30.6 31.7 32.7 33.8 34.9 36 37.2 38.4 Real GDP growth (%) 6.3 10.8 8.4 8.7 7.1 5.6 6.4 7.0 7.2 7.4 Real GDP per capita growth (%) 3.0 7.5 5.3 5.4 3.8 2.3 3.0 3.6 3.8 4.0 Government revenues (% of GDP) 12.2 12.5 12.6 12.8 12.5 12.5 13.1 13.5 14.0 14.4 of which grants (% of GDP) 7.5 5.4 4.5 2.7 3.4 2.4 1.8 1.8 1.6 1.4 Fiscal balance (recurrent only; % of GDP) -1.0 -0.6 0.4 0.3 1.2 0.8 1.6 1.9 2.4 2.9 Consumer price inflation (%) 8.0 6.6 6.8 7.3 14.2 9.5 4.1 5.2 5.3 5.2 Exports (% of GDP) 14.2 15.3 16.7 24.3 23.8 23.6 23.7 23.2 22.8 22.2 of which coffee (% of exports) 12.0 11.2 11.4 11.0 9.0 7.3 7.2 7.1 7.0 6.9 Imports (% of GDP) 24.9 28.4 30.1 32.0 35.3 33.6 34.5 33.9 32.6 31.8 Current acc. incl. grants (% of GDP) -1.4 -3.4 -3.9 -3.2 -4.3 -5.0 -5.6 -5.5 -5.2 -5.1 External debt (% of GDP) 56.0 53.6 18.3 17.7 19.6 20.1 23.3 25.7 26.3 26.4 Domestic debt (% of GDP) 9.2 8.7 9.3 10.7 8.4 7.6 7.0 6.7 6.6 6.5 Sources: Government of Uganda; IMF; Bank staff estimates. 12. The economy has undergone gradual structural transformation over the past two decades, but at an increasingly slower pace.4 As share of total output, services increased from 32 percent in 1990 to 48 percent in 2000 and to 52 percent in 2008. Industry as a share of total output increased from 11 percent in 1990 to 23 percent in 2000, but then remained almost unchanged at 26 percent in 2008. Over the same period, agriculture as a share of total output decreased sharply from 57 percent in 1990 to 30 percent in 2000 and to 23 percent in 2008. 13. Consistent with structural transformation, production is becoming spatially concentrated. The agricultural potential of northern Uganda has not been exploited due to twenty years of conflict. Higher value agricultural production is geographically concentrated in the southern, central, and western areas of the country. Modern sector economic activity is also geographically clustered around large towns and along transport corridors. 14. The labor market transition has lagged the structural change of the economy, as expected. Many economically active people are trapped in low productivity, low income activities due to both a poorly educated and rapidly growing (3 percent per annum) labor force. Agriculture and non-wage smaller enterprises employ the bulk of new entrants into the labor market. 15. In recent years, the government has shifted public expenditures towards addressing Uganda’s infrastructure constraints. The 2006 energy crisis, the deterioration of transport infrastructure, and analytical work highlighting binding constraints to growth led to a scaling up of infrastructure investments in the budget since FY 2008. 16. Uganda’s tax-to-GDP ratio is the lowest among East Africa Community (EAC) countries. Government revenue excluding grants amounted to 12.5 percent of GDP in FY 2009, compared to the EAC average, excluding Uganda, of 17.8 percent. Efforts to boost tax receipts have relied largely on improvements in revenue administration. The forthcoming introduction of a national identification system may also help reduce tax evasion. 4 Structural transformation typically involves: a falling share of agriculture in GDP and employment, a rising share of urban economic activity in industry and modern services, and migration of rural workers to urban settings. -3- 17. Uganda's economy was better positioned than many in Africa to weather the global economic crisis; but the impact of the crisis has become more apparent. Initially, Uganda’s economy showed resiliency due to strong fundamentals, prudent policies, comfortable reserves, and a sound and well regulated financial system. Exports, remittances, and foreign direct investment began to slow in late 2008, and the government responded with increased public investment expenditures as a fiscal stimulus. In FY09, GDP growth fell to 7.1 percent, only slightly short of the projected 8.0 percent. However, the fiscal stimulus package was less effective than anticipated: public investment expenditures fell substantially short of budget plans due to implementation constraints. 5 In FY10, GDP growth is expected to fall to 5.6 percent. 18. Uganda has taken further steps toward regional integration since signing the EAC treaty in 1999. Uganda was a signatory to the EAC Customs Union launched in January 2005, which aims to reduce non-tariff barriers and stimulate trade. An EAC Common Market protocol signed in November 2009 will allow for the free movement of goods, people, and services, increasing Uganda’s opportunities for regional trade and investment. Uganda has demonstrated its commitment to EAC integration by reducing tariffs, harmonizing standards, and supporting the establishment of the East African Legal Assembly. Uganda is also a member of the Common Market for East and Southern Africa (COMESA). The EAC, COMESA, and the Southern Africa Development Community are working to increase collaboration and launch a new East and Southern African Free Trade Area. 19. Since 1990, the Uganda Bureau of Statistics (UBOS) has improved the timeliness and quality of its data. Uganda has today one of the most professional and transparent statistical offices in Africa. With the support of the Bank and other development partners, UBOS is addressing its remaining weaknesses, which include agricultural statistics and data on businesses. UBOS recently completed an agricultural census, and will soon update its data on firms. During the CAS, the Bank will provide technical support to UBOS, including to field and analyze a new series of panel multi- purpose household surveys and prepare a new national statistics development plan. Poverty, Human Development, and Demography 20. Uganda’s high economic growth rates have enabled substantial poverty reduction. The proportion of people living in poverty fell from 57 percent in FY93 to 31 percent in FY06. The decline in poverty, particularly from 2002 to 2006, can be attributed to higher crop prices, agricultural diversification, growth of non-wage non-farm employment (primarily household enterprises), and the creation of new wage jobs in urban areas, particularly Kampala. 21. However, there is substantial and growing urban-rural inequality and inequality between regions. The national Gini coefficient rose from 0.35 percent in 1997 to 0.41 percent in 2006, in part because Uganda’s growth path has created opportunities in urban areas of the center and west, while wide swaths in rural areas and the north and east were left behind. In particular, northern Uganda has the highest rate of income poverty at nearly 60 percent, and poverty reduction in north and north-eastern regions has only been marginal. The poverty headcount rate could have declined by a further six percentage points if inequality hadn’t widened. The end of conflict in northern Uganda provides opportunities for poverty reduction, although agricultural production has yet to reach levels adequate to lift households out of poverty. 5 The Eighth Poverty Reduction Support Credit (US$120 million, FY11) will help address implementation and absorptive capacity constraints, which in turn should allow the fiscal stimulus to be more effective. The Bank’s analytical work, including the recent Roads PER, also provides advice to reduce implementation constraints. -4- 22. Uganda is expected to reach at least two of the eight Millennium Development Goals (MDGs) by 2015 (see Box 1). The country is close on halving poverty and has made substantial progress towards universal primary education and in addressing gender inequality. Uganda may even achieve the targets for combating HIV/AIDS, malaria, and other communicable diseases ensuring environmental sustainability; and developing global partnerships. MDGs on reducing child mortality and improving maternal health are unlikely to be met. Uganda ranks 156 of 179 in the FY09 Human Development Index of the United Nations Development Program (UNDP). The government, with UN support, is preparing its third MDG Progress Report, ahead of the September 2010 UN summit. Box 1: Uganda’s Prospects for Achieving the Millennium Development Goals by 2015 Goal 1: Eradicate extreme poverty and hunger Likely. Uganda has made steady and impressive progress on poverty eradication. The number of households living in poverty has declined from 56 percent in 1992 to 44 percent in 1997, 38 percent in FY02, and 31 percent in FY06. Uganda is expected to exceed the target of 28 percent by 2015. The proportion of underweight children under five years fell from 25.5 percent in 1995 to 20.4 percent in 2006, but is still far from the target of 11.5 percent. Goal 2: Achieve universal primary education Possible. The introduction of UPE in 1997 led to a 132 percent increase in gross enrollment from 3 million children in 1996 to 7.5 million in 2006. In FY08, Uganda recorded a net enrollment ratio of 93 percent (91 percent for girls, 95 percent for boys). However, completion rates are low at 52 percent (FY09). Drop out and repetition rates need to be addressed or recent achievements will be reversed. Goal 3: Promote gender equality and empower women Likely. The ratio of girls to boys in primary (0.99), secondary (0.85) and tertiary (0.72) education institutions indicate progress in achieving gender equality in education, as does the ratio of literate women to men age 15-24 (0.84). In the current parliament, 89 of the 310 members are women, representing 29 percent of the legislative body, up from 18 percent in 1995. Goal 4: Reduce child mortality Highly unlikely. The infant mortality rate improved from 119 deaths per 1,000 live births in 1989 to 76 deaths in 2006 (compared to the MDG target of 31). The under-five mortality rate fell from 180 to 137 deaths per 1,000 live births during the same period (compared to the MDG target of 56). Goal 5: Improve maternal health Highly unlikely. The maternal mortality rate stagnated at over 500 deaths per 100,000 live births between 1989 and 2000. The estimated maternal mortality is 435 deaths per 100,000 live births (2006) against the MDG target of 131. On average, only 41 percent of all deliveries receive skilled attendance. Goal 6: Combat HIV/AIDS, malaria, and other diseases Possible. By reducing prevalence rates from around 20 percent in 1990 to 7 percent in 2008, Uganda has already achieved the MDG target for combating HIV/AIDS. Malaria remains the leading cause of morbidity and mortality in Uganda. As of 2003, there were 478 reported cases of malaria per 1,000 people. The MDG target for malaria could be achieved if the anti-malarial interventions continue to expand as planned. Goal 7: Ensure environmental sustainability Possible. Uganda has made progress in increasing access to safe drinking water. Access to clean water has improved to 65 percent against a target of 62 percent, but access to improved sanitation is only 68 percent against a target of 72 percent. There is persistent degradation of the country’s natural resources, including declining soil fertility; deforestation; decreasing fish stocks; and water pollution caused by discharge from industries and domestic waste. The forest cover in Uganda declined from 26 percent in 1990 to 18 percent by 2007. The proportion of titled land remains 13 percent, versus an MDG target of 25 percent. Note: Data based on most recent local sources, and therefore not fully consistent with data in Annex 2. -5- 23. The government has sought to expand access to social services, especially education. Since the introduction of universal primary education (UPE) in 1997, net enrollment has increased to about 92 percent for boys and girls, although completion rates remain low at 52 percent. In 2006, Uganda launched a phased universal post-primary education and training program to absorb an increasing number of primary education graduates and improve the low secondary enrollment rates (27 percent in 2008). However, the Ministry of Education’s annual sector reviews and a draft parliamentary report reviewing the government’s free education programs warn that increases in enrollment are stressing existing school systems and facilities, negatively affecting educational quality. 24. Improvements in health care have been mixed. Malnutrition and maternal, child, and infant mortality have improved, but remain unacceptably high: nearly one in seven children die before age five; and one in five children under five years is underweight, down from one in four in 1995. Maternal mortality is among the highest in the world, linked to high fertility and poor pre- and post-natal care. There are high human capital losses due to morbidity and mortality from largely preventable and curable diseases and infections, such as malaria, HIV/AIDS, and tuberculosis. 25. Governance and capacity weaknesses hinder service delivery. Public expenditure reviews (PERs) in education (FY08) and health (FY09) have revealed high inefficiencies and wastage of public finances, particularly through high teacher and health care worker absenteeism rates and weak drug procurement and supply management. Low actual spending of budget allocations suggests challenges in complying with public financial management regulations, and there are frequent reports of misuse of public funds. Basic social services are delivered by local governments; thus, weaknesses in decentralization affect service delivery (see Box 2). There is a high administration burden at the district level, with wages consuming a large and increasing share of total expenditures, leaving insufficient funding for non-wage needs. The continued creation of new districts in Uganda is expected to exacerbate this situation. 26. Uganda’s population dynamics pose a challenge to development. It has the third highest total fertility rate in the world (6.7 births per woman according to government data). Population has doubled since 1988; and the median age is just above 15 years. Uganda is one of the few countries where the number of young-age dependents exceeds (by 10 percent) the number of working age individuals. This dependency rate makes it difficult to achieve sufficient per child investments in health and education, and also lowers the country's savings rate. It will be a challenge for the government to keep pace with the increasing demand for social services, let alone improve their quality. The lower savings rate is likely to translate into a lower investment rate. Medium-Term Prospects 27. Partly as a result of the global economic crisis, real GDP growth is expected to increase only slightly to about 6.4 percent in FY11. IDA Crisis Response Window resources (US$70 million) will help the government maintain essential social expenditures, including for reproductive health. 28. Uganda’s medium-term growth prospects remain solid. Services will continue to be the main driver of growth, underpinned by sustained growth in communications and by growth in the transport sector as infrastructure improves and regional trade expands. Uganda has a comparative advantage in agriculture, which, if exploited, can contribute significantly to growth. Agricultural production in the north is expected to increase and regional demand for Uganda’s exports, particularly food, is likely to grow. As firms take advantage of the EAC, overall manufacturing, particularly agro-based manufacturing, is expected to increase. Overall GDP growth is expected to remain robust, averaging about 7 percent from FY12-14. -6- Box 2: Decentralization in Uganda Uganda was one of the first countries in Africa to embark on decentralization. Local governments are responsible for providing basic public services, such as primary education, primary health care, water and sanitation, feeder roads, and agriculture extension services; and line ministries are responsible for policies, standards, supervision, and oversight and training of local governments. There are three levels of local government: districts and cities; municipalities and city divisions; and towns and sub-counties. Policy reversals over the last five years are hindering service delivery and value for money:  Near-elimination of local revenue base. Since the elimination in 2005 of the graduated tax, which provided local governments with 5 percent of their total revenue and was important for discretionary expenditures, local governments have become dependent on non-discretionary central government transfers for 98 percent of their budget, reducing accountability to local citizens.  Reduction in transfers to local government. Real per capita transfers from the central government to local governments fell by 13 percent from FY03 to FY08. Transfers to local governments as a percentage of public expenditure have declined from around 47 percent in FY02 to about 22 percent in FY09. Local governments are spending an increasing proportion of resources on non-discretionary wages and salaries.  Increased percentage of conditional grants. Tied sector conditional grants have increased as a percentage of total transfers from central to local government, from 65.5 percent in FY06 to about 95 percent in FY10, making it difficult for local government to plan for and respond to local demand and needs.  Creation of new districts. More than 25 new districts were created from 2004 to 2009, bringing the total to 90. The government continues to create new districts, purportedly to improve service delivery. In actuality, it increases the amount spent on salaries and administration costs, further reducing resources available for service delivery. A possible new level of local government. A draft Regional Government Bill would create five regional governments, which would be responsible for regional hospitals, secondary education, coordination, monitoring and supervision of agriculture, and forest and land management. Bank support to decentralization. The Bank is advising the government on the proposed regional governments and on local government financing, including own-source revenue, the intergovernmental fiscal transfer system, and possible borrowing. In addition, the Bank is supporting local government capacity building under the ongoing Local Government Management Service Delivery project. 29. Returning to and sustaining high per capita income growth in the medium and long term will require acceleration of structural transformation. The economy would have to transform from subsistence agriculture to commercial agriculture, from farm production to non-farm production, and from domestic markets to external markets. Non-farm activities in construction, trading, informal manufacturing, low-level agroprocessing, and retail services have provided sources of diversification of income, but need to be sustained to absorb the fast-growing labor force. 30. Accelerating structural transformation will require further addressing the infrastructure gap, especially in the energy and transport sectors. Better transport is needed to improve connectivity from producers to markets and to improve the mobility of the labor force; and industry needs reliable electricity. Better municipal infrastructure is needed to accommodate urbanization associated with structural transformation. The labor force will also need to be equipped with skills that meet the demands of a changing economic structure. 31. For public investments to succeed, governance and value for money need to improve. Waste and corruption threaten to undermine the quality and effectiveness of infrastructure investments and service delivery. Public investments are also facing constraints in absorption capacity and implementation, derailing the pro-growth fiscal stance. Uganda needs to strengthen capacity to plan and implement investments and build a culture of accountability, with an emphasis on eliminating waste. The country has made progress in strengthening procurement and public -7- financial management (PFM) laws, systems, and regulations, but more work is needed to strengthen compliance. Improving efficiency of public spending is particularly urgent in the context of future oil revenues. 32. Oil production will change Uganda’s economic outlook, although it is too early for projections.6 Oil exploration companies have announced discoveries totaling at least 800 million barrels of oil reserves, an amount comfortably above the threshold for commercial development. Total basin potential is estimated at 2 billion barrels. Limited oil production could start as early as 2011 to be used for power generation. Full-scale production, which is not likely to begin before 2016, could reach 150,000 barrels per day or more for ten to twenty years. Production at these levels would generate revenues of over US$3 billion annually at today’s crude oil prices, of which more than half would accrue to the government as royalties and taxes. At these levels, Uganda, while significantly affected by oil, will not be totally dependent on oil revenues. Uganda would be in the company of countries such as Azerbaijan, Sudan, and Trinidad & Tobago, as opposed to classic petro-states such as Angola, Equatorial Guinea, and Nigeria. Although full-scale production is unlikely to be reached during this CAS period, the multi-billion dollar capital investment projects needed to develop the oil exploitation sector will impact the economy. (For more information on oil, see Box 3 and Annex 6.) 33. The government is preparing the institutional environment for oil production and revenue management, but much remains to be done. In January 2008, the government issued a National Oil and Gas Policy, which articulates a best-practice framework for managing petroleum resources for sustainable economic development. The policy calls for the establishment of several new institutions and structures, including: a Directorate of Petroleum to set and monitor policy; a Petroleum Authority to regulate the sector; a national oil company to hold the state’s direct investment in oil projects; and a Petroleum Fund under the management of the Central Bank to stabilize the revenue flow to the budget. The policy also calls for revising the petroleum law and corresponding regulations to handle the development and production of oil and gas, appropriately capture recent trends and best practice in the industry, and harmonize with a future revenue management law. The government is in the process of producing enabling legislation. 34. Oil brings opportunities and challenges. Oil production is likely to increase foreign direct investment and domestic revenue and increase energy supply. But it may also bring inflationary pressures, exchange rate appreciation, and new governance challenges. The so-called “Dutch Disease” effect may reduce the competitiveness of Uganda’s agricultural exports and complicate the country’s growth strategy, making value addition, export diversification, and manufacturing harder to achieve. The National Oil and Gas Policy emphasizes that oil revenue will be used for strategic public investments, which could help increase productivity in other sectors and offset Dutch Disease. 6 Given the uncertainty around timing and volume of oil production, the figures provided should be treated as illustrations of the possible impact of oil, not as projections. -8- Box 3: Development of Oil Resources in Uganda Oil Discoveries and Potential: Since 2006, UK-based Tullow Oil and its partner Heritage Oil have made a series of large oil discoveries in the Lake Albert Rift Basin in western Uganda. Tullow Oil estimates the total oil discovered at over 800 million barrels, and estimates total basin oil potential at 2 billion barrels. This level of reserves would put Uganda into a peer group with Chad (0.9 billion barrels), Republic of Congo (1.9 billion), Equatorial Guinea (1.7 billion) and Gabon (3.2 billion), but far short of Angola (13.5 billion), and Nigeria (36.2 billion). Oil Revenue: Peak production is likely to be about 150,000 to 200,000 barrels per day for 10-20 years. Based on the current fiscal system and assuming an oil price of US$75 per barrel, government revenue at peak production could be over US$2 billion per year. By way of comparison, government revenue in 2008 was US$2.6 billion and GDP was US$14 billion. Timing: There is a high level of uncertainty regarding the time frame for reaching peak oil production and revenue generation. Huge investments in infrastructure—estimated at US$10 billion—will be needed to produce, transport, export, and refine the oil. Oil specialists estimate that peak production is likely to begin no earlier than 2016. A first phase of limited production (perhaps 10,000 to 15,000 barrels per day) could begin in 2010-2012. Some limited quantities of natural gas could also be produced for a 50 MW power plant. Nevertheless, government revenue during this early production phase would be negligible. Challenges: Development of Uganda’s oil will be complex for several reasons: Oil characteristics: The oil is contained in low-pressure reservoirs, which will increase the complexity and cost of production facilities. While light and low in sulphur, the oil has high paraffin content. Pipelines will need to be heated for the oil to flow. Refineries will need expensive processing and treating capacity. Also, much of the oil extends offshore under Lake Albert. While initial production will take place on land, future developments will necessarily move offshore, resulting in increased cost, complexity, and environmental sensitivity. Some offshore fields may be uneconomic to exploit. Environment: Strict environmental protection requirements will be needed: oilfields are located in and around Lake Albert and the Murchison Falls Conservation Area. Production sharing contracts: Foreign investors hold their blocks by means of production sharing agreements (PSAs) signed with the government between 1997 and 2005. Under the PSAs, the private investors bear the cost and risk of exploration and development in exchange for a defined share of oil production in the case of success. To date, the government has not disclosed the terms of the PSAs, leading to criticism from NGOs and others. Local communities: Addressing local community issues and compensation will pose a challenge given Uganda’s tradition of communal land ownership, unclear national land policy and regulation, and the possibility that speculators will attempt to profit from changes in land values. Transborder issues: Transborder issues with the DRC, such as allocation of resources, transport, security, and environmental management, could give rise to difficult negotiations or even conflict given incomplete border demarcation and a history of difficult relations between the two countries. Pipeline and refinery development: Pipeline and refinery development: Exporting oil would require construction of a 1,300 km export pipeline to an Indian Ocean port at a cost of some US$2-3 billion. A large domestic refinery would have a similar cost. Under either the export or refining option, forming the investment consortium and concluding the necessary commercial and financing agreements will be a complicated and time consuming process. Construction time for either the pipeline or the refinery would be roughly three years. Bank Support: Given the many uncertainties at this stage regarding petroleum sector development, the Bank program will be necessarily flexible. All Bank analytical work under the CAS will take into consideration petroleum sector issues. Annual policy notes on the petroleum sector will provide just-in-time advice to the government on key topics. The Bank and government are discussing a possible Petroleum Sector Support Project (FY12). The Bank will provide further support during the CAS period as requested by the government and as more information becomes available on petroleum sector developments. -9- Debt Sustainability 35. Uganda’s risk of debt distress is low, according to a recent update (March 2010) of the Joint IMF-World Bank Debt Sustainability Analysis. Its debt ratios have improved substantially due to the Heavily Indebted Poor Countries Initiative and Multilateral Debt Relief Initiative and to prudent macroeconomic management. The government plans to only gradually increase use of non- concessional borrowing to finance public infrastructure investments as they build debt management capacity. The analysis indicates that debt sustainability is sensitive to shocks, such as deterioration of economic growth. To minimize risk, the government needs to carefully select and implement public investment projects to accelerate economic growth at reasonable fiscal costs. The next Joint IMF- World Bank Debt Sustainability Analysis is planned for March 2011. C. Key Development Challenges 36. Accelerating structural transformation. The country’s uninterrupted growth since 1987 has been a noteworthy achievement. However, the weak point of economic performance has been the limited shift from a low-productivity, primary-based economy to a high-productivity economy based on industry and services. The country’s high population growth rate makes structural transformation particularly urgent to create nonagricultural and higher-productivity jobs for one of the fastest growing labor forces in the world. 37. Alleviating infrastructure and other bottlenecks. Inadequate infrastructure, especially transport and energy, is Uganda’s binding constraint for growth and economic transformation. The government needs to identify and facilitate implementation of infrastructure projects that will induce private sector investment in new products, resulting in increased exports and new jobs. Also, the financial sector needs to deepen and contribute more to growth. Lending as a share of deposits remains low. Pension reform is needed to create longer-term private investment financing. 38. Raising agricultural productivity and value addition. The government needs to continue supporting technology adoption to reduce the gap between yields achieved in farm trials and average national yields, and also improve value chain linkages through promoting agro-processing and public private partnerships. It is increasingly recognized that other core public functions, such as animal and plant disease control, regulatory services, water for agricultural production, sector statistics, and monitoring and evaluation, require support to ensure enduring agricultural growth. 39. Managing urbanization for growth. The pace of Uganda’s structural transformation will also depend on the efficiency of its spatial transformation. Although Uganda’s current level of urbanization is low, the rate of urban growth is high—estimated at 5.9 percent annually. Further agglomerations of people and economic activity will accompany structural transformation. Uganda has an opportunity to proactively strengthen decentralization and urban management to maximize the economic opportunities inherent in urbanization. 40. Reintegrating the North. Spurring economic recovery in northern Uganda is important for growth and poverty reduction, as well as for political stability. Development challenges in the north are acute: the region has the highest incidence of female-headed households in the country at 31 percent; and the infant mortality rate was 106 per 1,000 live births in 2006, compared to the national average of 76. Yet, northern Uganda has high potential for agricultural production and exports, given its proximity to markets in the DRC and southern Sudan. Ongoing investments in infrastructure and improvements in service delivery coordinated through the government’s Northern Uganda Peace Recovery and Development Plan and the Karamoja Integrated Disarmament and Development Plan will help harness this potential. - 10 - 41. Addressing the demographic challenge. Uganda could generate a demographic dividend for economic growth by accelerating the transition from high to low fertility and mortality rates.7 To achieve this, Uganda would need to improve its policies to reduce fertility and child and infant mortality and increase access to and quality of education, especially for girls. 42. Addressing the youth challenge. Nearly 400,000 youth enter the labor force each year; and their absorption into the labor market will remain a challenge for the medium term. To assist youth transition to stable employment, it will be important to raise the primary completion rate to near 100 percent, improve employment opportunities in the wage sector, and support youth in their transition to employment in the non-wage sector. (See Annex 7 for a full discussion on the youth challenge.) 43. Arresting environmental degradation and natural resource depletion. Despite efforts to improve institutions for environmental management and sustainable use of natural resources, the depletion of Uganda's natural resources and degradation of the environment is constraining growth. There is a high level of deforestation, while household expenditures for charcoal and fuelwood, principal sources of energy, have doubled during the last 15 years. Fishery resources, an important export, are declining. Other renewable natural resources—water resources, wetlands, grasslands, farmlands, and biodiversity—are being similarly depleted. Climate change will further challenge natural resource management. 44. Addressing a weakening governance environment. Uganda improved the quality of governance in the early part of the decade by strengthening accountability sector institutions, introducing decentralization, and accelerating public sector and public financial management reform. However, despite considerable transparency and a strong anti-corruption legal framework, accountability and enforcement are low. According to a 2009 Africa Peer Review Mechanism Country Review of Uganda, petty and high-level corruption are prevalent and affect every institution in the country, and are most rife in procurement, privatization, administration of revenues and public expenditures, and public service delivery. Despite the government’s zero tolerance policy on corruption, few if any high-level officials involved in major corruption scandals have been tried, hindering attempts to raise the bar and address lower level corruption. Reinvigorating institutions and accountability systems, rethinking decentralization policies, in particular fiscal aspects, and re- launching stalled public service reform processes will be essential elements for the development agenda in the coming years, especially before oil revenues come on stream. 45. Avoiding the so-called “resource curse.” Uganda’s overriding development challenge is to manage its oil endowment for stability, prosperity, and sustainability. Success will depend largely on the government’s near-term policy decisions, especially regarding resource management, revenue management, and environmental management. Effective petroleum sector governance requires the establishment of a clear and transparent legal, regulatory, and policy framework. The government must also manage public expectations regarding the future benefits coming from oil production and take steps to assure that the oil-affected communities feel the development benefits of oil. 7 When the fertility rate falls and the youth dependency ratios declines, the workforce becomes relatively larger, opening a window for faster human capital development and economic growth—known as the demographic dividend. - 11 - II. GOVERNMENT PROGRAM AND DEVELOPMENT PARTNER SUPPORT A. Uganda’s Poverty Reduction Strategy 46. Uganda was the first country to prepare a comprehensive, participatory, and country- owned national development strategy in 1997, creating the model for the Poverty Reduction Strategy Paper. The 1997 Poverty Eradication Action Plan (PEAP) received international praise. It was revised and updated in 2000 (PEAP II) and 2004 (PEAP III). PEAP III was extended for two years, to June 2010, due to delays in preparing its successor. 47. In February 2010, the government finalized a new five-year (FY2011-2015) National Development Plan (NDP). The NDP’s main theme is “Growth, Employment and Socio-Economic Transformation for Prosperity,” marking a broadening of the country’s development strategy from poverty reduction, the focus of the PEAPs, to structural transformation to raise growth and living standards. It is the first in a series of six plans intended to transform Uganda over thirty years into a modern and prosperous country. 48. The NDP has eight objectives. These are: (i) increase household income and promote equity; (ii) enhance the availability and quality of gainful employment; (iii) enhance human capital development; (iv) improve the stock and quality of economic infrastructure; (v) increase access to quality social services, (vi) promote science, technology, innovation, and information and communications technology (ICT) to enhance competitiveness; (vii) strengthen good governance, defense, and security; and (viii) promote sustainable population and use of the environment and natural resources. In addition, the NDP identifies four priority areas for investment: infrastructure development; human resource development; critical production inputs; and science, technology, and innovation. The NDP identifies fifteen “national flagship projects” intended to address binding constraints to growth. 49. The NDP includes analysis of cross-cutting issues crucial to sustained growth, such as gender. It highlights gender inequalities, commits to mainstreaming gender-responsive development, and proposes strategies to address gender gaps (see Box 4). Other cross-cutting issues include: governance, urbanization and decentralization, climate change, and regional cooperation. The NDP also includes a detailed discussion by sector, including a situational analysis, constraints, objectives, and planned interventions. 50. The IDA-IMF Joint Staff Advisory Note (JSAN) considers both the macroeconomic framework and the sector-specific plans to be generally compatible with the government’s vision of structurally transforming the economy. The JSAN also notes that weak governance and exogenous shocks could affect implementation adversely. The JSAN recommends measures to strengthen the NDP and enhance its implementation, such as better prioritization; actions to make growth more inclusive; preserving space for private sector initiatives and strengthening the legal and fiscal framework for public-private partnerships (PPPs); and including indicators of improving public financial management and governance in the NDP monitoring and evaluation plan. - 12 - Box 4: Gender Inequality in Uganda Uganda’s constitution guarantees gender equality and includes a number of affirmative action measures; however, as noted in Uganda’s National Development Plan (NDP), gender perceptions and practices continue to perpetuate inequalities that hinder economic development. The NDP introduces a comprehensive framework for mainstreaming gender-responsive development within the country’s objectives. It is informed by the National Gender Policy (2007) and the National Action Plan on Women. Based on the NDP’s gender analysis and the World Bank’s “Gender and Growth Assessment for Uganda” (2005), the key gender-based barriers to economic growth and poverty reduction are:  Women are marginalized in business ownership, skills development, access to financial resources, non- agricultural employment, and inheritance rights.  There is a marked gender gap in access to and control over productive resources. Women comprise 70 percent of the work force in agriculture but have unequal access to and control over productive resources, such as land, limiting their ability to move beyond subsistence agriculture.  Women have lower access to health and education services. There are gender disparities in primary school completion as well as secondary school enrollment. Only a third of girls enrolled in primary education continue in school to the age of 18, compared to half of boys  Early marriages and low girl primary school completion and secondary school enrollment are principal contributors to a high fertility rate and a high maternal mortality rate. During the CAS period, Bank-financed operations will be designed to reflect differences in men’s and women’s needs and constraints to ensure equal participation and equitable distribution of benefits. The CAS includes specific interventions to address gender inequalities in business skill development, education, health care, and agricultural production. The CAS results framework includes gender-disaggregated indicators in these areas. NDP Objectives 1 and 2: Income, Equity, and Employment 51. The NDP identifies eight primary growth sectors—agriculture, forestry, manufacturing, oil and gas, tourism, mining, ICT, and construction. The NDP calls for using national resources, better infrastructure, and development projects to ensure that all regions benefit from the growth of the national economy. 52. The private sector is constrained mainly by poor infrastructure and difficulty in accessing credit. The NDP notes that “Doing Business 2010” ranks Uganda 112th out of 183 countries. To improve conditions for private sector growth, the NDP calls for improving economic infrastructure, enhancing human capital development, strengthening competitiveness, and improving the private sector regulatory framework. 53. The NDP acknowledges agriculture as a key sector for growth, exports, employment, and food security. It provides the basis for growth in other sectors such as manufacturing and services. The NDP focuses on boosting agricultural production and productivity by increasing agroprocessing and strengthening policies and institutions. NDP Objective 4: Economic Infrastructure 54. Recognizing that weak infrastructure is a binding constraint for trade and growth, the NDP gives priority to improving infrastructure, especially energy and transport. The road sector carries 96 percent of total cargo freight, but only 4 percent is paved. Railways carry only 3.5 percent of freight cargo and only 28 percent of it is functional. Only 11 percent of the population has access to electricity. The NDP identifies several flagship projects to address these gaps, including - 13 - railway construction and rehabilitation, development of Kampala rapid transport systems, improvement of water transport on Lake Victoria, and construction of new hydropower plants. 55. The NDP also emphasizes the need to increase access to water for production. It notes the potential negative impact of climate change on agricultural yields. The construction of five large- scale irrigation systems is a national flagship project. NDP Objectives 3 and 5: Human Capital Development and Access to Social Services 56. While some progress has been made in recent years, Uganda’s health outcomes remain poor, even in comparison to other SSA countries. The health sector suffers from inadequate funding, understaffed health centers, health worker absenteeism, and waste in drug supply. The NDP emphasizes preventive and curative care, while exploring synergies with other sectors, such as education and water and sanitation, to reduce preventable diseases. It also focuses on addressing performance gaps by tackling health care systems and management, strengthening human resource planning, ensuring availability of drugs, and expanding access to Uganda’s National Minimum Health Care Package. 57. Education has been a priority since 1997, when the government introduced universal primary education. The government launched a phased universal post-primary education and training program in 2006, and has launched reforms to address quality. Nevertheless, widespread absenteeism, inequitable teacher deployment, insufficient spread of instructional materials, and weak governance structures at the school levels hinder the quality of service delivery. 58. The NDP also identifies skills development as a priority. The NDP notes the rapidly growing labor force and the high level of drop-outs from primary and secondary schools. In response, the government intends to develop a national vocational program. NDP Objective 6: Science, Technology, Innovation, and ICT 59. The NDP recognizes the role of science, technology, and innovation in growth and socioeconomic transformation. The NDP calls for the establishment of regional centers to adapt and promote new technology and provision of incentives to the private sector to encourage innovation. The government plans to improve ICT infrastructure by extending the national fiber- optic network to all districts and by introducing e-government services, including e-procurement. NDP Objective 7: Good Governance, Defense, and Security 60. The NDP identifies the weak public sector as a major constraint to development. Institutional inefficiency and ineffectiveness resulting from poor planning and management and limited staffing lead to low absorption of public funds and poor delivery of services. The NDP also recognizes the devastating socio-economic effects of corruption. It notes that Uganda is ranked 130th out of 180 countries in Transparency International’s 2009 Corruption Perception Index, below many other African countries. 61. The NDP identifies a number of key actions to address institutional weaknesses and governance challenges. This includes using the NDP as a key document to ensure alignment with all sectors plans, improve policy coordination, introduce institutional performance contracts at all levels, improve human resource management of public servants, review pay and incentives systems, and improve coordination and cooperation with the private sector and civil society. The NDP aims to - 14 - increase transparency and accountability by introducing value for money performance standards and performance budgeting in all sectors. NDP Objective 8: Promote Sustainable Population and Use of Environment and Natural Resources 62. The NDP recognizes that current population trends pose challenges to future growth and structural transformation unless actions are taken to generate a population dividend. It notes that high fertility results from low levels of education, early child bearing, a low contraceptive prevalence rate of 24 percent, and a high unmet demand for family planning estimated at 41 percent. The NDP identifies several key areas for intervention: implementation of the national population policy (including mobilization of resources); increasing access to and availability of family planning and reproductive health care; and increasing enrollment of youth and adults in education and training programs to increase the availability of skilled labor. 63. Uganda’s natural resources and biodiversity are deteriorating due to population pressures and economic activity. The country has the sixth highest deforestation rate among 62 tropical countries—losing one quarter of its forests from 1990 to 2005. Fish production fell by 14 percent from 2004 to 2007, and biodiversity is declining. By 2017, Uganda could be a water stressed country. Recognizing the productivity effects on agriculture, industry, and fisheries, the NDP calls for restoring degraded ecosystems, ensuring sustainable management of environmental resources, increasing public awareness, and enforcing environmental laws and regulations. B. Development Partner Support 64. Uganda is highly dependent on development assistance. Official Development Assistance (ODA) increased from US$192 million in 1986 to US$1.7 billion in 2007.8 Relative to GDP, total ODA to Uganda stood at 5 percent in 1986, peaked at 25 percent in 1992, and averaged 14 percent from 2004 to 2008. On-budget donor support amounted in FY08 and FY09 to about US$800 million per year; thus, donors finance around 30 percent of the government’s budget. 65. More than 40 bilateral and multilateral development partners (DPs) provide aid to Uganda; but only three DPs account for almost half of total ODA. The World Bank, the single largest financier, accounted for 19 percent of the US$7.3 billion disbursed from 2004 to 2008. The United States accounted for 18 percent; and the European Commission accounted for 10 percent. The number of small donors creates a challenge for lowering the transaction costs of donor assistance: 12 DPs accounted for 90 percent of ODA over the period; while 30 DPs accounted for the remaining 10 percent. 66. There have been efforts since the 1990s to improve donor harmonization. The government and DPs signed a set of Partnership Principles in 2003, which emphasized the government’s preference to use budget support as an aid modality. Over the last decade, in line with government preferences, DPs have shifted increasingly from project support to budget and sector support. In 2007, 66 percent of disbursed aid was provided as either general budget support or within program-based approaches, up from 50 percent in 2005. 8 ODA is measured by donors as expenditures that have as their main objective the promotion of the economic development and welfare of developing countries. What is classified as ODA to Uganda will not equal the amount received by the Government of Uganda. - 15 - 67. In 2005, seven DPs joined together to elaborate a Uganda Joint Assistance Strategy (UJAS) to support the government’s 2004 PEAP. Five additional DPs joined the UJAS framework in 2006, bringing the total number of UJAS partners to twelve.9 It was the first joint assistance strategy of its kind, representing a commitment among DPs to improve harmonization and aid effectiveness. 68. A review of the UJAS concluded that transaction costs were not reduced.10 The development of a joint assistance strategy was well intended, but in retrospect was neither a necessary nor sufficient condition for more effective aid. For example, while the UJAS outlined joint development partner commitments and aspirations to work more effectively towards the achievement of the PEAP goals and objectives, the UJAS was not effective as an operational tool during implementation. Consequently, UJAS partners and other DPs decided to engage with government on the development of on-the-ground mechanisms to improve aid coordination and alignment with national priorities, rather than on developing joint strategic documents. 9 The initial seven UJAS partners comprised: the African Development Bank, Germany, the Netherlands, Norway, Sweden, the United Kingdom, and the World Bank Group. Five DPs signed up to the UJAS in 2006: Austria, Belgium, Denmark, Ireland, and the European Commission. 10 “Review of the Uganda Joint Assistance Strategy – Current and Future Prospects,” January 2009, by Dr Alison Evans, Overseas Development Institute, London, and Peter Ssentongo, Centre for Performance Management and Evaluative Research, Kampala. The evaluation was financed by DFID and carried out in collaboration with UJAS partners and other DPs. - 16 - III. IMPLEMENTATION OF THE UGANDA JOINT ASSISTANCE STRATEGY AND LESSONS LEARNED 69. World Bank Executive Directors discussed the Uganda Joint Assistance Strategy (UJAS) in January 2006 (Report number 34310-UG). Part 1 of the UJAS covered a joint DP assessment and strategy, and Part 2 covered the World Bank Group assistance program. 70. The UJAS adopted the five pillars of Uganda’s 2004 Poverty Eradication Action Plan (PEAP). These were: (i) economic management, with a focus on macroeconomic stability consistent with rapid private sector-led growth; (ii) enhancing production, competitiveness, and incomes; (iii) security, conflict resolution, and disaster management; (iv) good governance; and (v) human development. Within these five pillars, the UJAS identified 15 high-level strategic objectives, 40 outcomes, and 56 outcome indicators. 71. The UJAS Completion Report rates Bank achievements under the UJAS as moderately satisfactory. Pillar 1 (economic management) and pillar 3 (security, conflict resolution, and disaster management) were rated satisfactory; while pillar 2 (enhancing production, competitiveness, and incomes) and pillar 5 (human development) were rated moderately satisfactory. Pillar 4 (good governance) was rated moderately unsatisfactory. A Country Assistance Evaluation by the Independent Evaluation Group (IEG) rated World Bank support during the period 2000-2007 (covering the FY01-03 CAS and the first two years of the UJAS) as moderately satisfactory (see Box 5). In 2008, the Bank contracted a client survey to provide information on perceptions of the Bank’s work in Uganda, which revealed that most stakeholders surveyed would like the Bank to focus on infrastructure and play a leading role in fighting corruption (see Box 6). See Annex 19 for the full UJAS Completion Report. Box 5: Uganda Joint Country Assistance Evaluation, 2001-2007 The World Bank’s Independent Evaluation Group (IEG) and the Operations Evaluation Department of the African Development Bank produced a Joint Country Assistance Evaluation (CAE) dated March 19, 2009, covering the period 2000 to 2007, corresponding to the FY01-03 CAS and the first two years of the UJAS. IEG Findings. World Bank programs were substantially effective in decentralization, public sector reform, growth and economic transformation, education, and water and sanitation. IEG deemed that more could have been done to help counter the perception of increasing corruption, improve power supply, reduce transport costs, enhance agricultural productivity, and help with family planning and reproductive health. The CAE rated the overall outcome of World Bank support as moderately satisfactory. IEG Recommendations and Corresponding Country Team Actions: (i) Support the government in developing an analytical framework to guide governance reforms. Action: The Bank and DPs are developing a Data Tracking Mechanism. (ii) Encourage and support government efforts to develop medium-to-long term master plans for infrastructure. Action: The Bank has supported a Power Sector Investment Plan; a National Transport Master Plan, including a Transport Master Plan for Greater Kampala Metropolitan Area; and a 15-year investment plan (2008 - 2023) for all modes of transport. The Bank will also support a Rural Electrification Strategy. (iii) Encourage the government to coordinate ongoing monitoring and evaluation initiatives by its development partners to ensure reliable monitoring and evaluation (M&E) of its overall poverty reduction strategy. Action: The government, whose PEAP evaluation identified weak and uncoordinated M&E as a factor hindering policy evaluation and decision making, is drafting a national policy on public sector M&E to address legislative gaps, clarify roles and responsibilities, and enforce institutional accountability for service delivery. (iv) Reinforce the effectiveness of general budget support as an instrument for minimizing transaction costs and facilitating the use of country systems. Action: The Bank and DPs have developed a Joint Budget Support Framework. 1/ Report Number 49395 dated August 11, 2009. - 17 - Box 6: Client Survey Methodology. From May to July 2008, about 550 stakeholders of the World Bank in Uganda were invited to provide their opinions on the Bank’s assistance to the country. 306 stakeholders (56%) responded to the survey. Survey results:  Respondents across most stakeholder groups and all geographic locations believed that the Bank considered its top priority in Uganda to be ensuring macroeconomic stability consistent with rapid growth.  Respondents indicated that it would be most productive for the Bank to focus most of its resources on strengthening basic infrastructure.  Respondents felt that the Bank should play a leading role in fighting corruption (mean response rating of 5.2 on a 6-point scale, where 1 is “not at all” and 6 is to “a great degree”).  The majority of respondents felt that the Bank should be more involved in Uganda’s development strategies; 20% felt that the Bank is currently involved at an optimum level. Only 8% of respondents felt that the Bank should be less involved or should not be involved at all.  Respondents felt that the Bank’s policy and economic advice and financial resources were its greatest values. The Bank’s lending when others won’t, donor coordination, knowledge, and technical advice were also considered of great value.  Respondents felt that the Bank’s greatest weaknesses in its work in Uganda were imposing theoretical and technocratic solutions without regard to political and other realities and being too bureaucratic in its operational policies and procedures  Across all respondents, the Bank’s overall effectiveness in Uganda received a mean rating of 6.3 on a 10-point scale, with 1 being very unfavorable and 10 being very favorable. Ratings were highest from employees of ministries (7.0), local government (7.2), and other organizations (7.4) and lowest from nongovernmental organizations (4.9). IDA, Trust Funds, and Analytical and Advisory Activities 72. World Bank Executive Directors approved about US$1.3 billion in IDA during the UJAS period (FY06-09) for seventeen operations. Budget support operations (Poverty Reduction Support Credits) amounted to US$460 million—35 percent of total lending.11 73. In terms of net commitments, the Uganda portfolio is the sixth largest in the Africa Region. As of end January 2010, there are sixteen IDA-financed operations with a net commitment amount of US$1.3 billion. In addition, there are five regional projects and an IDA guarantee of US$115 million for the Private Power Generation (Bujagali) Project. 74. The current sector distribution of IDA commitments reflects the government’s emphasis on infrastructure. About 68 percent of commitments are allocated to energy, mining, environment, urban development, and transport. About 22 percent are allocated to education and social development; 8 percent to finance and private sector development; and 1 percent to economic and public sector management.12 (Annex 8 provides a summary of the Operations Portfolio.) 75. Overall, project implementation performance has been satisfactory. The portfolio disbursement rate is 28.5 percent, versus the Africa Region average of 18.5 percent. There are one 11 The three PRSCs were: PRSC-5 in FY06; PRSC-6 in FY07; and PRSC-7 in FY08, which also provided funding for FY09 under an exceptional two-tranche design to align the PRSP with the Joint Budget Support Framework. 12 Uganda is currently in between PRSC cycles. When there is a PRSC in the active portfolio, the allocation to economic and public sector manager increases to about 9 percent. - 18 - potential and two actual problem projects, resulting in commitments at risk of 4.9 percent, much less than the Africa Region average of 28 percent.13 IEG project ratings of projects exiting the portfolio have been largely consistent with Implementation Completion Report ratings. However, delays in IDA credit effectiveness caused by Uganda’s lengthy approval process have often resulted in cost overruns and project delays.14 Of the seventeen projects under implementation at the start of FY09, six had effectiveness delays of 200 days or more. On average, effectiveness took 185 days. (Annex 9 provides selected indicators of the Bank portfolio.) 76. Uganda benefitted during the UJAS from 48 trust funds providing nearly US$65 million in grants. Most were linked to lending operations. They focused mainly on: environment (GEF); renewable energy (GEF); demobilization and reintegration of ex-combatants (MDTF); avian influenza; sanitation and hygiene (WSP); monitoring and evaluation (IDF); and piloting output-based aid in health and water supply (GPOBA). (A list of active trust funds is shown in Annex 10.) 77. The Bank’s analytical and advisory activities (AAAs) underpinned investment operations and sector strategies, and informed the government’s reform path. Analytical work included the Country Economic Memorandum (CEM, FY07), which helped the government shift toward investments to accelerate economic growth and structural transformation. The CEM was followed by a strategically planned series of public expenditure reviews (PERs), focusing on education (FY08), health (FY09), and roads (FY10). The report “Public Finance Management in Uganda – a Platform Approach” (2008), including an assessment of fiscal decentralization and the PEFA Report (FY09) has informed the public finance management reform agenda. Other AAA includes: a Diagnostic Trade Integration Study, an Investment Climate Assessment, a Financial Sector Study, a Land Poverty and Social Impact Assessment, an Agriculture Sector PER, and a study on Regional Inequality. 78. A recent Country Portfolio Performance Review (CPPR) identified portfolio issues and actions to improve portfolio performance and disbursements. The CPPR, which concluded in February 2010, recommended actions to improve quality at entry; build project implementation capacity, especially procurement; reduce effectiveness delays; and increase attention to environmental and social safeguard issues. The full CPPR Action Plan is shown in Annex 11. A CPPR Progress Report is planned for September 2010. The International Finance Corporation 79. IFC investment commitments over the CAS period (FY 2006-2009) amounted to US$201 million for eleven projects. Investments were mainly in the electricity sector (US$155 million) and the financial sector, especially for small and medium enterprises (SMEs), and telecommunications. Since 2006, the IFC has focused on intermediaries for SME finance, resulting in improved portfolio performance with negligible loss reserves. Currently, the portfolio amounts to US$193 million, the fourth largest country portfolio for IFC in Africa (see Annex 12 for additional details). IFC initiated 14 advisory projects during the period with a total value of US$7.6 million. In many cases, these advisory projects complemented investments to broaden development impact, for example supporting distributor networks and the Village Phone model with cell phone operators; working with banks to build capacity for SME lending, including facilities targeting women 13 Actual project projects have Project Development Objective (PDO) or Implementation Progress (IP) ratings of moderately unsatisfactory or lower. Potential problem projects are those with PDO or IP ratings of moderately satisfactory or higher, but have three or more risk flags. 14 Under Ugandan law, parliament approves each loan or credit. - 19 - entrepreneurs, and expanding housing finance. Other areas included assistance to improve the investment climate, address constraints for businesswomen, promote foreign investment, and develop models for private participation in small-scale rural water and electricity provision. Uganda also benefited from IFC’s advisory work to structure the private concession for Kenya Railways, which was extended to incorporate Uganda Railways in a single concession. Multilateral Investment Guarantee Agency 80. During the UJAS period, MIGA became increasingly involved in Bank group energy projects. MIGA is supporting Globeleq Holdings (United Kingdom) with a US$41 million guarantee of its investment in Umeme Ltd, the project company that has leased the electricity distribution grid of Uganda for 20 years. MIGA is also supporting Sithe Global (USA) with a US$115 million guarantee of its equity in Bujagali Energy Ltd. MIGA has a third guarantee in support of agribusiness. In all, MIGA’s portfolio of three guarantees has a combined gross exposure of US$158 million. Lessons Learned 81. The CAS Completion Report identified the following key lessons, which are incorporated in this CAS: (i) Focus on fewer outcomes and ensure a clear results framework. Typical of many early- generation results-focused CASes, the UJAS included an unrealistic number of outcomes (40) and indicators (56), which reduced the Bank’s strategic focus and ability to track its own effectiveness. In addition, both the UJAS and the PEAP had weak and incomplete results frameworks. (ii) Strengthen support to improve governance and help the government identify and track governance indicators to guide governance interventions. Focus on country-specific actionable governance indicators rather than on perception-based and cross-country comparative indicators. (iii) PRSC reforms should be linked to sector strategies and specific sector operations. Long- term sector reforms are best tackled when addressed simultaneously by a development policy operation and a sector specific operation. (iv) Focus on developing on-the-ground mechanisms to improve aid coordination and alignment with national priorities, rather than on joint strategic documents. The development of a joint assistance strategy was well intended, but it did not increase aid effectiveness nor reduce transaction costs for the government or DPs. (v) Anticipate at the project design stage the possibility of delays in credit effectiveness, due to delays in Uganda’s approval process. In addition, the Bank should ensure that government informs parliament about proposed projects at the appraisal stage, and puts in place a mechanism to track the approval process. - 20 - IV. THE WORLD BANK GROUP ASSISTANCE STRATEGY 82. The CAS aims to support Uganda’s vision of structural transformation by selectively assisting the government in implementing the NDP. The CAS provides a framework for World Bank Group support to Uganda over five years, from FY11-15, in alignment with the five-year NDP. A. The Framework for World Bank Engagement in Uganda 83. Align with national priorities. The CAS supports the implementation of the NDP and relevant sector strategies and regional strategies, such as the Northern Uganda Peace Recovery and Development Plan and the Karamoja Integrated Disarmament and Development Plan. CAS outcomes are a subset of NDP outcomes, focusing on areas where Bank interventions will contribute measurably to NDP outcomes. The Bank considered the views of a range of stakeholders during CAS preparation (see Annex 13, summarizing CAS consultations). 84. Maintain flexibility to mitigate risks. The first twelve months of CAS implementation will take place within a pre-election environment with inherent uncertainties and governance risks (see Section VI: Risks and Mitigation). The recent discovery of oil further increases political and governance risks. A CAS Progress Report will be prepared in FY13, or earlier if required, to update and adjust the CAS program as needed. 85. Continue to improve donor harmonization and reduce transaction costs for the government. Development partners in Uganda continue to seek ways to further improve aid effectiveness. Recognizing the limitations of the UJAS, DPs are focusing on basket funds, sector- wide approaches, and new coordination mechanisms, such as the Joint Budget Support Framework (see also Box 7), rather than on collective documents. 86. Strengthen strategic partnerships. The Bank will complement its core program by establishing strategic partnerships through single- and multi-donor trust funds and co-financing arrangements. This will enable the Bank to leverage its own resources and capacity for greater impact on the ground. 87. Enhance World Bank Group cooperation. The electricity sector is an example of close collaboration between IDA, IFC, and MIGA. IDA worked to restructure the sector and establish the framework for private participation; IFC helped to structure the Private Power Generation (Bujagali) Project, and IDA, IFC, and MIGA financing instruments were combined to realize the financing. The three Bank Group entities also provide joint support to the electricity distribution company, Umeme. During the CAS period, the World Bank Group will further enhance collaboration focusing on three areas: infrastructure (energy and transport); private sector development and business environment; and commercialization of agriculture. 88. Enhance regional integration. The number of regional projects has increased from one project in FY01 to an expected six projects by the end of FY10, reflecting an increasing emphasis on regional integration that will continue under the CAS. The proposed CAS program includes regional analytical work and projects to help Uganda increase growth through regional integration. 89. Strengthen institutional capacity. Lending operations will include components as needed to build or strengthen institutional capacity, including joint analytical work with local think tanks, research centers, and academia (such as the Economic Policy Research Center, Makerere University) to both support and strengthen them. Through an Institutional Development Fund grant (FY10, - 21 - US$500,000), the Bank will also support the Diaspora Division within the Ministry of Foreign Affairs, which aims to use Uganda’s diaspora to build institutional capacity in energy, roads, and railways. 90. Strengthen attention to governance and value for money. Given its cross-cutting nature, governance and value for money is addressed under various CAS outcomes. A Governance Partnership Facility (GPF) Window 1 grant (US$1.48 million) will help intensify attention to governance and anti-corruption (GAC) under this CAS. A Governance Risk Assessment Matrix, which summarizes risks, opportunities, gaps, and planned actions, will be monitored during the CAS (see Annex 14). A core Bank governance team in the Uganda Country Office will meet periodically to assess GAC initiatives and adjust them as needed. GAC initiatives to be undertaken during the CAS include: 15 (i) Enhance the focus on governance in sector projects, using them as entry points. The Bank will undertake political economy analysis and sector GAC assessments to design customized approaches to addressing governance risks that impede outcomes. During FY10, a GPF Window 2 grant was used to undertake political economy studies of the health and agriculture sectors, and a GAC assessment of the health and roads sectors. The analyses informed sector dialogue, were integrated into project design, and were used to prepare Governance and Anti-corruption Action Plans (GAAPs) that were adopted by the corresponding ministries. A GPF Window 1 grant provides funds to continue this approach during the CAS period, including for energy (in the context of oil exploitation) and local government/decentralization (in the context of moves towards recentralization and increased challenges to effective service delivery). GAAPs will be reassessed after one year of implementation. (ii) Continue to build demand-side mechanisms into project design. Five out of the sixteen ongoing IDA-financed investment projects already include demand-side mechanisms, such as citizen report cards. Demand-side mechanisms will be used during the CAS period whenever feasible. In addition, the Bank will test third-party monitoring of project implementation and results by a civil society organization. (iii) Increase transparency and disclosure of project activities to encourage citizen monitoring. In response to views expressed at CAS consultations, the Bank will increase public communication to ensure that project beneficiaries have access to information about budgets, contracts, and expected results. The Bank will initiate this approach with selected operations: Agriculture Technology and Agribusiness Advisory Services; Health Systems Strengthening; and Northern Uganda Social Action Fund II. (iv) Launch a Data Tracking Mechanism (DTM)—a GAC monitoring tool using actionable and country-specific indicators. The DTM was designed to use national data, such as reports of the Auditor General, the Inspector General, and the Budget Monitoring Unit. During a workshop in April 2010, government and DPs agreed to use the DTM to track corruption trends. The DTM will be managed by an independent research institute. 91. Mainstream gender within CAS outcomes. The CAS addresses gender concerns identified in the NDP, focusing on four areas: agriculture, girls’ education, private sector, and reproductive health, which are captured in the CAS Results Framework. 15 The Bank’s Country Team discussed GAC initiatives at a Governance Workshop in Kampala in December 2009. - 22 - B. IDA Resources 92. IDA resources under the FY11-15 CAS are estimated at about SDR1.3 billion (US$1.97 billion equivalent). The CAS covers the last year of IDA15 (FY11), the three years of IDA16 (FY12-14), and the first year of IDA 17 (FY15). Uganda’s indicative IDA allocation in FY11 (before front-or back-loading in FY09-10) is SDR 252 million (about US$385 million equivalent). Given an expected slight back-loading of IDA resources in FY10, the available resource in FY11 is estimated to be SDR256 million (US$390 million equivalent). An estimated average annual allocation of about SDR 252 million (US$385 million equivalent) would also be available during each year in FY12- FY15, assuming that the IDA 16 and 17 replenishments will provide as much IDA resources as the IDA 15 replenishment. The estimates for FY11-15 are indicative only and can change depending on: (i) total IDA resources available; (ii) the country’s performance rating; (iii) the number of IDA eligible countries; (iv) the performance and assistance terms of other IDA-eligible countries; and (v) the terms of IDA’s assistance to Uganda (grants or credits), which are determined annually and based on the risk of debt distress. IDA allocations are made in SDRs based on performance, and the US$ equivalent is dependent upon the prevailing exchange rate. Uganda could also potentially access IBRD for enclave projects, such as rehabilitation and expansion of the railway network. 93. The government can increase its IDA allocation by improving its Country Performance Rating, as measured by the Country Policy and Institutional Assessment (CPIA) and a portfolio performance rating. Uganda performs better than average for IDA countries (and the Africa region) on economic management (macroeconomic, fiscal, budget, and structural management). However, Uganda performs average or below average on service delivery, public sector management, efficiency of revenue mobilization, quality of public administration, and transparency, accountability and corruption. C. CAS Outcomes and the Proposed Program of Support 94. To support the NDP, the CAS will focus on three strategic objectives, one cross-cutting objective, and eleven outcomes. The relationship between CAS strategic objectives and outcomes is shown in Figure 1. CAS Instruments 95. Analytical and advisory activities. AAA will include: core diagnostic economic and sector work (ESW); ESW to underpin lending; and technical assistance (TA) and just-in-time policy notes as requested. As done effectively under the UJAS, the Bank will use AAA to expose development bottlenecks. The Bank will also use AAA to underpin its enhanced engagement on governance issues. There will be increased emphasis on results-based AAA and on dissemination of ESW to generate political debate and stimulate demand for more efficiency. In undertaking AAA, the Bank will emphasize government ownership and donor partnership to ensure that findings are translated into actions and results. A tentative AAA pipeline is shown in Table 2 and Annex 15). A CAS Progress Report (FY13) will identify AAA for FY 2013-15. 96. IDA-financed operations. To achieve CAS outcomes, the World Bank will finance investment operations, adjustable program loans (APLs), development policy operations, regional operations, and additional financing to scale up successful interventions. A tentative lending pipeline is shown in Table 3 and Annex 16. IDA lending by CAS objective is shown in Annex 17. A CAS Progress Report will define the IDA portfolio for FY 2013-15 based on an updated analysis of needs and priorities. - 23 - Figure 1: CAS Strategic Objectives and Outcomes CAS Strategic Objective 1:  CAS Strategic Objective 2:  CAS Strategic Objective 3:  Promote Inclusive and  Enhance Public  Strengthen Human  Sustainable Economic  Infrastructure Capital Development Growth CAS Outcome 3.1:  CAS Outcome 1.1:  Improved access  to  Improved conditions  CAS  Outcome 2.1:  Increased access to  and quality of  for private sector  primary and post‐ growth electricity primary education CAS Outcome 1.2:  CAS Outcome 2.2:  CAS Outcome 3.2:  Improved  Improved access to  Strengthened health  interconnectivity for  and quality of roads care delivery regional integration CAS Outcome 1.3:  CAS Outcome 2.3:  Increased  Increased access to  productivity and  and quality of water  commercialization of  and sanitation  agriculture services CAS Outcome 1.4:  CAS Outcome 2.4:  Increased efficiency  Improved  and sustainability of  management and  natural resource  delivery of urban  management  services CAS Cross‐Cutting Objective 4:  •CAS Outcome 4.1:  Improve Good Governance and  Strengthened accountability and  efficiency of  Value for Money financial and human resource management 97. Budget support. Development policy operations are expected to account for about one third of IDA financing under this CAS, as was the case under the UJAS.16 PRSC-8, which is planned for early FY11, is the start of a new PRSC series within a Joint Budget Support Framework (see Box 7).17 The new series, PRSCs 8-11, will focus on improving efficiency and value for money in the delivery of core public services, recognizing that strengthened accountability and efficiency of public spending is critical for the effective utilization of future oil revenues. To this end, the PRSCs will support (i) effective delivery of healthcare, education, water supply and sanitation, and road construction and maintenance; and (ii) complementary reforms in procurement, budget planning and execution, public sector management, public financial management, and decentralization. The PRSCs will build on recent public expenditure reviews, which identified binding constraints to service delivery. 98. Trust Funds. Continuing the trend under the UJAS, trust funds are expected to grow in both volume and strategic importance during the CAS period. Two recently-approved trust funds provide cross-cutting support to NDP and CAS outcomes: a US$1.48 million grant for recipient-executed 16 The volume and nature of budget support will be reassessed, as needed, during the CAS period within the JBSF. 17 PRSC-8 was originally planned for Board delivery in late FY10, but has been shifted to FY11 due to delays in a prior action involving amendments to the procurement law. - 24 - activities under the Governance Partnership Facility will be utilized to enhance the focus on governance during the CAS period; and a US$12 million programmatic trust fund financed by the United Kingdom’s (UK’s) Department for International Development (DFID) will support the government’s implementation of the NDP. A third, multi-donor trust fund, is being established to undertake analytical activities related to the Joint Budget Support Framework (JBSF), thereby informing the dialogue with the government and providing a platform for harmonized DP positions. In addition, trust funds will provide cofinancing for Bank operations, such as the Northern Uganda Social Action Fund II and the Transport Sector Development Project. Trust funds, such as Global Partnership for Output-Based Aid (GPOBA) and the Netherlands Trust Fund Africa Renewable Energy Access Program, will also help pilot innovative approaches that can be scaled up under IDA- financed operations. The Water and Sanitation Program (WSP) will continue supporting sanitation and improving service delivery to the poor in urban areas. Table 2: Proposed Analytical and Advisory Activities, FY10 and FY11-15 Fiscal Year Technical Assistance and Economic and Sector Work Joint Staff Advisory Note (JSAN) on PRSP PER: Strengthening the Impact of the Roads Budget 2010 TA: Governance and Anti-Corruption TA: PPP and Capital Markets PER: Public Investment Programming CEM Follow Up: Making Growth More Inclusive Water Country Assistance Strategy 2011 Financial Sector Assessment Program Policy Notes: Petroleum Sector Regional Integration, Trade, and Growth in the Great Lakes Programmatic TA: Governance and Anti-Corruption PER: Decentralized Service Delivery Youth Transition to Work Demography and Growth 2012 TA on Water for Production Tourism Policy Notes: Petroleum Sector Programmatic TA: Governance and Anti-Corruption PER (focus TBD) Agricultural Sector Review 2013 Policy Notes: Petroleum Sector Programmatic TA: Governance and Anti-Corruption CEM (focus on petroleum sector) 2014 PER (focus TBD) Programmatic TA: Governance and Anticorruption PER (focus TBD) 2015 Programmatic TA: Governance and Anticorruption Note: A CAS Progress Report (FY13) will define the FY13-15 AAA program. - 25 - Table 3: Proposed IDA Financing, FY10 and FY11-FY15 Fiscal Year Amount Proposed Operation (US$ million) 10 Regional: East Africa Agricultural Productivity (approved Nov. 12, 2009) 190 Transport Sector Development (approved Dec. 10, 2009) 2010 120 Agriculture Technology and Agribusiness Advisory Services 130 Health Systems Strengthening (includes $30 million CRW) 3.3 Regional: East Africa Public Health Laboratory Networking Total (FY10) 453.3* *Includes US$30 million Crisis Response Window (CRW) funds 120 Poverty Reduction Support Credit 8 (PRSC 8) (includes $40 million CRW) 2011 100 PRSC 9 90 Electricity Sector Development Project 120 Transport Sector Development Additional Financing Subtotal (FY11) 430* *Includes US$40 million Crisis Response Window (CRW) funds 100 PRSC 10 2012 150 Municipal Infrastructure Development 30 Petroleum Sector Support (infrastructure for areas with oil resources) 100 Power Sector Support 25 Regional: East African Transport Links 30 Regional: Communications Infrastructure Program Subtotal (FY12) 435 100 PRSC 11 2013 100 Post-Primary Education APL II (incl. vocational training and skills dev.) 130 Water Sector Development and Management 50 Private Sector Competitiveness III 40 Kampala Institutional and Infrastructure Development Project APL II 50 Forestry/Natural Resource Management Subtotal (FY13) 470 100 PRSC 12 2014 50 Agriculture Sector Support 130 Transport Sector Development Project II 115 Local Government Management and Capacity Building APL II 40 Energy for Rural Transformation APL III Subtotal (FY14) 435 2015 100 PRSC 13 100 Northern Uganda Integration and Growth Subtotal (FY15) 200 Total (FY11-15) 1,970 Notes: (1) IDA financing amounts are indicative only. (2) Additional financing (AF) for ongoing projects will be considered based on (i) IDA availability; and (ii) government priorities and needs. Potential candidates for AF include: Private Sector Competitiveness II; Millennium Science; Local Government Management and Capacity Building APL I; and Public Service Performance and Enhancement Project. (3) Regional projects are funded one-third from the country IDA envelope and two-thirds from the regional IDA envelope. The amounts shown above are those from the country IDA envelope only. (4) A CAS Progress Report (FY13) will define the FY13-15 lending program. Budget support in FY12-15 depends on an assessment of country performance, including governance and anti-corruption. - 26 - Box 7: A New Joint Budget Support Framework The government and development partners (DPs) approved, for the first time, a Joint Budget Support Framework (JBSF) in October 2009, to reduce the transaction costs of budget support for the government, increase the predictability of disbursements, and create a stronger and more consistent policy dialogue that fosters mutual accountability in line with the Paris Declaration on Aid Effectiveness. JBSF partners. There are 12 JBSF partners, three multilateral DPs (the African Development Bank, European Commission, World Bank), and nine bilateral DPs (Austria, Belgium, Denmark, Germany, Ireland, the Netherlands, Norway, Sweden and the United Kingdom). JBSF partners combined are expected to disburse over US$300 million per year, with the Bank accounting for about one third of the total. JBSF governance structure. It is two tiered:  A DP Policy Committee meets regularly and engages with the government at an annual high-level forum;  At the working level, the JBSF Technical and Policy Dialogue Taskforce meets frequently to coordinate the design and implementation of the JBSF and conduct an annual assessment of performance. A multi-donor trust fund managed by the Bank will be used to establish a Technical and Administrative Support Unit, to provide administrative support and generate high-quality technical and analytical work. Joint Assessment Framework (JAF). The JAF is developed and agreed by the government and JBSF DPs, and is used by DPs to assess the government’s performance in agreed areas. The assessment of performance will form the basis for DPs’ disbursement decisions. The JBSF also ensures timely disbursement by DPs. D. Strategic Objective One: Promote Inclusive and Sustainable Economic Growth 99. The Bank will focus on four outcomes to promote inclusive and sustainable growth. To improve conditions for the private sector, the Bank will support government efforts to improve land registry, streamline regulations, and deepen the financial sector. The Bank will also help Uganda maximize the benefits of regional integration, including by decreasing non-tariff barriers, such as transit time through the northern corridor. Bank support will help farmers adopt new technologies to increase yields and the share of production marketed, with outreach to female farmers to increase their access to advisory services. To address the sustainability of growth, the Bank will support improved land use management, reforestation, and promulgation of environmental regulations relating to oil and gas policy. CAS Outcome 1.1: Improved conditions for private sector growth 100. Analytical underpinnings. An Investment Climate Assessment (FY09) based on a 2006 survey pointed to lack of electricity and cost and unavailability of financing as key business constraints. The Bank’s “Making Finance Work for Uganda” (FY09) explored issues relating to access to finance and development of term finance, highlighting the need for pension sector reform. Under the CAS, the Bank’s policy dialogue will support financial sector and pension system reforms to improve access to financial services, and the preparation and implementation of a financial market strategy. The Bank and IMF plan to undertake a Financial Sector Assessment Program (FSAP) in FY11 or FY12. A study on “Youth Transition to Work” (FY12) will use updated panel data and new quantitative data to analyze constraints faced by youth in making the transition to work and identify effective approaches to address these constraints, paying special attention to gender and post-conflict issues. 101. Expected results of IDA-financed operations. The ongoing Second Private Sector Competitiveness Project (PSCP II, FY05) aims to improve enterprise growth (including outreach to women entrepreneurs), business registration and licensing procedures, transparency and efficiency of land registry (including lowering the time it takes to register property), and access to financial services; and it supports the establishment of the Kampala Industrial Business Park. Under the - 27 - CAS, additional financing (US$20 million, FY11) may be used to scale up the land registry component; and a planned PSCP III (US$50 million, FY13) will finance activities to increase tourism, youth employment, and exports of nontraditional commodities. 102. Expected results of regional operations. The Bank and the EAC Secretariat are discussing a first and second EAC Financial Sector Regionalization Project (EAC FSRP I, FY11, covering the first year; EAC FSRP II, FY12, covering years two through six) to establish a single market in financial services among EAC members, following up on the signature of the EAC Common Market Protocol in November 2009. 103. Expected results from trust funds. Trust funds will be used for targeted support linked to project outcomes. A grant from the DFID Trust Fund for NDP Support will help the government establish a new pension system regulatory framework, including a new Uganda Retirement Benefit Authority. A grant from the Public-Private Infrastructure Advisory Facility is financing technical support for the establishment of a PPP unit. The DFID Trust Fund may also be used to prepare a detailed work program for the new PPP unit and build its capacity, and to develop a more focused private sector competitiveness strategy and a system to monitor investment climate and doing business indicators. 104. IFC. IFC has provided lines of credit and advisory services to commercial banks for on- lending to SMEs, with a focus on expanding access to credit for women entrepreneurs, and has undertaken an advisory program to develop mortgage lending. In support of PSCP II, IFC is providing assistance on investment promotion and an investment climate reform program that covers licensing, regulatory reform, business taxation, and other areas tracked in the Doing Business indicators. IFC will assist viable investments in the Kampala Industrial and Business Park. 105. MIGA. During the CAS period, there will likely be opportunities for MIGA to support foreign direct investment in the agribusiness, manufacturing, services, and energy sectors. Projects will be supported on an as-needed basis. Given the typical size of transactions in these sectors, MIGA would likely support some of these projects under its Small Investor Program (SIP). At MIGA, SIP projects have individual (gross) exposures of less than US$10 million and are normally approved in less than two months given their streamlined procedures. 106. Development partners. DPs coordinate their activities through a Private Sector Development Working Group co-chaired by the Bank. DPs supporting private sector development include: the Danish International Development Agency (DANIDA), DFID, the European Commission (EC), the German Agency for Technical Cooperation (GTZ), Ireland, Norway, and the United States Agency for International Development (USAID). CAS Outcome 1.2: Improved interconnectivity for regional integration 107. Analytical underpinnings. The Bank recently launched “Regional Integration, Trade and Growth in the Great Lakes Region of Africa” (FY11), financed mainly by a grant from the Multi- donor Trust Fund for Trade, to produce policy notes on measures to facilitate trade and increase future growth. 108. Expected results of IDA-financed operations. The ongoing East Africa Trade and Transport Facilitation Project (FY06) finances the construction of one-stop border posts between Uganda and Kenya and Uganda and Rwanda, which is expected to reduce the transit time through the Northern Corridor from Mombasa to Kigali. The project also supports the concessioning of the Mombasa to Kampala railway to a private operator and the preparation of a feasibility study to - 28 - upgrade the Tororo–Pakwach line. The project will be restructured and may require additional financing. The Bank and IFC plan to work jointly with the EAC and the African Development Bank (AfDB) to help formulate regional regulatory and legal frameworks to facilitate sound railway operations. When a comprehensive railway plan for the EAC is completed, the World Bank Group could advise on prioritization and financing, including possible use of IBRD funds in addition to use of IDA resources and other World Bank Group resources. A proposed East Africa Transport Links (US$25 million for Uganda, FY12) will help improve Lake Victoria transit. Uganda is expected to join the Regional Communications Infrastructure Program (RCIP) (FY12, US$70 million, of which US$30 million from Uganda’s IDA allocation), which will provide funding for ICT infrastructure and various e-government activities to lower the cost of communications and improve transparency and efficiency of government services. 109. IFC. The Rift Valley Railways (RVR) line from Kampala to Mombasa was privatized in 2006 with advisory assistance from IFC. Two 25-year concessions were signed by the Governments of Kenya and Uganda and IFC subsequently provided loans to the concessionaire. However, owing to ongoing problems with RVR management and performance, IFC loans were not fully disbursed. IFC has worked to ensure the success of the concession, with the introduction of a new sponsor group which will inject additional equity and bring onboard experienced rail operators as managers. Once the restructuring is finalized, IFC will continue its financial support to the railways under the existing project, with MIGA willing to consider guaranteeing the equity investment. In telecommunications, IFC is supporting the East African Submarine Cable System to connect East African countries to the rest of the world via high bandwidth fiber optic cable. 110. MIGA. As part of its commitment to Africa's regional integration agenda, MIGA may be asked to provide guarantee support for the Kenya/Uganda railway, depending upon the pace of ongoing commercial negotiations. IFC and the Bank are already supporting this project with loans and guarantees, respectively, thus MIGA is working closely with both to ensure effective coverage. 111. Development partners. In the ICT sector, the Government of China is financing the development of the national ICT backbone network, the first phase of which was completed in 2008 although it is still not fully operational. The second phase is under implementation. CAS Outcome 1.3: Increased productivity and commercialization of agriculture 112. Analytical underpinnings. The Sustainable Land Management PER (FY08) and the Agriculture PER (FY09) informed the Development Strategy and Investment Program (DSIP) of the Ministry of Agriculture, Animal Industry, and Fisheries. Following agreement on the DSIP, government and DPs signed the Comprehensive African Agricultural Development Program (CAADP) compact in March 2010. The DSIP provides the strategic framework for the Bank’s future lending. During the CAS, the Inclusive Growth ESW (FY11) will identify constraints to agricultural commercialization and inclusive agricultural growth. Once agricultural census results are available (FY13), the Bank will undertake additional AAA to inform lending and the policy dialogue. TA on water for agricultural production will be undertaken during the CAS period (FY13). 113. Expected results of IDA-financed operations. The Agriculture Technology and Agribusiness Advisory Services Project (ATAAS, US$120 million, FY10), building on the Second Agricultural Research and Training Project, which closed in June 2009, and the National Agricultural Advisory Service Project (NAADS), which closed in December 2009, will lead to increased agricultural yields and shares of farm production marketed. The ongoing Northern Uganda Social Action Fund II will complement ATAAS by helping IDP returnees and other vulnerable groups in northern Uganda re-start agricultural activity and become eligible for advisory services. The Bank and - 29 - government are discussing a new project (US$50 million, FY14) to address other priority areas for public investment identified in the DSIP, which could include irrigation, animal health, pest control, food safety, and quality assurance. 114. Expected results from trust funds. The ATAAS will be supplemented by a US$7.2 million GEF grant to promote sustainable land management and help respond to climate change. In addition, a DFID Trust Fund grant of about US$1 million will provide TA for DSIP implementation. 115. Regional integration. In FY10, Uganda joined the East Africa Agricultural Productivity Project (US$30 million), which focuses on the regional aspects of agricultural research and technology promotion, complementing the ATAAS. 116. IFC. The Bank and IFC will work together to identify actions to promote more rapid commercialization of agriculture. Potential joint activities include: (i) input production (investments in domestic/regional fertilizer production, support to seed companies and agro-input providers, PPPs for provision of key inputs and services, and support to private sector investors on irrigation); (ii) output marketing (support to outgrowers and PPPs for storage facilities); (iii) processing/value addition (support for agri-business and expansion of PPPs in value chains); and (iv) exports (investments in exporters and support related to infrastructure, trade finance, and logistics/handling infrastructure). 117. Development partners. An Agriculture Sector Working Group plays a strong role in coordinating support for the agriculture sector, aligned with the CAADP. Both the ATAAS and the proposed Agriculture Sector Support Project are envisaged to be funded through a “basket fund” using a SWAp approach with other active DPs in the sector. Three DPs will together provide about US$41 million to the ATAAS basket: DANIDA (US$7 million), EC (EUR 15 million), and the International Fund for Agricultural Development (IFAD, US$14 million). In addition, DANIDA and USAID provide substantial off-budget support for commercializing agriculture. 118. Governance/value for money. GAC-related risks of ATAAS are high, given charges of misuse of funds under NAADS. Consequently, the government and IDA have designed ATAAS to strengthen management, enhance accountability, and minimize corruption risks. ATAAS includes a Governance and Anti-Corruption Action Plan. The Agriculture PER (FY09) included a value for money analysis that also informed the design of ATAAS. CAS Outcome 1.4: Increased efficiency and sustainability of natural resource management 119. Analytical underpinnings. Oil and gas: The Bank will prepare just-in-time policy notes (FY11, FY12, FY13) on petroleum-related subjects and the experiences of other countries, which could include: fiscal federalism; establishment of a petroleum training center; oil production in environmentally sensitive areas; and development programs for local communities in oil-affected areas. Water resources: The Bank and the government are preparing a Country Water Resources Assistance Strategy (FY11) to identify entry points for Bank engagement in the water sector to reduce existing water-related vulnerability of the economy and enhance the positive impact of water on growth and poverty reduction. Follow-on TA during the CAS period will include support to the government for advancing its Water Strategy and Investment Planning (FY13), and mainstreaming climate resilience in water resources planning and management (FY14), building on earlier Bank work on water and climate change. Environment: A study on environment and growth—as a stand- alone ESW or to be included in the Inclusive Growth ESW (FY11)—will help identify environmental and natural resource management priorities as a basis for informing a possible Bank investment aimed at protecting and conserving natural resources including forestry. - 30 - 120. Expected results of IDA-financed operations. The broad-based Environmental Management and Capacity Building II (EMCBP II, FY01) helps establish the institutional and legal framework for national and local-level environmental management. Additional financing (FY09) is supporting afforestation, improved municipal solid waste, and the establishment of environmental standards for oil and gas exploration and production. The ongoing Sustainable Management of Mineral Resources Project (SMMRP, FY04) and additional financing (FY09) strengthens government capacity to manage the sector responsibly, supports artisanal and small-scale mining communities, and lays the foundation for future investment through high tech geological mapping and a modern transparent mining rights system. Based on the findings of the Country Water Resources Assistance Strategy and the government’s Water Resources Assessment and Strategy, the Bank and government plan to prepare a Water Sector Development and Management Project (US$130 million, FY13) to invest in strategic urban water supply and sanitation systems (see para. 140) and help the government operationalize water management zones. The Bank and the government are discussing possible IDA support for the petroleum sector, which could include support for towns and municipalities in the petroleum-affected area. 121. Carbon-finance operations. Uganda has developed about a dozen Clean Development Mechanism projects that bring global resources to mitigate climate change and support local sustainable development priorities. Uganda was one of the pioneering countries to develop a project with the Prototype Carbon Fund with the West Nile Electricity Project. Another carbon operation involves the management and composting of waste in several small, growing cities across the country. Uganda is also implementing a highly replicable community-based timber replanting project. Carbon resources can also help projects that use biomass co-generation to generate heat and electricity to supply the nation's electricity grid using renewable resources, such as bagasse generation from sugar mills. 122. Regional integration. Given the transboundary nature of Uganda’s water resources, there are numerous regional activities under the Lake Victoria Environmental Management Project (LVEMP) and the Nile Basin Initiative (NBI), in which Uganda has been involved for ten years. Work under the second phase of LVEMP (US$27.5 million to Uganda) includes strengthening institutional capacity for water and fisheries management, point source pollution control and prevention, and watershed management in the Katoga river catchment. 123. Development partners. The Bank works with a number of sector working groups on various natural resource management issues, including the Environment Sector Working Group and the Water Sector Working Group. The Bank has proposed the establishment of a Petroleum Sector Working Group to improve the flow of information and ensure harmonized DP support. Norway, the lead DP in the petroleum sector, is implementing a three-year US$15 million program based on three pillars: resource management, revenue management, and environmental management. The IMF is also providing support on petroleum revenue management; and the AfDB is providing support on infrastructure. The UN is currently developing a joint program on climate change. 124. Governance. The SMMRP is improving minerals sector governance by building institutional capacity and implementing a new mining cadastre system. There is now revenue transparency at the local level though publication of the share of royalty income to local governments. Revenue transparency at the macro level has been agreed to in principle but Uganda has not yet embraced the Extractive Industries Transparency Initiative (EITI) process as a means to achieve this. EITI would also provide a multi-stakeholder forum for more effective dialogue with civil society on both mining and oil revenues and sector concerns. - 31 - Box 8: Climate Change in Uganda Impact on Uganda: Uganda’s exposure to climate change risk is moderate. Models by the Intergovernmental Panel on Climate Change predict Uganda to get wetter and hotter. Climate change risks are associated mainly with increased frequency and severity of floods and droughts, and associated natural disasters, such as landslides, erratic rain and weather patterns, and spread of malaria to higher elevations due to increase in temperature. The CAS will take a two-pronged approach to climate change: Consistent with the Africa Region Climate Change Strategy, the CAS will support actions that make Uganda’s economy more resilient to climate risks. Actions will comprise: (i) mainstreaming of adaptation to climatic changes in sector operations in key productive sectors; and (ii) targeted interventions for priority adaptation or mitigation issues (for example, in forestry or climate resilient infrastructure in Kampala). In addition, the Global Facility for Disaster Reduction and Recovery is financing regional technical assistance (Climate Observations and Regional Modeling in Support of Climate Risk Management and Sustainable Development Country: Eastern Africa) to help countries, including Uganda, better prepare in managing risks associated with climate change. Adaptation: Adaptation will be mainstreamed through sector operations, including agriculture, transport, municipal infrastructure, and water resource and watershed management. Mitigation: Mitigation of greenhouse gas emissions will target one of the most significant sources of greenhouse gas emissions in Uganda—deforestation and forest degradation—and will be implemented through a forestry or natural resource management operation and through support for renewable energy. Coordination and technical assistance: An overwhelming number of donor initiatives on climate change and limited capacity of sector ministries to respond to climate change require both strengthened donor coordination and targeted technical assistance to the government. Both will be supported through the DFID Trust Fund for NDP Support and draw on recent work by GTZ to map climate actors in Uganda. The DFID Trust Fund for NDP Support and Country Environmental Analysis trust fund may also support studies on economic impacts of climate change and environmental degradation on Uganda to inform targeting of the investment interventions. In addition, the Uganda Water Resources Assistance Strategy will study climate change risks to water resources. E. Strategic Objective Two: Enhance Public Infrastructure 125. The Bank will support Uganda’s effort to address its most binding constraint to growth—poor infrastructure. CAS interventions in the energy sector aim to reduce unmet demand for electricity and increase the rural population’s access to electricity, including through renewable energy. The CAS program also aims to increase the percentage of national roads in good condition, while rehabilitating key corridors that will help reintegrate northern Uganda and facilitate trade with neighboring countries; and it aims to increase the rural population’s access to all-season roads. Expected results in the water sector include increasing the percentage of the population with access to an improved water source, and the percentage of households with access to safe and effective sanitation. The Bank will provide support to strengthen institutions and improve infrastructure and services in cities and towns to facilitate spatial agglomeration needed for structural transformation. CAS Outcome 2.1: Increased access to electricity 126. Analytical underpinnings. The government has pursued rural electrification in accordance with the Rural Electrification Framework (2001-2010). The government will prepare a new Rural Electrification Strategy (2011-2010) to accelerate access to electricity from the current low level. The Ministry of Energy and Mineral Development and the Bank will collaborate on a diagnostic study (possibly financed by the DFID Trust Fund for NDP Support) to inform the new Rural Electrification Strategy. 127. Expected results of IDA-financed operations. There is substantial World Bank Group support for energy, exceeding US$700 million including guarantees, which will continue under the CAS. The 250 megawatt Bujagali hydropower station, supported by IFC, MIGA, and an IDA Partial - 32 - Risk Guarantee (PRG), is expected to be commissioned in April 2012. The ongoing Energy for Rural Transformation Program APL II (US$75 million IDA, US$8 million GEF, FY09), is part of a three- phase APL to expand rural electricity access from the current less than 5 percent to 10 percent (400,000 new connections) by 2015 in addition to supporting the development of at least 40 megawatts of renewable energy. The ongoing Power Sector Development Operation (US$300 million, FY07) is supporting short-term investments (emergency thermal generation and energy efficiency activities) to overcome power generation shortfalls and financing gaps so as to stabilize the sector in addition to sector policy changes needed to promote its sustained future expansion. An ongoing component of the Privatization and Utility Sector Reform Project (US$5.5 million IDA PRG, FY01) supports the concession of electricity distribution to Umeme. 128. The proposed Electricity Sector Development Project (US$90 million, FY11) will increase electricity supply by financing improvements to the transmission grid system. Additional power sector support (US$100 million) is programmed in FY12. The Energy for Rural Transformation Program APL III (US$40 million, FY14) will focus on implementing the new Rural Electrification Strategy to increase access to electricity and build necessary institutional capacity. Additional funds for ERT III may be leveraged from other DPs to increase the program’s scope. In addition, during the CAS period, the government may request World Bank Group support for one of the major hydropower projects identified as part of government long term sector strategy and cited as national flagship projects in the NDP. 129. Expected results from trust funds. The Energy Sector Multidonor Assistance Program (ESMAP) will support Uganda’s efforts to identify geothermal resources and prepare feasibility studies where possible. Under the Energy for Rural Transformation APL II, IDA and GPOBA funds will be used for an OBA scheme to increase energy access to poor households in rural and peri-urban areas. As part of the Netherlands Trust Fund for the Africa Renewable Energy Access Program, the Biomass Energy Initiative for Africa will finance two pilot projects in Uganda, one involving production of air-controlled top lit updraft stoves by local tinsmiths, and another to use fish waste to produce electricity for a local community. Finally, a Russian Energy for Small and Medium Enterprises Trust Fund is financing studies to assess barriers to private sector initiatives in the development of renewable energy. 130. IFC. In addition to the ongoing support to the Bujagali project, IFC has provided a US$25 million loan to Umeme, the private electricity distribution company, to improve the quality of its service and connect up to 20,000 new customers annually. The IFC loan contributes to Umeme’s US$50 million investment program for 2009 and 2010, which will enable Umeme to upgrade its existing equipment and provide new electricity connections. The company currently supplies power to over 300,000 customers. 131. MIGA. MIGA plans to continue supporting as needed its two guarantees in the energy sector: the Bujagali project guarantee and a US$41 million political risk guarantee to Umeme. Given MIGA’s upstream involvement in the sector and contacts with the energy investor community, it is likely that MIGA will be asked during the CAS period to provide additional cover for the Umeme project as well as cover for new power generation projects. MIGA is, in principle, prepared to extend additional guarantees, given the chronic power shortages in the country and the low rate of access to electricity. 132. Regional integration. The emerging East Africa Power Market offers a long-term opportunity for least cost power in eastern Africa. AfDB and JICA are financing electricity grid interconnections between Uganda-Rwanda and Uganda-Kenya. A planned East Africa Power Pool - 33 - Project will support the development of the newly established Power Pool and further strengthen the backbone lines in Uganda, Tanzania, Kenya and Rwanda. In addition, the Nile Basin Initiative trust fund is financing feasibility studies for the Uganda-DRC and Uganda-Sudan transmission lines. Subject to the feasibility study recommendations, the regional program may support construction of the Uganda-DRC line. 133. Development partners. The key players in the sector include: the Norwegian Agency for Development Cooperation (NORAD), the German Reconstruction Credit Institute (KfW), Japan International Cooperation Agency (JICA), and AfDB – and have provided financing towards generation, transmission network development in addition to rural electrification and technical assistance and capacity building activities. To enhance the cooperation among the development partners and joint support to the sector, the Bank under the ongoing Power Sector Development Operation is supporting the set up and operation of the Energy Sector Working Group led by the Ministry of Energy and Minerals Development. The major objectives of the Sector Working Group are to: align the work within the energy and mineral development sector more closely with national priorities, and strengthen the cross-sectoral links between sector activities and other sectors by adopting a participatory and inclusive planning process. 134. Governance/value for money. The sector faces challenges arising out of the sector’s unbundling with increased private sector participation and relatively young institutions to plan, oversee, and regulate sector activities. Specifically, there are capacity gaps related to preparation of PPPs and negotiation and enforcement of Power Purchase and Concession Agreements. This has tended to dilute the perceived benefits of the ongoing PPPs in the generation and distribution activities. IDA, over the CAS period, will support development of the requisite framework and capacity in the areas of PPPs and project finance so as to leverage the available public financing and at same time ensure value for money. CAS Outcome 2.2: Improved access to and quality of roads 135. Analytical underpinnings. A PER on Strengthening the Impact of the Roads Budget (FY10) recommends ways to improve the allocation of rural road budgets, and makes detailed recommendations in relation to national roads, including design, land take, procurement, and monitoring and evaluation, to improve value for money and absorption capacity. 136. Expected results of IDA-financed operations. The Government of Uganda has embarked on an ambitious program to scale up road sector investment and IDA is strongly committed to continuing its support. The ongoing Road Development APL III (US$107.6 million, FY05) is 94 percent disbursed and scheduled to close in FY11. Executive Directors approved the Transport Sector Development Project (TSDP, US$190 million) in December 2009 to pave sections of national roads to Southern Sudan (Gulu-Atiak) and north-eastern Democratic Republic of Congo (Vurra- Arua-Oraba), finalizing these corridors to neighboring countries and improving growth prospects in post-conflict northern Uganda. The TSDP is part of a sector-wide approach that finances a three-year (FY11-FY13) time slice of the government’s National Transport Master Plan. Under the CAS, additional financing to the TSDP (US$120 million, FY11) will finance the paving of Kamwenge-Fort Portal in eastern Uganda, complementing work financed by the AfDB, and will improve roads and drainage in Kampala. A second TSDP (US$160 million), planned for FY13 or FY14, will continue to finance the National Transport Master Plan, including phase 1 of the Kampala Bus Rapid Transit. 137. Expected results from trust funds. Through the DfID Trust Fund for NDP Support, the Bank will provide TA to the government on transport issues, including strengthening institutions and increasing absorption capacity. - 34 - 138. Development partners. In 2009, government and development partners established the first sector-wide approach (SWAp) for the road sector. As part of the SWAp, DANIDA, EC, and IDA provide coordinated institutional support for the road sector. The government and sector stakeholders hold annual Joint Transport Sector Review meetings and quarterly performance reviews to review progress against targets 139. Governance/value for money. There is growing negative public perception of road sector procurement and quality control. A GPF Window 2 grant financed a GAC diagnostic for the transport sector and the development of a Governance and Anti-Corruption Action Plan (GAAP) for the TSDP. A sector-wide GAAP for the transport sector is under preparation and will be a key element of future Bank support. CAS Outcome 2.3: Increased access to and quality of water and sanitation services 140. Analytical underpinnings. The Bank has had a long standing engagement in the water supply and sanitation sector, supporting many of the key reforms that have led to the sector’s turnaround. A study on “Environmental Sanitation in Uganda: Addressing Institutional and Financial Challenges” (FY10) highlights the need to integrate budgets for sanitation and hygiene; address institutional bottlenecks that underlie sanitation and hygiene promotion; and remove institutional constraints that hinder solid waste management and drainage services. In FY11, the Bank will conduct a study of “Ten Years of Budget Support to Improve Rural Water Supplies and Sanitation in Uganda.” 141. Expected results of IDA-financed operations. Over the past decade, the Bank has mainly supported rural water supply and sanitation through the PRSC and the Northern Uganda Social Action Fund. A proposed integrated Water Sector Development and Management Project (US$130 million, FY13) will finance investments in water supply and sanitation in a number of priority towns and cities, including several of the municipalities included in the Municipal Development Program (FY12). 142. Expected results from trust funds. Two Output-Based Aid (OBA) water pilots will be completed within the CAS period: one involving small local private operators in small towns and rural growth centers, and the other involving expanding access to the urban poor through the National Water and Sewerage Corporation. Results so far have been encouraging; and the government and DPs are considering scaling-up OBA. During the CAS period, the WSP will provide TA for a large-scale rural sanitation program addressing the enabling environment, local government capacity building, and private sector participation. The WSP will continue to support the implementation of large-scale sanitation programs in districts and helping to deliver sanitation and improved water services to the poor in small towns. 143. IFC. Under the Small Scale Infrastructure Program in Water, IFC is providing advisory assistance to the Ministry of Water and Environment and selected local governments to establish PPP structures that encourage private water operators. The program is proceeding with a pilot in Busembatia, has developed a generic PPP contract for replication in other towns, and has conducted training for officials from 24 local governments. IFC is also working with Ugandan banks to stimulate interest in commercial financing for the private operators, which would complement concessional funding for a substantial portion of capital costs. 144. Regional integration. WBI has recently initiated steps to build a regional training hub in Kampala, around the Water Academy established with NWSC support. The intention is to develop a cadre of trained middle to senior managers in the region. Other related operations are the NBI and - 35 - LVEMP (US$27.5 million to Uganda) which address water resources related issues, but include some element of water supply investments. 145. Development partners. The Bank is engaged in the Water Sector Development Group. This effort has largely been focused on ensuring the success of budget support mechanism including the PRSC. The Bank is working with ten other DPs to develop the PRSC and budget support mechanism. It is also working with the AfDB, KFW, EC and DFID to review options for support to NWSCs highly urbanized towns. UNICEF has a water and sanitation component as part of its “Keep Children and Mothers Alive” program. 146. Governance/value for money. WSP and the World Bank have supported a Water Integrity Scan, which has led to an Action Plan on Good Governance; and the GPF Window 1 grant will support its implementation. WBI is helping the government pilot community and citizen score cards to promote better governance. CAS Outcome 2.4: Improved management and delivery of urban services 147. Analytical underpinnings. Cities Alliance is supporting the development of a national urban policy and strategic urban development plan, which will provide a framework for interventions in the urban sector. 148. Expected results of IDA-financed operations. The Bank is committed to long-term support for Kampala, secondary cities, and local governments through APLs. The ongoing Kampala Institutional and Infrastructure Development Project APL I (KIIDP, FY08) will improve urban planning and management in Kampala. The Transport Sector Development Project (TSDP, FY10) finances detailed designs for a Bus Rapid Transit in Kampala and provides support to establish a Metropolitan Area Transport Authority. Additional financing to TSDP (US$130 million, FY12) will provide further support for Kampala roads and drainage. A proposed Municipal Infrastructure Project (US$150 million, FY12) aims to improve management and accountability of thirteen secondary cities to enable urbanization and structural transformation. 149. Expected results from trust funds. A recently-approved Cities Alliance grant (US$4.2 million) for the government’s “Strategy for Transforming Settlements of the Urban Poor in Uganda” aims to help develop inclusive national urban development policies and strategies and begin improving urban institutions and management in five municipalities, laying the foundation for the proposed IDA-financed Municipal Infrastructure Project. 150. Development partners. The Bank is engaged in the Decentralization Sector Working Group, which also includes Belgium, the EC, Ireland, the Netherlands, and UNDP. The UNDP has provided US$250,000 to the government for urban sector baseline surveys, which will be used to formulate the national urban policy and strategy. JICA is working with the government to improve urban roads and traffic flow in Kampala. 151. Governance/value for money. The Bank has provided support for the development of a good governance and anti-corruption strategy at the local government level; and its implementation is supported by the Local Government Management and Service Delivery APL I. Under KIIDP, the Bank has introduced citizen report cards as a tool for designing and monitoring investment projects and to improve transparency and accountability to the citizens of Kampala. - 36 - F. Strategic Objective Three: Promote Human Capital Development 152. The CAS supports higher access to and quality of education and health care to improve human development indicators and enable the transformation of the economy. In education, expected results are increased percentages of students reaching literacy proficiency in government- aided schools, and a higher average national gross enrollment rate for lower secondary education, both with particular attention to girls’ schooling, which is expected to lower the fertility rate and maternal mortality. To decrease maternal mortality, expected health care results include a higher percentage of deliveries taking place in government and private not-for-profit health centers and a higher contraceptive prevalence rate. CAS Outcome 3.1: Improved access to and quality of primary and post-primary education 153. Analytical underpinnings. The Bank’s support is informed by the PER (2007), which focused on education. The ongoing Universal Post-Primary Education and Training Program APL I includes financing for analytical work to inform future policy and IDA support, such as double-shift instruction and public-private partnerships in the provision of lower secondary education. 154. Expected results of IDA-financed operations. The ongoing Universal Post Primary Education and Training Program (UPPET) APL I (US$150 million, FY09) supports expanded access to lower secondary education, including reforms to improve quality, efficiency, management capacity, and rationalize staffing. The UPPET also supports the preparation of a strategy for business, technical, and vocational education and training. UPPET APL II (US$100 million, FY13) will strengthen reforms to improve access to and quality of lower secondary education, leading to increases in gross enrollment from 28 percent to 40 percent by 2012, will provide strategic support for improving upper secondary education, and will help support the findings of the strategy for business, technical, and vocational education and training. The ongoing Millennium Science Initiative (US$30 million, FY07) supports high quality scientific research awarded through a transparent and competitive process, technology-based innovation and its adoption by the private sector, and an outreach program to support science education. The Bank could provide additional financing if requested to continue support for annual research grants. The Bank is also supporting education through multisectoral operations: the ongoing Local Government Management Support Project and Northern Uganda Social Action Fund II provide demand-driven financing at the local level to improve access to education, and the PRSC series focuses on improving public service delivery at the local government level, including quality of primary education. 155. Expected results from trust funds. Through the Education Program Development Fund, the Bank is supporting the government to refine and rationalize its Education Sector Strategic Plan and prepare a proposal for submission to the Fast Track Initiative Catalytic Fund to help meet the financing gap to achieve universal primary education. 156. Governance/value for money. The Education Sector PER and follow-up work, such as the Human Resource Management Actionable Governance Indicators study, highlighted sector governance challenges, including teacher absenteeism and difficulties in deploying teachers to rural and remote areas. An education sector governance diagnostic will be carried out to ensure that UPPET APL II addresses core governance issues. 157. Development partners: Uganda receives substantial support from DPs to improve access and quality of primary education, among these: UNICEF, EC, Ireland, Netherlands, UNFPA, and USAID. AfDB, Belgium, GTZ, JICA, and the Netherlands also support post-primary education, including technical and vocational education. - 37 - CAS Outcome 3.2: Strengthened health care delivery 158. Analytical underpinnings. The Bank’s PER Fiscal Space for Health in Uganda (FY08) recommends ways to increase spending efficiency, especially by improving human resource management (health worker absenteeism is a major source of waste), strengthening procurement and logistics management of medicines and medical supplies, and better programming development assistance for health. The PER is informing the Bank’s health policy dialogue and underpins the lending program. During the CAS period, the Bank will help the Ministry of Health follow up the issues identified in the PER, including through a policy paper on human resources for health and policy notes on health financing. 159. Expected results from IDA-financed operations. The ongoing Local Government Management Support Project and Northern Uganda Social Action Fund II provide demand-driven financing at the local level to improve health care delivery, including by rehabilitating health centers. The Uganda Health Systems Strengthening Project (US$130 million, FY10), which will be presented to the Board together with this CAS, aims to strengthen national capacity to deliver essential health services, with a particular focus on reproductive health, targeting activities which have been shown to reduce maternal mortality and expanding access to family planning commodities and services. The project includes US$30 million in Crisis Response Window resources to safeguard public spending on reproductive health. The PRSC series and UPSPEP will complement the investment project by addressing cross-cutting barriers to improved service delivery, such as lack of supply management capacity, including procurement, poor human resources management and inadequate structures and capacity for the management of health facilities. 160. Expected results from trust funds. The ongoing OBA Reproductive Health Program Pilot in Western Uganda is expected to benefit 50,000 women by providing subsidized reproductive health services and another 15,000 individuals through treatment for reduction in sexually transmitted diseases. The Bank-administered trust fund, GPOBA (US$4.33 million) is working with KfW, which is implementing the scheme and is providing co-financing of about US$3 million. 161. IFC. Under the IFC Health in Africa Initiative, Uganda is one of five countries identified for a comprehensive policy assessment on the environment for private health care provision. This will be complemented by a market assessment providing information for banks and other financial institutions. Following completion of this advisory work, IFC also expects to identify investments in the health sector, including PPPs, either for direct investment or indirect support through the two equity funds IFC has established for health care investments in Africa, or lending from commercial banks with IFC backing. 162. Regional integration. The Regional East Africa Public Health Laboratory Networking Project (US$10 million for Uganda) will be presented to the Bank’s Executive Directors in May 2010, together with this CAS. It aims to help participating countries—Rwanda, Kenya, Tanzania, and Uganda—prevent and control the spread of communicable diseases in East Africa by sharing information, developing harmonized approaches, strengthening laboratories, and establishing a center of excellence in each county to provide regional leadership in a thematic area. The IGAD Regional HIV/AIDS Partnership Program (IRAPP) Support Project aims to increase preventive actions reduce misperceptions of cross border and mobile populations, refugees and surrounding host communities concerning HIV/AIDS prevention and mitigation and to establish a common and sustainable regional approach to supporting these populations in the IGAD states. 163. Development partners. DPs supporting the health sector coordinate their activities through the Health Development Partners Group. Belgium, DANIDA, DFID, Italy, and the Swedish - 38 - International Development Cooperation Agency (SIDA) support the health sector through general and sector budget support. The US provides substantial support for health, especially through the President’s Emergency Program for Aids Relief and the President’s Malaria Initiative. Global health initiatives, including the Global Fund for AIDS, Tuberculosis and Malaria (US$300 million in grants) and Global Alliance for Vaccines and Immunization (US$162 million over 5 years) provide targeted support for HIV/AIDS, malaria, and immunization, although grants were suspended in 2005 over allegation of corruption. The suspensions have been lifted, but operations have not yet returned to normal. The UN family has a number of interventions under Outcome 3 of the UN Development Assistance Framework. 164. Governance. As part of the preparation of the Health Systems and Strengthening Project, the Ministry of Health developed and adopted a governance strategy and action plan, which emphasizes actions to strengthen health sector management functions and accountability and transparency in service delivery. The project has a strong emphasis on improving human resource and budget management, which are among the core challenges to effective service delivery. The project will support aspects related to strengthening logistics management for drugs, which should lead to improved drug availability and reduced wastage. G. Strategic Objective Four: Good Governance and Value for Money 165. Strengthening value for money is critical for high-quality infrastructure investments and service delivery, and thus for structural transformation. It is especially important in the context of future oil wealth. Under the CAS, the Bank aims to strengthen accountability and improve public financial management (PFM), public procurement, and public sector management at both local and national levels. CAS Outcome 4.1: Strengthened accountability and efficiency of public financial and human resource management 166. Analytical underpinnings. A study “PFM Reform in Uganda—A Platform Approach” (FY09) and a Public Financial Management Performance Report (PEFA Report, FY09) inform the PFM reform agenda. PFM and procurement reform are supported by the Financial Management and Accountability Program (FINMAP), a US$60 million basket fund financed by the government and six DPs. The Bank is leading a restructuring of FINMAP to better focus on service delivery. During the CAS period, FINMAP is expected to support the roll out of an integrated financial management system (IFMIS); improve program-based budgeting with procurement planning integrated in the budgeting process; strengthen accountability functions relating to internal audit, external audit, procurement, and the oversight committees of parliament; and ensure that the PFM system supports frontline service delivery. A pilot study on the use of Actionable Governance Indicators in human resource management informs the design of public service reforms. Programmatic TA on governance and anticorruption (FY11-15) will support key aspects of the public service reform agenda, focusing particularly on ways of introducing and sustaining performance management, addressing equity in service delivery, staffing of public service positions in rural areas, and tracking progress on public service reform through a regular update of Actionable Governance Indicators on Human Resource Management. 167. Expected results from IDA-financed operations. The Bank is supporting improved governance and value for money at both the local and national levels. Since 2000, the Bank has helped implement decentralization and build local government capacity and accountability to citizens. The ongoing Local Government Management and Service Delivery APL I (LGMSD, FY08), the Kampala Institutional and Infrastructure Development Project (FY08), and the Northern - 39 - Uganda Social Action Fund II (FY09) support more effective local government management, including mechanisms to empower communities to demand better services from their local governments. The LGMSD APL I finances capacity building and the rollout of an IFMS to all districts and municipal governments to increase transparency and efficiency in public financial management and public procurement. A proposed second phase, LGMSD APL II (US$115 million, FY13), will ensure local government capacity to sustain transparent and accountable service delivery. The PRSC series (Pillar 2 – Good Governance) will provide complementary, cross-cutting support for decentralization by supporting transparent and efficient PFM and procurement, such as increasing the number of local governments publishing financial transfers and budgets from 53 percent to 90 percent by 2011. The ongoing Uganda Public Service Performance Enhancement Project (UPSPEP) supports the establishment of more transparent and efficient public service management systems, including an integrated payroll and personnel management system that will decrease ghost workers from 15 percent to 5 percent by 2013. The PRSC 8 (US$120 million, FY11) supports the adoption by 2011 of a public service pay system based on performance principles, increasing compliance with procurement audit recommendations and increasing the number of contracts with records that comply with public procurement regulations from 32 percent to 70 percent. The PRSC also supports piloting a procurement indicator framework to track compliance with the procurement law in 15 ministries or agencies, with further roll out expected under future operations. These indicators will inform the design of future public procurement reforms. 168. Expected results from trust funds. A Governance Partnership Facility Window 1 grant (US$1.48 million) will help reposition the Bank’s role on governance during the CAS period, by financing further work on the Data Tracking Mechanism, political economy and GAC diagnostics in various sectors, engagement with external stakeholders in implementing the GAAPs developed under the GPF Window 2 grant, and peer learning sessions for Bank staff. 169. Development partners. DPs are developing a common approach to addressing GAC issues, based on the OECD/DAC principles on constructive and collaborative engagement with government counterparts, in the context of the Accountability Sector Working Group, co-led by DFID and the World Bank. DFID is funding a capacity building program to strengthen accountability sector institutions (including an emphasis on demand side accountability) and the EC is financing civil society capacity building to enhance demand for good governance, particularly in relation to service delivery. The Bank's agreed role is to manage a participatory process to develop the Data Tracking Mechanism, an anti-corruption monitoring tool, to improve governance arrangements in investment projects and to think through the re-positioning process related to the reduced reliance of government on budget support. H. Strengthening Aid Effectiveness 170. During the CAS period, the Bank will continue to promote donor harmonization and aid effectiveness. The Bank is the permanent chair of the Local Development Partners’ Group (LDPG), which is the apex development partner forum in Uganda. The LDPG and its sector/thematic groups provide a forum for development partner coordination and interfacing with the government. In addition, the Bank is the permanent co-chair of the Joint Budget Support Framework. 171. Under the LDPG, there are around 15 sector/thematic development partner groups (DPGs). The Bank chairs or co-chairs seven of the DPGs. The DPGs serve to form common positions and provide the LDPG with technical analysis feeding into policy dialogue with the government, and recent efforts have attempted to make the DPGs more results-focused. Each of the DPGs is mirrored by a government-chaired sector working group (SWG) or equivalent, with participation from the government, DPs, civil society, and other stakeholders. Most SWGs function - 40 - as a practical forum for technical level discussions and elaboration of sector investment plans and strategies, thus providing a basis for coordinated DP-government interventions. 172. The government will adopt a new Partnership Policy to provide a contractual framework to advance the aid effectiveness agenda in Uganda. The NDP includes a section on government-DP relations, outlining key issues related to aid effectiveness and stating the government’s intention to adopt a new Partnership Policy addressing alignment of aid with national priorities and systems, transaction costs, coordination issues, predictability of aid flows, mutual accountability for development results, and partnerships beyond aid. The Partnership Policy is expected to play an important role for the management of aid over the medium term, as oil revenues gradually reduce the government’s reliance on external assistance. 173. The DPs undertake periodic division of labor exercises to encourage selectivity. The 2008 division of labor matrix is shown in Annex 18. Once the new Partnership Policy is adopted, it is expected that DPs will undertake a new division of labor exercise under government leadership. During the CAS period, the Bank will continue to encourage SWAps and joint supervision missions where relevant. I. Implementing and Monitoring the Country Assistance Strategy 174. The Bank will begin using Uganda’s financial management (FM) systems for investment operations, in line with the Accra Agenda for Action and consistent with World Bank financial management policy. The Bank undertook an assessment in April 2010 to identify risks and mitigation measures. Uganda has already made a good start in the use of country FM systems, as currently all Bank-financed investment projects are incorporated in the annual budget and audited by the Office of the Auditor General. Under the CAS, use of country FM systems will be considered for each investment lending operation, taking into account the project’s nature and complexity and supplementary assessments of implementing ministry capacity. 175. The Bank will maintain a decentralized and high-capacity Uganda Country Office. Out of 11 operations (including the Bujagali Project and the Reintegration and Demobilization MDTF), 13 are supervised by Task Team Leaders based in the Country Office or neighboring country offices, and this will increase to 17 by the end of FY10. The Bank office includes the Cluster Leader for governance for Central and East Africa is based in Kampala and a local governance specialist. The Bank will establish a satellite office in Gulu, intended to be shared with the UN family, to strengthen on-the-ground supervision of programs in northern Uganda, deepen our dialogue with local government officials and other stakeholders, and improve our understanding of issues affecting the poorest part of the country. In total, the office currently comprises 81 staff and consultants. 176. The CAS Results Framework presents the results chain for the Bank’s program of support (see Annex 1). The framework uses Uganda’s NDP as its starting point, and narrows down the range of outcomes to those that the Bank can demonstrably influence over the CAS period. CAS outcomes will be monitored jointly by the Bank and the government over the CAS period. Also, the Bank will use the new Country Program Results Monitoring Tool to monitor portfolio impact and progress towards CAS outcomes. Since most of the new operations foreseen in this CAS will likely not finish implementation until after 2015, results during this CAS period will come mainly from existing operations and the quicker-disbursing interventions included in the CAS. 177. The Bank will carry out annual results-based CPPRs, building on the matrix of actions from the recent CPPR (see para. 78 and Annex 11). - 41 - 178. Trust funds are fully integrated in the CAS and will be managed accordingly. The Bank has already taken measures to integrate trust fund programs and budgets with Bank-funded programs and to ensure that trust funds are aligned with the CAS. Analytical work and policy notes funded by trust funds undergo the same rigorous review as Bank budget-funded analytical work; and trust fund- financed activities are implemented in accordance with the same fiduciary requirements as IDA- financed operations. The Country Management Unit has established a trust fund management team (including fiduciary and governance staff) to guide the use and management of the new programmatic DFID and JBSF trust funds. 179. The Bank will prepare a CAS Progress Report in FY13, or earlier if needed, to evaluate progress toward CAS outcomes and adjust strategy and program. The Progress Report will be completed after Uganda’s national elections in 2011, allowing consideration of new government policy. By FY13, there will be a clearer picture of the oil sector, which is likely to impact the Bank’s strategy and program. Adjustments to projects under implementation will be reflected in revised project results frameworks. - 42 - V. RISKS AND MITIGATION 180. There are considerable risks for CAS implementation, especially in light of the March 2011 presidential and parliamentary elections and the recent discovery of oil. However, risks would be even higher if Uganda does not move forcefully down the path of structural transformation as required to increase growth, create employment for the growing labor force, and further reduce poverty and inequality, and if Uganda does not build the transparent and accountable institutional arrangements needed to manage future oil wealth. 181. Political risks are heightened by ethnic and regional divisions and by upcoming elections. Since independence, ethnic and regional divisions have contributed to conflict and influenced politics. While Uganda has made progress towards democracy, it has not yet established an enduring political process through which all groups, regardless of region or ethnicity, have a meaningful stake and can contest for power. In this context, governance and stability could deteriorate in advance of presidential and parliamentary elections in 2011. Civil disturbances resulting from clashes between the central government and the Buganda Kingdom in September 2009 have revealed some of the fractures in the political landscape. 182. There is a risk of policy reversals due to election pressures and when oil exploitation begins. Frustration over the slow pace of structural transformation could lead some policy makers to question pro-market policies and advocate for more state intervention. Also, as oil revenues come on stream, reliance on donor assistance and their economic advice may decrease. 183. The “oil curse” represents the most substantial risk. The discovery of a valuable natural resource in the context of poverty often increases the risk of conflict and poor governance. Even when countries stay at peace, resource wealth typically leads to reduced growth, because resource rents lead to increased patronage, negatively affecting governance and public investment. The more ethnically diverse the society, the worse the performance of a resource-rich democracy, because patronage is especially effective in ethnically diverse settings, and because oil can exacerbate existing ethnic and regional cleavages. To avoid the “oil curse,” Uganda must manage citizen expectations and establish an institutional framework that ensures transparent and accountable management of oil revenues for the benefit of all Ugandans. 184. Electoral pressures and oil wealth could exacerbate negative trends in governance. Corruption, both high-level and small-scale, is increasingly pervasive, affecting infrastructure investments; productive sectors, such as agriculture; and social services. A governance risk matrix has been designed to map these risks as well as risk mitigation strategies (see Annex 6). The Bank will conduct regular reviews of governance risks to adapt the CAS program as required, including the balance between budget support and investment lending. 185. Growing numbers of poor, uneducated, urban youth could create further challenges. With about half the population below the age of 15, Uganda has one of the youngest populations in the world. According to the Uganda Bureau of Statistics (2007) up to 58 percent of Uganda’s unemployed are youth with the greatest risk of unemployment being the educated youth entering the labor market for the first time. An estimated 490,000 youths enter the labor market annually, yet the formal sector (both public and private) creates only about 150,000 jobs each year. Unemployed youth or underemployed youth tend to degenerate into “discouraged workers” who can easily be mobilized for rebellion and social unrest. This was evident during the September 2009 riots, where the majority of those arrested for participating were unemployed youth. The World Bank will work closely with the Youth Unemployment Network to update the National Action Plan on youth unemployment for Uganda. - 43 - 186. As a landlocked country, Uganda is particularly affected by the security situation in neighboring countries. For example, political strife in Kenya following the controversial election disrupted Uganda’s key trade route, underscoring the need to develop alternative trade routes. Although the general situation in the region has improved, new or recurring conflicts are possible during the CAS period. The run-up or aftermath of the independence referendum in Southern Sudan in 2011 could affect the stability and security situation in Sudan and thereby regional trade and remittances. Lack of political stability in Southern Sudan could also provide an avenue for the return of LRA activities in northern Uganda. There is also the risk of refugees returning to Uganda into areas that are currently recovering from a long period of insecurity. The development of resources around Lake Albert could be a source of tension with neighboring DRC. 187. Other exogenous risks include weather and the associated impact on international prices for agricultural goods. Weather conditions, such as droughts, have a strong influence on the output of the agricultural sector and on the availability of hydroelectricity. Uganda is vulnerable to other natural disasters, such as earthquakes, floods, landslides, and storms, which are likely to increase as climate variability becomes more pronounced. - 44 - Annex 1: Uganda Country Assistance Strategy Results Matrix Country Long Term Strategic Major Issues and CAS Outcomes Milestones Bank Group Program Development Obstacles Goals 18 Strategic Objective 1 : PROMOTE INCLUSIVE AND SUSTAINABLE ECONOMIC GROWTH Enhance the  Administrative Ongoing Lending: requirements to 1.1 Improved conditions Commercial laws revised increased from 21 in PSCP II (FY05) availability and for private sector growth establish a business are 2009 to 42 in 2011(PSCP) SMMRP (FY04) + AF (FY09) quality of gainful long, expensive and Enterprises sharing new formal businesses IFC projects: employment (ii) cumbersome Time taken to register a increased from 13,000 in 2009 to 15,000 by 2011 Uganda Primary Mortgage Market Initiative  Inefficient property (land and buildings) (PSCP) Investment Climate Reform Program administration and (PSCP) Investments/Advisory services to banks to % share of total national labor force maintenance of the land Baseline: 77 days (DB 2010) Business Uganda Development Scheme grants expand SME lending employed (including registration issued to firms increased from 901 in 2009 to Target: <3 days (2015) under-employed)  An outdated legal 1,383 in 2012 (PSCP) Non-Lending: increased from framework in selected ICT Policy dialogue 70.9% in 2009 Female beneficiaries of the Business Uganda PPP and Capital Markets areas Development Scheme remain above 40% through PER : Public Investment Programming 2011 (PSCP) Pipeline Lending: Land titles, cadastral sheets indexed and scanned AF PSCP II (FY11) increase from 15% in 2009 to 100% in 2011 PSCP III (FY13) (PSCP) FSRP (FY12) Improving the stock and Government land surveyed increase from 5% in Pipeline Non-Lending: 2009 to 100% in 2011(PSCP) FSAP (FY11) quality of Tourism Development (FY12) economic Youth and Employment (FY12) infrastructure Demography and Growth (FY11) (iv) Pipeline Trust Funds: Ranking based on DFID TF NDP Support “doing business” survey improves  High transport and 1.2 Improved Ongoing Lending: from 112/183 in logistical costs in East Insurance policies of at least US$25 mil. will be EATTF (FY06) interconnectivity for issued by end project (RTFP) RTFP (FY01) 2009 to 82/183 in Africa regional integration 2015  Poor condition of The EAC Customs Union is established and Pipeline Lending: transport infrastructure, Transit time through the functions in an harmonized way by 2011 (EATTF) EATLP (FY12)  Underdeveloped Northern Corridor from RCIP (FY12) transport and logistics National cargo tracking system for Uganda is 18 The objectives refer to the eight NDP objectives. Indicators are derived from the Development Indicators and Targets table (Table 4.15) - 45 - Country Long Term Strategic Major Issues and CAS Outcomes Milestones Bank Group Program Development Obstacles Goals 18 services Mombasa to Kigali (EATTF) established by 2010 and linked to the regional Non-lending:  Slow and costly Baseline: 19 days (2005) system by 2011 (EATTF) Regional Int., Trade and Growth in the Target: 13.3 days (2011) Great Lakes Region (FY11) bureaucratic procedures dealing with imported IFC: and exported goods Investment/Guarantee for the Kenya- Uganda Railway EASSY cable project for ICT backbone  Low agricultural Ongoing Lending: % share of productivity 1.3 Increased 140 water infrastructure for production built or LVEMP (FY09) productivity and rehabilitated by 2012 (NUSAF) NUSAF II (FY09) agricultural sector  Limited effectiveness of in GDP decreases commercialization of EAAPP (FY10) agriculture research and from 23% in 2009 to agriculture Increase in farm households using improved Program for Control of Avian Influenza advisory services agricultural technology by type (from baseline in (FY08) 21.4% in 2015  Weak integration of 2010 to target in 2012): (ATAAS) EMCBP- SIL II (FY01) + AF (FY09) % of labor force in small farmers into value Increase of average agricultural - crops from 25% to 40% agricultural sector chains income of rural households (in - livestock from 12% to 20% Pipeline Lending: decreases from ATAAS (FY10) real terms) (ATAAS) 73.3% in 2009 to Farm households accessing advisory services Agriculture Sector Support (FY14) Baseline: Ushs. 4,200,000 GEF: Sustainable Land Management 69.3% in 2015 (2005) increased from 32% in 2010 to 38% in 2012 (ATAAS) (WSDMP) (FY13) Target: Ushs. 5,040,000 (2015) NUIG (FY15) Women accessing agricultural advisory services (from total number of direct project beneficiaries) Non-lending: Share of farm production increased from 49% in 2010 to 53% by 2012 Inclusive Growth (FY11) marketed by NAADS targeted (ATAAS) Agriculture Sector Diagnostic Study (FY13) beneficiaries (ATAAS) Challenge Fund for Agribusiness PPPs put in IFC: Baseline: 25% (2005-08) place by 2012 (ATAAS) Investments for agribusiness Target: 45% (2015) IFC advisory services Increase in research scientists working in regional research projects (percent of total research staff of RCoEs) from 5% in 2009 to 20% in 2012 (EAAPP) Increase in adoption of new varieties, breeds and management practices from 0% in 2009 to 12% in 2012 (EAAPP) Governance Anti-Corruption Action Plan under the ATAAS successfully implemented (yes/no) - 46 - Country Long Term Strategic Major Issues and CAS Outcomes Milestones Bank Group Program Development Obstacles Goals 18 Promoting  Low institutional 1.4 Increased efficiency Ongoing Lending: sustainable capacity for sustainable Environment: LVEMP (FY09) and sustainability of Adoption of Lake Victoria basin-wide water and PAMSU (closing June 2010) population and natural resource based natural resource fisheries resources management frameworks by EMCBP- SIL II (FY01) + AF (FY09) use of the development and management 2012 (LVEMP) SMMRP (FY04) + AF (FY09) environment management of mineral resources Adoption of harmonized policies and regulatory Trust Funds: and natural resources (viii)  Undue interference in Environment: frameworks for water and fisheries resources GEF: PAMSU (FY03) compliance with Area brought under improved management in Lake Victoria (together with BCF: Uganda Nile Basin Reforestation environmental laws and land use management in the Kenya and Tanzania)by 2013 (LVEMP) Proportion of regulations Katonga river watershed Ongoing Non-Lending: ecosystems restored Reduction in untreated effluent disposed into Country Water Resources Assistance  Insufficient water (15,244 Km²) (LVEMP) Murchinson Bay by targeted municipalities by 5% Strategy (FY11) Level of infrastructure and poor Baseline: zero in 2009 by 2012 (LVEMP) management of water management Target: 50% by 2013 (7,622 Pipeline Lending: environmental Km²) Area reforested increases from 445 hectares in Natural Resource Management/Forestry resources 2009 to 2,000 hectares in 2011 (EMCBP) (FY13) Mining: WSDMP (FY13) Forest cover Accuracy and transparency of Two environmental regulations relating to oil and Petroleum Sector Support (FY12) increased from 13% mining licensing measured by gas policy promulgated by 2011(EMCBP) in 2009 zero unresolved complaints by Pipeline Trust Funds: 2011 (SMMRP) Mining: GEF: Sustainable Land Management Mining Cadastre and Registry system established by 2011 (SMMRP) Pipeline Non-lending: Environment and Growth (FY11) Creation of a computerized Environmental and Policy Notes: Petroleum Sector (FY11 and Social Management Information System by 2011 FY12) (SMMRP) TA on Mainstreaming Climate Resilience in Water Resource Planning and Management Licenses given to artisanal and small scale miners (FY14) increased from 100 in 2003 to 300 in 2011 TA on Advancing GoU Water Strategy and (SMMRP) Investment Planning (FY13) Regular publication of mining sector revenues at both local and national level by 2011 (SMMRP) Strategic Objective 2 : ENHANCE PUBLIC INFRASTRUCTURE Improve the  Lack of adequate and Ongoing Lending: reliable power among 2.1 Increased access to 250 MW of power generation capacity added from PSDP (FY07) stock and electricity top constraints to doing the Bujagali power station by 2012 (Bujagali) Priv. Power Generation (Bujagali) (FY07) quality of ERT APL II (FY09) economic business in Uganda 30 MW of additional power generation from PUSRP (FY01) infrastructure  Overall access renewable sources by 2011 (ERT) Rural population with access to (particularly in rural Trust Funds: (iv) electricity (ERT) areas) to modern energy Households connected to the extended grid Uganda West Nile Electrification Baseline: 4% (2006) - 47 - Country Long Term Strategic Major Issues and CAS Outcomes Milestones Bank Group Program Development Obstacles Goals 18 Power consumption services is low Target: 10% (2015) increase from 151,000 in 2009 to 166,000 by 2011 GEF: ERT (FY09) per capita increased  Performance and (ERT) Grid-based OBA in Uganda from 60 Kwh in Unmet demand (GWh/monthly) financial viability of the 2009 (PSDP) Households using solar PV systems increase from IFC/MIGA: power sector 12,000 in 2009 to 17,000 in 2011 (ERT) Investment/Guarantee to Bujagali Energy Proportion of Baseline: 30 (2007) Ltd. households Target: 18 (2011) OBA mechanisms in place for rural electrification Investment/Guarantee to Umeme accessing power funding by 2011 (OBA) from the national Pipeline Lending: grid increases from Sector investment plan developed by Quarter2 Electricity Sector Development (FY11) 11% in 2009 2010 (ERT) ERT APL III (FY14) Power Sector (FY12) Electricity Regulatory Agency approving tariff adjustments according to Tariff Methodology by Pipeline Non-lending: 2015 (PUSRP) Accelerated Rural Electrification (FY13) Energy sector Governance and Anti-Corruption Action Plan developed by 2012 Improve the  36% of national road Ongoing Lending network is in poor 2.2 Improved access to 160 kms of national roads paved by 2013(TSDP) KIIDP (FY08) stock and and quality of roads condition Road Dev APL III (FY05) quality of 70 kms of community roads built or rehabilitated TSDP (FY10) economic  Large part of the rural by 2012 (NUSAF) infrastructure population do not have Access of the rural population Pipeline Lending: access to an all-season to all-season roads in the target Transport Policy updated by 2011 (TSDP) AF TSDP (FY11) (iv) road area (TSDP) TSDP II (FY14) Proportion of paved  Road safety situation in Baseline: 64 % (2009) Transport Sector Data Management System PRSC 8-13 (FY11-15) Uganda has reached (TSDMS) established by 2013 (TSDP) KIIDP II (FY13) roads to the total Target: 90% (2014) road network alarming proportions Road Safety Authority created and operational by Non-Lending increase from 4% in National roads in poor 2011 (TSDP) PER : Roads (FY10) 2009 condition (TSDP) Baseline: 36% (2009) Governance Anti-Corruption Action Plan for Percentage of passenger traffic by Target: 15% (2014) Transport sector successfully implemented (yes/no) rail increased from 3.5% in 2009 Increase access  Limited access to safe On-going Lending: drinking water sources 2.3 Increased access to 150 water points built or rehabilitated by 2012 KIIDP (FY08) to quality social and quality of water and (NUSAF) NUSAF II (FY09) services (v)  Financing and sanitation services LVEMP (FY09) maintenance of water- 10,500 connections established through OBA by Rural water schemes 2011 (GPOBA) Trust Funds: coverage increased  Limited access to Population with access to OBA in Water Supply in Small Towns and from 65% in 2009 adequate sanitation improved water source Districts with operational CBMS Water User Rural Growth Centers Committee increase from 40% to 60% by 2010 OBA Kampala Water Connections for the - 48 - Country Long Term Strategic Major Issues and CAS Outcomes Milestones Bank Group Program Development Obstacles Goals 18 Urban water facilities (NUSAF) (PRSC 8) Poor coverage increased Baseline: 48.6% (2008) from 66% in 2009 Target: 68% (2013) Improved water sources that are functional at the IFC: time of spot checks increase from 82% in 2008 to Small Scale Infrastructure Advisory 84% in 2011 (PRSC 8) Program Households with access to safe and effective sanitation (PRSC Compost produced annually from municipal solid Pipeline Lending: 8) waste increase from 0 t in 2009 to 20,000 t in PRSC 8-13 (FY11-15) Baseline: 62% (2008) 2011 (EMCBP) Municipal Infrastructure Dev. (FY12) Target: 68% (2011) WSDMP (FY13) Action plan on Good Governance successfully NUIG (FY15) implemented (yes/no) KIIDP II (FY13) Non lending: Water Country Assistance Strategy (FY11) TA on Rural Sanitation Program WSP (FY14) Improve stock  Limited access to key 2.4 Improved On-going Lending: and quality of urban services management and Drains improved, expanded and strengthened KIIDP (FY08) along 38 km of roads by 2010 (KIIDP) TSDP (FY10) economic  High levels of traffic delivery of urban infrastructure congestion in Kampala services 38 kms of roads rehabilitated in Kampala by 2010 Trust Funds: (iv)  Low operational (KIIDP) OBA Kampala Water Connections for the capacity of Kampala Increase in public satisfaction Poor Proportion of City Council in service delivery of key Detailed bidding documents for Phase I of Bus Cities Alliances Grant population living in services in Kampala (from a Rapid Transport in Kampala completed by 2012 urban centers (TSDP) Pipeline Lending: baseline in 2009 to target by increased from 13% PRSC 8-13 (FY11-15) 2011) Share of Kampala City Council own source Municipal Infrastructure Dev. (FY12) in 2009 (a)Roads from 18% to 50% revenue spent on service delivery increased from WSDMP (FY13) (b)Drainage from 22% to 31% 30% in 2009 to 34% in 2012 (KIIDP) KIIDP II (FY13) Increase access (c)Solid waste from 44% to AF TSDP (FY11) to quality social 60% Kampala City Council own source revenue TSDP II (FY14) services (v) increased from Ushs 22 billion in 2009 to Ushs 33.5 billion in 2012 (KIIDP) Urban water coverage increased Building plan permit approval processing time in from 66% in 2009 Kampala decreases from 1 year in 2009 to 60 days in 2012 (KIIDP) National Urban Policy developed by 2011 (Cities Alliance Grant) - 49 - Country Long Term Strategic Major Issues and CAS Outcomes Milestones Bank Group Program Development Obstacles Goals 18 Strategic Objective 3 : STRENGTHEN HUMAN CAPITAL DEVELOPMENT Increase access  Improving quality of 3.1 Improved access to Ongoing Lending to quality social primary education is a and quality of primary Primary UPPET (FY09) challenge Teachers at task in the 12 worst off districts MSI (FY07) services (v) and post-primary increased from 63% in 2009 to 75% in 2011 NUSAF II (FY09)  High teacher education (PRSC 8) LGMSDP (FY08) Net enrolment rate absenteeism in primary school  Primary enrolment has Pupils reaching literacy Customized Performance Targets are Pipeline Lending: increased from improved significantly proficiency in Government implemented in 12 districts by 2011 (PRSC 8) UPPET APL II (FY13) 93.3% in 2009 but secondary NUIG (FY15) aided schools (PRSC 8) enrolment remains low New teacher rationalization and deployment PRSC 8-13 (FY11-15) Net enrolment rate Baseline P6 total: 52%  Lack of physical Baseline P6 girls: 53% policies developed by 2011 (PRSC 8) in secondary school Pipeline Trust Funds: increased from infrastructure at the (2008/9) 285 education facilities built or rehabilitated by EFA-FTI 23.5% in 2009 secondary level Target P6 total: 57% 2012 (NUSAF)  Lack of learning Target P6 girls: 59% (2010/11) Net completion rate materials (text books, Secondary in secondary school science laboratories, Average national Gross Secondary classrooms increased from 4,788 in (O level) increased learning kits etc) in Enrollment for lower 2009 to 9,881 in 2011 (UPPET) from 35% in 2009 schools Secondary education (UPPET) 1,7 million textbooks provided for Secondary Pupil-Teacher ratio Baseline: Boys: 28% education by 2011 (UPPET) improves from 56:1 Baseline Girls: 25% (2008) in 2009 Target Boys: 42% Curriculum and assessment reform program for Target Girls: 40% (2012) lower secondary in place by 2013 (UPPET) Pupil-Classroom ratio improves from Higher Education 78:1 in 2009 10 undergraduate programs created or upgraded by 2011 (4 new and 6 upgraded) (MSI) Education sector governance diagnostic carried out (yes/no) Increase access  High childhood and On-going Lending: maternal morbidity and 3.2 Strengthened health Approved posts filled by qualified health workers UPSPEP (FY06) to quality social care delivery mortality rates increased from 51% in 2008 to 59% in 2011 LGMSDP (FY08) services (v) (PRSC 8) HIV/AIDS Great Lakes Initiative (FY05)|  Inequality in health care service delivery is NUSAF II (FY09) Deliveries taking place in Hospitals and HC IV offering comprehensive Infant mortality rate significant emergency obstetric care increase from 20% in Government and PNFP Health decreased from 76.0  Lack of qualified health 2010 to 30% in 2012 (HSSP) Trust Funds: in 2009 to 56.5 in personnel and high Facilities (%) (HSSP) OBA Uganda Reproductive Health 2015 healthcare worker Baseline: 34% (2009) Health Facilities with Client Charters increase Target: 45% (2015) from 0% in 2010 to 30% in 2012 (HSSP) IFC: absenteeism rates Maternal mortality Advisory Services/Investments under rate decreased from  Frequent stock-outs of Health facilities without stock-outs of tracer - 50 - Country Long Term Strategic Major Issues and CAS Outcomes Milestones Bank Group Program Development Obstacles Goals 18 435.0 in 2009 to drug supplies Contraceptive prevalence rate medicines and supplies increases from 26% in Health in Africa Program 335.0 in 2015 (HSSP) 2009 to 30% in 2012 (HSSP) Pipeline Lending: Baseline: 24% (2010) HSSP (FY10) Target: 35% (2015) Satellite laboratories compliant with regionally East Africa Public Health Laboratory harmonized SOPs increase from 0% in 2009 to Networking (FY10) 60% in 2012 (Regional TB Labs) NUIG (FY15) PRSC 8-13 (FY11-15) 70 Health centers built and rehabilitated by 2012 (NUSAF) Governance strategy action plan under Health Systems Strengthening Project successfully implemented (yes/no) Strategic Objective 4 : IMPROVE GOOD GOVERNANCE AND VALUE FOR MONEY Strengthen  Weak transparency and 4.1 Strengthened On-going Lending: good accountability Financial Management: LGMSDP (FY08) accountablity and LGs that have been computerized for at least one UPSPEP (FY06) governance, mechanisms pose efficiency of financial year completing bank reconciliation in at least 1 NUSAF II (FY09) defense and increasing risks to and human resource month increases from 70% in 2009 to 100% in Emergency Demob. & Reintegration security (vii) service delivery management 2011 (LGMSDP) (FY08)  Serious weaknesses in KIIDP (FY08) procurement, financial Share of higher LGs registering at least 20% Increased level of Financial Management: transparency in management and increase in own source revenue from baseline Pipeline: control systems LGs publishing financial year 2005/6 increased to 40% by 2011 LGMSDP APL II (FY14) public institutions  Weak human resource transfers and budgets at local (LGMSDP) PRSC 8-13 (FY11-15) management, and level (PRSC 8) NUIG (FY15) Increased level of Baseline: 53% (2009) Kampala City Council overdue liabilities reduced Municipal Infrastructure Dev. (FY12) core sector limited accountability of from Ushs 3 billion in 2009 to Ushs 0.5 billion in KIIDP II (FY13) capabilities public officials Target: 90% (2011) 2012 (KIIDP)  Lack of mechanisms for Procurement: Non-lending: open engagement Procurement: PER: Decentralized Serv. Delivery (FY12) Contracts with complete Revisions of Procurement Regulations and TA Governance and Anti-Corruption – between communities, procurement records in Guidelines in line with the revisions to the PPDA yearly local government and compliance with PPDA Act by 2011 (PRSC 8) Governance Partnership Facility national government to regulations (by number) (PRSC negotiate public- 8) Standard Bidding Documents and Requests for Pipeline Trust Funds: community partnerships Proposals based on the amended PPDA Act and DFID TF NDP Support Baseline: 32% in (2009) and hold each other Regulations prepared by 2011 (PRSC 8) TSUPU (FY10-13) Target: 70% (2011) accountable Work plan, cash flow and procurement plan Human Resources: alignment rolled out to all ministries and local Degree of discrepancy between government and key information captured in a staff paid through the payroll central database by 2011 (PRSC 8) and actual staff, as revealed through inspections and payroll Human Resources: - 51 - Country Long Term Strategic Major Issues and CAS Outcomes Milestones Bank Group Program Development Obstacles Goals 18 audits (UPSPEP) Performance management system fully Baseline: 15% (2009) implemented in selected MDAs and Local Target: 5% (2013) Governments by 2013 (UPSPEP) Public Officers receiving annual training on Accountability: priority aspects of the public sector reform Population satisfied with agenda increase from 0 in 2009 to 600 in performance of local 2011(UPSPEP) governments (as measured through the National service LGs in Northern Uganda with at least 65% of the delivery survey) approved staffing filled increase from 35% in Baseline: 45.9% (2005) 2009 to 65% in 2011 (LGMSDP) Target: 70% (2012) New public service pay system based on performance principles by 2011 (PRSC 8) Accountability: Sub-counties with operational community level tracking systems increased to 60% in 2012 (NUSAF II) List of Project Acronyms ATAAS Agriculture Technology and Agribusiness Advisory NUIG Northern Uganda Integration and Growth Services NUSAF North Uganda Social Action Fund DPO Development Policy Operation PAMSU Protected Areas Management and Sustainable Use Project EAAPP East Africa Agricultural Productivity Project PRSC Poverty Reduction Support Credit EATTF East Africa Trade and Transport Facilitation Project PSCP Private Sector Competitiveness Project EATLP East Africa Transport Links Project PSDP Power Sector Development Project EMCBP Environmental Management and Capacity Building PUSRP Privatization and Utility Sector Reform Project ERT Energy for Rural Transformation RCIP Regional Trade Facilitation Project FSRP Financial Sector Regionalization Project RTFP Regional Trade Facilitation Project HSSP Health System Strengthening Project SMMRP Sustainable Management of Mineral Resources Project KIIDP Kampala Institutional and Infrastructure Development TSDP Transport Sector Development Project Project UPPET Uganda Post-Primary Education and Training Project LGMSDP Local Government Management and Service Delivery UPSPEP Uganda Public Service Performance and Enhancement Project Project LVEMP Lake Victoria Environmental Management Project WSDMP Water Sector Development and Management Project MSI Millennium Science Initiative - 52 - Annex 2: Uganda at a Glance Uganda at a glance 2/25/10 Sub- Ke y D e v e lo pm e nt Indic a t o rs Saharan Lo w Uganda A frica inco me Age distribution, 2008 (2008) Male Female P o pulatio n, mid-year (millio ns) 31.7 81 8 973 75-79 Surface area (tho usand sq. km) 241 24,242 19,310 60-64 P o pulatio n gro wth (%) 3.3 2.5 2.1 Urban po pulatio n (% o f to tal po pulatio n) 13 36 29 45-49 30-34 GNI (A tlas metho d, US$ billio ns) 13.3 885 510 15-19 GNI per capita (A tlas metho d, US$ ) 420 1,082 524 GNI per capita (P P P , internatio nal $ ) 1,140 1 ,991 1,407 0-4 15 10 5 0 5 10 15 GDP gro wth (%) 9.5 5.0 6.4 percent of total population GDP per capita gro wth (%) 6.0 2.5 4.2 ( m o s t re c e nt e s t im a t e , 2 0 0 3 – 2 0 0 8 ) P o verty headco unt ratio at $ 1 .25 a day (P P P , %) 52 51 .. Under-5 mortality rate (per 1,000) P o verty headco unt ratio at $ 2.00 a day (P P P , %) 76 73 .. Life expectancy at birth (years) 53 52 59 200 Infant mo rtality (per 1,000 live births) 82 89 78 Child malnutritio n (% o f children under 5) .. 27 28 150 A dult literacy, male (% o f ages 15 and o lder) 82 71 72 100 A dult literacy, female (% o f ages 15 and o lder) 66 54 55 Gro ss primary enro llment, male (% o f age gro up) 116 103 102 Gro ss primary enro llment, female (% o f age gro up) 117 93 95 50 0 A ccess to an impro ved water so urce (% o f po pulatio n) 64 58 67 A ccess to impro ved sanitatio n facilities (% o f po pulatio n) 33 31 38 1990 1995 2000 2007 Uganda Sub-Saharan Africa N e t A id F lo ws 19 8 0 19 9 0 2000 2008 a (US$ millio ns) Net ODA and o fficial aid 113 663 845 1,728 Growth of GDP and GDP per capita (%) To p 3 do no rs (in 2007): United States 13 30 58 302 15 United Kingdo m 7 35 217 167 12 Euro pean Co mmissio n 25 35 36 117 9 A id (% o f GNI) 9.2 15.7 13.9 14.3 6 A id per capita (US$ ) 9 37 35 56 3 0 Lo ng- T e rm E c o no m ic T re nds -3 95 05 Co nsumer prices (annual % change) .. 45.5 5.8 3.5 GDP implicit deflato r (annual % change) 45.9 44.4 8.5 6.3 GDP GDP per capita Exchange rate (annual average, lo cal per US$ ) 1.0 319.6 1,512.0 1,720.4 Terms o f trade index (2000 = 100) .. 85 1 00 102 19 8 0 – 9 0 19 9 0 – 2 0 0 0 2 0 0 0 – 0 8 (average annual gro wth %) P o pulatio n, mid-year (millio ns) 12.7 17.7 24.4 31.7 3.4 3.2 3.2 GDP (US$ millio ns) 1,245 4,304 6,193 14,326 2.9 7.1 7.5 (% o f GDP ) A griculture 72.0 56.6 29.6 22.7 2.1 3.7 1.8 Industry 4.5 11.1 22.9 25.8 5.0 12.1 10.2 M anufacturing 4.3 5.7 7.8 7.6 3.9 14.1 6.7 Services 23.5 32.4 47.5 51.5 2.8 8.2 10.0 Ho useho ld final co nsumptio n expenditure 88.9 91.9 77.8 82.4 2.7 6.8 7.4 General go v't final co nsumptio n expenditure 11.2 7.5 14.5 11.8 2.0 7.1 3.9 Gro ss capital fo rmatio n 6.2 12.7 19.5 23.6 8.0 8.9 12.1 Expo rts o f go o ds and services 19.4 7.2 10.6 15.6 1.8 14.7 12.4 Impo rts o f go o ds and services 26.0 19.4 22.5 33.4 4.4 10.0 1 1.4 Gro ss savings -0.9 0.6 8.6 12.1 No te: Figures in italics are fo r years o ther than tho se specified. 2008 data are preliminary. .. indicates data are no t available. a. A id data are fo r 2007. Develo pment Eco no mics, Develo pment Data Gro up (DECDG). - 53 - Uganda B a la nc e o f P a ym e nt s a nd T ra de 2000 2008 Governance indicators, 2000 and 2008 (US$ millio ns) To tal merchandise expo rts (fo b) 456 1,787 To tal merchandise impo rts (cif) 1,043 2,912 Voice and accountability Net trade in go o ds and services -703 -2,102 Political stability Current acco unt balance -644 -811 as a % o f GDP -10.4 -8.2 Regulatory quality Rule of law Wo rkers' remittances and co mpensatio n o f emplo yees (receipts) 238 489 Control of corruption Reserves, including go ld 719 2,673 0 25 50 75 100 2008 Country's percentile rank (0-100) C e nt ra l G o v e rnm e nt F ina nc e higher values imply better ratings 2000 (% o f GDP ) Current revenue (including grants) 10.8 13.0 Source: Kaufmann-Kraay-Mastruzzi, World Bank Tax revenue 9.9 12.5 Current expenditure 10.4 1 1.5 T e c hno lo gy a nd Inf ra s t ruc t ure 2000 2008 Overall surplus/deficit -13.2 -5.0 P aved ro ads (% o f to tal) .. 23.0 Highest marginal tax rate (%) Fixed line and mo bile pho ne Individual 30 30 subscribers (per 1 00 peo ple) 1 28 Co rpo rate 30 30 High techno lo gy expo rts (% o f manufactured expo rts) 4.3 10.6 E xt e rna l D e bt a nd R e s o urc e F lo ws E nv iro nm e nt (US$ millio ns) To tal debt o utstanding and disbursed 3,497 2,249 A gricultural land (% o f land area) 62 64 To tal debt service 74 74 Fo rest area (% o f land area) 20.6 18.4 Debt relief (HIP C, M DRI) 1,434 1,805 Natio nally pro tected areas (% o f land area) .. 31 .9 To tal debt (% o f GDP ) 56.5 15.7 Freshwater reso urces per capita (cu. meters) 1,498 1,273 To tal debt service (% o f expo rts) 10.5 2.3 Freshwater withdrawal (billio n cubic meters) .. .. Fo reign direct investment (net inflo ws) 161 788 CO2 emissio ns per capita (mt) 0.06 0.08 P o rtfo lio equity (net inflo ws) 0 -32 GDP per unit o f energy use (2005 P P P $ per kg o f o il equivalent) .. .. Composition of total external debt, 2008 Energy use per capita (kg o f o il equivalent) .. .. IBRD, 0 Short-term, 458 Wo rld B a nk G ro up po rt f o lio 2000 2008 Private, 25 IDA, 1,004 (US$ millio ns) Bilateral, 193 IB RD To tal debt o utstanding and disbursed 0 0 Disbursements 0 0 P rincipal repayments 0 0 Other multi- IMF, 9 Interest payments 0 0 lateral, 560 US$ millions IDA To tal debt o utstanding and disbursed 2,115 1,004 Disbursements 190 172 P riv a t e S e c t o r D e v e lo pm e nt 2000 2008 To tal debt service 9 8 Time required to start a business (days) – 25 IFC (fiscal year) Co st to start a business (% o f GNI per capita) – 100.7 To tal disbursed and o utstanding po rtfo lio 36 73 Time required to register pro perty (days) – 77 o f which IFC o wn acco unt 36 64 Disbursements fo r IFC o wn acco unt 0 51 Ranked as a majo r co nstraint to business 2000 2008 P o rtfo lio sales, prepayments and (% o f managers surveyed who agreed) repayments fo r IFC o wn acco unt 6 0 Electricity .. 63.3 Tax rates .. 11.0 M IGA Gro ss expo sure 43 158 Sto ck market capitalizatio n (% o f GDP ) 0.6 1.2 New guarantees 0 115 B ank capital to asset ratio (%) 9.8 10.3 No te: Figures in italics are fo r years o ther than tho se specified. 2008 data are preliminary. 2/25/10 .. indicates data are no t available. – indicates o bservatio n is no t applicable. D l tE i D l tD t G (DECDG) - 54 - Millennium Development Goals Uganda With selected targets to achieve b etween 1990 and 2015 (estimate clo sest to date sho wn, +/- 2 years) Uga nda G o a l 1: ha lv e t he ra t e s f o r e xt re m e po v e rt y a nd m a lnut rit io n 19 9 0 19 9 5 2000 2008 P o verty headco unt ratio at $ 1 .25 a day (P P P , % o f po pulatio n) 68.7 64.4 60.5 51.5 P o verty headco unt ratio at natio nal po verty line (% o f po pulatio n) .. .. 33.8 37.7 Share o f inco me o r co nsumptio n to the po o rest qunitile (%) 4.9 7.3 6.0 6.1 P revalence o f malnutritio n (% o f children under 5) 19.7 21 .5 19.0 .. G o a l 2 : e ns ure t ha t c hildre n a re a ble t o c o m ple t e prim a ry s c ho o ling P rimary scho o l enro llment (net, %) 51 .. .. 95 P rimary co mpletio n rate (% o f relevant age gro up) .. .. 57 54 Seco ndary scho o l enro llment (gro ss, %) 12 11 16 23 Yo uth literacy rate (% o f peo ple ages 1 5-24) 70 .. 81 86 G o a l 3 : e lim ina t e ge nde r dis pa rit y in e duc a t io n a nd e m po we r wo m e n Ratio o f girls to bo ys in primary and seco ndary educatio n (%) 82 .. 93 98 Wo men emplo yed in the no nagricultural secto r (% o f no nagricultural emplo yment) .. .. .. 39 P ro po rtio n o f seats held by wo men in natio nal parliament (%) 12 18 18 31 G o a l 4 : re duc e unde r- 5 m o rt a lit y by t wo - t hirds Under-5 mo rtality rate (per 1 ,000) 175 164 149 130 Infant mo rtality rate (per 1,000 live births) 106 100 92 82 M easles immunizatio n (pro po rtio n o f o ne-year o lds immunized, %) 52 57 59 68 G o a l 5 : re duc e m a t e rna l m o rt a lit y by t hre e - f o urt hs M aternal mo rtality ratio (mo deled estimate, per 1 00,000 live births) .. .. .. 550 B irths attended by skilled health staff (% o f to tal) 38 38 39 42 Co ntraceptive prevalence (% o f wo men ages 1 5-49) 5 15 23 24 G o a l 6 : ha lt a nd be gin t o re v e rs e t he s pre a d o f H IV / A ID S a nd o t he r m a jo r dis e a s e s P revalence o f HIV (% o f po pulatio n ages 1 5-49) 13.7 11.8 8.5 5.4 Incidence o f tuberculo sis (per 100,000 peo ple) 163 31 9 340 330 Tuberculo sis cases detected under DOTS (%) .. 60 51 51 G o a l 7 : ha lv e t he pro po rt io n o f pe o ple wit ho ut s us t a ina ble a c c e s s t o ba s ic ne e ds A ccess to an impro ved water so urce (% o f po pulatio n) 43 49 56 64 A ccess to impro ved sanitatio n facilities (% o f po pulatio n) 29 31 32 33 Fo rest area (% o f to tal land area) 25.0 22.8 20.6 18.4 Natio nally pro tected areas (% o f to tal land area) .. .. .. 31.9 CO2 emissio ns (metric to ns per capita) 0.0 0.0 0.1 0.1 GDP per unit o f energy use (co nstant 2005 P P P $ per kg o f o il equivalent) .. .. .. .. G o a l 8 : de v e lo p a glo ba l pa rt ne rs hip f o r de v e lo pm e nt Telepho ne mainlines (per 1 00 peo ple) 0.2 0.2 0.3 0.5 M o bile pho ne subscribers (per 1 00 peo ple) 0.0 0.0 0.5 27.0 Internet users (per 1 00 peo ple) 0.0 0.0 0.2 7.9 P erso nal co mputers (per 1 00 peo ple) .. 0.0 0.2 1.7 Education indicators (%) Measles immunization (% of 1-year ICT indicators (per 100 people) olds) 125 100 30 100 75 75 20 50 50 25 10 25 0 2000 2002 2004 2006 2008 0 0 1990 1995 2000 2007 2000 2002 2004 2006 2008 Primary net enrollment ratio Fixed + mobile subscribers Ratio of girls to boys in primary & secondary Uganda Sub-Saharan Africa education Internet users No te: Figures in italics are fo r years o ther than tho se specified. .. indicates data are no t available. 2/25/10 Develo pment Eco no mics, Develo pment Data Gro up (DECDG). - 55 - Annex 3: Key Economic Indicators Actual Estimate Projected Indicator 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 National accounts (as % of GDP) a Gross domestic product 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 Agriculture 21.7 19.7 18.5 17.4 16.9 15.8 16.1 15.5 14.3 17.9 Industry 25.7 26.7 27.4 27.7 27.4 28.1 27.4 27.4 27.3 32.4 Services 52.6 53.5 54.1 55.0 55.7 56.1 56.5 57.0 57.5 65.7 Total Consumption 87.5 87.8 87.5 81.1 83.5 87.0 85.1 82.6 81.2 80.0 Gross domestic fixed investment 22.5 24.4 26.1 25.5 26.1 23.2 23.5 25.3 25.7 26.4 Government investment 4.9 5.2 5.3 4.9 5.4 5.6 6.4 7.7 7.8 8.1 Private investment 17.4 19.1 20.6 20.4 20.5 17.5 16.9 17.5 17.8 18.2 b Exports (GNFS) 14.2 15.3 16.7 24.3 23.8 23.6 23.7 23.2 22.8 22.2 Imports (GNFS) 24.9 28.4 30.1 32.0 35.3 33.6 34.5 33.9 32.6 31.8 Gross domestic savings 12.5 12.2 12.5 18.9 16.5 13.0 14.9 17.4 18.8 .. c Gross national savings 22.3 18.9 20.9 21.0 20.8 22.4 22.9 27.1 28.5 29.3 Memorandum items Gross domestic product 9,223 9,957 11,916 14,440 15,736 17,703 18,758 20,543 22,546 24,807 (US$ million at current prices) GNI per capita (US$, Atlas method) 300 340 370 420 460 500 530 560 590 630 Real annual growth rates (%, calculated from 98 prices) Gross domestic product at market prices 6.3 10.8 8.4 8.7 7.1 5.6 6.4 7.0 7.2 7.4 Gross Domestic Income 6.4 11.4 9.7 9.5 1.6 6.4 6.6 7.2 Real annual per capita growth rates (%, calculated from 98 prices) Gross domestic product at market prices 3.0 7.5 5.3 5.4 3.8 2.3 3.0 3.6 3.8 4.0 Total consumption -0.6 1.9 7.8 4.7 -2.5 6.9 6.8 0.7 0.6 2.1 Private consumption -0.8 2.2 9.1 6.1 -2.2 8.8 7.7 0.8 0.7 2.0 Balance of Payments (US$ millions) b Exports (GNFS) 1,209 1,543 2,009 3,156 3,753 4,171 4,442 4,764 5,130 5,519 Merchandise FOB 786 1,042 1,500 2,597 3,085 3,432 3,657 3,924 4,229 4,552 b Imports (GNFS) 2,208 2,670 3,325 4,624 5,557 5,953 6,476 6,963 7,361 7,886 Merchandise FOB 1,624 1,969 2,495 3,509 4,225 4,409 4,797 5,158 5,453 5,842 Resource balance -999 -1,128 -1,317 -1,468 -1,804 -1,782 -2,034 -2,199 -2,231 -2,367 Net current transfers 1,103 1,037 1,075 1,278 1,378 1,285 1,309 1,383 1,438 1,513 Current account balance -130 -335 -470 -469 -758 -942 -1,156 -1,246 -1,283 -1,396 Net private foreign direct investment 338 512 694 778 733 811 897 991 1096 1213.4 Long-term loans (net) 186 318 489 606 684 945 814 779 783 784.3 Official 164 248 389 369 388 672 550 728 728 728.0 Private 22 70 99 237 296 273 264 51 55 56 Other capital (net, incl. errors & ommissions) -151 -333 -31 -370 -496 -525 -494 -292 -317 -313 d Change in reserves -242 -163 -682 -545 -163 -288 -60 -232 -279 -289 Memorandum items Resource balance (% of GDP) -10.8 -11.3 -11.0 -10.2 -11.5 -10.1 -10.8 -10.7 -9.9 -9.5 Real annual growth rates ( YR98 prices) Merchandise exports (FOB) 13.1 15.5 16.9 21.9 23.8 23.6 23.7 23.2 22.8 22.2 Primary .. .. .. .. .. .. .. .. .. .. Manufactures .. .. .. .. .. .. .. .. .. .. Merchandise imports (CIF) 17.6 19.8 20.9 24.3 26.8 24.9 25.6 25.1 24.2 23.5 (Continued) - 56 - Annex 3: Key Economic Indicators (continued) Actual Estimate Projected Indicator 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 e Public finance (as % of GDP at market prices) Current revenues 12.2 12.5 12.6 12.8 12.5 12.5 13.1 13.5 14.0 14.4 Current expenditures 13.1 13.1 12.2 12.5 11.3 11.8 11.5 11.5 11.5 11.6 Fiscal balance (excl. capital expenditures) -1.0 -0.6 0.4 0.3 1.2 0.8 1.6 1.9 2.4 2.9 Capital expenditure 7.9 6.3 6.5 5.9 6.8 6.1 7.4 8.7 8.7 9.0 Foreign financing 0.8 1.5 2.2 2.5 2.0 2.0 2.6 3.2 2.9 2.6 Monetary indicators M3/GDP 18.7 18.0 18.1 20.6 21.0 21.3 21.9 22.4 23.0 23.6 Growth of M3 (%) 8.7 16.4 17.4 31.1 25.0 19.3 13.7 15.6 15.9 16.0 Private sector credit growth / 5.4 11.6 10.3 24.0 17.1 9.8 7.2 7.7 7.6 7.6 total credit growth (%) Price indices (YR98 =100) Merchandise export price index 120.3 160.7 163.0 233.3 258.5 280.1 286.4 298.1 311.0 324.4 Merchandise import price index 120.0 130.7 139.1 162.2 157.4 156.2 163.1 165.7 168.1 170.5 Merchandise terms of trade index 100.2 123.0 117.2 143.8 164.2 179.3 175.6 179.8 185.0 190.3 f Real exchange rate (US$/LCU) 20.8 20.4 21.0 20.2 21.5 21.7 21.7 21.7 .. Real interest rates Consumer price index (% change in oeriod 8.0 6.6 6.8 7.3 14.2 9.5 4.1 5.2 5.3 5.2 GDP deflator (% change) -1.7 2.4 7.5 6.4 14.3 11.3 4.2 5.4 5.4 5.3 a. GDP at factor cost b. "GNFS" denotes "goods and nonfactor services." c. Includes net unrequited transfers excluding official capital grants. d. Includes use of IMF resources. e. Consolidated central government. f. "LCU" denotes "local currency units." An increase in US$/LCU denotes appreciation. - 57 - Annex 4: Key Social Indicators - 58 - Annex 5: Key Exposure Indicators Actual Estimated Projected Indicator 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 Total debt outstanding and 6040.0 6191.0 3861.0 4258.0 4154.8 4694.6 5510.5 6460.0 7172.5 7895.23 a disbursed (TDO) (US$m) a Net disbursements (US$m) 346 214 467 173 369 542.5 645.4 766.8 722.6 744.082 Total debt service (TDS) 217.3 220.8 195.9 188.1 131.6 183.1 271.8 312.9 389.7 454.109 a (US$m) 1525.1 1983.6 2333.7 3710.0 4498.5 4946.0 5284.4 5669.0 6103.6 6566.16 Debt and debt service indicators (%) b TDO/XGS 396.0 312.1 165.4 114.8 92.4 94.9 104.3 114.0 117.5 120.2 TDO/GDP 56.0 53.6 18.3 17.7 19.6 20.1 23.3 25.7 26.3 26.4 TDS/XGS 18.0 14.3 9.8 6.0 3.5 4.4 6.1 6.6 7.6 8.2 Concessional/TDO 60.5 62.5 22.6 27.7 35.1 18.4 28.1 30.7 33.0 35.9 IBRD exposure indicators (%) IBRD DS/public DS 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 Preferred creditor DS/public 92.4 88.8 87.6 89.6 91.2 91.4 100.0 100.0 100.0 100.0 c DS (%) IBRD DS/XGS 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 d IBRD TDO (US$m) 0 0 0 0 0 0 0 0 0 0 Of which present value of guarantees (US$m) Share of IBRD portfolio (%) 0 0 0 0 0 0 0 0 0 0 d IDA TDO (US$m) 3150 3297 743 957 1177 528.5 1050.9 1313.9 1534.2 1806.77 IFC (US$m) Loans Equity and quasi-equity /c MIGA MIGA guarantees (US$m) a. Includes public and publicly guaranteed debt, private nonguaranteed, use of IMF credits and net short- term capital. b. "XGS" denotes exports of goods and services, including workers' remittances. c. Preferred creditors are defined as IBRD, IDA, the regional multilateral development banks, the IMF, and the Bank for International Settlements. d. Includes present value of guarantees. e. Includes equity and quasi-equity types of both loan and equity instruments. - 59 - Annex 6: Oil in Uganda I. INTRODUCTION 1. In recent years, there have been significant oil discoveries along the Albertine Rift in western Uganda. Reserves of at least 800 million barrels have been confirmed to date, and the basin is now believed to contain up to 2 billion barrels of oil. Even at conservative prices, oil revenue will be considerable, potentially doubling government revenue within 6-10 years and constituting an estimated 10-15 percent of GDP at peak production. However, oil price volatility will make revenue and budget management a persistent challenge. 2. Extensive exploration activities along Uganda’s Albertine Rift started in 2003-04. Currently, five of nine exploration areas are licensed to four companies. UK independent Tullow Oil is at the most advanced stage of exploration and currently holds three blocks that comprise multiple discoveries. Tullow is in the process of buying out its former partner Heritage Oil and is now seeking to form a joint venture with one or more major international oil companies that can bring capital and expertise to the projects as they move into the development phase. 3. Tullow has estimated that it could produce between 150,000 and 200,000 barrels per day over a 25-year production period. While timelines remain tentative, production is likely to be phased and will be driven by the pace of infrastructure development. Limited production of 10,000- 20,000 barrels per day, primarily for domestic use, could start within two to three years, using trucking and railroad transportation. Full scale production could be reached in five to seven years, once downstream infrastructure is in place. Only at this stage would the government begin to realize significant revenue from oil production. 4. Oil production will require significant infrastructure development. Discussions about the downstream processing and export of oil are ongoing. The government favors the construction of a refinery in Uganda to serve the domestic and regional market. The oil companies are exploring a number of export options, including the construction of a pipeline through Uganda and Kenya to Mombasa and the possibility of exporting crude oil via rail and water through Kenya or Tanzania. Tullow is estimating an investment of several billion dollars over the next five to ten years to develop the requisite oil infrastructure. Regardless of the path chosen, large infrastructure programs could generate employment and other economic opportunities but will also put pressure on government regulatory and oversight systems. 5. The Government of Uganda is receiving support from Norway under an Oil for Development Program to improve the institutional framework for management of oil resources. In 2008, Uganda adopted a new National Oil and Gas Policy that reflects best international practices in all important respects and calls for the establishment of several new institutions and structures. These include a Directorate of Petroleum to set and monitor policy; a Petroleum Authority to regulate the sector; a national oil company to hold the country’s direct investment in oil projects; and a Petroleum Fund under the management of the Central Bank to stabilize the revenue flow to the budget. Important legal amendments and developments will be needed to implement the Oil and Gas Policy. Amendments to the Petroleum Act are being prepared, and revisions to the revenue code related to the fiscal regime for oil are under preparation. A division within the Ministry of Energy – the Petroleum Exploration and Production Department (PEPD) – has been established to manage developments in the petroleum sector. While these developments are welcome, it will also be vital to strengthen institutional capacity within respective ministries and agencies to make the policy and legal framework operational. - 60 - 6. Uganda’s oil resources are located in ecologically sensitive and valuable areas; several of the exploration areas are within or border on national parks. The general framework for management of Uganda’s environmental resources is set out in the 1995 National Environment Act, which created the National Environment Management Authority (NEMA). This act also sets out the process by which companies are required to conduct Environmental Impact Assessments (EIAs), administered by NEMA. However, NEMA has little capacity to analyze EIAs and monitor the implementation of environmental requirements. 7. Oil prospects bring both opportunities and challenges. The economic impact of oil production could be profound, with dramatic increases in foreign direct investment and domestic revenue in the medium term and the possibility of reducing energy costs. But it may also bring inflationary pressures, exchange rate appreciation, and new governance challenges. The so-called “Dutch Disease” effect may impact the competitiveness of Uganda’s agricultural exports, and it is likely to make the country’s growth strategy – with an emphasis on value added, export diversification, and manufacturing – harder to achieve. This would threaten to increase, rather than decrease, the income gap. However, the government has indicated its intention to earmark oil revenue for strategic public investments, which could help to increase productivity in other sectors and thereby offset the effects of Dutch Disease. 8. Experience from around the world also suggests that natural resource discoveries commonly decrease government transparency and accountability and increase corruption, as the government becomes less dependent on the local tax base. While the 2008 National Oil and Gas Policy promises transparency and strong accountability measures for oil revenue, the government has not been very forthcoming to date with information about sector developments or the terms of the production sharing agreements with oil companies. This has raised public concerns about lack of transparency that are compounded by the government’s expressed reluctance to sign on to the EITI. The government also faces the difficult challenge of managing high public expectations of immediate social benefits stemming from the country’s oil riches. Public and political pressure, especially in the run up to the 2011 election, could fuel rapid and unsystematic public spending. 9. The government will also need to consider the impact of oil on other sensitive national issues, such as land policy, fiscal decentralization, and regional cooperation. The debate about land rights is becoming fiercer in the run up to petroleum production, and speculative land purchases in the oil rich regions have already begun. The recently enacted Land Bill revealed significant tensions between “indigenous” tribal claims to land and land rights for settlers or migrants. The benefits sharing arrangement between central and local government is also a thorny issue that has yet to be tackled publicly, and the government’s recent pattern of subdividing districts, often along ethnic lines, could intensify local political interests over national interests. The oil discoveries are primarily in poor and conflict prone regions, and thus tension over access to the oil benefits, be they revenue, jobs, or social benefits, threaten to fuel existing social fissures and local grievances. Local politicians and traditional leaders in oil rich regions are already advocating for more resources to be allocated to their respective communities. Furthermore, oil may impact external relations. The Ugandan and Congolese Governments have yet to fully resolve disputes about the border through Lake Albert, which caused a flare up in 2007. II. PRODUCTION FORECASTS AND MACROECONOMIC EFFECTS (i) INDICATIVE PRODUCTION AND REVENUE FORECASTS 10. Despite investor and government appetite for early revenue, full-scale production is likely to be reached only in 2016 or later, once downstream infrastructure in place. Although - 61 - the pace of production ramp up will be governed by infrastructure (see Table 6.1), the duration of plateau production will depend on the ultimate quantity of reserves. At the current estimate of 800 million barrels of reserves, plateau production could be sustained for 10 years or so before natural field decline sets in. If the proved resource base expands to 1.2 billion barrels (not unreasonable given the 2 billion barrel total basin potential cited by Tullow and others) peak production could be maintained for 20 years or more. These two scenarios are presented for illustrative purposes in Figure 1. Given the level of uncertainty around timing and volume of oil production, the figures should not be treated as revenue projections, but merely as illustrations of the possible fiscal impact. 11. Using the indicative baseline reserve scenario of 800 million barrels, government revenue could double once peak production is reached and after investors recoup their costs. Using the current fiscal regime and a Brent price assumption of US$75 per barrel through the projection period, government oil revenue at peak production is estimated to gradually increase from US$1.6 billion to US$2.4 billion per year (see Table 6.2) over the peak production period (2016- 2024). There is a lag between reaching peak production and peak revenue flows to Government of one to two years due to investor recovery of capital and operating costs. Table 6.1: Plausible Oil Infrastructure Development and Production Path Phase Approximate Commercialization Production Timeframe (Barrels/day) Phase 1 2010-2012 Intermittent trucking of oil from extended tests of a 1,000 – 2,000 limited number of wells. Sales to small industrial or power gen. users Phase 2 2013-2015 Expanded trucking operations and/or railroad. Sales to 10,000 – 20,000 domestic refinery and power generator. Possible limited exports via railroad Phase 3 2016+ Full scale export via export pipeline or domestic 125,000 – 175,000 refinery Figure 6.1: Example of Baseline and High-Case Scenario for Oil Production Oil Production ('000 barrels/day) 160 140 120 100 80 60 40 20 - 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030 2031 2032 2033 2034 2035 2036 2037 2038 2039 2033 800 mil. Barrel Case 1.2 bil. Barrel Case   - 62 - (ii) MANAGING REVENUE VOLATILITY 12. Due to the volatility of oil prices, government oil revenue can be expected to vary enormously from year to year even under the stable production scenarios described above. Recent oil price experience confirms that prices can change by 50 percent or more from one year to the next. Short term price shocks can result in even sharper movements. At US$40 per barrel (roughly 50 percent lower than today’s prices), Uganda’s oil revenue would drop to US$800-900 million. If low prices were to occur during the startup period when investors are recovering their costs, government revenue could be depressed even further to US$400 million or so. Conversely, if prices increase to US$120 per barrel, government revenue could climb to well over US$4 billion per year. The likelihood that annual oil revenue could vary to such a degree, even under a stable production scenario, will present a persistent governance challenge for Uganda. 13. There is a need to protect the budget from potentially large fluctuations in oil revenue. If variations in revenue are allowed to spill into the fiscal operations, they are likely to adversely affect economic management, as they will undermine the medium term fiscal framework and frustrate investment planning. Windfall revenue may also fuel unsustainable recurrent expenditure. If oil revenue is shared with local governments, they could also destabilize local government financing. Regardless of the revenue sharing arrangements chosen, responsibility for stabilization of oil revenue should be managed by the central government, as local governments’ capacity to manage such mechanisms is limited. Table 6.2: Government Revenue Indicative Central Scenario of 800 million barrels at US$75/Bbl Year Oil Gross Capital & Investor Government Production Revenue Operating Costs Cash Flow Revenue '000 bpd US$ million US$ million US$ million US$ million 2010    ‐       ‐    200.0    (200.0)   ‐   2011    4.0      89.2      305.8    (236.5)    19.9 2012     10.0     223.0    314.6    (152.6)    61.1 2013     10.0     223.0    314.6    (152.6)    61.1 2014     15.0     334.5    521.9    (281.9)    94.5 2015     20.0     446.0    729.2    (411.1)    128.0 2016     135.0    3,010.7      897.1    864.5    1,249.1 2017     150.0    3,345.2      719.0    820.9    1,805.3 2018     150.0    3,345.2      319.0    805.6    2,220.6 2019     150.0    3,345.2      319.0    626.2    2,400.1 2020     150.0    3,345.2      319.0    596.2    2,430.1 2021     150.0    3,345.2      319.0    554.2    2,472.1 2022     150.0    3,345.2      319.0    528.7    2,497.6 2023     150.0    3,345.2      219.0    548.5    2,577.7 2024     150.0    3,345.2      219.0    544.3    2,581.9 2025     135.0    3,010.7      197.1    492.1    2,321.5 2026     113.4    2,529.0      165.6    418.8    1,944.6 2027     95.3    2,124.4      139.1    356.6    1,628.7 2028     80.0    1,784.5      116.8    303.6    1,364.0 2029     67.2    1,498.9     98.1      262.7    1,138.1 2030     56.5    1,259.1     82.4      228.4    948.3 2031     47.4    1,057.7     69.2      199.5    788.9 2032     39.8     888.4   58.2      175.2    655.1 TOTAL     45,240.9   6,961.8      6,891.1   31,388.0   Source: World Bank COCPO Estimates       - 63 - 14. Appropriate legal arrangements and stabilization mechanisms as well as prudent fiscal management would help to shield fiscal operations against this variability. First, the legal and regulatory framework for oil revenue needs to include appropriate stability clauses that include capital recovery rules, income and withholding tax rates, royalty rates, and maximum rate in import duties. Second, a stabilization mechanism would be required to fix the amount of resources allowed to flow into the budget and the balance that can be saved/invested outside the government budget. In the National Oil and Gas Policy, the government has indicated its intentions to establish a Petroleum Fund to create a permanent source of wealth as a provision for intergenerational equity. However, the types of fund and management modalities have yet to be articulated. There are two main types of stabilization mechanisms: under a Stabilization Fund arrangement, a reference price for oil is established, and only the revenue from oil production evaluated at that reference price is transferred to the budget, while the rest is invested in the Fund. A Permanent Income Fund is used to invest oil revenue and channels only the interest rate revenue from the accumulated assets to the budget. Once the government has decided on the type of stabilization mechanism to use, it will need to select the operational modalities. If it is to be a Stabilization Fund, the reference price above which revenue is transferred into the budget will need to be specified. If it is to be a Permanent Income Fund, management and investment options for this fund (domestic or external) will need to be specified. 15. Fiscal prudence, as established over the past two decades, will help ensure that oil revenue is used productively. Given Uganda’s level of development, the demographic pressures of a fast growing young population, and the public’s anticipated gains from oil revenue, there will be strong social pressures to increase public spending on infrastructure, education and health services, and raise public service wages. Politicians will be hard pressed to show rapid dividends from the country’s oil wealth. The National Oil and Gas Policy emphasizes that oil revenue will be utilized not for consumption but for capital investment and infrastructure development. An effective process is to be established to evaluate investment proposals to be financed by the oil revenue based on forecast rates of return. Strengthened institutional capacity, rigorous budgeting processes, and strict controls will help safeguard these aims. Uganda may also want to consider the enactment of a Fiscal Responsibility Law, as has been done in several other countries, to reduce the discretionary power of using windfall revenue. (iii) DOWNSTREAM PRODUCTION AND INFRASTRUCTURE CHOICES 16. Uganda’s oil reserves vastly exceed the amount that could be consumed domestically, or even regionally. Currently, Uganda consumes 13,000 barrels per day of petroleum products (fuel oil and distillates), and this figure reaches approximately 24,000 barrels per day if it includes demand from Rwanda, Burundi, and neighboring parts of eastern DRC. Regional demand is growing rapidly and could reach 50,000 barrels per day in 10-15 years. 17. Nevertheless, the government has declared its intent to refine all Ugandan crude within Uganda. While improving Uganda’s fuel supply security, a domestic refinery carries profound risk for Uganda. A world class refinery in a landlocked country with undiversified crude supply undoubtedly will face severe commercial challenges. Even a small-scale refinery tailored to Uganda’s domestic fuel needs will diminish the scale economies of export infrastructure without necessarily reducing domestic fuel prices. There will be a temptation to embed hidden fuel subsidies within a domestic refining entity. Reducing the price of crude oil feedstock to improve the profitability of the refinery would reduce the value of the upstream oil production ventures where large resource rents are set to be captured. However, the greater risk for Uganda is that protracted debate over domestic refining strategy will delay important export infrastructure decisions. - 64 - 18. Exporting oil would require the construction of a 1300 km export pipeline to an Indian Ocean port. The most likely route would be through Kenya to Mombasa following the route of the existing Kenya Pipeline, although port congestion in Mombasa is causing the oil companies to consider other routes, some of which would pass through Tanzania instead of Kenya. Whatever route is selected and whatever technology is used to assure flow (heating, dilution, or treatment), a complex 1300 km pipeline would probably cost US$2-3 billion to construct and result in a transportation tariff of US$ 8-10 per barrel. Forming the investment consortium for such a pipeline and concluding the necessary commercial and financing agreements would be a complicated undertaking. Access rules must be sorted out through policy and contract. Transit fees must be established between Uganda and Kenya through what could be a difficult treaty negotiation. Using the timeline of the Chad-Cameroon pipeline as a guide, these preconstruction activities could take three years or more to complete. Assuming a further three years for construction, the earliest that an export pipeline could enter service is 2016, and even this date carries substantial risk. (iv) THE IMPACT OF “DUTCH DISEASE” 19. Among the other economic challenges, resource booms normally cause the currency to appreciate as demand increases. This causes prices for non tradable goods to rise and reduces productivity as factors shift to the non tradable sector and raise reallocation and transition costs, which makes temporary specialization very costly. Such a phenomenon, normally referred to as a ‘Dutch Disease’, materializes due a mismatch between demand and supply. Prices rise with increased demand only if supply does not expand to match the increased demand. Hence, the key point to emphasize is that although the economy’s capacity to absorb big oil revenue may have macroeconomic implications, capacity constraints are essentially microeconomic “supply side” phenomena. 20. Concerns about the “Dutch Disease” in Uganda are not new, given the country’s long history as a large recipient of external funding. In fact, Uganda already possesses some of the symptoms of Dutch Disease. There is a large and growing non tradeable, non agricultural sector, and costs of non tradeables are high. Nonetheless, the real exchange rate remains substantially more depreciated than in the mid-1990s despite a slight reversal from trend in recent years (and a slight slowing of real merchandise export growth). Given the expected appreciation of the currency that would come with sustained large foreign inflows from the oil, it will be important for the government to focus on other factors that determine export competitiveness. Uganda’s landlocked situation, high transport costs, high fuel costs, and poor electricity supply, are important considerations in this respect. It will therefore be important to use the oil revenue optimally to generate productivity gains and growth. The government may also want to consider how and if the country’s oil and gas resources can help to increase availability and reduce the cost of energy. While it is advisable to allow market forces to determine domestic pricing of petroleum products, it is nonetheless important to promote a competitive market so that any fall in crude oil prices are passed on to the consumers. III. INSTITUTIONAL CAPACITY FOR EFFECTIVE MANAGEMENT OF OIL RESOURCES (i) LEGAL AND REGULATORY FRAMEWORK 21. Uganda’s existing legal framework for petroleum sector governance is focused on promotion and exploration activities and needs to be updated and expanded. Petroleum exploration and production activities in Uganda are governed by the Petroleum (Exploration and Production) Act, Chapter 150 of the Laws of Uganda 2000 (the “Petroleum Act”). This law permits the award of petroleum licenses to private entities under certain conditions and gives the mandate for - 65 - directing the upstream petroleum sector to the responsible Minister, currently the Minister of Energy and Mineral Development. The Minister receives applications for any petroleum rights and is responsible for issuing, renewing, and revoking petroleum exploration and production licenses. The Petroleum Act also establishes the position of Commissioner for Petroleum Exploration and Development, who is responsible for carrying out petroleum exploration promotion, initiating petroleum legislation, and monitoring oil companies’ compliance with existing laws, regulations, and agreements. The Petroleum Act and corresponding regulations has served Uganda well during the promotion, licensing, and exploration phase but needs to be updated substantially to handle the development and production of oil and gas, appropriately capture recent trends and best practice in the industry, and harmonize with a future revenue management law. 22. The government’s overall policy on oil and gas exploration and production is laid out in the National Oil and Gas Policy for Uganda, adopted in 2008. This well crafted document reflects international best practices in all important respects. It declares Government’s intention “to use the country’s oil and gas resources to contribute to early achievement of poverty eradication and create lasting value to society.” It sets very high standards in the key areas of resource, revenue, and environmental management. It promotes measures to defend the non-oil sector against the onset of the “resource curse” and it commits Government to transparency and accountability in the management of oil revenues. Consistent with best practice, the policy calls for the establishment of three separate institutions to manage the sector: an oil and gas policy making and monitoring body within the Ministry (Directorate of Petroleum), an independent regulatory agency (Petroleum Authority of Uganda), and a separate commercial entity to hold Government’s direct participation in oil developments (the Uganda National Oil Company). 23. While there is broad recognition within the government of the need to enact a revenue management law, amend the Petroleum Act, update the regulations, and establish the new institutions called for in the policy, none of the necessary legislation has yet been brought forward. (ii) TRANSPARENCY OF OIL SECTOR MANAGEMENT AND EITI 24. Although the government has stated its intention to manage the country’s oil resources with full transparency, implementation of such transparency measures has been limited to date. While not a sufficient precondition to ensure prudent resource management, transparency measures make it easier for civil society and the media to scrutinize performance in the oil sector and thereby hold the Government and private sector to account. Although the country’s national oil and gas policy calls for transparent resource management, Government has been reluctant to share information regarding contracts, and the terms of the Production Sharing Agreements (PSAs) signed have not been disclosed. Uganda has so far argued that this is not in the country’s commercial interest. The authorities have also expressed reluctance about joining EITI on the grounds that this initiative signals that the country in question has weak/nontransparent revenue management systems. While a case could be made for these arguments, Uganda’s deteriorating governance and international concerns about weak control of corruption should encourage Government do more rather than less to demonstrate a commitment to transparency and thereby encourage confidence in its oil management systems. 25. While the discussion on transparency has so far focused mainly on the disclosure or nondisclosure of PSAs, there are a number of other aspects of transparency in oil sector management that equally need attention. Of particular importance in this regard are the modalities for marketing the government’s share of oil production, an issue closely related to the question of ‘refinery vs. pipeline’. International experience shows that this is the aspect of oil sector management that is most prone to fraud and abuse of public resources. - 66 - a. Transparency in commercialization operations: national oil company vs. international operators 26. Some of the greatest risks of opacity lie in the planned creation of a national oil company to hold the state’s direct interest in oil production projects and to market the state’s share of oil production. The experience of establishing and operating national oil firms in the African context has shown that these firms are often non transparent, inefficient and an instrument for patronage. While progress has been made in some countries in reforming national firms, experience shows that once such institutions get off to a bad start, it becomes hard or even impossible to make corrections along the way, as vested interests are notoriously difficult to dislodge. Success in some instances has been achieved by forcing the national oil company to adopt a purely commercial role rather than that of a de facto regulator. In Uganda the risks of mismanagement of marketing practices is exacerbated by the plans to build a refinery. International practice shows that transactions between national oil firms and state owned refineries are prone to price manipulation, often at the cost of the treasury and, by extension, the population. 27. Two alternative solutions can be proposed for addressing these risks. First, in case a national oil firm is created and charged immediately with oil marketing functions, there is a need to institute high levels of transparency in the operations of such structures from the start, as well as adhering to high professional standards. Measures worth considering to safeguard transparency include: i) having the accounts of the national oil firm or other structure charged with oil marketing audited by audit firms of international reputation; ii) ensuring publication of the findings of such audits, as well as of follow up actions taken by the structure; and iii) conducting regular reviews of marketing procedures. A further set of actions should focus on the choice of intermediaries in oil marketing. Setting criteria for choosing intermediaries and ensuring that national oil marketing structures deal only with firms of international reputation is an effective mitigating measure to prevent the kind of ‘insider trading’ that is one of the largest sources of revenue loss to oil producing countries.19 Lastly, the rapid development of training programs in the sector, as well as a bursary system that could have locals rapidly trained in the principles of oil sector management, would be essential to safeguard professional standards. 28. Second, a transition period could be agreed during which oil marketing operations of the state share of production would be contracted out to an international operator, under disclosed terms. This would allow Government to build up the capacity of the national firm and define transparent rules and procedures. The national firm would then take over the marketing tasks after this transition period. 29. Finally, in case a refinery option would be chosen, transparent and fully disclosed price setting mechanisms for the transfer of part of the state share to the refinery would need to be set. b. Transparency in revenue generation and management 30. Transparency in the transfer of oil revenue from the marketing structure to government, as well on any taxes paid by international operators, is a further essential element. 19 Consisting of national oil trading structures trading with ‘front intermediaries,’ which basically are owned by related nationals, and thus lead to large revenue losses as oil is sold on unfavorable terms to maximize profits of the intermediaries. - 67 - Apart from the creation of an EITI-like monitoring structure, the verification of oil sector revenue and their effective transfer to the Treasury will contribute further to a transparency agenda. 31. Government may consider internationally established “best practice” principles with regard to public disclosure of oil revenue. Regardless of whether or not the Government chooses to formally adhere to the EITI, it is advisable that EITI principles are respected in the way oil revenue is managed, as EITI principles have become a minimum standard for good management of oil revenue. Thus, it would be essential to institutionalize the following actions in a routine manner:  Disclosure by private firms operating in the oil sector of taxes paid to Government, and verification of receipt by Treasury;  Disclosure by the national structure in charge of oil marketing of revenue transferred to Treasury, and verification of receipt; and  Creation of a multi stakeholder structure, including members of civil society, to monitor revenue flows.20 c. Transparency in the use of revenue 32. Finally, a commitment to enhanced transparency in the use of oil resources is important, as experience shows that resources are squandered as often in the downstream process (investment project choices and procurement) as in the revenue generation process. The section on investment management (below) elaborates on this. In the context of oil, it will become even more important to ensure that measures related to the transparent selection of projects according to sound economic principles and transparent application of procurement rules are enforced. (iii) ENVIRONMENTAL POLICY AND GOVERNANCE 33. Much of Uganda’s exploitable oil is located in ecologically sensitive and biodiversity rich areas, which poses a particular challenge for oil and gas exploration and development in Uganda. The Albertine Graben is the most species rich eco region for vertebrates in Africa. The principal threats to biodiversity in Uganda include habitat loss, modification, and alteration, including specifically oil exploration and production. Another complicating factor is that much of the oil is adjacent to or under the Albertine Lakes, which presents the threat of contamination of large water bodies. 34. The oil rich areas are also key ecotourism sites (for example, Murchison Falls National Park) with high tourism potential. Oil exploration and production activities could have a variety of negative impacts on the environment. They induce economic, social, and cultural changes through alteration in land use patterns, migration, and socioeconomic and cultural systems. They also increase liquid and gaseous waste streams, which may affect plant and animal communities due to changes in their environment through variations in water, air, and soil/sediment quality and through disturbance by noise, extraneous light, and changes in vegetation cover. These negative impacts need to be mitigated and addressed to ensure ecosystem integrity. 35. To minimize adverse impacts of oil exploitation on the environment, Uganda needs to update and strengthen its environmental laws and regulations, strengthen institutional capacity, and provide adequate resources to ensure enforcement. The environmental impacts of 20 This would constitute a “minimum package” but does not cover the full EITI menu, which also includes disclosure of PSAs. - 68 - oil and gas exploration and development are regulated through the National Environment Act, Cap. 153, and related laws and regulations that prohibit degradation of the natural environment and protect biological diversity. Existing legislation, guidelines, and policies that enforce/provide for detailed requirements for environment pollution control are, however, inadequate for petroleum operations, and the existing legal framework (policies, laws and regulations) in other sectors needs to be updated, as well. Furthermore, human capacity and technical infrastructure in government agencies responsible for regulation are currently inadequate to handle upstream and downstream oil and gas impacts on the environment and require further strengthening. In addition, there is inadequate knowledge about the environment and possible environmental impacts of oil and gas exploration and development activities. (iv) BUILDING DOMESTIC CAPACITY TO ENGAGE IN THE OIL SECTOR 36. Capacity building will be required to ensure that the oil sector has a transparent and effective management system and delivers employment opportunities to Ugandan nationals. Capacity is required in many forms, but crucial gaps include: negotiation capacity to ensure that PSAs are negotiated in Government’s favor; oil marketing capacity to ensure that state owned oil resources are sold at the proper market value; oil revenue forecasting and links to budgeting; and skills related to management of royalties from petroleum, oil and gas exploration and processing, natural resource management, and civic engagement with communities. 37. Government, through the Ministry of Education and Sports (MoES), plans to establish the Uganda Petroleum Institute as a constituent college of Busitema University for purposes of building capacity through vocational training in oil and gas industry trades. Courses will be given up to Crafts and Master levels (equivalent to Ugandan low and high level certificates) together with ordinary diplomas. Curricula development is underway, and MoES has articulated the need to support human resource development for faculty and infrastructure developments (laboratories, equipment, and workshop installations). MoES vehicles for promoting these needs include the Education Sector Consultative Committee and the Education Budget Working Group. Further, the faculty of science at Makerere University introduced a bachelor’s program in petroleum science in the academic year 2008/09. Quality delivery requires regular interface with oil sites and collaborative arrangements that provide staff with short term skills improvement programs. As part of the National Oil and Gas policy, Government plans to conduct a comprehensive assessment of capacity needs for all supporting institutions. 38. The plan to create a Petroleum Institute is an important step in the right direction when it comes to creating long term capacity. However, two complicating factors need to be addressed. Retaining graduates of such an institute at public service wage levels will prove difficult. This poses risks not only in terms of capacity gaps between the producing country and international operators, but also inside the national institutional system, as non public service institutions will be able to attract graduates while other institutions, such as the Ministry of Finance, may not. This puts Government at risk of being unable to control its own operators. Furthermore, while setting up a Petroleum Institute would address medium term expertise needs, it will not address critical short term requirements. Therefore, the creation of the institute should be accompanied by development of a limited bursary program (possibly supported by external partners) to deliver crash course type training to a small core group of experts. 39. Finally, it is important that capacity building is not just limited to government and parastatals but also benefits the broader civil society. Stimulating the development of expertise in civil society and oversight institutions is equally critical, and these institutions may not necessarily benefit from the institute. Thus, creating funding opportunities for NGOs and think tanks to - 69 - strengthen their expertise on oil sector governance issues, for instance through a ‘development market place’ competitive mechanism of grant awards, would be an essential supplement to the creation of a National Petroleum Institute. IV. OIL REVENUE AND COMMUNITY ISSUES (i) OIL REVENUE AND INTER-GOVERNMENTAL FISCAL TRANSFERS 40. The government has yet to announce if and how oil revenue will be shared with local governments and how communities affected by oil production will be compensated. Experience from other countries in Africa, most notably Nigeria, has shown that the importance of revenue sharing arrangements between central and local governments and benefits that offset the adverse effects of oil production on local communities. These play a key role in ensuring social cohesion and a stable investment and production environment. Furthermore, pressures may arise across the country for increased budget allocations to local governments to satisfy high public expectations of benefits from oil production. 41. Uganda’s policy of decentralization is embedded in the Constitution and is one of the major policy reforms adopted by government in the 1990s. The policy transferred a number of service delivery mandates from the central to local governments. Today, basic services such as primary education; primary health care; water and sanitation; district, urban, community, and access roads; and agriculture extension are being provided by LGs. Given the LG’s weak revenue base and the recent abolition of the graduated tax, which was one of the major revenue sources for rural LGs, most service delivery mandates for LGs are being financed through transfers from central government. Despite an increase in the service delivery responsibilities of local governments and the creation of many new districts, the proportion of the budget allocated to local governments has been decreasing in recent years, which is reducing the efficiency of expenditure in the social service sectors. In anticipation of oil revenue, pressure is likely to mount on the central government to increase the share of the budget allocated to local governments. 42. Once the oil revenue comes on stream and more revenue becomes available to the government, it will need to address comprehensively the current debate about LG financing and propose a clear policy regarding intergovernmental fiscal transfers. Government is preparing to undertake a study to determine a holistic strategy for LG financing that will cover LG’s own source revenue and fiscal transfers. This study offers an opportunity for Government to investigate the impact of oil revenue on LG financing. Government also needs to address what direct benefit would accrue to the districts and communities from which the oil is being extracted, over and above the general resources being transferred to LGs through the IGFT. These transfers/benefits should be provided in an equitable manner that will ensure the unity and cohesion (not tensions and disintegration) of the country. (ii) OIL AND LAND POLICY 43. To commence oil production, oil companies and the government will need to acquire land for oil production facilities and infrastructure. This requires adequate institutional provisions for land allocation, purchases and leasing arrangements. The Constitution of Uganda (1995) and the Land Act, Cap 227, vests all land in Uganda in its citizens under four tenure systems: (i) freehold, (ii) leasehold, (iii) mailo, and (iv) customary tenure. These systems provide the framework for protecting the rights of the citizens and ensuring they are not deprived of personal property without compensation. In essence, therefore, the legal framework exists for dealing with land matters in the event of oil discovery in any part of Uganda, namely: (i) compensation of individuals or communities - 70 - in whose land oil is discovered, (ii) resettlement of individuals or communities in other areas to ensure safety from the vagaries of oil extraction, and (iii) providing for sharing oil proceeds in the short, medium, and long terms. However, following the discovery of large deposits of oil in the Western part of the country, it has become evident that the details of all these arrangements remain to be worked out. For example, there are no provisions for oil related matters in the ongoing consultations and drafting of the land policy, and a national resettlement policy remains to be developed. Furthermore, land policy in Uganda is a politically sensitive issue and bound up with regional and ethnic identity and politics. V. PUBLIC INVESTMENT PLANNING 44. Resource rich countries have often fallen into a resource trap in which gross domestic income rises fast, while non resource related domestic output stagnates (see Collier and Goderis 2008). Uganda’s oil resources are a depletable resource, and consequently it is important for sustainable development that the rents from resource extraction lead to income from other activities as a means to overcome the resource trap. Therefore, the manner in which rents from oil are spent is critically important. Public policy in general and public investment programs in particular need to aim for the continuation of current non oil exports and facilitate the emergence of new export sectors given that oil revenue is most likely not sufficiently abundant to provide a permanent income stream (Page 2008). 45. Resource and non resource rich countries are increasingly recognizing the importance of public investment programs for building a more competitive and diversified economy. For example, the new public investment management systems introduced by Chile and South Korea to improve the efficiency of public investments have resulted in a more strategic selection of projects, a higher degree of completion, greater transparency in the project cycle, and enhanced integration of the capital and recurrent budgets.21 For the Government of Uganda to be able to prioritize public investments, it is important to have in place an institutional rule based process, which requires proper prior analysis of expected economic and social benefits of each public investment project. 46. It will be important to assess how effective the existing Public Investment Management system is in Uganda (see Box 1 on the various dimensions of public investment management system) and to address its shortcoming before the oil revenue starts flowing into the Treasury and the pressure to spend is there. Although some procedures are currently in place to guide the preparation of investment projects, these are different across ministries, and capacity in ministries to prepare, plan, and execute projects is weak. Not surprisingly, managing public investment is one of the most challenging aspects of public finance, as these challenges span from planning, both at the project and overall public investment budget level, to physical and financial execution of projects, including procurement, monitoring, and evaluation of impact of investments. Integrating the use of public private partnerships into the processes of selecting public investment projects is another critical challenge. Government of Uganda has realized that its public investment management system is in need of strengthening. 47. It is expected that an assessment of the current public investment management system will be undertaken this fiscal year and will lead to a comprehensive public investment management action plan. The action plan is expected to be a mix of policy and process reform and 21 For an overview, see Rajaram, Minh Le and Biletska (2008). A Diagnostic Framework for Assessing Public Investment Management. World Bank: Unpublished Background Paper for IDA Development Committee. - 71 - technical assistance to build up the capacity to effectively manage Uganda’s public investment program. Box 6.1: Main Elements of an Effective Public Investment Management System Desirable Indicators Institutional Arrangement 1. Strategic focus  Existence of realistic national poverty reduction and development strategy and preliminary (PRSP) and detailed strategies for key sectors with costing screening  All projects consistent with PRSP and corresponding sector strategy  All projects meet test of being real investment rather than recurrent budget items 2. Formal and  Formal criteria for economic, social, and environmental cost/benefit analysis standardized available project  All projects in public investment program (PIP) are appraised (form and scale of appraisal appraisal adapted to project size and importance)  Adequate skills in project design and appraisal available 3. Clear roles and  Central unit for appraising complex and large projects independent  Independent checks are conducted for all large and complex projects to ensure reviews in objectivity in appraisal and clarity of implementation arrangements appraisal 4. Project  Structured and credible medium-term fiscal framework establishes sector selection envelopes for public investments aligned with  Project selection process (steps 1-3 above) integrated with annual budget process budget process  O&M costs of existing and new investments fully budgeted for 5. Transparent and  Published guidelines for financial and physical project implementation effective project  Financial execution respects PFM procedures execution  Cost effective, competitive, and transparent procurement practices 6. Closely  Implementation reports for all major projects regularly published monitored, yet  Flexible funding review process to allow for disbursement changes (or flexible cancellations) to adapt to changing circumstances implementation  Regular updates of C&B analyses  Maintain accurate asset registers including asset values 7. Ex-post  Evaluation criteria built into the design of large projects evaluation  Institutional arrangement in place for evaluating outcomes of large projects and publishing results - 72 - Annex 7: Youth Employment in Uganda 1. In 2005/06, Uganda’s labor force amounted to nearly 11 million people, of which 26 percent were less than 25 years old. Close to 400,000 youth enter the labor force every year. They face challenges in transitioning to stable employment that generates earnings high enough to meet their aspirations. This challenge is expected to grow with the projected increase in the number of youth to close to eight million by 2015. Major constraints to youth’s transition to stable employment are: (i) Poor skills. In 2005/06, about half of the youth entering the labor market did not complete primary school. Opportunities in the non-farm sectors for those without complete primary education are very limited, especially for women. Vocational skill training for those with limited education is not widely available. (ii) Poor opportunities leading to underemployment. Many adults are in stable but low productivity employment; but, especially in rural areas, they report working less than 40 hours a week, so they are underemployed. Nationally, 12 percent of the labor force is in this category, as is 20 percent of youth, especially youth in agricultural households. (iii) High expectations. Many of Africa’s youth expect white-collar wage and salary jobs although most youth are not qualified and such jobs are scarce. Although Uganda grew at 12 percent per annum between 2003 and 2006, private wage jobs accounted for just 10 percent of total employment in 2006. Few youth graduate from school ready to create a business in Uganda’s rapidly growing informal sector; and most youth do not desire employment in agriculture, despite its commercial potential. 2. Structural factors such as the education deficit, the pace of economic development and demographic challenges (the labor force grows at 3 percent per annum), imply the problem of youth absorption into the labor market will remain a challenge for the medium term. However, measures can be taken to reduce the costs of youth transition to work. This requires both demand and supply side interventions that help youth’s transition to stable employment, taking cognizance of the characteristics of Uganda’s labor market in general and its youth in particular. (i) Develop and implement polices to improve employment opportunities throughout the economy and labor market in the wage sector. Uganda’s NDP focuses on creating employment in small, medium, and large firms. Youth will benefit from these opportunities. The NDP also focuses on improving opportunities in agriculture through more capital and technology. If these initiatives are successfully implemented, youth with some education should be well-placed to take up the opportunities created in the agriculture sector and earn an adequate income. (ii) Encourage non-farm self employment. Self employment in the informal sector has enormous potential for the economy. This sector has been the source of many productive opportunities with ability to provide stable employment and solid earnings. The number of non-farm household enterprises grew at an average of 8.6 percent per annum between 1992 and 2005. At this rate, approximately 25 percent of new jobs between 2015 and 2020 will be created in this sector. However, nearly 50 percent of household non-farm enterprises fail in their first three years. New entrants in this sector face high uncertainties and some may obtain lower income than they aspire. Strategies to increase opportunities and reduce risks - 73 - are needed in this sector as part of overall strategies for local economic development. Increasing access to low cost banking services plays a key role. (iii) Support youth in their transition to employment through programs that help youth identify opportunities and find support. Evaluation studies are ongoing for some projects in Uganda supported by the World Bank and non-state actors that have potential in this regard. 3. The strategy for this CAS includes supply side interventions to address the skills development and demand side interventions geared towards continued creation of private wage jobs, entrepreneurship training, supporting household enterprises in the non-farm sector to increase their incomes, increasing productivity in agriculture, public works and community programs that help youth identify opportunities and find support. Some of the on-going projects and AAA that address this issue and programs planned for the CAS are listed below. 4. Analyze constraints faced by youth in making the transition to work and identify most effective approaches to address these constraints. Table 7.1—Uganda Youth Employment Programs Sector  Current Programs  Future Programs  Financial Sector Financial Sector DPO – To improve access to Development financial services Private Sector PSDP: Supports pilot informal sector training and its Implementation of pilot for Household Development evaluation and entrepreneurship training Enterprises Education UPPET –Supports the development of a Post Primary Implementing the Vocational and Skills Education and Vocational Skills Development Strategy Development Strategy Social NUSAF – Complete the randomized evaluation of the Youth Protection Opportunities Program Agriculture & Agriculture Sector Support Program – To Rural improve productivity and commercialization of Development agriculture Social Emergency Demobilization & Re-integration Project Development (UgDRP) – Facilitates re-integration of former rebels, some of whom are youths, into civilian life through referral to jobs and training Urban Local Government Management and Service Delivery Development Project (LGMSD) and Kampala Institutional Infrastructure Development – Increases job creation by emphasizing on LG contracting to private sector to develop infrastructure. Poverty ESW on Labor Markets and Poverty, including a study on ESW on Youth Transition to Work (qualitative Reduction and Raising Productivity and Reducing the Risk of Household and quantitative) Economic Enterprises (jointly w/PSD). Management - 74 - Annex 8: Operations Portfolio (IBRD/IDA and Grants) Operations Portfolio (IBRD/IDA and Grants) As Of Date 3/9/2010 Closed Projects 91 IBRD/IDA * Total Disbursed (Active) 497.99 of w hich has been repaid 0.00 Total Disbursed (Closed) 1,828.79 of w hich has been repaid 162.21 Total Disbursed (Active + Closed) 2,326.78 of w hich has been repaid 162.21 Total Undisbursed (Active) 804.28 Total Undisbursed (Closed) 0.28 Total Undisbursed (Active + Closed) 804.56 Active Projects Difference Between Last PSR Expected and Actual Supervision Rating Original Amount in US$ Millions Disbursements a/ Development Implementation Frm Project ID Project Name Fiscal Year IDA GRANT Cancel. Undisb. Orig. Objectives Progress Rev'd P069208 UG - Power Sector Dev. Project (FY07) S S 2007 300 91.5 39.1 P073089 UG-EMCBP SIL 2 (FY01) S S 2001 37 14.3 -3.2 7.6 P075932 UG-GEF PAMSU SIL (FY03) S S 2003 8 0.2 0.2 P078382 UG-Kampala Inst & Infrast Dev Prj (FY08) S MS 2008 33.6 30.3 23.7 P090867 UG-Local Govt Mgt Svc Del Pjt (FY08) S MS 2008 55 39.4 19.3 P086513 UG-Millennium Science Init (FY06) S S 2006 30 17.3 1.1 P079925 UG-Natl Re Dev TAL (FY04) MS MS 2004 30 8.5 1.4 0.4 P065437 UG-PAMSU SIL (FY03) S S 2003 27 0.0 -3.5 P110803 UG-Post Primary Educ & Trg APL-1 (FY09) S S 2009 150 154.7 0.0 P050439 UG-Priv & Utility Sec Reform (FY01) MS S 2001 48.5 12.1 8.5 17.2 11.7 P083809 UG-Priv Sec Competitiveness 2 MS MS 2005 70 47.4 42.5 P050440 UG-Pub Serv Perform Enhance (FY06) MU MU 2006 70 51.2 17.6 57.9 2.1 P074079 UG-Road Dev APL 3 (FY05) S S 2005 107.6 12.0 5.0 5.6 P111633 UG-SEC N-Uganda SAF (NUSAF2) (FY09) S S 2009 100 87.3 P112334 UG: Energy for Rural Transformation APL2 S S 2009 75 74.9 7.8 P112340 UG: GEF Energy for Rural Transf. APL2 S S 2009 9 9.0 1.1 P110207 UG:Program for Control of Avian Influ U U 2008 10 9.5 5.3 P092837 UG:Transport Sector Development Project # # 2010 190 191.0 Overall Result 1333.7 17 63.3 813.5 199.6 27.5 Regional projects P063683 Regional Trade Facilitation S HS 2001 10 0.0 P079734 East Africa Regional Trade and Transport MS MS 2006 199.02 121.6 P080413 Great Lakes Initiative on HIV/AIDS MU MS 2005 20 2.1 P100406 Lake Victoria Phase II APL 1 MS MS 2009 90 81.7 P112688 East Africa Agricultural Productivity Programme MU MU 2009 94.56 94.6 - 75 - Annex 9: Selected Indicators of Bank Portfolio Performance and Management Indicator 2007 2008 2009 2010 Portfolio Assessment Number of Projects Under Implementation a 18 17 16 16 Average Implementation Period (years) b 5.5 4.8 4.3 3.7 Percent of Problem Projects by Number a, c 0.0 29.4 12.5 12.5 Percent of Problem Projects by Amount a, c 0.0 20.6 14.8 2.2 Percent of Projects at Risk by Number a, d 11.1 35.3 12.5 18.8 Percent of Projects at Risk by Amount a, d 12.3 26.2 14.8 4.9 Disbursement Ratio (%) e 25.4 27.8 30.2 28.5 Portfolio Management CPPR during the year (yes/no) No Yes No Yes Supervision Resources (total US$) 1893 1950 1637 1224** Average Supervision (US$/project) 105 115 88 77** Memorandum Item Since FY 80 Last Five FYs Proj Eval by IEG by Number 77 9 Proj Eval by IEG by Amt (US$ millions) 3,870.2 526.8 % of IEG Projects Rated U or HU by Number 32.4 0 % of IEG Projects Rated U or HU by Amt 35.5 0 a. As shown in the Annual Report on Portfolio Performance (except for current FY). b. Average age of projects in the Bank's country portfolio. c. Percent of projects rated U or HU on development objectives (DO) and/or implementation progress (IP d. As defined under the Portfolio Improvement Program. e. Ratio of disbursements during the year to the undisbursed balance of the Bank's portfolio at the beginning of the year: Investment projects only. * All indicators are for projects active in the Portfolio, with the exception of Disbursement Ratio, which includes all active projects as well as projects which exited during the fiscal year. ** As of March 22, 2010 - 76 - Annex 10: Trust Fund Portfolio ( Figures in thousands of USD ) Net Funds Grant Program Man. Trust Fund Trust Fund Name Grant Disb. to Disb. % Closing Project Name Exec. By Source Unit Amount Date Date TF050569 P CF-ERP A: Uga nda W e s t Nile Ele ctrifica tio n P roje ct 3,900 6 0% CARBON 12/31/2012 ENVCF UG-W e s t Nile Ele ctrifica tio n Re cipie nt GEF2: P ro te cte d Are a s Ma na ge me nt a nd P rote cte d Are a s Ma na ge me nt a nd TF051204 8,000 7,790 97% GEF 6/30/2010 AFTEN Re cipie nt Sus ta ina ble Us e P ro je ct Sus ta ina ble Us e P ro je ct (FY03) Stre nghte ning the Mo nito ring a nd Eva lua tio n IDF Stre ngthe ning M&E Sys te m TF056783 Syys te m fo r the P ove rty Era dica tio n a nd Actio n 495 447 90% IDF 12/25/2009 AFTRL Re cipie nt (FY06) P la n TF056883 Uga nda Nile Ba s in Re fore s ta tion P ro je ct 1,084 0 0% CARBON 12/31/2017 ENVCF Nile Ba s in Re fo re s ta tio n (FY06) Re cipie nt Output Ba s e d Aid - Uga nda W a te r TF057882 Sma ll To w ns W a te r 1,069 608 57% GP OBA 12/31/2011 GP OBA Re cipie nt Sma ll To w ns Output Ba s e d Aid - Re productive TF090755 Re pro ductive He a lth 4,300 1,039 24% GP OBA 12/31/2011 GP OBA Re cipie nt He a lth (FY08) Output Ba s e d Aid in Ka mpa la -W a te r TF091510 Ka mpa la W a te r Co nne ctions for the P o o r 2,527 167 7% GP OBA 12/31/2011 GP OBA Re cipie nt Co nne ctions No rthe rn Uga nda P e a ce re co ve ry a nd No rthe rn Uga nda Socia l Actio n Fund TF091665 1,657 495 30% DGF 6/30/2010 AFTSP Re cipie nt De ve lo pme nt Fund (NUSAF) (FY09) Ge nde r a nd La bo r Fo rce P a rticipa tion Effe cts fro m Impa ct Eva lua tion of Citize n Re port TF092025 75 60 80% GENTF 12/31/2010 DRGP S Ba nk the Uga nda Citiz e n Re port Ca rd a t community Ca rd l l h h h Suppo rt to Uga nda De mobiliz a tio n a nd UG-Eme rge ncy De mob & Re inte g. TF092059 340 257 75% FS-SP 6/30/2010 AFTCS Ba nk Re inte gra tion P ro je ct (FY08) Eme rge ncy, De mo biliz a tio n a nd Re inte gra tion UG-Eme rge ncy De mob & Re inte g. TF092061 2,850 2,850 100% FS-SP 6/30/2010 AFTCS Re cipie nt P ro je ct (FY08) TF092516 Africa Sma ll a nd Me dium Ente rpris e s - Uga nda 569 96 17% IFC 6/30/2010 CAFSF Ba nk Uga nda : Re cha rching Fe e s for La mps ca n Buy TF092903 200 160 80% P P IAF 4/29/2010 P P IAF Re cipie nt Ho urs of So la r Light Avia n a nd Huima n Influe nz a P re pa re dne s s a nd P rogra m fo r Co ntro l of Avia n TF092919 2,000 0 0% AHI 6/30/2011 AFTAR Re cipie nt Re s pons e P roje ct Influe nz a NUSAF Youth Opportunitie s P ro gra mme Impa ct TF092991 335 190 57% SIEF 6/30/2010 HDNCE NUSAF Scho o l To W o rk Ba nk Eva lua tio n Ro a d Se cto r De ve lo pme nt P roje ct TF093453 Bus Ra pid Tra ns it Co nce ptua l De s ign 279 118 42% P P IAF 4/30/2010 AFTTR Ba nk AP L 3 (FY05) Tra ns po rt Se cto r De ve lo pme nt TF093559 Ro a d Sa fe ty Ma na ge me ne t Ca pa city Re vie w 80 48 60% GRSP 4/30/2010 ETW TR Ba nk P roje ct (FY10) TF093674 Re ne w a ble Ene rgy - P o w e re d Milk Co ole rs 200 100 50% GEFIA 10/1/2011 W BIIN Re cipie nt Te chinca l As s is ta nce Suppo rt to Uga nda UG-Eme rge ncy De mobiliza tio n a nd TF093863 300 45 15% FS-SP 6/30/2010 AFTCS Ba nk De mobiliz a tion a nd Re inte gra tio n P ro je ct Re inte gra tion (FY08) TF094036 Emplo yme nt, P ove rty a nd Ine qua lity in Uga nda 150 53 35% BP RP 6/30/2010 AFTP 2 UG-P ove rty a nd Ine qua lity Ba nk SIEF Impa ct Eva lua tio n of NUSAF Yo uth TF094355 100 10 10% GENTF 8/31/2010 HDNCE UG-NUSAF Schoo l To W ork Ba nk Oppo rtunite is P ro gra mme Ene rgy for Rura l Tra ns fo rma tio n TF094484 Uga nda : Ene rgy fo r Rura l Tra ns fo rma tion II (GEF) 9,000 0 0% GEFIA 6/30/2013 AFTEG Re cipie nt AP L2 (FY09) Impa ct Ana lys is o f W a te r a nd Sa nita tio n Se ctor AFTU1 - Impa ct e va lua tion in Uga nda W a te r TF094527 108 32 30% W P P 6/30/2010 Ba nk P o licy a nd Inve s tme nts in Uga nda HIS Sa nita tion Se cto r W a te r Impa ct Eva lua tio n (W a te r Co nne ctions for Output Ba s e d Aid - W a te r TF094543 123 0 0% SIEF 7/31/2010 GP OBA Ba nk the P o or) Co nne ctions for the P o o r Go ve rna nce in the Ne w Uga nda CAS: Ca pturing P rogra mma tic Go ve rna nce Te chinca l TF094730 215 163 76% GP F 4/30/2010 AFTP R Ba nk Oppo rtunite is a nd Mitiga ting Ris ks As s is ta nce Ene rgy Se cto r Ma na ge me nt As s is ta nce TF095004 P ro gra mme : Citie s Allia nce Re co nna is s a nce 24 24 100% ESMAP 12/31/2009 ETW ES Ba nk Mis s io n to Uga nda Re a dine s s P re pa ra tio n P ro pos a l fo r Fo re s t Ca rbon TF095015 200 0 0% FCP FR 7/31/2010 AFTEN FCP F Re a dine s s Gra nt Re cipie nt Re a dine s s Fa cility (FCP F) Uga nda - Da ma ge s , Lo s s e s a nd Ne e ds TF095318 72 68 95% GFDRR 3/31/2010 AFTCS DALA Tra ining Ba nk As s e s s me nt (Da LA) Tra ining TF095367 TA fo r P ove rty Ana lys is fo r Uga nda 100 33 33% BP RP 10/31/2011 AFTP 2 Uga nda P ro gra mma tic P o ve rty Ba nk Uga nda - Educa tio n Se cto r Stra te gic P la n (ESSP ) P o s t P rima ry Educa tio n & Tra ining TF095382 275 237 86% FTIE 2/28/2010 AFTED Ba nk Suppo rt AP L-1 (FY09) Grid-Ba s e d Output Ba s e d Aid in Uga nda - Ene rgy Ene rgy for Rura l Tra ns fo rma tio n TF095575 85 2 3% GP OBA 4/30/2012 AFTEG Ba nk Te chinca l As s is ta nce AP L2 (FY09) CA-Uga nda Se conda ry Citie s P roj. TF095686 Uga nda Se co nda ry Citie s P ro je ct - Se tup 196 0 0% CITIES 12/31/2010 AFTUW Ba nk Sta rtUp Re pro ductive He a lth Vo uche rs in W e s te rn Uga nda UG-GP OBA W 3: Re pro d. He a lth TF095767 171 19 11% GP OBA 12/31/2011 AFTHE Ba nk P ro je ct (FY08) Uga nda CAS Imple me nta tio n: Re pos itio ning the TF096312 1,600 0 0% GP F 12/31/2012 AFTP R UG:P ro gra mma tic Go ve rna nce TA Ba nk Ba nk's ro le on Go ve rna nce Uga nda Gro w th a nd Environme nt TF096393 Trus t Fund fo r Co untry Enviro nme nta l Ana lys is 151 0 0% FS-SDN 4/30/2011 AFTEN Ba nk CEA P ro gra m Ma na ge me nt a nd Trus t Fund UK-DFID Trus t Fund to Support TF096396 889 0 0% UG-DP 6/30/2014 AFMUG Ba nk Adminis tra tio n Go U's NDP Total 43,717 15,118 35% - 77 - Annex 11: CPPR Action Plan Cross Cutting Issues Issue Action By Date Status Resettlement Costs Amend Financing Agreements for projects for which RAP funds are not readily WB Ongoing forthcoming, i.e. compensation to be covered by the projects. Procurement Ensure that procurement is advanced while project is awaiting effectiveness to WB/GoU Ongoing ensure head-start in implementation. Continue procurement workshops for PIU staff at launch to inform of WB WB Ongoing procurement policies/provide hands-on training. Project Preparation Advances (PPAs) Task Teams to use PPAs to advance project preparation and reduce demand on BB. WB Ongoing Communications with GoU on status Project ratings (PDO/IP/sub-ratings) to be spelled out in Aide Memoires and WB Ongoing of portfolio (and impact on CPIA) transmittal letters. Monitoring and Evaluation (M&E) Include CORE indicators and indirect/direct beneficiaries in ISRs. WB Next ISR Project Specific Issues Action By Date Status PROGRAM FOR CONTROL OF AVIAN INFLUENZA Project restructuring to better align project objectives and components with current situation and needs, including WB 5/30/10 national and regional H1N1 initiatives. Extension of closing date to allow for sufficient time for implementation. Official request needed. GoU 3/31/10 MILLENNIUM SCIENCE INITIATIVE Provide tighter scrutiny of financial budgets and allow for more flexibility on the amounts awarded. PCU Next mission Need to finalize M&E baselines and achievements to date before Additional Financing can be considered. WB Next mission For future rounds, evaluate grantee’s project management and planning capacity to ensure readiness for PCU Next mission implementation (including procurement and FM). To the extent possible, delegate procurement to grantees - progress on which should be included in quarterly reports. PCU Next mission Due to B rating for Environmental safeguards, include safeguards consultant on team. WB Next mission UGANDA POST PRIMARY EDUCATION AND TRAINING PROJECT Due to the size and complexity of the text-book procurement package (US$27 million), this needs close follow up to WB/PCU 4/30/10 ensure that the process is carried out in a proper and timely manner. Engage consultant to assist PCU in planning and implementation of civil works component. WB/PCU Next mission SUSTAINABLE MANAGEMENT OF MINERAL RESOURSES Once reallocation exercise is finalized, consult with MEMD/MoF on options for additional funds. WB Next mission Finalize M&E framework. WB Next mission PRIVATE POWER GENERATION PROJECT (BUJAGALI) - 78 - Action By Date Status Continued close follow up from the Bank task team on the MAP and to finalize outstanding issues. WB AfDB to resolve compensation issues as agreed. AfDB Regular updates on the Q&E section on the web-site. WB ENERGY FOR RURAL TRANSFORMATION APL 2 Continued focus on procurement activities to ensure momentum of project implementation. WB Ongoing Recruitment of a sociologist/anthropologist be undertaken to address the backlog of resettlement related activities. PCU Next mission Recruitment of an environmental specialist to strengthen capacity. REA Task team to closely follow overall staffing arrangements in the PCU and REA. WB POWER SECTOR DEVELOPMENT PROJECT Regular updates of the power sector financial model and sensitivity analysis is required to provide a solid analytical GoU Bi-annually basis for further sector investments. Revise PDO to include support to Power Sector Development Plan and national data suppository on sector. WB Next Mission Sector working group to be established to ensure sector dialog and provide strategic support to GoU. WB Provide the Bank with (i) forecasted generation financing plan up to the expected date of Bujagali commissioning UETCL Next Mission and (ii) forecasted energy supply balance up to the commissioning of the next major power plant. Mitigation measure for households and the nearby school affected by the noise to be finalized. PCU Resettlement implementation completion report to be submitted to the Bank. PCU 3/30/10 PROTECTED AREAS MANAGEMENT & SUSTAINABLE USAGE PROJECT Final supervision mission to ensure proper project closing. WB 3/10/10 Ongoing Initiate early delivery of Implementation Completion Report to provide key lessons. WB 11/30/10 Ongoing ENVIRONMENTAL MANAGEMENT AND CAPACITY BUILDING 2 Mission to ensure proper handover to CO based TTL by June 30, 2010. WB 5/31/10 Planned Amend environmental category from C to B and extend closing date by 12 months. WB 5/31/10 PRIVATE SECTOR COMPETITIVENESS PROJECT 2 Downgrading PDO and IP to Unsatisfactory. WB Next mission Letter sent KIBP tender documents, including design of treatment plan, to be urgently designed and reviewed by Senior UIA (4/6/10) to Technical Advisor. MoFPED Ensure that commercial legislation is enacted without further delays. MoFPED on all Ensure that activities under Uganda Registry Services Bureau (URSB) are fast-tracked (including hiring a change PCU issues manager). Ensure full compliance on environmental and social safeguards, including hiring of a social specialist. UIA Update procurement plan to revise dates for contract processes. PCU PRIVATIZATION AND UTILITY SERVICE REFORM PROJECT Undertake a technical study to inform GoU of potential measures to further reduce losses. Unless done by GoU, hire GoU/WB 5/31/10 consultant to undertake the analysis. - 79 - Action By Date Status Continuous updating of Sector Financial Model is necessary to provide analytical backing for sector investments with GoU/WB 5/31/10 mid- and long-term implications. Unless done by GoU, hire consultant to undertake the analysis. Prepare 2 pager for CMU on means to ensure financial neutrality (retail tariff vs. loss reduction). WB 4/30/10 Technical/legal advice to help in negotiating concession agreement GoU/MoF PUBLIC SERVICE PERFORMANCE ENHANCEMENT PROJECT Engagement at highest level of Government to ensure full buy-in and sufficient financing and to get implementation MoPS/ Ongoing back on track. MoFPED Continue to provide TA to strengthen procurement function. Management to review the procurement plan on a MoPS Ongoing regular basis to ensure that issues are addressed in a timely manner. An agreed action plan should be prepared and adhered to. The number of activities needs to be simplified. Hire an administrator to provide support to task managers. PCU Next mission Improve coordination between IPPS and IFMIS through an MOU to ensure that pilot sites for IPPS are available and MoFPED Next mission ready for construction. Update the Abbreviated Resettlement Action Plan for the National Records Center and Archives to account for PCU/WB Next mission inflation of entitlements from 2005. If necessary, amend FA to have Bank cover resettlement funds. Review the M&E for the project and adjust indicators where necessary. WB Next mission TTL should ensure that the correct credit amount is reflected in Bank systems (affects IDA balance and portfolio WB Ongoing indicators). EMERGENCY DEMOBILIZATION AND REINTGRATION PROJECT Keep MDTF open (even if no additional DP funds are added) as a rapid response funding mechanism should the WB 5/31/10 political situation deteriorate. Close PRDP TF as no action done by OPM. WB 6/30/10 Letter sent to OPM Prepare Q&E on Bank’s engagement in Northern Uganda for CAS discussion at the Board. WB 5/31/10 NORTHERN UGANDA SOCIAL ACTION FUND PROJECT 2 Ensure close coordination with OPM to facilitate implementation. WB Ongoing No replenishment of Designated Accounts unless 80% accounted for WB Ongoing The DFID Cofinancing Arrangement needs to be finalized and signed and the Development Credit Agreement WB/DFID 3/30/10 amended to reflect the additional funds. Publish contracts at community level (contract, unit prices, name of contractor, etc). PCU Finalize the ToR for the auditors. PCU 2/28/10 ROAD DEVELOPMENT PROJECT PHASE 3 Ensure sufficient budget for FY2010/11 to enable completion of works. MoFPED 6/30/10 Early delivery of Implementation Completion Report (ICR) to provide lessons, particularly of provision of WB 10/30/11 TA/institutional strengthening in the sector. - 80 - Action By Date Status KAMPALA INSTITUTIONAL & INFRASTRUCTURE DEVELOPMENT PROJECT Advance MTR to June 2010 WB/KCC Next mission Reduce turn-around time for procurement submission to no more than 3 weeks. WB (April, 2010) Amend FA to have Bank cover resettlement funds. WB Environmental safeguards training on relevant Uganda and IDA requirements PCU Prepare revised implementation and procurement plans to arrive as a realistic new closing date. PCU/WB Revise outcome indicators and targets for Component 2 as the ones related to secondary and tertiary drainage are no PCU longer relevant. Based on revised and realistic implementation and procurement plans, Government request for an extension of the GoU project closing date. LOCAL GOVERNMENT MANAGEMENT AND SERVICE DELIVERY PROJECT Increase LDG from the current UGS65 billion/annum to UGS100 billion. MoFPED Next mission Develop a strategic plan to build and maintain LG staffing levels. MoLG Engage on additional funding to cover cost overruns to the civil works (US$6.5 million). MoLG/ Secure needed funds for implementation of the Good Governance and Anti-Corruption Strategy. MoFPED Secure acceptable documentary evidence of ownership of land to enable works to move forward. MoLG Work with counterpart/provide assistance in strengthening procurement function. WB LAKE VICTORIA ENVIRONMENTAL MANAGEMENT PROJECT 2 Follow up on effectiveness issues in Uganda with Attorney General and Parliament. WB Ongoing Follow up on legal covenant on mechanism for monitoring water releases. WB EAST AFRICA TRADE AND TRANSPORT FACILITATION PROJECT Fast tracking of OBSB and weigh bridge components. Closely monitor implementation of Recovery Action Plan, WB including improved coordination and approval within GoU system, to ensure timelines are maintained, including a number of large procurement processes that will help speed up disbursements. Railway concession: Close follow up with government required to ensure progress. Need to consider if all indicators WB/IFC can be achieved. Continuous follow up with IFC on concession negotiations is required. Review M&E framework with regard to updating closing dates. PCU/WB Revised project costs: Follow up with counterparts to ensure additional funding is secured to address increased PCU project costs. Safeguards: Need for clarification regarding implementation and management of RAP. REGIONAL TRADE FACILITATION PROJECT Complete impact assessment. PCU Follow up with ATI on membership expansion and recruitment of CEO. WB Agree on follow up on communication issues. WB/AfDB - 81 - Annex 12: IFC Investment Program 2007 2008 2009 2010* Commitments (US$m) Gross 169.90 3.16 35.60 3.00 Net** 158.40 3.16 35.60 3.00 Net Commitments by Sector (%) GUARANTEE 1.51 100 15.74 100 LOAN 75.76 77.24 QUASI LOAN 22.73 7.02 Total 100 100 100 100 Net Commitments by Investment Instrument (%) Guarantee 1.51 100 15.74 100 Loan 75.76 77.24 Quasi loan 22.73 7.02 Total 100 100 100 100 * As of March 31, 2010 ** IFC's Own Account only Uganda Committed and Disbursed Outstanding Investment Portfolio As of 2/28/2010 (In USD Millions) Committed Disbursed Outstanding **Quasi Particip **Quasi Particip FY Company Loan Equity Equity *GT/RM ant Loan Equity Equity *GT/RM ant 1992 Aef clovergem 0.84 0 0 0 0 0.84 0 0 0 0 2007 Bujagali energy 100 0 30 0 0 55.25 0 30 0 0 2007 Celtel uganda 16.29 0 0 9.36 16.29 0 0 0 9.36 2007 Orient (U) 0 0 0 5 0 0 0 0 0 0 0 Dfcu bank 7.86 0 3 0 0 7.86 0 0 0 0 2008 Stanbic Bank (Celtel) 0 0 0 2.05 0 0 0 0 0 0 2009 Pine 2.5 0 2.5 0 0 0 0 0 0 0 2009 Umeme 25 0 0 0 0 5 0 0 0 0 Total Portfolio: 152.49 0 35.5 7.05 9.36 85.24 0 30 0 9.36 * Denotes Guarantee and Risk Management Products. ** Quasi Equity includes both loan and equity types. - 82 - Annex 13: CAS Consultations 1. The World Bank carried out CAS consultations with stakeholders in Kampala in December 2009 and March 2010. The stakeholders emphasized a role for the Bank in addressing the following challenges: commercialization of agriculture, infrastructure development, skills gaps, population growth, youth unemployment, and governance and anti-corruption. 2. Private sector representatives emphasized the difficult business environment due to high power tariffs, lack of effective transport opportunities, corruption, and the lack of skilled labor. Participants advised the Bank to focus on infrastructure, commercialization of agriculture, and improved access to finance. On the knowledge agenda, the private sector would welcome research on low-cost power generation, migration, and measures to improve vocational skills training and literacy skills. Further, the private sector would welcome a tougher stance on governance and anti-corruption. 3. Civil society organizations (CSOs) highlighted the following key issues: education and technical skills, youth unemployment, urbanization and associated challenges, infrastructure development and regional inequalities. Representatives would welcome a more prominent Bank role in oil management, governance issues, support to commercialization of agriculture and land reform, and access to energy for all. The Bank was also encouraged to provide more information about projects, enhance its communication strategy, and involve CSOs as partners in promoting the value for money agenda. Representatives recommended that the Bank should maintain focus on poverty reduction and apply more conditionality in its dialogue with the government. 4. Government representatives recommended that the Bank focus on transport infrastructure, including railways, energy, and the commercialization of agriculture. The Bank was encouraged to assist the government in addressing the demographic challenge, youth unemployment, and reproductive health. Participants emphasized the importance of the value for money agenda to reduce waste and corruption in service delivery, supporting vocational and technical skills training, tackling rapid urbanization, supporting regional trade, and addressing gender inequalities. Some participants were of the view that the Bank should be more selective and focus on infrastructure. 5. Members of Parliament encouraged the Bank to provide support to commercialization of agriculture, energy infrastructure, education including vocational training, addressing the demographic challenge, and knowledge products in the area of employment. They recommended that the Bank focus its lending on a few sectors. Finally, they highlighted the need to ensure equity amongst project beneficiaries and encouraged support to Parliament to strengthen its oversight role. 6. Development partners recommended a strengthened Bank role in the following areas: financial services, commercialization of agriculture and land issues, population and employment generation, good governance and public sector management, health and climate change. In addition, they recommended that the Bank contribute to analytical work highlighting how DP interventions contribute to alleviate bottlenecks towards achievement of the MDGs. 7. Country team governance consultations recommended using projects as entry points to enhance governance in sectors and piloting interventions on enhanced transparency and third party monitoring. The country team emphasized the need to be modest in expectations given the political economy challenges, upcoming elections, potential for government to be less responsive to advice given prospects of oil, continued weaknesses in institutions, and limited citizen engagement. - 83 - Annex 14: Governance Risk Assessment Matrix – Opportunities, Gaps, and Planned Actions Risks Opportunities Gaps Planned Actions 1. Procurement  Ongoing legal reforms to establish an independent  Systematic approach to  Strengthen and enforce procurement planning as a  Capacity constraints procurement complaints handling mechanism. identifying weaknesses at condition for budget release [under JBSF and in implementing  Regular value for money audits to be initiated by Office sectoral/ institutional level PRSC dialogue]. agencies. of the Auditor General (OAG) in a number of sectors.  Increasing interference  Scale up procurement audit efforts in particularly  Proposal to introduce  Enhanced capacity of Public Procurement Disposal Act could weaken PPDA problematic institutions (e.g. health and unrestricted use of (PPDA) to conduct procurement audits. capacity to withstand agriculture, perhaps water). “force account”  Establishment of Procurement Performance political pressure  Strengthen data sources and capacity for reporting increases Measurement System (PPMS) by Government.  Force account (FA) issue on procurement issues in a systematic manner. opportunities for  World Bank -funded project GAAPs to serve sector raises questions about  Commit to project-specific procurement actions corruption. entry points for procurement reforms. commitment to impacting on sectors through the GAAPs.  Limited compliance  Development partner dialogue on procurement reforms competition; but GoU  Scale down budget support in preference for with Procurement through Joint Budget Support Framework (JBSF). could limit FA through projects. Law. regulations 2. Corruption  Commitment and political will in MoFPED and OPM.  Inadequate data sources  Support development of the Data Tracking  Increased impunity  2011 elections to be debated on issues of good facilitate dialogue. Mechanism for tracking corruption trends. leading to public governance.  Anticipated oil revenues  Commit to development partner joined up action apathy.  Increased exposure through Public Accounts could outstrip Auditor against corruption.  Loss of government Committee probes, recovery efforts, judicial actions, General capacity to audit.  Influence OAG work plan and reporting including and donor funds at all sanctions, and media reports.  Weak enforcement of VFM reviews levels.  Government commitment to self assessment through AG/PAC, BMAU, IGG  Support development of OAG capacity to deal  High cost of doing value for money audits, BMAU processes, and and other with oil issues business, slowed development of the Data Tracking Mechanism (DTM). recommendations on  Development of PAC public relations capacity economic growth.  Name and Shame initiative by CSOs (ACCU). corruption. and greater use of special reports.  Capacity development support to OAG from NAO  Weak institutional  Address potential oil sector-related corruption (UK). capacity of anti-corruption through engagement on EITI-type actions. agencies.  CSO/NGO mobilization and capacity building. 3. Clientelism  Citizen dissatisfaction seen in increasing demands for  Inadequate systematic  Collective action with DP heads focusing on  Diversion of action from opposition. follow-up of reports of specific issues. government funds.  Increased attention to accountability for service Commissions of Inquiry  Third party monitoring of Bank-funded programs.  Inequitable delivery through performance contracting. increasing impunity.  Include IEC component in Bank funded projects. distribution of  Development partner dialogue under JBSF and PRSC  Increasing self censuring resources and on increased accountability and performance of media to avert clamp economic management. down. development.  Enhanced media reporting on corruption cases at both political and technical level. - 84 - Risks Opportunities Gaps Planned Actions  FINMAP II support to OAG, AG and demand side accountability. 4. Weak public sector-  Plan to enhance capacity of inspectorate departments  Capacity of inspectorates  Program of professional development support to management across government, very weak both in terms of accounting officers.  Unclear  JBSF commitment by government to review HR manpower and resources.  Use project GAAPs to introduce sector-wide accountability systems and process.  Inadequate financing for initiatives on performance management. structures.  FINMAP for strengthening financial management public sector reform.  Use of human resource actionable governance  Ineffective systems indicators to identify key bottlenecks and track supervision and  World Bank support to public sector reform and JBSF progress on their removal. enforcement of policy dialogue on public sector reform. decisions and sanctions. 5. Diversion of money  Government commitment to self assessment through  Not all local government  Strengthen capacity of CSO engagement in key from purpose reports from the OAG (Audit), Accountant General, finance and revenues are MDG sectors-  [includes districts, Internal Audit Reports, and BMAU which provide captured at the center.  Strengthening CS engagement in the oil sector. subcounty, or budget information on percentage of resources diverted from  District development plans  Development partner dialogue under JBSF and discipline, poor initial purpose. not plugged into central PRSC on comprehensive use of administrative planning, and plans  OPM to establish monitoring framework using JBSF government plans and sanctions. that are impossible in indicators. budgets. practice]  DFID proposed support to BMAU.  Ineffective use of punitive  NPA proposal to have the subcounty as the center for sanctions. funding, moving away from the district level. 6. Wage bill control  Open engagement on issues of pay reform across the  Issues of actual pay not on  Realistic engagement on issues of pay and pay and ineffective pay board. the table for discussion. reform as a critical entry point in addressing reform measures  Increased demand for better service delivery linked to corruption and poor performance.  Both high level and pay drawing from institutions like OAG and National low level corruption. Water and Sewerage Corporation.  WB - Integrated Personnel and Payroll System (IPPS) - cleaning up the pay roll. 7. Weak civil society  Local umbrella organizations such as ACCU and  CSO capacity to  Capacity building of CSOs, particularly on oil  Challenge of capture. Regional Anti-Corruption Initiatives (e.g. in Rwenzori systematically engage on sector management (through a development  Challenge of (RAC), Teso (TAC), monitor corruption trends. key issues, e.g. on impact market place- type initiative) resources.  Engagement of CSOs in key health and transport sector of oil.  Engagement of CSOs in policy dialogue at the  Limited entry points as part of GAAPs,  Absence of CSOs in key various sector forums for citizen  Government commitment to bring CSOs on board forums, e.g. sector engagement. under NDP. working groups in roads,  Norway to fund CSO engagement in oil sector. health, and oil sectors. - 85 - Annex 15: Summary of Non-Lending Services Product Completion FY Cost (US$000) Audience a Objective b Recent completions Country Economic Memorandum 2007 1,378 G, D, B, P KG, PS, PD Public Expenditure Review (education) 2008 654 G, B, D KG, PS Financial Sector Study 2009 175 G, B, D KG, PS Public Expenditure Review (agriculture) 2009 141 G, B, D KG, PS PEFA Indicator Update 2009 1 G, B KG, PS Investment Climate Assessment 2009 146 KG, PS Poverty and Inequality Study 2009 353 G, D, B, P KG, PS Public Expenditure Review (health) 2009 424 G, B, D KG, PS TA - Governance and Anti Corruption 2010 G, B, D KG, PS TA- PPP and Capital Markets 2010 G, B, D KG, PS Planned Public Expenditure Review (roads) 2010 G,D, B, P KG, PS, PD Water Country Assistance Strategy 2011 G, B, D KG, PS CEM Follow up: Making Growth More Inclusive 2011 G, B, D, P KG, PS Demography and Growth 2011 G, B, D, P KG, PS, PD Environment and Growth 2011 G, B, D, P KG, PS, PD FSAP 2011 G, B, D, P KG, PS, PD Policy Notes: Petroleum Sector 2011 G, B, D, P KG, PS Regional Integration, Trade and Growth in Great Lakes Region 2011 G, B, D, P KG, PS PER: Public Investment Programming 2011 G, B, D, P KG, PS TA - Programmatic Poverty Support 2011 G, B, D, P KG, PS TA - Governance and Anti-Corruption 2012 G, B, D, P KG, PS PER: Decentralized Service Delivery 2012 G, B, D, P KG, PS, PD Youth and Unemployment 2012 G, B, D, P KG, PS, PD TA: Water for Production 2012 G, B, D, P KG, PS, PD Tourism study 2012 G, B, D, P KG, PS, PD Policy Notes: Petroleum Sector 2012 G, B, D KG, PS TA: Governance and Anti-Corruption 2012 G, B, D KG, PS Policy Notes: Petroleum Sector 2013 G, B, D, P KG, PS Agricultural Sector Review 2013 G, B, D, P KG, PS PER (Focus TBD) 2013 G, B, D, P KG, PS, PD TA: Governance and Anti-Corruption 2013 G, B, D KG, PS CEM (focus on petroleum sector) 2014 G, B, D KG, PS, PD PER (Focus TBD) 2014 G, B, D, P KG, PS, PD TA: Governance and Anti-Corruption 2014 G, B, D KG, PS a. Government, Donor, Bank, public dissemination. b. Knowledge generation, public debate, problem-solving. - 86 - Annex 16: IDA Summary Program (FY11-FY15) Strategic Rewards Implementation Fiscal year Project US$(M) (H/M/L) Risks (H/M/L) 2010 Agricultural Technology and Agribusiness Advisory Services 120 M H Health Systems Strenghtening Project 130 H M Transport Sector Development Project 190 H M Regional - East Africa Agriculture Productivity Project 10 M H Regional - Eastern Africa Health Laboratory Netw orking Project 3.3 M M Result* 453.3 2011 PRSC 8 120 M M PRSC 9 100 M M Electricity Sector Development Project 90 M L Transport Sector Development Project Additional Financing 120 M L Result 430 2012 PRSC10 100 M M Municipal Infrastructure Development 150 M M Pow er Sector Support 100 H M Petroleum Sector Support 30 H M Regional - East Africa Transport Links 25 M M Regional - Reg. Communications Infrastructure Program 30 H M Result 435 2013 PRSC11 100 M M Water Sector Development and Management Project 130 H M Private Sector Competetiveness III 50 H M Forestry/Natural Resource Management 50 Kampala Institutional and Infrastructure Development APL II 40 Post Primary Education APL II 100 M L Result 470 2014 PRSC12 100 M M Transport Sector Development Project II 130 H M Local Government and Capacity Building APL II 115 M M Agriculture Sector Support 50 Energy for Rural Transformation 40 H M Result 435 2015 PRSC13 100 M M Northern Uganda Integration and Grow th 100 H M Result 200 Overall Result (FY11-15) 1970 * Includes $70m Crisis Response Window (CRW) funds ** Covered by JICA. - 87 - Annex 17: IDA Lending by Objective NDP Objectives CAS Outcomes Project Financial Year 2010 2011 2012 2013 2014 2015 Totals22 CAS Strategic Objective 1: Promote inclusive and sustainable economic growth 365 Enhance the availability of gainful 1.1. Improved conditions for private Private Sector Competiveness III 50 50 employment (ii) sector growth 1.2 Improved inter connectivity for East Africa Transport Links 25 55 Improving stock and quality of the regional trade Regional Communications and Infrastructure Project 30 economic infrastructure (iv) Agriculture Technology and Agribusiness Advisory 120 1.3 Increased productivity and Service Enhancing human capital 50 commercialization of agriculture Regional East Africa Agriculture Productivity Project 10 development (iii) Agriculture Sector Support 50 Promoting sustainable population Natural Resource Management and Forestry 50 1.4 Increase efficiency of natural and use of environmental and Petroleum Sector Support Project 30 210 resource management natural resources (viii) Water Resource and Management Project 130 CAS Strategic Objective 2: Enhance Public Infrastructure 770 Electric Sector Development Project 90 2.1 Increased access to electricity Energy for Rural Transformation III 40 230 Improve the stock and quality of Power Sector 100 economic infrastructure (iv) Transport Sector Development Project 190 2.2 Improved access to and quality of TSDP Additional Financing 120 250 roads Transport Sector Development Project II 130 Municipal Infrastructure Development project 2.3 Increased access to and quality of 150 290 Increase access to quality social water and sanitation services Northern Uganda Integration and Growth 100 services (v) 2.4 Increased access to and quality of key Kampala Institutional and Infrastructure Development 40 urban services Project APL II CAS Strategic Objective 3: Strengthen Human Capital Development 100 3.1 Improved access to quality of primary UPPET APL III 100 Increase access to quality social and post-primary education 100 services (v) Health Systems Strengthening Project 130 3.2. Strengthened health care delivery East Africa Public Health Laboratory Networking 3.3 CAS Strategic Objective 4: Good Governance and Value for Money 735 4.1. Strengthened accountability, LGMSDP APL II 115 115 Strengthen Good Governance, procurement and management of financial defense and security(vii) and human resources PRSC 8 120 620 PRSC9 - PRSC13 100 100 100 100 100 Grand Total 453.3 430 435 470 435 200 1970 22 Includes FY11-FY15 only. - 88 - Annex 18: Division of Labor with Development Partners Lead Role in Sector  Active Engagement in Sector Planning New Engagement Leaving Sector Future Lead Role Active Engagement in Subsector Funding of a sector programme Ac Fu t iv Ac nd e  E Se Pl a t iv in g c to ng e  E Ac nn   of ag W r L tiv in ng   a  or em ea g n e D ag Se l d  en d  i em ew c to Fo Ps t s  n  F od  in  en en r P in   Y  2 Le m  P r  FY ts  ro ga S Ne av m 00 ub W og in   gr 20 ge UN ing e UN th or se 8/ a S Ge UN r am De 08 m UN UN UN UN ec er ‐O l d  Be UN Sw c  Se No 20 ‐W UN en Au Ic e Ire Ja p UN UN UN /0 to rm nm Fr IF E l an to AI HC ‐I D Ba me lg i HC ‐IF 09 ed ‐F A c to rw ts r Af an HO 9 str l an la n IC r DS an It a an DP US EP FP u M ar k IM nk ds HR O* AD en R* DB ay EF ce UK Sectors and subsectors m EC ia r O * y d d ly * * A * * 1 * A F 1. Security 3 0 1 2 0 0 1 2. Roads and Transport 5 1 3 0 2 1 1 8/9 10 9/10   3. Agriculture 13 3 6 4 0 0 3 8 9 4. Education 11 2 5 3 1 0 2 10/11 8 9/10 5. Health 16 2 10 2 0 1 3 10 9+9/10 10/11 6. Water and Environment 6.1 Water and sanitation 8 1 7 0 1 2 11/12 10/11 8/9 9/10 6.2 Environment/Climate change 7 1 6 0 1 0 8/9 12/13 7. Justice, Law and Order 10 1 7 2 0 2 1 10/11 8/9 8. Accountability 6 0 4 2 0 3 0 10/11 8.1 Public Financial Management 3 3 0 3 0 0 0 8.2 Anti Corruption 3 1 0 1 0 0 0 9. Tourism, Trade and Industry 8 0 5 3 1 2 2 9 11 10. Information, Communication and Technology 3 1 1 1 0 1 0 10‐14 11. Energy and Mineral Development 6 1 4 1 1 2 1 8 9/10 12. Lands and Housing 3 0 2 1 0 1 0 13. Social Development 11 0 7 4 1 0 0 14. General Public Administration 2 0 1 1 0 0 1 15. Public Sector Management 15.1 Decentralisation 6 1 5 0 0 3 9/10 9 13 8/93 15.2 Public Service Reform 4 1 3 0 0 1 8/9 16. Parliament 5 0 3 2 0 0 0 9/10 9/10 Cross cutting issues 5.CC HIV/AIDS 18 1 9 8 0 0 0 8/9 8/9 13.CC Gender 10 1 7 2 0 1 0 8/9 DP active in sectors in FY2009/111 8 1 17 9 2 4 7 4 3 4 7 8 7 2 7 8 9 11 1 13 1 8 8 5 8 6 3 1 7 3 8 Sector Lead  1 0 4 2 1 0 2 0 2 0 3 1 0 1 2 1 1 2 1 3 1 0 0 0 0 0 0 1 0 0 0 Active Engagements in Sector 5 0 12 3 1 2 2 0 0 0 2 4 5 1 3 2 3 6 0 4 0 3 4 1 4 0 1 0 3 2 7 Active Engagements in Subsector 1 1 1 2 0 0 3 1 1 4 2 3 2 0 2 4 2 2 0 4 0 5 4 0 3 6 2 0 4 1 1 Planning new engagements 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 1 1 0 1 0 1 0 0 1 0 0 0 0 0 0 Funding of a Sector Programme 1 0 0 2 0 2 0 3 0 0 0 0 0 0 0 1 0 0 0 1 0 0 0 4 0 0 0 0 0 0 0 Leaving Sector 0 0 0 0 2 2 3 0 2 0 4 0 0 0 0 2 2 1 0 0 0 0 0 0 0 0 0 0 0 0 0 1  Active DPs in FY2008/09: includes engagements in all sector, subsectors and cross cutting issues: lead DP in FY2008/09 and future lead DPs, active in sector and subsector.  2   UNCDF are not resident and their engagement as subsector lead is therefore stated under UNDP. 3  The DPs in the Accountability sector will be represented by the chair of the PFM group under the LDPG and by the chair of the Anti Corruption group under the PDG. *   For DPs with  * information  on  concentration in  sectors refers to the years 2008/09 except when  specified  otherwise - 89 - Annex 19: CAS Completion Report - 90 - Annex 19: CAS Completion Report   Period Covered: FY2006‐FY2009  Document Date of the 2005‐2009 UJAS: December 14, 2005  Board Approval Date: January 17, 2006  CAS Completion Report by: Kasper Dalsten (AFMUG) and Jonas I. Parby (AFCTZ)  E XECUTIVE  S UMMARY   1. The  CAS  Completion  Report  (CAS  CR)  covers  the  four­year  FY2006­09  Uganda  Joint  Assistance  Strategy  (UJAS).    The  UJAS  was  aligned  with  the  five  pillars  of  the  Government  of  Uganda’s  Poverty  Eradication  Action  Plan  (2004):  i.  economic  management;  ii.  enhancing  production,  competitiveness  and  incomes;  iii.  security,  conflict‐resolution  and  disaster‐ management; iv. good governance; and v. human development.   2. Of  the  15  PEAP/UJAS  high­level  strategic  objectives  included  in  the  CAS  results  framework, three were achieved, eight were partially achieved, three were not achieved, and  for  one  strategic  objective  it  was  not  possibly  to  assess  progress.    Bank  contributions  to  the  achievement of the strategic objectives were rated satisfactory in four cases, moderately satisfactory  in  another  four  cases,  moderately  unsatisfactory  in  six  cases,  and  unsatisfactory  in  one  case.   Therefore,  Bank  contributions  to  achievement  of  strategic  objectives  included  in  the  CAS  is  rated  moderately satisfactory.   3. While  Bank  interventions  were  generally  implemented  successfully,  they  did  not  match  the  CAS  program,  which  covered  all  five  pillars  of  the  PEAP,  15  strategic  objectives,  40  outcomes, and 56 outcome indicators.  In addition, the CAS results framework was never refined as  intended,  thus  lacking  an  operational  framework  for  Bank  contributions  to  the  PEAP  outcomes.   Consequently, the CAS suffered from lack of focus and from being over‐ambitious.  4. The  Bank  delivered  a  larger  lending  program  with  fewer  projects  than  projected  in  the  CAS.    Apart  from  minor  gaps  in  project  preparation  and  supervision,  the  quality  of  project  implementation, outcomes and portfolio performance was generally satisfactory and cost effective.  The Bank delivered more IDA support to the energy, education and social  protection sectors, and  less  through  PRSCs  and  to  the  transport  sector  than  planned;  however,  this  in  part  reflected  the  Bank’s  flexibility  in  responding  to  changing  client  priorities.    While  portfolio  performance  was  satisfactory,  there  is  still  room  for  improvement  in  addressing  quality  of  project  preparation,  addressing effectiveness delay issues, and ensuring efficient project implementation.    5. The  Completion  Report  identifies  a  number  of  lessons  learned  to  be  taken  into  account  when  formulating  the  next  Country  Assistance  Strategy  for  Uganda.    The  most  important of these are the following:  i. A  joint  strategy,  elaborated  with  other  development  partners,  is  neither  a  necessary  nor  a  sufficient  condition  for  more  effective  aid.    Rather  than  spending  resources  on  elaborating  a  joint  strategy,  efforts  should  be  devoted  to  developing  an  operational  framework  for  alignment  with  the  national  development  strategy,  allowing  for  dynamic  changes, and for harmonization and coordination amongst development partners.  The Joint  Budget  Support  Framework  (JBSF),  and  the  GoU’s  Aid  Policy  currently  under  formulation,  are examples of operational frameworks, although lack of government ownership may be a  challenge.  ‐ 90 ‐    ii. Full  alignment  with  an  incomplete  and/or  irrelevant  national  development  strategy  should  be  avoided.    A  careful  assessment  of  the  completeness,  ownership,  and  strategic  relevance of Uganda’s new National Development Plan should guide the formulation of the  next CAS for Uganda.  iii. The  impact  of  a  CAS  may  be  reduced  in  cases  where  there  is  no  or  limited  selectivity.   The Bank should consider focusing its lending operations in a limited number of sectors.  iv. Credible,  concise  and  realistic  results  frameworks  for  the  CAS  and  for  individual  projects are essential for planning, monitoring and budgeting purposes, including realistic  targets for PRSCs with their relative short life‐cycle.  v. Successful  reforms  depend  on  strong  sector  involvement  and  ownership.    Therefore,  reforms  supported  under  PRSCs  should  be  linked  to  sector  strategies  or  specific  sector  investment  operations.    A  corollary  to  this  insight  is  that  long  term  sector  reform  issues  should  not  be  addressed  exclusively  through  APLs  or  SILs.    In  addition,  government  leadership is a prerequisite for effective reform in any sector.  vi. The  Bank  should  develop  a  country­focused  set  of  actionable  governance  indicators  (e.g. compliance with rules and laws) for specific sectors to enable tracking of progress on  the governance and anti‐corruption (GAC) agenda in the next CAS.  vii. Delays  to  effectiveness  of  lending  operations  have  affected  the  performance  of  the  Bank portfolio negatively throughout the CAS period.  These delays should be addressed  by  ensuring  early  involvement  of  relevant  stakeholders,  including  Parliament,  at  project  design and appraisal stages.   6. Box  1  below  summarizes  performance  of  the  Bank  and  the  Government  over  the  CAS  implementation period.  Box 1: Bank and Government Performance during Uganda CAS Implementation, FY2006­09  What did the Bank do well?   Quality and impact of analytical work: ESWs (CEM, PERs) had significant impact as evidenced in policy  priorities of GoU and in subsequent lending operations.   Supporting government reforms: sector dialogues led to reforms in some sectors (e.g. in roads,  education) but not in other sectors (e.g. health, agriculture).   Using PRSCs to address policy reforms with cross sectoral importance.   Post conflict development: the Bank played an important role in supporting GoU with post conflict  rehabilitation of northern Uganda.   Portfolio performance relatively good and disbursements higher than the Africa region average.  What did the Bank not do well?   Limited results focus: the Bank elaborated a joint assistance strategy in the spirit of the Paris  Declaration.  But the CAS was of limited operational value because of a weak results framework.  For  example, indicators were often irrelevant to planned Bank interventions; targets were too ambitious;  data for indicators was not available or not observed frequently enough to measure progress; or change  in indicators could not be attributed to Bank interventions.     Limited selectivity: the Bank was engaged in almost all sectors of the PEAP.  Alignment with the  government strategy does not imply that the Bank needs to have an active lending portfolio in all areas.   Limited focus on the governance agenda: the Bank lacked a clear focus for interventions to address  governance challenges and did not make much progress on advancing public service reform, good  governance and accountability.  ‐ 91 ‐    What did the Government do well?   Maintenance of stability and growth: the Government managed to maintain macroeconomic stability  and continuous growth with prudent fiscal policies.    Realignment of budget priorities towards infrastructure, in line with CEM and PER recommendations.   Suggesting and pursuing policy reforms in complex areas, including the roads and energy sectors.   Effectively achieved stability in northern Uganda.  What did the Government not do well?   PEAP as planning tool: the Government did not use the third PEAP as the central framework for policy  making, budgeting, implementation and review in the CAS period.   Limited results focus: no clear results framework to measure progress of PEAP implementation.   Implementation challenges: lack of effective coordination and clear division of labor between main  actors (MoFPED, OPM, NPA) led to weak implementation of the PEAP.   Inequality: the Government did not adequately address inequality, as evidenced by poverty headcounts  in the north and northeast.   Effectiveness delays were a recurrent problem during the CAS period, mainly due to long parliamentary  approval processes and lack of sufficient consultations between the Bank, relevant government  institutions and Parliament.  I.  I NTRODUCTION   7. This  Country  Assistance  Strategy  Completion  Report  (CAS  CR)  assesses  the  effectiveness  of  the  FY2006­09  Joint  Assistance  Strategy  for  the  Republic  of  Uganda (Report  No.  34310‐UG;  December  14,  2005),  henceforth  referred  to  as  the  UJAS  when  covering  the  entire  Joint Assistance Strategy, or the CAS when referring to the Bank‐specific part of the UJAS.1    8. The purpose of this report is to assess the overall performance of the UJAS and the Bank’s  contribution  to  development  results  in  Uganda,  and  to  present  a  set  of  lessons  for  future  Bank  assistance to Uganda.  9. The  Uganda  CAS  for  FY2006­09  consists  of  a  joint  part  (the  UJAS)  and  a  Bank  Group  specific  assistance  program.  This Completion Report considers achievements against both parts.   At  the  time  of  drafting  the  Joint  Assistance  Strategy,  UJAS  partners  consisted  of  five  bilateral  development  partners  (Germany,  the  Netherlands,  Norway,  Sweden,  and  the  UK),  the  African  Development Bank, and the World Bank Group.  Subsequently, in 2006, another five development  partners (Austria, Belgium, Denmark, Ireland, the European Commission) signed up to the UJAS.  10. There  was  no  CAS  Progress  Report (PR).  UJAS partners did not prepare a Joint CAS PR  because of limited interest in re‐opening the UJAS to lengthy re‐negotiations.  Bank staff considered  preparing a Bank‐specific CAS PR in FY08 and early FY09, but decided against it on the basis that a  new CAS would be prepared in FY09, leaving little time between the two documents.  However, the  Government eventually delayed the preparation of the NDP by two years, thereby delaying the CAS.  In hindsight, the Bank should have prepared a CAS PR regardless of the timing in order to sharpen  the results framework and realign Bank interventions.                                                                1 The main sources for the Completion Report are the following:  i. the Independent Evaluation Group (IEG) Uganda  Country Assistance Evaluation (CAE), 2001‐07 (Report No. 49395, dated August 11, 2009); ii. the UJAS Review (report  financed by the UK Department for International Development, DFID; final report dated January 20, 2009); iii.  Implementation Status Reports (ISRs) and Implementation Completion Reports (ICR); iv.  IEG reviews of ICRs; v. the draft  Country Results Management Review (CRMR); vi. the Evaluation of the Implementation of the Paris Declaration in Uganda  (Office of the Prime Minister, Uganda, May 2008); vii. the Independent Evaluation of Uganda’s Poverty Eradication Action  Plan (Oxford Policy Management, July 2008); and viii. inputs from the Uganda Country Team.  ‐ 92 ‐    11. The PEAP, the UJAS, and the  Bank  specific assistance  program had inadequate  results  frameworks.    The  UJAS  took  the  principle  of  strategy  alignment  with  the  national  planning  framework too far.  Full alignment with (a sub‐set of) an inadequate PEAP results framework meant  that also the UJAS results framework was inadequate, as outlined in more detail in paragraphs 23‐ 25  below.    With  an  unclear  results  framework  for  Bank  interventions  and  attributions,  the  evaluation of performance in this Completion Report has had to deviate from simple comparisons  of  status  with  targets  and  an  assessment  of  attribution,  as  baselines,  targets,  status  of  indicators,  and planned interventions are often unclear from the CAS results framework.  12. The remainder of this report is organized as follows:   Part  II  outlines  Uganda’s  long  term  development  objectives  and  the  alignment  of  the  UJAS/CAS with those objectives.   Part  III  reports  on  progress  towards  PEAP/UJAS  outcomes  and  assesses  to  which  extent progress can be attributed to Bank interventions.   Part IV assesses Bank portfolio performance over the CAS period.   Part  V  summarizes  lessons  learned  and  highlights  issues  that  should  be  addressed  in  the new CAS for Uganda.  II.  U GANDA ’ S  L ONG  T ERM  D EVELOPMENT  O BJECTIVES   13. Three  successive  Poverty  Eradication  Action  Plans  (PEAPs,  Uganda’s  Poverty  Reduction  Strategy  Paper,  PRSP)  have  guided  the  Government  of  Uganda’s  (GoU’s)  policies  since  1997.    The  first PEAP (PEAP‐97), pre‐dating the series of PRSPs, covered the period 1997‐2000.  The revision  in 2000, the PEAP‐00, covered the period 2000‐03, while the third, PEAP‐04, initially covered the  period FY2005‐08, but was extended first to the end of FY09 and subsequently to the end of FY10.  14. The  UJAS,  as  well  as  the  Bank  Group  specific  assistance  program,  were  both  aligned  with  the  five  pillars  of  the  PEAP­04:  i.  economic  management;  ii.  enhancing  production,  competitiveness  and  incomes;  iii.  security,  conflict‐resolution  and  disaster‐management;  iv.  good  governance; and v. human development.    15. While the long term strategic goals for Uganda have not changed per se since the UJAS was  prepared,  the  2004  PEAP  became  increasingly  irrelevant  in  the  political  landscape  since  the  elections  in  2006.    The  three  successive  PEAPs  were  all  formulated  in  a  no‐party  environment.   Since  the  2006  multiparty  elections,  the  Government  has  increasingly  measured  its  own  success  against  objectives  set  out  in  the  National  Resistance  Movement  (NRM)  manifesto  (launched  in  January 2006) and against sector specific policies and plans.    16. In  retrospect,  the  PEAPs  and  the  UJAS  should  have  focused  more  on  productive  sectors.    While  the  two  first  PEAPs  provided  adequate  frameworks  for  poverty  reduction  in  an  economy  still  recovering  from  an  extended  period  of  civil  wars,  further  sustainable  reductions  in  poverty  reduction  are  dependent  on  addressing  binding  constraints  in  the  economy.    This  was  highlighted  in  the  Country  Economic  Memorandum  (2007)  as  well  as  in  the  PEAP  evaluation  (2008).    17. The PEAP­04 and the UJAS would have benefitted from earlier delivery of the Country  Economic Memorandum.  The CEM was delivered in 2007, eleven years after the previous CEM for  Uganda.    Thus,  the  Bank  missed  an  opportunity  to  provide  inputs  for  a  better  prioritized  PRSP.   When  several  of  the  CEM  conclusions  began  to  be  reflected  in  the  national  budgets,  the  PEAP  became increasingly irrelevant as the overall guiding framework for the budget.  ‐ 93 ‐    18. The  UJAS  was  one  of  the  first  joint  assistance  strategies  elaborated.    UJAS  partners  deserve  credit  for  effectively  bringing  together  a  majority  of  the  most  important  development  partners  in  Uganda  in  an  attempt  to  improve  aid  effectiveness  by  strengthening  harmonization  between partners as well as alignment with the PEAP.  However, the UJAS was centered on three  principles,  which  were  at  best  only  partially  realized.2    In  hindsight,  therefore,  the  UJAS  could  be  said  to  be  premature.    For  example,  while  the  UJAS  outlined  joint  development  partner  commitments and aspirations to work more effectively towards the achievement of the PEAP goals  and objectives, the UJAS was not effective as an operational tool during implementation.  Further,  the  extended  deliberation  period,  and  associated  transaction  costs,  meant  that  the  UJAS  was  practically dated by the time it was published, by being fully aligned with a national development  strategy which had lost its relevance.  The expected complications associated with a revision of the  UJAS  meant  that  it  was  never  revised  in  light  of  the  changed  environment.    There  was  also  some  disappointment on DP side that GoU showed limited interest in engaging with UJAS partners over  UJAS implementation and other efforts towards improved aid effectiveness.  In practice, therefore,  the  joint  strategy  had  limited  operational  importance  amongst  partners,  and—according  to  the  UJAS review—appears not to have reduced transaction costs associated with aid on either GoU or  development partner side.  19. The  UJAS  was  weak  in  its  analysis  of  political  economy  issues  and  in  outlining  credible  responses  to  poor  governance.    The  joint  analysis  and  joint  risk  assessment  point  to  rampant  corruption  and  state  that  “[t]he  Government  has  failed  to  successfully  prosecute  a  single  high­profile  case  of  corruption…”.    At  the  time  of  drafting,  UJAS  partners  were  well  aware  that  increased political patronage could undermine the effective implementation of the PEAP.  Yet, the  UJAS response amounts to little more than dialogue, capacity building, and strengthening of public  financial  management  and  procurement  processes.    Elaborating  a  systematic  approach  to  dealing  with governance risks within the Bank’s mandate may also have been hampered by the decision to  formulate a joint strategy with agencies having different mandates from the Bank.  20. The  UJAS  outlined  joint  financing  scenarios (low case, base case, high case) intended to  provide  a  coordinated  response  to,  for  example,  GoU  failure  to  improve  governance  and  public  financial  management,  based  on  a  UJAS  assessment  framework.    The  assessment  framework,  however, depended on the annual PEAP Review which never transpired as intended, partly because  of  the  PEAP’s  incomplete  results  framework.    Consequently,  the  joint  financing  scenarios  were  never  implemented  as  intended,  as  demonstrated  by  three  UJAS  partners’  decisions  to  divert  assistance away from budget support in response to the 2006 elections.  21. The  Bank’s  lending  program  was  generally  relevant  to  Uganda’s  officially  stated  long  term development objectives.  As would be anticipated, projects delivered towards the end of the  CAS period were increasingly not foreseen at the time the CAS was drafted (see Figure 4 on page  113).  More importantly, projects delivered deviated from planned projects, cf. Figure 1 and Figure  2 below, where commitments are broken down by pillar and by sector board.3  Thus,   i. PRSCs  were  reduced  from  $600m  to  $460m.    Combined  with  the  increase  in  the  overall  program  from  $1,000m  to  $1,287m,  PRSC’s  share  of  overall  new  lending  in  the  period  declined from the planned 60 percent to 36 percent;                                                                 2 The three strategic principles for the UJAS are: i. a country‐owned and country‐led PEAP [in hindsight not the case]; ii.  more effective collaboration among development partners [realized] and with the government [not realized as witnessed  by GoU’s limited appetite for engaging with UJAS partners]; iii. focus on results and outcomes [never realized given the  inadequate and poorly monitored PEAP results framework].  3 The base‐case lending program for the CAS included a number of projects with no allocations (see CAS Annex B3, p. 91).   Therefore, some “new” operations, such as the NUSAF‐2 project, were in fact anticipated at the time of CAS formulation,  only under another name and with no indicative allocation.   ‐ 94 ‐    ii. delivered  commitments  under  pillar  2  almost  doubled  to  $470m  compared  to  the  plan  ($260m),  mainly  due  to  the  new  $300m  Power  Sector  Development  project  and  delays  to  planned road projects;  iii. NUSAF‐2  ($100m)  was  not  anticipated  and  explains  the  difference  between  planned  and  delivered projects under pillar 3/social protection;  iv. delivered  commitments  under  pillar  4  were  reduced  as  the  Public  Service  Performance  Enhancement (UPSPEP) project was reduced from $70m to $23m;  v. the non‐planned $150m Post‐Primary Education and Training (UPPET) project explains the  significant increase in delivered commitments under pillar 5/education.  Figure   1   –   Planned   and   Delivered   Commitments   by   Figure   2   –   Planned   and   Delivered   Commitments   by   PEAP/UJAS   Pillar,   FY2006 ‐ 09   Sector   Board,   FY2006 ‐ 09   US$m US$m 600 600 500 500 400 400 300 300 200 200 100 100 0 0 Pillar  1  Pillar  2 Pillar  3 Pillar  4 Pillar  5 ARD ED EMT ENV PS PRSCs SP TR UD (PRSCs) Planned Commitments Delivered  Commitments Planned Commitments Delivered  Commitments Note:   Technically,   PRSCs   are   under   the   Public   Sector   Governance   Board.    However,   due   to   the   prominent   role   of   PRSCs   in   the   lending   program   in   Uganda,   PRSCs   are   presented   as   a   separate   category.     22. This  deviation  between  planned  and  delivered  commitments  could  be  interpreted  in  different ways: with GoU priorities changing, the Bank was merely responding to client demands;  the change in client demands was a response to a  highly  relevant  non­lending  program; or the  deviation could be an indirect response to what was perceived as an increasingly inadequate CAS.     While flexibility in the lending program may have been the second‐best response to an inadequate  CAS, the absence of  a formal realignment  of the  CAS in response to  a CAS Progress Report meant  that  interventions  delivered  in  the  latter  part  of  the  CAS  period  lacked  a  strategic  framework  guiding interventions.  Having said that, all of the projects delivered were aligned with the strategic  objectives included in the CAS.  III.  P ROGRESS  A GAINST  CAS   O UTCOMES   23. The  assessment  in  this  section  focuses  on  progress  against  the  outcome  indicators  and  intermediate  results  outlined  in  the  UJAS  (Appendix  1  of  the  CAS:  World  Bank  specific  program).    The  PEAP  Results  and  Policy  Matrix  was  organized  around  the  five  pillars  mentioned  above, 15 strategic objectives, 51 outcomes, and 76 outcome indicators.  The World Bank specific  program of the UJAS was directly aligned with 15 of these strategic objectives, 40 of the outcomes,  ‐ 95 ‐    and  56  of  the  outcome  indicators.4    In  addition,  the  Bank  specific  program  included  a  number  of  qualitative and quantitative intermediate results, which are a sub‐set of policy actions in the PEAP  Result and Policy matrix.  With these limitations in mind, Annex 1 provides a summary of progress  against the 56 indicators included in the Bank specific program.  24. Assessing  progress  against  CAS  outcomes  posed  two  main  challenges:  i.  the  PEAP  results  matrix  was  never  completed;  ii.  the  Bank  specific  program  did  not  provide  a  clear  link  between  interventions and results.  Baselines and/or targets were missing for at least 31 indicators (41%) in  the  PEAP.    Alignment  with  an  incomplete  framework  meant  that  also  the  CAS  results  matrix  was  incomplete.  In addition, there was no clear link from Bank interventions and strategies/actions to  anticipated  intermediate  results  and  progress  on  the  outcome  indicators.    Because  the  indicators  chosen were those of the PEAP, attribution of Bank interventions could not always be assessed.5  25. The  Bank  specific  part  of  the  UJAS  recognized  the  lack  of  an  adequate  results  framework  against which the contribution of Bank interventions to PEAP outcomes could be assessed.6  Yet, the  UJAS  results  framework  was  never  refined  as  intended.    With  those  limitations  in  mind,  the  following sections consider to which extent Bank interventions during implementation of the UJAS  contributed to the outcomes as intended.  26. Bank contributions to the achievement of the strategic objectives were rated  satisfactory in  four cases,  moderately  satisfactory in another four cases,  moderately  unsatisfactory in six cases, and  unsatisfactory  in  one  case.    Therefore,  Bank  contributions  to  achievement  of  strategic  objectives  included  in  the  CAS  is  rated  moderately  satisfactory.    A  summary  of  CAS  outcomes  and  Bank  contributions is provided in Box 2.  Box 2: Highlights of CAS Outcomes and Bank Achievements by Pillar  Pillar 1: Macroeconomic Stability Consistent with Rapid Private­Sector Led Growth: Satisfactory   Macroeconomic stability continued to improve during the CAS period, following the trends of the  preceding decade. Almost all targets were achieved. Growth rates remained high throughout the period,  the fiscal deficit was reduced beyond target, government revenues increased slightly, and credit to the  private sector increased.   Policy dialogue, mainly through the PRSC instruments, and robust recommendations from analytical  work successfully contributed to a prudent fiscal and overall sound macroeconomic policy framework.  Pillar 2: Enhancing Production, Competitiveness, and Incomes: Moderately Satisfactory   Limited progress was made towards the outcome of increased private sector competitiveness, although  access to micro‐finance increased significantly.     The lack of a clear policy, strategic and institutional framework for the agriculture sector hampered  overall progress, despite the Bank’s contributions to research and advisory services.    Road infrastructure improved and the Bank played a major role in establishing the Road Development  Fund, which is essential for sustainability of road sector investments.  Access to electricity more than                                                                4 The results matrix for the Bank specific program of the UJAS has in some instances listed outcomes as strategic  objectives rather than following the distinction between strategic objectives and outcomes in the PEAP results  framework.  While the one‐to‐one relationship between indicators in the PEAP and the UJAS is maintained, headings and  groupings in Annex 1 differ slightly from Appendix 1 of the CAS.  5 The targets that were specified in the PEAP were for FY08.  With full alignment of the results framework, UJAS targets  were also for FY08, even though the UJAS covered FY2006‐09.  Dates for status of indicators are provided in Annex 1.  In  any case, it is the trend in indicators, rather than specific value in a single year, that matters for an assessment of progress  towards targets as outlined in the PEAP/UJAS.  6 UJAS, Part 2, paragraph 20: “In operationalizing the UJAS, the Bank in collaboration with the government and other  development partners will further refine its results framework presented in appendix 1.  This framework will establish a  more direct link between specific PEAP goals to government–led outcomes, and the contribution of Bank outputs to these  outcomes.” [Emphasis added].  ‐ 96 ‐    Box 2: Highlights of CAS Outcomes and Bank Achievements by Pillar  doubled, but still only 8% of Ugandan households have access to mains power.  Management of natural resources did not improve.  Deforestation, depletion of fish stock and declining  soil fertility remain major challenges.  Pillar 3: Security, Conflict­Resolution, and Disaster­Management: Satisfactory   The negative socio‐economic effects of the conflict in northern Uganda were reduced significantly due to  the cessation of Lord’s Resistance Army (LRA) hostilities.  This is reflected in the reduced number of  casualties from conflict, the reduced number of Internally Displaced Persons (IDPs), and the increase in  the number of former rebels and their collaborators resettled, having received amnesty.   Uganda has a strengthened policy framework to address conflicts and disputes as well as regional  disparities as reflected in the Peace Recovery and Development Plan (PRDP) and the Karamoja  Integrated Disarmament and Development Plan (KIDDP).   The Bank played a major role towards these achievements, mainly through interventions availing access  to improved social services for almost half the population of IDPs in northern Uganda.  Pillar 4: Good Governance: Moderately Unsatisfactory   Uganda has not witnessed progress in terms of tackling corruption, improving public sector  management or improving the justice sector, with almost all indicators showing lower scores compared  with the baseline year.  Policy dialogue under the PRSC process as well as Bank‐funded operations were  not able to provide significant momentum to the public service reform agenda, including good  governance and reduction of corruption.    Pillar 5: Human Development: Moderately Satisfactory   In the education sector, indicators on enrollment and coverage show improvements, but major  challenges remain with respect to completion rates.   Uganda has seen some progress in fighting HIV/AIDS and malaria, increasing immunization rates and in  reducing infant mortality.  However, the health sector still faces significant challenges, as witnessed by  high maternal and child mortality rates.    Coverage and access to water and sanitation have increased, but at a slower speed compared to earlier  periods.    27. The  World  Bank’s  Independent  Evaluation  Group  (IEG)  and  the  Operations  Evaluation  Department  of  the  African  Development  Bank  produced  a  Joint  Country  Assistance  Evaluation  (CAE) dated March 19, 2009, covering the period 2000 to 2007.  The CAE assessed Bank support to  Uganda under the FY01‐03 World Bank Country Assistance Strategy and the first two years of the  UJAS.  Main findings of the CAE are provided in Box 3.  Box 3: Uganda Joint Country Assistance Evaluation, 2001­2007  According to the CAE, the World Bank programs were effective in the areas of decentralization, public sector  reform, growth and economic transformation, education, and water and sanitation. IEG found that more  could have been done to help counter the perception of increasing corruption, improve power supply, reduce  transport costs, enhance agricultural productivity, and help with family planning and reproductive health.  The CAE rated the overall outcome of World Bank support moderately satisfactory.  IEG Recommendations:   Support GoU in developing an analytical framework to guide governance reforms.   Encourage and support GoU efforts to develop medium‐to‐long term master plans for infrastructure.   Encourage GoU to coordinate ongoing monitoring and evaluation initiatives by its development  partners in order to secure reliable monitoring and evaluation of its overall poverty reduction strategy.   Reinforce the effectiveness of general budget support as an instrument for minimizing transaction costs  and facilitating the use of country systems.  ‐ 97 ‐    28. The remainder of Section III  assesses performance against CAS outcomes.  Normally, such  an assessment would evaluate performance outcome by outcome.  However, with 40 outcomes and  56 outcome indicators, such an approach would lose sight of the bigger picture.  The performance  assessment is therefore organized around the five pillars and 15 strategic objectives, with reference  made to specific outcomes and outcome indicators where this is relevant.  A complete overview of  performance by outcome indicator is provided in Annex 1.  PILLAR 1: ECONOMIC MANAGEMENT  29. Fiscal  consolidation,  macroeconomic  stability,  and  significant  debt  relief  helped  foster  an  environment  conducive  to  a  growing  private  sector.    While  challenges  remain,  the  strategic  objective was generally  achieved.  The single strategic objective was highly relevant for the country  and as a prerequisite for the success of other Bank interventions.  Table   1   –   Summary   Assessment   of   Bank   Contribution   to   the   Strategic   Objective   under   Pillar   1   PEAP/UJAS Strategic Objective  Result  Bank Contribution  1.1: Macroeconomic Stability Consistent with Rapid Private‐ Achieved Satisfactory  sector Led Growth    30. While it is difficult to attribute macro‐level effects to specific Bank interventions, it is fair to  say that the Bank contributed positively and  satisfactory to the relatively good performance under  Pillar  1.    Policy  dialogue  in  connection  with  the  PRSC  series  entailed  agreement  with  GoU  on  the  MTEF,  annual  budget  executions  were  closely  monitored,  and  Poverty  Action  Fund  (PAF)  expenditures  consistently  exceeded  95  percent  of  appropriations  (although  public  administration  expenditures  exceeded  the  budget).    Further,  PRSC  prior  actions  underpinned  public  financial  management reforms, as further detailed in Box 4.  Box 4: The PRSC Series in Uganda  The World Bank has been applying Poverty Reduction Support Credits in Uganda since 2001.  While the  PRSC1‐3 series mainly focused on poverty reduction through human development improvements, PRSC4‐7  increasingly focused on supporting the growth agenda as a means to reduce poverty.  PRSC4‐7 thus focused  more on macroeconomic management, public financial management reforms, reforms to improve the  business environment for the private sector, and reforms for increased efficiency in service delivery.  The PRSCs supported an expansion of service delivery and led to an increase in poverty‐reducing  expenditures.  The expansion was largely pro‐poor and equitable, but was offset by poor quality of service  delivery, governance and human resource challenges, and limited impact on outcome indicators.  However,  the PRSCs proved useful for addressing cross‐cutting issues, which explains the expansion of the PRSCs’  policy action agenda.  Despite the above achievements, providing assistance through PRSCs in Uganda also entailed a number of  challenges.  For example, PRSCs did not facilitate governance reform, as the direct links between Bank  support and outcomes were not clear, as evidenced in disconnects between short term prior actions and long  term objectives.  Further, the PRSCs proved inadequate in dealing with specific health sector issues, for  example addressing human resource management issues as an impediment to effective service delivery.  Therefore, long term sector reforms are often better addressed simultaneously by development policy  lending and a sector specific operation supported by the Bank or another development partner.    The use of a results matrix as a performance framework has tended to create contradictory incentives. The  GoU sought to establish modest performance targets (especially with respect to governance), while the Bank  would push for more ambitious targets.  This led to dialogue giving too much attention to the details of the  assessment process rather than policy reform dialogue.   Finally, PRSCs suffered from a lack of clear and measurable outcomes, and an often rather weak connection  between policy actions and monitorable indicators in the PRSC matrices themselves. These challenges should  be addressed under the new PRSC8‐10 series. ‐ 98 ‐    31. As  outlined  in  Table  2,  progress  on  outcome  indicators  were  generally  met  save  for  a  few  exceptions.  Targets were all realistic if not slightly unambitious in some instances.  Table   2   –   Progress   on   Outcome   Indicators   under   Strategic   Objective   1.1   PEAP/UJAS Outcome Indicator  Baseline   Target   Status  Year/Source  (2002/03)  (2007/08)  Fiscal deficit (% of GDP)  11.3% 8.2% 5.1% FY08; IMF  Revenues (% of GDP)  12.0% 13.2% 12.8% FY08; IMF  Expenditures (% of GDP)  23.9% 21.8% 17.9% FY08; IMF  CPI inflation  5.7% < 5.0% 7.3% FY08 average; BoU Credit to private sector (% of GDP)  7.1% 10.4% 11.2% FY08; IMF  NPV of external debt (% of exports)  305.0% 238.0% 46.7% 2007; IMF/WB DSA   32. While the  fiscal  deficit was reduced to 5.1 percent of GDP, this was largely a result of poor  performance  related  to  government  expenditure  as  well  as  revenue  mobilization.    Government  revenues reached only 12.8 percent of GDP, against the rather unambitious target of 13.2 percent of  GDP  by  2007/08.    While  tax  administration  has  been  modernized,  low  revenue  mobilization  remains  a  challenge.    The  largely  informal  local  business  sector  remains  outside  the  scope  of  tax  collections and the majority of taxes collected are still trade related.  Government expenditures were  reduced  beyond  target,  largely  as  a  result  of  limited  absorption  capacity  hampering  the  planned  increase in development spending.   33. Although  core  CPI  inflation  reached  12.1  percent  by  end  June  2008,  and  the  average  for  FY08 reached 7.3 percent, this was largely attributed to the domestic energy crisis exacerbated by  high international commodity prices, and core CPI inflation had reduced to less than six percent by  early  2010.    The  fiscal  stance  and  prudent  monetary  policy  kept  inflation  at  reasonable  levels  without crowding out private sector finance.   Credit  to  the  private  sector increased to 11.2 percent  of GDP against a target of 10.4 percent by the end of FY08.  The growth in private sector lending is  attributed to prudent monetary and fiscal policies as well as increased competition in the financial  sector.    External  debt  was  reduced  to  46.7  percent  of  exports,  easily  surpassing  the  target  of  238  percent,  largely  due  to  debt  relief  under  the  HIPC  and  MDRI  initiatives.    Since  MDRI,  government  borrowing has been underpinned by a Debt Strategy (2007) underscoring fiscal consolidation and  limits new borrowing to concessional terms, except for infrastructure development.   34. Policy dialogue, mainly through the  PRSC instruments, and robust recommendations  from  analytical  work  have  contributed  to  a  continued  prudent  fiscal  and  macroeconomic  policy  framework  in  Uganda.    Focus  on  spending  on  public  administration,  efficiency  in  use  of  public  resources highlighted by the PERs, and improving procedures for public procurement, to an extent  helped  curtail  expansion  of  spending  in  non‐productive  areas.    Re‐orientation  of  the  budget  towards addressing infrastructure constraints is attributed to the CEM and the PER on fiscal policy  for growth.  According to the Diagnostic Trade Integration Study (2006), Bank support to the URA  Customs Modernization Program (under the East Africa Trade and Transportation Project) helped  improve  efficiency,  reduced  the  scope  for  corruption,  and  eased  cargo  tracking,    exchange  of  clearing  information,  and  revenue  collection.    The  Bank  contributed  to  increased  private  sector  access to credit through the Second Private Sector Competitiveness project (PSCP‐2).  This project  provided  technical  assistance,  training,  information  campaigns  and  support  to  business  development services via support to the Private Sector Foundation Unit.  35. Progress on CAS outcomes under Pillar 1 are sustainable as witnessed by Uganda’s ability to  weather  the  impact  of  the  global  financial  crisis.    Future  progress  depends  on  Uganda’s  ability  to  address road and energy infrastructure bottlenecks in particular and how successful the value‐for‐ ‐ 99 ‐    money  in  service  delivery  agenda  is  being  pursued.    The  management  of  potentially  significant  revenues from oil extraction poses an emerging challenge to macroeconomic stability.  PILLAR 2: ENHANCING PRODUCTION, COMPETITIVENESS, AND INCOMES  36. Under Pillar 2 of the CAS, the Bank sought to contribute to seven strategic objectives and 14  outcomes,  measured  by  20  outcome  indicators.    Several  indicators  are  missing  baselines  and/or  observations making it futile to assess performance based on the outcome indicators only.  Rather,  an assessment of progress towards each strategic objective, and the Bank’s attribution, is provided  in the following.  37. Most  of  the  PEAP/UJAS  strategic  objectives  were  not  achieved  or  only  partially  achieved.   Despite  this,  Bank  interventions  had  a  positive  impact  towards  meeting  the  strategic  objectives,  although links between interventions and  outcomes and strategic objectives are not always clear.   Delays  to  effectiveness  and  implementation,  poor  follow‐up  on  lessons  learned,  inadequate  attention  to  institutional  weaknesses  and  trying  to  achieve  too  much  means  that  the  Bank  contribution to the strategic objectives included in the Bank specific results matrix under Pillar 2 is  rated moderately satisfactory.7  Table   3   –   Summary   Assessment   of   Bank   Contributions   to   Strategic   Objectives   under   Pillar   2   PEAP/UJAS Strategic Objective  Result  Bank Contribution  2.1: Increased and more efficient private sector production Partially Moderately satisfactory achieved  2.2: Increased and more efficient agricultural production Not achieved Moderately satisfactory 2.3: Increased and sustainable fisheries production Partially  Unsatisfactory  achieved   2.4: Increased and more efficient production of non‐agricultural  Partially  Moderately unsatisfactory goods and services  achieved  2.5: Strengthened infrastructure in support of increased  Partially  Moderately satisfactory production of goods and services  achieved  2.6: Strengthened ENR management regime in support of  Not possible  Moderately unsatisfactory sustainable production of goods and services  to assess  2.7: Strengthened financial sector in support of increased  Achieved Satisfactory  production of goods and services    Strategic   Objective   2.1:   Increased   and   more   Efficient   Private   Sector   Production   38. Some progress was made towards increased private sector competitiveness.  Private sector  investment  rose  only  marginally,  but  value  of  exports  exceed  even  its  FY14  target.    On  this  basis,  strategic  objective  2.1  was  partially  achieved.    Bank  interventions  were  relatively  successful,  but  suffered  from  delays  in  implementation  and  did  not  quite  match  the  ambitious  agenda  for  Bank  contributions as set out under SO2.1.  For example, absolute performance against the  Ease  of  Doing  Business  indicators  improved  only  marginally,  while  relative  performance  gradually  deteriorated.   On that basis, Bank contributions to SO2.1 are rated moderately satisfactory.   39. Bank  lending  operations  under  SO2.1  consist  of  a  Regional  Trade  Facilitation  Project  and  the  Second  Private  Sector  Competitiveness  Project  (PSCP2).    The  former  successfully  set  up  the  African  Trade  Insurance  Agency,  facilitating  international  trade  by  providing  insurance  against                                                                7 Note that it is possible for the PEAP/UJAS strategic objective to not have been achieved, yet the Bank’s contribution  positive (MS or S), as long as the Bank’s contributions match the ambitions set out in the CAS.  This apparent disconnect is  a result of “over‐alignment” with the PEAP results matrix and does not necessarily reflect poor Bank performance in the  individual operations.   ‐ 100 ‐    political  risks.    The  latter  has,  among  other  things,  successfully  contributed  to  improved  GoU‐ private  sector  dialogue  via  the  Presidential  Investors’  Round  Table.    Other  achievements  include  support to the establishment of the  land and company registries and the credit reference bureau.   Financial deepening efforts were further supported by the IFC’s mortgage support program.     40. Non‐lending  activities  under  SO2.1  included  three  major  pieces:  Diagnostic  Trade  Integration  Study  (DTIS),  Options  for  Strengthening  the  East  African  Community’s  (EAC)  Trade  Integration,  and  the  Investment  Climate  Assessment.    Common  to  these  studies  is  that  they  need  closer review and follow‐up actions to achieve an impact.  In addition to these analytic pieces, the  Bank  provided  on‐the‐ground  advice  to  the  GoU  on  private  sector  related  issues.    Among  other  things, the Bank served as a member on the steering committee for a revision of the GoU’s Medium  Term Competitiveness Strategy.  Strategic   Objective   2.2:   Increased   and   more   Efficient   Agricultural   Production   41. The agriculture sector grew at an average annual rate of just 1.1 percent from FY03‐FY08,  significantly  lower  than  the  PEAP/UJAS  target  of  +3.8  percent.8    While  several  other  outcome  indicators  with  respect  to  agricultural  output  and  land  titling  were  formulated,  these  indicators  were not monitored and data are not readily available.  On this basis, SO2.2 was not achieved.    42. Bank  interventions  (the  National  Agricultural  Advisory  Services  Project  (NAADS),  the  Second  Agricultural  Research  and  Training  Project  (ARTP2),  and  PRSC  support  to  the  Plan  for  Modernization of Agriculture (PMA)), contributed towars policy reforms in the sector (fulfillment of  prior actions for the PRSC credits), sustaining a liberal trade and pricing policy, availing investment  resources,  and  provision  of  knowledge  and  advice.    In  particular,  Bank  interventions  provided  support to the following intermediate results: i. establishment of the National Agricultural Research  System (NARS); and ii. Expansion of the NAADS program to cover all sub‐counties.  Other aspects of  the agriculture agenda were addressed by other development partners (e.g. agricultural marketing,  livestock  services,  regulatory  services,  oilseeds  development,  rural  roads,  fisheries  etc.)    Thus,  despite the strategic objective not being achieved, Bank interventions largely delivered what they  set out to do.  Consequently, Bank contribution to SO2.2 is rated moderately satisfactory.  43. During the period, the Government pursued a liberal price and trade policy that supported  the agriculture sector.  Domestic prices for agricultural and food products were in line with border  prices adjusted to marketing costs.  In contrast to Kenya, where the state actively intervenes into  grain  marketing  through  the  National  Cereal  and  Produce  Board  (NCPB),  and  to  Tanzania,  which  bans  the  export  of  maize,  the  trade  policy  in  Uganda  remained  liberal,  with  the  Government  pursuing outward‐oriented policies through and beyond the EAC customs union.   44. A common weakness of the Bank’s interventions in the agriculture sector has been the lack  of a clear government policy framework regarding the roles of the public vs. the private sector and  overlaps in various programs.  Initially, the PMA was the agreed framework for the PEAP.  Over the  past couple of years, however, new initiatives for rural development have been introduced, namely  the Rural Development Strategy (RDS) and Prosperity for All (PFA).  These programs have almost  identical objectives and overlapping mandates.  In addition, recent government interference in the  sector  may  be  motivated  by  political  patronage  considerations  rather  than  ensuring  the  strategic  objective  is  met.    With  unclear  and  potentially  parallel  implementation  arrangements,  leading  to  significant duplication of efforts and wastage of development resources, there is an urgent need for  the  Government  to  clarify  its  policy  and  institutional  framework  to  facilitate  a  coordinated  approach to meeting the strategic objective.  Recognizing the need for a clear policy framework, the                                                                8 The growth rate of the agriculture sector over the period is disputed.  Whatever the correct growth rate is, it is likely to  be unimpressive and below the target of more than 3.8 percent per annum.  ‐ 101 ‐    Bank,  together  with  other  development  partners,  is  currently  engaged  with  the  Government  to  address these concerns in the Development Strategy and Investment Plan (DSIP) for 2009‐2014.  45. Non‐lending  activities  in  support  of  SO2.2  consisted  of  the  PER  on  Sustainable  Land  Management and an Agriculture Sector PER.  The findings of this analytical work has already been  feeding  into  the  preparation  of  the  next  phase  of  support  to  National  Agricultural  Research  Organisation (NARO) and NAADS, preparation of a project with the Ministry of Agriculture, Animal  Industry and Fisheries (MAAIF) to support core public functions, and the finalization of the DSIP.   46. The major lessons to be learned for the next CAS are the following.  First, despite the critical  role  in  supporting  technology  generation  and  dissemination,  it  is  critical  to  support  other  core  mandates of MAAIF under the proposed DSIP, such as animal and plant disease control, regulatory  services, water for agricultural production, sector statistics and monitoring and evaluation, etc. to  support  agricultural  growth,  including  the  desired  impact  of  research  and  advisory  services.   Second,  cross‐sectoral  support  is  required  to  enhance  lasting  agricultural  growth.    Better  rural  roads,  greater  access  to  electricity  and  communication  infrastructure,  more  and  better  marketing  infrastructure,  and  better  access  to  finance  in  rural  areas  are  urgently  needed  to  complement  agriculture‐related policy and lending activities of the Bank.  Third, an increasingly important factor  for agricultural development in Uganda is the recent surge in regional trade, notably with southern  Sudan and Kenya.9  Agro‐processing is another critical area for future support, but its success will  ultimately  depend  on  whether  concerted  efforts  on  supporting  rural  infrastructure  and  private  sector  development  are  made  to  enhance  pro‐poor  agricultural  growth.    Finally,  for  sustainable  impact  in  the  agriculture  sector,  and  to  support  commercialization  of  agriculture  in  Uganda,  the  articulation of a clear policy, strategic and institutional framework is a must.  Strategic   Objective   2.3:   Increased   and   Sustainable   Fisheries   Production   47. The fishery sector showed rapid growth rates with the value of fish exports increasing from  $88m in 2003 to $124m in 2008, after peaking at $146m in 2006.  While no indicator is assessing  the objective of  sustainable fisheries production, annual fish catch was 15% lower in 2007 than in  2004.  This reflects the continued depletion of fish stocks as a result of overfishing and use of illegal  fishing gears that end up catching immature fish, which in turn undermines the sustainability of the  fishery sector and fish exports.  On that basis, SO2.3 is only partially achieved.  48. The PEAP/UJAS outcome indicators for SO2.3 were included in the Bank specific program,  but the Bank has had neither lending nor non‐lending operations supporting this objective over the  CAS period.  The regional Lake Victoria Environmental Management Project (LVEMP) closed at the  onset  of  the  CAS  and  the  follow‐on  project,  LVEMP‐2,  will  only  become  effective  in  FY10.    This  demonstrates  that  CAS  alignment  with  a  government’s  development  plan  should  include  a  higher  degree  of  selectivity  rather  than  uncritically  copying  objectives,  outcomes  and  indicators.   Therefore,  under  this  strategic  objective,  the  CAS  was  neither  relevant  nor  realistic,  and  Bank  contribution is rated unsatisfactory.  Strategic   Objective   2.4:   Increased   and   more   Efficient   Production   of   Non ­ agricultural   Goods   and   Services   49. The PEAP/UJAS outcome indicators chosen to monitor progress against SO2.4 were mostly  inadequate.  Several baselines, target values, and statuses are missing, making it difficult to evaluate  progress  towards  the  outcomes,  cf.    Annex  1.    That  said,  some  progress  was  observed.    Thus,  the  number  of  tourists  visiting  Uganda  increased  by  65%  over  the  period  considered,  thus  exceeding  the target by a wide margin.  Further, the contribution to GDP from mining and quarrying increased  by 33 percent in real terms over the period consider.  On that basis, SO2.4 was  partially  achieved.                                                                 9 Uganda’s official exports to Sudan increased eleven‐fold from $22.7m in 2004 to $245.9m in 2008.  ‐ 102 ‐    Bank interventions were fairly successful but suffered from slow implementation, partly as a result  of poor stakeholder participation at project design stage (PSCP‐2).  Thus, the Bank’s contribution is  rated moderately unsatisfactory.   50. Bank  interventions  consisted  of  three  projects  carried  over  from  the  previous  CAS,  the  PSCP‐2,  the  Protected  Areas  Management  and  Sustainable  Use  (PAMSU)  project,  and  the  Sustainable  Management  of  Mineral  Resources  Project  (SMMRP).    There  were  no  non‐lending  activities  in  direct  support  of  SO2.4  and  no  new  lending  operations  were  approved  in  the  CAS  period under review.    51. Achievements of the PSCP‐2 include the reduced time to register a property; reduced time  to  register  a  business;  new  business  registrations;  and  support  to  MSMEs  under  the  Business  Uganda Development Scheme (BUDS).  Other components are performing unsatisfactory, including  the Kampala Industrial Business Park, and monitoring of project implementation suffers from poor  availability  of  data  on  the  chosen  intermediate  outcome  indicators.    The  PAMSU  project  has  suffered  significant  delays  in  implementation  but  is  showing  progress  towards  objectives.   Development  outcomes  of  the  SMMRP  are  mostly  satisfactory  if  delayed  and  the  project  faces  challenges over extension and additional financing, which was not yet approved by the end of FY09.   Strategic   Objective   2.5:   Strengthened   Infrastructure   in   Support   of   Increased   Production   of   Goods   and   Services   52. Bank support to infrastructure over the CAS period was aligned with outcome indicators for  road conditions, rural access to electricity, and freight carried by rail, cf. Annex 1.  Limited progress  and  some  deterioration  was  registered,  although  the  indicator  for  roads  in  good  condition  fluctuates  and  improved  in  the  latter  period.    Thus,  SO2.5  was  only  partially  achieved.    Bank  interventions  in  the  infrastructure  sector  were  largely  successful,  but  delays  to  implementation,  and timing and sequencing of interventions, could have been better.  Bank contribution to SO2.5 is  thus rated moderately satisfactory.  53. Bank  interventions  in  the  roads  sector  consisted  of  three  phases  of  the  Road  Development  Program  (RDP1‐3)  amounting  to  $263m,  the  Road  Sector  and  Institutional  Support  Project (RSISP), and the East Africa Trade and Transport Facilitation Project (EATTFP).  The RDPs  contributed to establish and/or upgrade a network of urban and rural roads, backed by analytical  work on the transport sector strategy, on environmental policy, and on management and financing.   Besides  improving  access  to  rural  and  economically  productive  areas,  the  RDPs  contributed  to  a  reduction  in  average  travel  time  and  transport  and  vehicle‐operating  costs.    Although  implementation  of  the  RSISP  has  suffered  from  significant  delays,  the  project  has  largely  been  successful.    Thus,  Uganda  National  Roads  Authority  was  established  and  operational  as  of  July  1,  2008; the Road Fund Act was approved by Parliament in June 2008 and gazetted in October 2008;  and the role of the Ministry of Works and Transport (MoWT) was redefined towards a regulatory  and  planning  body.  The  EATTFP  contributed  to  the  establishment  of  the  EAC  Customs  Union  and  reduced transit times for cargo traffic at border posts in the region.  54. Bank interventions contributed to improvements in the roads sector.  Despite this success, a  number  of  important  lessons  have  been  learned,  notably  with  regards  to  the  Adaptable  Program  Loan (APL): i. with the RDP phases being implemented in parallel, it was not possible to incorporate  lessons  learned  from  one  phase  in  the  design  of  the  following;  ii.  intermediate  triggers  should  be  defined  in  support  of  steps  needed  to  implement  the  reform  program;  iii.  establishment  of  new  institutions  is  a  lengthy  process;  and  iv.  it  proved  difficult  to  agree  with  the  Government  on  a  comprehensive  long  term  reform  program,  calling  into  question  the  appropriateness  of  the  APL  modality in this sector.  ‐ 103 ‐    55. In  addition  to  the  lessons  learned,  future  Bank  interventions  in  the  roads  sector  should  explicitly  seek  to  address  the  Government’s  limited  absorptive  capacity  in  infrastructure  investments and address the relatively high unit costs of road construction and rehabilitation.  56. The energy sector was the largest area of Bank interventions during the CAS period.  Three  projects were carried over and are now closed or fully disbursed: the Power Project 4 (PP‐4), the  Energy  for  Rural  Transformation  Project  (ERTP),  and  the  Privatization  and  Utility  Sector  Reform  Project (PUSRP).10  The $300m Power Sector Development Project (PSDP) and the Bujagali Private  Power Generation guarantee were delivered in FY07.  57. The  PEAP  recognized  that  energy  supply  is  critical  for  production,  competitiveness,  and  incomes.    In  2002/03,  only  3%  of  Ugandan  households  in  rural  areas  and  8%  in  urban  areas  had  access to grid electricity, while the rest relied on biomass and other renewable energy.  Uganda has  large  energy  potential,  notably  hydroelectric  power  potential,  and  the  Bank  CAS  supported  the  Government’s strategy to develop new energy resources.  Accordingly, operations (PUSRP) focusing  on improving the financial viability of the sector were implemented.  58. In  addition  to  financial  viability  of  the  sector,  there  was  a  strong  focus  on  expanding  the  quantity  and  quality  of  power  (PP‐4,  PSDO,  Bujagali),  as  well  as  on  increasing  access  (ERTP).   Strategically,  the  investments  served  to  bolster  Uganda's  private  sector  led  and  commercially  oriented energy sector structure and supported both long term generation development (PP‐4 and  Bujagali) and interim generation (PSDP).  The Bank collaborated closely with other members of the  Bank  Group  (IFC,  MIGA)  and  other  development  partners.    The  Bank  actively  supported  the  creation  of  an  Energy  Sector  Working  Group  (with  government  and  development  partner  participants) and has sown the seeds for a coordinated, collaborative future investment program by  financing the preparation of a Sector Investment Plan.    59. Achievements  include  the  following:  i.  through  the  ERTP,  the  Bank  introduced  a  cross‐ sectoral approach for access expansion, providing key stakeholders in the health, education, water,  agriculture, and local government sectors a direct role in planning and implementing their energy  investments; ii. the PP‐4 made major contributions to improve energy supply and strengthened the  borrower’s capacity to manage reform, privatization and development in the power and petroleum  sub  sectors;  iii.  PUSRP  contributed  to  an  improved  regulatory  framework  and  investments  in  the  distribution network are taking place.  In addition, initiatives to reduce technical and non‐technical  power losses were launched; iv. PSDP successfully contributed to the significant reduction in power  rationing, in light of delays to the Bujagali dam; v. the Bujagali hydro power project is expected to  provide least‐cost power generation capacity that will eliminate power shortages at the time of its  commissioning.11  60. Looking forward, the key area of emphasis will be access expansion and the generation and  transmission investments needed to support it.  There will also be an increased focus on regional  aspects  of  energy  development,  including  regional  interconnections  as  part  of  the  emerging  East  Africa  power  market,  and  also  assessment  of  domestic  generation  as  it  relates  to  the  regional  market.  61. The main lessons learned are that policy reforms should not be combined with SILs as this  tends to delay project implementation.  An example is inclusion of sector reforms in PP‐4 leading to  commitments beyond the control of the implementing agency, such as the completion  time of the  Bujagali  hydro  power  project,  and  reduction  of  distribution  network  losses.    These  sector  reform  issues  would  be  better  addressed  under  the  PRSC  policy  dialogues.    From  ERTP,  general  lessons                                                                10 The Privatization and Utility Sector Reform Project is technically not closed, as there is still a contingent credit.  11 For details on the Bujagali Inspection Panel case, see Box 5 on page 116.  ‐ 104 ‐    learned include the need for assessment of potential private sector investments in rural energy as  well  as  taking  into  account  institutional  capacity  of  implementing  agencies  at  the  project  design  stage.  62. Bank  interventions  in  the  railway  sector consisted of two IFC loans ($10m and $22m) to  Rift  Valley  Railways  (RVR)  to  finance  capital  expenditures  for  the  rehabilitation,  operation,  and  maintenance of the railway.  The IFC has also acted as an advisor to the Governments of Kenya and  Uganda  regarding  privatization  of  the  joint  Kenya‐Uganda  railway  line  (see  also  paragraph  155).   However,  since  RVR  has  experienced  severe  financial  and  operational  difficulties  as  a  result  of  mismanagement,  and  the  much  poorer  than  expected  condition  of  rolling  stock  and  tracks,  disbursement of the larger of the two IFC loans is pending restructuring  of RVR.   These activities  will carry over to the new CAS and results will only be realized then.  Strategic   Objective   2.6:   Strengthened   Environment   and   Natural   Resource   (ENR)   Management   Regime   in   Support   of   Sustainable   Production   of   Goods   and   Services   63. Incomplete  data  on  baselines,  target  values  and  status  makes  it  impossible  to  assess  to  which  extent  SO2.6  was  achieved.    Bank  interventions  did  contribute  to  their  stated  objectives.   However,  with  none  of  the  PEAP/UJAS  indicators  monitored  and  with  the  ENR  sector‐wide  approach (SWAp) dropped, Bank contribution to SO2.6 is rated moderately unsatisfactory.  64. Bank lending operations in support of SO2.6 consisted of the Protected Areas Management  and  Sustainable  Use  Project  (PAMSU)  and  the  Second  Environmental  Management  and  Capacity  Building  Project  (EMCBP‐2).    Both  projects  were  carried  over  from  previous  CASs  and  both  were  extended,  with  EMCBP‐2  receiving  additional  financing.    Bank  interventions  did  contribute  to  the  strengthening  of  institutional  capacity  of  the  main  regulatory  bodies  in  the  ENR  sector  including  NEMA, UWA and UWEC.  The Bank also contributed to the preparation and launching in 2008 of the  ENR Sector Investment Plan.  However, the ENR SWAp was dropped because of little interest from  the Government.   65. Lending  operations  were  planned  to  be  complemented  by  analytical  work  on  the  linkage  between  natural  resource  management,  growth  and  poverty  reduction  in  Uganda;  however,  this  ESW was never finalized and thus had negligible impact.  66. A major lesson learned is that environmental issues and concerns, including climate change,  are  closely  linked  to  sustainable  natural  resource  management.    In  the  rush  to  get  quick  results  from  national  development  efforts,  this  factor  is  normally  relegated  to  a  secondary  issue.    To  be  effective  and  achieve  the  desirable  results,  sustainable  ENR  programs  need  better  integration  in  other development efforts to have the desired impact.  Strategic   Objective   2.7:   Strengthened   Financial   Sector   in   Support   of   Increased   Production   of   Goods   and   Services   67. Micro  finance  institutions  (MFIs)  served  4.3m  clients  in  2008,  almost  a  five‐fold  increase  over just five years.  The single outcome indicator under SO2.7 thus exceeded the target and, by that  measure,  the  objective  was  achieved.    Bank  interventions  actively  supported  SO2.7  and  are  thus  rated satisfactory.  68. Bank lending operations in support  of SO2.7 consisted of PSCP‐2 (see paragraphs  34, 51).   Non‐lending operations in support of a strengthened financial sector included a number of studies  related to remittances, strengthening of the financial sector and associated reforms.  These enabled  stakeholders to focus on policy issues and provide a framework on the way forward.  For example,  work is being done to reform the pension sector and the anti money laundering bill is being tabled  to Parliament.      ‐ 105 ‐    PILLAR 3: SECURITY, CONFLICT‐RESOLUTION AND DISASTER‐MANAGEMENT  69. Under  the  single  strategic  objective  under  Pillar  3,  the  Bank  aimed  at  contributing  to  two  outcomes measured by three outcome indicators.  Most indicators did not have any baseline values,  but with targets indicating trends only, it was still possible to assess progress.  70. Improvement in the security situation in northern Uganda was reflected in progress on all  outcome indicators under Pillar 3.  The number of IDPs was reduced by 66% (almost 1.2m people  returned from IDP camps), the number of casualties as a result of the conflict was reduced, 95% of  former  rebels  and  their  collaborators  were  resettled  (having  received  amnesty)  and  economic  activity  in  formerly  conflict  affected  areas  increased.    Consequently,  the  strategic  objective  under  Pillar  3  was  achieved.    Bank  support  under  Pillar  3,  while  aided  by  positive  external  factors,  was  successful  in  supporting  improved  livelihoods,  the  return  of  IDPs,  and  reintegration  of  ex‐ combatants.  Therefore, Bank contribution under pillar 3 was assessed as satisfactory.  Table   4   –   Summary   Assessment   of   Bank   Contribution   to   the   Strategic   Objective   under   Pillar   3   PEAP/UJAS Strategic Objective  Result  Bank Contribution  3.1: Protection of persons and their property through  Achieved Satisfactory  elimination of conflicts and cattle rustling, resettlement of IDPs,  and strengthened disaster management    71. Bank  Support  under  Pillar  3  consisted  of  both  lending  and  non‐lending  products,  the  key  projects  being  the  Northern  Uganda  Social  Action  Fund  (NUSAF)  project  and  support  to  Amnesty  Commission  through  the  Multi‐country  Demobilization  and  Reintegration  Program  (MDRP).    The  key  non‐lending  products  were  the  Northern  Uganda  PER  and  a  study  on  northern  Uganda  on  “Land Policy and the Return to Peace”.    72. Given the importance of external factors in achieving the outcomes, it is difficult to attribute  progress to Bank interventions.  Nonetheless, it should be acknowledged that Bank alignment of the  CAS with Pillar 3 of the PEAP was highly relevant and timely.   73. The  support  provided  to  the  Uganda  Amnesty  Commission  through  the  Bank‐managed  Multi‐Country  Demobilization  and  Reintegration  Program  (MDRP)  contributed  to  the  return  of  former rebels to civilian life.  The Northern Uganda Social Action Fund (NUSAF) was able to allocate  resources increasingly to areas where displaced people (IDPs) returned when the security situation  allowed, following the initiation of peace talks between the GoU and the LRA.   74. The peace talks initiated in mid 2006, starting with a cessation of hostilities in August 2006,  contributed significantly to the increased security in northern Uganda.  That in turn led to increased  economic  activity  and  trade,  incentives  for  IDPs  to  return  to  their  original  settlements,  and  a  reduced number of casualties as a result of the conflict. These were positive exogenous factors that  contributed  to  the  achievement  of  CAS  outcomes  and  cannot  be  attributed  to  Bank  interventions.   The Government deserves credit for having included security and conflict resolution as a separate  pillar  in  the  PEAP‐04.    Similarly,  UJAS  partners’  decision  to  include  Pillar  3  and  align  operations  with  the  strategic  objective  paved  the  way  for  support  to  recovery  and  development  efforts  with  the cessation of hostilities.   75. The combination of one major lending operation (NUSAF) and a few smaller operations and  non‐lending products, notably the northern Uganda PER (NUPER) and the study on the implications  of  resettlements,  was  appropriate  in  supporting  GoU  in  the  effort  to  reduce  poverty  in  northern  Uganda and improve the security situation in the region.  The Bank was particularly successful in  contributing to improved livelihoods among households in northern Uganda: forty‐seven percent of  the population in northern Uganda, against a target of thirty percent, has improved access to social  ‐ 106 ‐    services  through  NUSAF,  and  the  MDRP  provided  reinsertion  support  to  almost  15,000  former  rebels and their collaborators.  The NUPER provided key inputs to GoU and development partners  in assessing the status and the gaps in resource flows from the central government, humanitarian  and  development  partners  to  northern  Uganda,  as  well  as  the  allocations  of  expenditures  in  the  region.  It also provided timely recommendations for the elaboration of the PRDP by GoU.   76. Aid coordination in northern Uganda remained a challenge throughout the CAS period, not  least in the process of development partners switching their focus from humanitarian assistance to  development  and  rehabilitation  efforts.    With  GoU‐elaboration  of  a  strategic  framework  for  recovery and development in northern Uganda, the PRDP, aid coordination is improving.  77. The implementation of NUSAF demonstrated that communities in a post‐conflict are able to  identify,  plan,  manage,  and  monitor  social  investments  well  suited  to  their  needs;  thus,  even  in  a  fragile environment, the right project design may contribute to improved bottom‐up accountability.  PILLAR 4: GOOD GOVERNANCE  78. Under Pillar 4 of the CAS, the Bank sought to contribute to six outcomes under two strategic  objectives,  measured  by  seven  outcome  indicators.    Several  indicators  are  missing  data  making  it  difficult  to  assess  performance  based  on  the  outcome  indicators  only.    Rather,  an  assessment  of  progress towards each strategic objective, and the Bank’s attribution, is provided in the following.  79. Limited progress was recorded under Pillar 4.  For example, there is a general perception of  growing corruption and the Government has failed to pursue any of several high‐profile corruption  scandals during the CAS period.  While to a certain extent this may be attributed to external factors,  the ambitious Bank agenda under Pillar 4 was not followed up with appropriate instruments and  interventions.    Consequently,  the  Bank’s  contribution  under  Pillar  4  is  rated  moderately  unsatisfactory.  Table   5   –   Summary   Assessment   of   Bank   Contributions   to   Strategic   Objectives   under   Pillar   4   PEAP/UJAS Strategic Objectives  Result  Bank Contribution  4.1: Strengthened legal and justice systems Partially Moderately unsatisfactory achieved  4.2: Strengthened public sector management and accountability  Not achieved Moderately unsatisfactory   Strategic   Objective   4.1:   Strengthened   Legal   and   Justice   Systems   80. Some progress was made on indicators towards the targets under SO4.1, although none of  the targets were actually met.  On that basis, SO4.1 was only  partially  achieved.  Bank contributions  did not match the ambitious objective and is therefore rated moderately unsatisfactory.  81. The  Bank’s  contribution  towards  SO4.1  consisted  of  PRSC  policy  dialogue  and  the  second  Private Sector Competitiveness Project (PSCP‐2).  These interventions contributed to the setting up  of the Anti‐Corruption Division of the High Court, improvements in the commercial court system to  reduce the case backlog and improved access to justice.  82. The  Bank  also  worked  on  a  knowledge  product,  the  Legal  and  Judicial  Sector  Assessment.   An unfinished draft was initially prepared by the end of FY05.  It was subsequently updated in FY08  and was circulated internally, but has yet to be disseminated to the Government.  The knowledge  product  was  intended  to  inform  the  sector  dialogues  and  Bank  interventions  going  forward.   However,  significant  delays  meant  that  the  assessment  had  negligible  impact  and  the  rather  late  internal  circulation  meant  that  there  was  a  gap  in  informing  policy  dialogue  and  Bank  interventions.  ‐ 107 ‐    83. A well‐functioning justice, law and order sector (JLOS) is an important complement to the  effectiveness  of  other  Bank  interventions.    Looking  forward,  therefore,  the  Bank  should  consider  providing  support  to  the  sector  beyond  the  PRSC  policy  dialogue,  coordinated  with  support  provided by other development partners.  Strategic   Objective   4.2:   Strengthened   Public   Sector   Management   and   Accountability   84. Progress on outcome indicators under strategic objective 4.2 showed limited progress short  of  targets  or  deterioration.    Indicators  related  to  corruption  and  local  government  revenue,  have  worsened  since  the  baseline  year.    Consequently,  SO4.2  was  not  achieved.    In  addition,  the  Public  Service  Reform  Program  (PSRP)  did  not  achieve  the  expected  results,  e.g.  failure  to  implement  results‐oriented  management  in  the  public  sector.    Although  semi‐external  factors  such  as  effectiveness  delays  partly  explain  the  Bank’s  limited  contributions  to  SO4.2,  overcall  Bank  contributions to SO4.2 are rated moderately unsatisfactory.   85. Bank  lending  operations  in  support  of  public  sector  management  and  accountability  included the second Economic and Financial  Management Project (EFMP‐2) and the second Local  Government Development Project (LGDP‐2), both carried over from previous CASs.    86. In  the  area  of  local  government  development,  the  Bank  used  a  combination  of  policy  dialogue  through  the  PRSCs  and  investment  lending  under  LGDP‐2  to  assist  the  Government  develop,  publish  and  roll‐out  the  Harmonized  Participatory  Planning  Guide  (HPPG)  to  improve  planning and budgeting at local governments (LG); implement the Fiscal Decentralization Strategy;  and the restructuring and support to the Local Government Service Commission to recruit new staff  to  operationalize  the  new  local  government  structures.    The  Bank  also  contributed  to  ensuring  compensation of LGs for taxes abolished.  87. The  EFMP‐2  successfully  contributed  to  improve  government  planning,  budgeting  and  financial  management.    Effective  since  FY00,  the  project  achieved  most  of  its  results  prior  to  this  CAS period.  Three other projects (KIIDP, LGMSDP, UPSPEP) were approved during the CAS period,  but  did  not  reach  effectiveness  until  November  2008.    Thus,  those  projects  did  not  deliver  any  results in the period under review.  88. The Public Expenditure and Financial Accountability (PEFA) assessment highlighted several  challenges relating to enhancing transparency in budget execution.  These issues are being followed  up with the PRSC‐8 operation, and the PEFA assessment provided insights to the design of the Joint  Assessment Framework under the Joint Budget Support Framework.    89. Bank  support  towards  improved  accountability  suffered  from  the  lack  of  studies  on  accountability  and  corruption  to  inform  PRSC  policy  dialogue,  even  if  the  issue  was  covered  indirectly  in  PERs  (e.g.  absenteeism  and  other  waste  in  the  education  and  health  sectors).    For  example,  baselines  on  locally  relevant  actionable  governance  indicators  need  to  be  established  prior to inclusion as prior actions in PRSCs.  90. In  order  to  support  strengthened  public  sector  management  and  accountability  in  the  future,  the  Bank  must  adopt  a  clearer  framework  with  actionable  governance  indicators  and  tracking mechanisms in support of the GAC agenda under the new CAS.  Not least in the run up to  general  elections  in  2011,  the  Bank  will  need  to  consider  its  role  vis‐à‐vis  other  development  partners with respect to advancing the GAC agenda in Uganda.       ‐ 108 ‐    PILLAR 5: HUMAN DEVELOPMENT  91. The  Bank  CAS  program  under  Pillar  5  included  14  outcomes  measured  by  20  outcome  indicators  grouped  under  four  strategic  objectives  relating  to  education,  health,  water  and  sanitation, and empowered communities.  As is the case for other pillars, several indicators did not  have a baseline and/or where not monitored.  92. Bank  interventions  under  this  pillar  consisted  of  lending  through  PRSCs,  stand  alone  projects, and non‐lending (e.g. PERs focusing on health and education, and water sector reviews).   The PRSCs were the main vehicle to support specific actions under the human development pillar.    Table   6   –   Summary   Assessment   of   Bank   Contributions   to   the   Strategic   Objectives   under   Pillar   5   PEAP/UJAS Strategic Objectives  Result  Bank Contribution  5.1: Better educated Ugandans  Partially  Satisfactory  achieved  5.2: Healthier Ugandans  Partially  Moderately unsatisfactory achieved  5.3: Improved access to safe water supply and sanitation Partially  Moderately satisfactory achieved  5.4: Revitalized community development function Not achieved Moderately unsatisfactory   93. Performance under Pillar 5 was mixed.  Only two out of 14 outcomes were fully achieved,  eight outcomes were partially achieved, while four outcomes were not achieved.  In particular, the  health  sector  and  community  development  saw  limited  progress.    The  Bank  made  significant  contributions  towards  the  progress  in  education  and  water  and  sanitation  through  lending,  PRSC  policy dialogue and through analytical work. However, support to the human development agenda  through  PRSCs  in  some  cases  proved  ineffective  in  targeting  systemic  impediments  in  service  delivery  within  the  sectors.  On  that  basis,  Bank  contribution  under  Pillar  5  is  rated  moderately  satisfactory.  Strategic   Objective   5.1:   Better   Educated   Ugandans   94. Progress was recorded on several of the PEAP/UJAS indicators for education.  Particularly,  the  target  for  primary  enrollment  was  surpassed,  while  the  target  for  secondary  enrollment  was  almost  met.  Primary  completion  rates  remain  low  (47%)  and  did  not  meet  the  target  (69%).   Results  for  post  primary  enrollment  and  completion  rates  as  well  as  tertiary  enrollment  were  slightly below target.    95. Uganda  has  made  progress  towards  MDG‐2  (primary  school  completion)  in  terms  of  reaching full enrollment, but low completion rates continue to pose a challenge for the outcomes in  education.    Relatively  high  rates  of  girls  to  boys  at  all  levels  of  education  indicate  that  Uganda  is  making  progress  in  achieving  gender  equality  in  education  (MDG‐3).  Yet,  challenges  remain  with  regards  to  low  completion  rates  and  substandard  quality  of  primary  and  secondary  education,  including high rates of absenteeism of teachers and increasing pupil‐teacher ratios.  On this basis,  SO5.1 was only partially achieved.  96. Through  the  PRSCs,  the  Bank  provided  support  to  the  education  sector  reforms  including  undertaking the primary education curriculum review process and contributing towards sustained  resource  flows  to  the  sector.  The  focus  on  supporting  GoU  in  improving  the  quality  of  education  rather than just expanding coverage was a step in the right direction.  Other lending included the  Millennium  Science  Initiative,  which  led  to  some  improvements  in  the  quality  of  science  and  engineering  graduates,  science  and  technology  research,  and  coordination  of  growth‐oriented  science initiatives.  In addition, the Makerere Service Delivery Pilot Project, which was undertaken  ‐ 109 ‐    in  partnership  with  the  Rockefeller  Foundation,  supported  local  government  capacity  building  undertaken  by  universities  as  well  as  reform  of  education  and  training  activities  at  Makerere  University.  The project succeeded in establishing partnerships between universities on curriculum  reform and provided training to more than 2,000 academic and local government staff.    97. Among  the  analytical  work  undertaken,  the  PER  2007  pointed  to  inefficiencies  in  primary  education  such  as  teacher  absenteeism,  inefficient  teacher  deployment,  and  underfunding  of  non‐ wage expenditures in public schools.  Subsequently, the Bank initiated institutional support to the  Directorate  of  Education  Standards  to  strengthen  teacher  supervision  systems  through  partnerships with the Ministry of Local Government.   98. The  combined  lending  and  non‐lending  Bank  activities  under  SO5.1  were  relatively  successful, not only in implementing the strategies laid out in the CAS, but also through the policy  dialogue  with  GoU  in  terms  of  identifying  core  problems,  initiating  and  sequencing  reforms  and  addressing  quality  issues  in  the  education  sector.    On  this  basis,  the  performance  of  the  Bank  is  rated satisfactory.  99. Bank  interventions  in  the  education  sector  in  the  next  CAS  should  focus  on  quality  of  education, partnerships with the private sector to reduce the cost of education service delivery, and  efforts  to  track  and  address  education  unit  costs  and  quality  gaps.    Further,  interventions  should  include  strategies  for  school‐to‐work  transition  and  skills  training  (Business,  Technical  and  Vocational Education and Training).  Strategic   Objective   5.2:   Healthier   Ugandans   100. Only limited progress against the PEAP/UJAS outcomes were recorded under SO5.2, partly  explained  by  the  limited  availability  of  frequent  data.    Maternal  and  child  mortality  rates  remain  high and HIV/AIDS prevalence rates, which saw sharp reduction in the 1990s, recently increased.   At  the  current  pace,  Uganda  is  unlikely  to  meet  MDG‐4  (child  mortality)  and  MDG‐5  (maternal  health),  but  will  most  likely  achieve  MDG‐6  (combat  HIV/AIDS,  malaria).    However,  the  health  sector indicators could be argued to be too high‐level, unrealistic to meet over the short period, and  difficult to monitor on a timely and regular basis.  Further, an increase in HIV/AIDS prevalence rate  could reflect that more people now have access to ARVs even if the incidence is declining.    101. The sector faces a number of major challenges: governance and accountability problems are  rampant,  as  demonstrated  with  the  two  cases  of  misappropriation  of  funds  from  vertical  funds  (GAVI and Global Fund); population growth continues to increase the demand for health services;  and  the  sector  allocation  from  the  national  budget  is  declining.    Together,  these  challenges  contributed  to  the  poor  results  recorded  in  the  sector,  which  is  therefore  assessed  to  be  only  partially achieved.   102. Bank assistance towards SO5.2 was mainly provided in the form of: i. support through the  PRSCs;  ii.  the  Uganda  AIDS  Control  Project  (UACP);  and  iii.  economic  sector  work  in  the  form  of  annual health sector reviews, the 2008 health sector PER, and the Health Systems Support report.   While  providing  analytical  advice  and  support  to  the  Health  Sector  Investment  Plan,  Bank  interventions  were  not  fully  effective  in  achieving  the  targets  set  and  actions  planned,  which,  among other things, included support to reproductive health, family planning, malaria control, and  provision  of  skilled  health  workers.    On  that  basis,  Bank  performance  is  rated  moderately  unsatisfactory.  103. Through a combination of analytical work and the PRSCs, the Bank was partially effective in  shaping  the  policy  dialogue  and  agenda,  including  support  to  human  resources  management  and  procurement  reforms.    The  2008  health  sector  PER  documented  widespread  waste  and  absenteeism  in  the  sector  and  highlighted  resource  gaps,  and  the  policy  recommendations  now  ‐ 110 ‐    provide  the  foundation  for  sector  reforms  and  a  Bank  project  currently  under  preparation  to  support  health  systems  strengthening.    Further,  the  CEM  successfully  put  the  issue  of  high  population growth rates on the domestic policy agenda by adopting an indirect approach of looking  at the economic and fiscal consequences of unchecked population growth.   104. The  Uganda  AIDS  Control  Project  supported  capacity  building  at  central,  district  and  community  level  and  played  an  important  role  in  shaping  the  Government’s  response  to  the  epidemic, but most results were achieved under the previous CAS.  105. Lessons  learned  from  the  CAS  highlight  that  PRSCs  may  not  always  provide  the  optimal  instrument  for  addressing  health  specific  problems,  and  the  CAS  program  for  the  sector  was  not  realistic  and  commensurate  with  the  interventions  undertaken.    This  was  particularly  true  when  GoU’s  priorities  during  CAS  implementation  changed  towards  productive  sectors.    In  response  to  this and to GoU demands, the Bank is now preparing a standalone health sector project.    106. Looking  forward,  population  is  likely  to  play  a  prominent  role  in  the  GoU’s  NDP,  which  should be reflected in the next CAS.  However, rather than a stand‐alone issue, population should be  embedded in a broader cross‐sectoral framework looking not just at health and family planning, but  also focusing on youth unemployment, skills training, and public service delivery.  Strategic   Objective   5.3:   Water   and   Sanitation   107. While  some  progress  in  water  and  sanitation  were  noted,  the  results  fell  short  of  the  PEAP/UJAS  targets.    Nevertheless,  the  improvements  indicate  that  Uganda  is  on  track  to  meet  or  even  exceed  the  corresponding  MDG  targets,  e.g.  proportion  of  population  having  access  to  safe  water  facilities  (target:  62%;  status:  65%)  and  sanitation  facilities  (target:  72%;  status:  68%).   Significant  progress  was  recorded  on  improved  water  facility  maintenance  and  the  target  was  almost  achieved.    On  the  other  hand,  the  lack  of  progress  in  sanitation  provision  and  hygiene  mitigation  had  negative  effects  on  achievement  of  MDGs  in  the  area  of  infant,  child  and  maternal  mortality.    On  this  basis,  SO5.3  was  partially  achieved.    Bank  interventions  were  generally  successful,  as  interventions  were  able  to  address  sector  wide  challenges  such  as  an  insufficient  regulatory  framework  as  well  as  coordination  of  efforts  between  ministries.    Therefore,  Bank  contribution is rated moderately satisfactory.  108. The Bank provided support to the water  and sanitation sector via lending through PRSCs,  NUSAF, output‐based aid pilot projects to improve access to piped drinking water in small towns,  and analytical work.  The Bank  also  provided support through the Water and Sanitation Program  (WSP), focusing on strengthening the sanitation interventions of GoU.  WSP contributed to raise the  profile  of  sanitation  in  the  second  Health  Sector  Strategic  Plan  (HSSP‐II)  and  in  the  PEAP‐04,  leading to a better integration and efficient use of resource at district and sub‐district levels.   109. Through  policy  dialogue,  the  Bank  highlighted  the  importance  of  hygiene  and  sanitation  interventions, functionality of water facilities, value for money, better resource allocation between  sectors,  sector  capacity  building,  integrated  water  resources  management,  equity  issues,  and  governance  issues  in  the  sector,  and  linkages  to  the  Ministry  of  Health.    The  PRSC  and  SWAp  processes supported the development of improved and more specific sector plans.  Through PRSC  prior  actions,  debt  of  the  National  Water  and  Sewerage  Cooperation  (NWSC)  was  written  off,  making NWSC more attractive for private financing.  Further, the Bank assisted the Government in  creating  additional  pro‐poor  services  and  the  NWSC  created  a  pro‐poor  unit.    In  addition,  the  recommendations  of  a  study  on  governance  issues  and  service  delivery  in  the  sector  informed  sector planning and the draft National Development Plan.       ‐ 111 ‐    Strategic   Objective   5.4:   Community   Development   110. The Bank’s support towards SO5.4 was an integrated part of the PRSC series.  In addition to  lending, the Bank developed a policy note on Civic Engagement and Social Accountability.   111. PEAP/UJAS targets were not achieved and only saw very limited progress.  Thus, community  development  workers  and  community  development  management  committees  were  not  increased  in numbers, capacity and management as planned.  Bank contributions did not match the intended  objectives and is rated moderately unsatisfactory.  112. As  much  as  policy  reforms  were  expedited  and  completed  during  the  CAS  period,  only  limited progress was noted on actual implementation of policies.   Thus, the National Gender Policy  was  approved  in  2007,  but  the  policy  has  yet  to  be  implemented;  the  Equal  Opportunities  Commission  was  established  in  2007,  but  has  yet  to  be  operationalized;  the  Community  Mobilization  and  Empowerment  Strategy  was  only  partly  implemented;  and  the  Community  Development Policy was never finalized.  113. A number of factors have contributed to the lack of progress under this strategic objective: i.  the  Ministry  of  Gender,  Labour  and  Social  Development  is  very  resource‐constrained;  ii.  political  support  for  implementation  of  the  national  gender  policy  remains  vague;  and  iii.  the  increased  number  of  districts  have  put  districts  and  sub‐counties  under  increased  fiscal  pressure.    Despite  these challenges, Uganda launched gender budgeting as a cross‐cutting issue in the national budget  process in 2009.  114. The  PRSCs,  mainly  focusing  on  macro  level  reforms  across  financial  and  social  sectors,  do  not  seem  to  have  been  the  best  available  instrument  for  influencing  change  regarding  the  community development component of the PEAP.  In retrospect, using the existing interventions on  decentralization  and  public  sector  reforms  could  have  provided a  much  more  direct  and  possibly  more effective intervention.  115. The  policy  note  on  institutionalizing  Civic  Engagement  and  Social  Accountability  for  improved  development  outcomes  provided  specific  recommendations  to  GoU  on  harmonizing  collaboration for improved social accountability.  Some of its recommendations (e.g. elaboration of  NGO  policy  and  an  NGO  quality  assurance  certification  mechanism)  were  since  taken  up  by  the  Government and stakeholders, but otherwise the note suffered from lack of follow up in the policy  dialogue and lack of interconnection to other sectors and operations.   IV.  B ANK  P ORTFOLIO  P ERFORMANCE   VOLUME, LENDING AND COSTS – IDA  116. The  CAS  projected  new  IDA  commitments  to  reach  $1,000m  over  the  FY06­09  CAS  period.  By the end of FY09, actual new IDA commitments amounted to $1,287m, cf. Annex 2 and  Figure 3.  The increase in total commitments was largely due to the record amounts raised for IDA‐ 15 and to Uganda’s consistently high performance in CPIA ratings.12  The PRSCs were reduced from  $600m to $460m over the CAS period.  Combined with the increase in the overall program, PRSC’s  share of overall new lending in the period declined from the planned 60 percent to 36 percent.13                                                                 12 Uganda scored 3.9 in the IDA Resource Allocation Index every year from 2005‐08, consistently higher than the IDA  borrowers’ average of 3.3.  13 PRSCs 5‐8 were planned as single‐tranche one year operations each amounting to $150m.  PRSC5 and PRSC6 were  reduced by $40m in total, mainly due to limited follow‐up on prior actions by the Government.  The planned PRSC7 and  PRSC8 were merged in a dual‐tranche two‐year operation amounting to $200m (PRSC7).  See also paragraph 135 below.  ‐ 112 ‐    117. Nineteen  projects  were  planned  for  delivery  during  the  CAS  period  of  which  only  ten  were  delivered.14    However,  seven  new  projects,  including  two  regional  projects  and  three  additional  financing  operations,  were  delivered  over  the  period,  bringing  the  total  number  of  projects delivered to 17, cf. Figure 4.  A number of projects slipped one or two financial years, partly  because  preceding  projects  in  the  same  sector  experienced  implementation  delays  (e.g.  local  government and energy).  Figure   3   –   Commitments   and   Disbursements,   FY06 ‐ 09   Figure   4   –   Planned   and   Actual   Lending   Program,   FY06 ‐ 09   US$m 6 450 400 5 350 4 300 250 3 200 2 150 100 1 50 0 0 2006 2007 2008 2009 2006 2007 2008 2009 Planned projects Delivered projects Planned Commitments Delivered Commitments Disbursements Of which new projects Of which additional  financing   118. Allocations  by  sector  and  pillar  of  delivered  projects  deviated  substantially  from  the  planned  lending  program.  As detailed in paragraphs 21 and 22, commitments to projects in the  energy, education and social protection sectors significantly exceeded planned commitments, while  delivered commitments for PRSCs, public sector and the transport sector were lower than planned.   119. Total  projects  under  implementation during this period averaged 18 projects (only IDA  credits),  with  an  average  total  commitment  of  $1,276m.    World  Bank  Group  disbursements  to  Uganda during the CAS period amounted to $754m, in addition to IFC and MIGA guarantees, loans  and equities amounting to $164m and $171m respectively.  120. The  project  portfolio  consisted  of  twenty­two  IDA  lending  operations  at  the  end  of  FY09  (including  four  regional  projects  and  one  guarantee),  of  which  12  were  projects  approved  during  FY2006‐09.    According  to  ISRs,  fourteen  projects  were  rated  satisfactory,  five  moderately  satisfactory, one unsatisfactory, while two projects were not yet effective.   121. A  total  of  fourteen  projects  closed  from  FY06­FY09, cf. Annex 5.15  ICRs were available  for eleven of the projects that exited the portfolio, but only nine of these were reviewed by IEG, cf.  Annex 6.16  IEG rated outcomes of five projects (56%)  satisfactory, two projects (22%) were rated  moderately  satisfactory,  while  two  projects  were  rated  moderately  unsatisfactory.    These  ratings  were generally in accordance with ICR ratings, although there were three  disconnects, where IEG  rated  outcomes  lower  than  the  ICRs.17    Bank  performance,  borrower  performance,  and  quality  of  Bank  supervision  were  generally  rated  moderately  satisfactory  or  satisfactory  by  IEG  with  two                                                                14 Excluding the Private Power Generation Guarantee (Bujagali).  15 This excludes two GEF projects: Lake Victoria Environment and Energy for Rural Transformation.  16 At the time of CASCR finalization, ICRs were available for NUSAF and ERT, but no IEG reviews were yet available. Both  projects were rated Satisfactory. A joint ICR is under preparation for the PRSC 5‐7 series; thus, individual ICRs are not  available for PRSC5 and PRSC6.  17 Disconnects for the three projects are generally related to overambitious development objectives and targets, and  indications of performance targets not having been met.  ‐ 113 ‐    exceptions.    IEG  ratings  of  quality  at  entry  reveal  some  weaknesses,  notably  because  of  poor  monitoring  and  evaluation  (M&E)  quality  ratings.    The  main  problems  with  M&E  quality  were  related  to  inadequacies  and  lack  of  indicators  and  baselines  at  design  stage,  limited  follow  up  on  indicators during implementation, and insufficient utilization of M&E systems in terms of tracking  project outcomes.   122. Key  lessons  learned  from  projects  completed  and  evaluated  during  the  CAS  period  include the following:  i. APL  phases  should  be  executed  sequentially  and  not  simultaneously  to  allow  systematic  integration of lessons learned from one phase to the next.  ii. Well‐designed  risk  assessments  and  results  frameworks  are  crucial  for  success  in  implementation and lack of these may hamper project outcomes.  iii. When undertaking institutional reforms, it is crucial to take into account the existing level of  capacity  and  adequately  account  for  it  through  provision  of  technical  assistance.    In  addition,  project  designs  should  be  realistic  with  respect  to  institutional  reform  achievements and consider phasing of reforms and associated projects.  iv. The Bank should consider restructuring projects showing significant implementation delays.  v. Regional  projects  require  strong  emphasis  on  clarity  of  project  objectives,  M&E  frameworks, governance and management systems, and clear accountability structures.    123. These  recommendations  have  subsequently  been  addressed  through  the  introduction  of  standardized M&E reviews of all new project packages, application of coherent and sequenced APL  phases,  and  undertaking  restructuring  or  comprehensive  reviews  of  operations  that  are  significantly  delayed  (e.g.  UPSPEP).    The  challenges  identified  should  be  closely  monitored  under  the new CAS.  124. The  disbursement  rate  averaged  Figure   5   –    Commitments   and   Disbursements   FY90 ‐ 09   24.3%  over  the  period  reflecting  US$m US$m improvements  in  FY08  and  FY09.    The  1,500 300 disbursement rate for Uganda compares well  with  the  regional  average  of  21.9%  over  the  1,250 250 same  period.    In  a  historical  perspective,  the  1,000 200 Bank  increased  its  total  commitments  in  Uganda  to  an  all  time  high  of  more  than  750 150 $1.4bn  in  FY09  (cf.  Figure  5).    At  the  same  500 100 time,  the  number  of  national  IDA  operations  were reduced from 23 projects in FY01 to 16  250 50 by  the  start  of  FY10,  thus  indicating  a  trend  0 0 towards  fewer,  larger  projects.    Absolute  disbursements  reached  an  all  time  high  in  FY09,  although  disbursements  relative  to  Commitments Commitments  at  risk commitments only recently reached previous  Disbursements (right axis)   highs.    125. The  average  age  for  projects  closed  during  the  CAS  period  was  7.4  years (excl. PRSCs  and GEF), compared to the regional average of five years.  Further, only one of the projects exiting  the  portfolio  during  the  CAS  period  (excl.  PRSCs)  did  not  extend  the  closing  date.    This  reflects  delays to effectiveness and underestimation of implementation times.       ‐ 114 ‐    126. Project  portfolio  performance  has  been  satisfactory  overall,  cf.  Annex  4.    From  FY06‐ FY09,  five  to  thirty‐five  percent  of  projects  were  at  risk  and  six  projects  were  rated  as  problem  projects.    The  main  reasons  for  problem  status  were  effectiveness  delays,  implementation  delays,  and  slow  disbursements.    All  problem  projects  improved  their  status  quickly  due  to  proactive  interventions  from  project  teams,  as  evidenced  by  high  pro‐activity  rating.    The  (revised)  realism  index  stood  at  71  percent  by  the  end  of  FY09,  compared  to  the  43  percent  average  for  the  Africa  Region.  127. Project  preparation  and  supervision  costs.    Project  preparation  costs  (IDA  only)  averaged  $329,000,  compared  to  the  regional  average  of  $478,000,  over  the  period.    Average  supervision cost per project amounted to approximately $108,000, on par with the regional average  of  $103,000.    There  is  evidence  that  the  supervision  budget  provided  was  sufficient  and  ensured  good quality project supervision.  However, a safeguards review of the portfolio completed in FY09  indicated  that  while  safeguards  risks  are  generally  managed  well  in  the  portfolio,  some  projects  suffer  from  limited  and  inconsistent  supervision  of  safeguards  issues,  especially  for  social  safeguards (see also paragraph 135).  128. Effectiveness  delays.    At  the  end  of  FY09,  ten  of  the  projects  in  the  Uganda  portfolio  experienced effectiveness delays between eight and twenty‐nine months.18  Effectiveness delays are  usually  caused  by  delays  to  Parliamentary  approval,  a  requirement  for  IDA  credits  in  Uganda.    In  most  cases,  delays  were  due  to  inadequate  consultations  between  the  implementing  government  agencies  and  Parliament,  through  the  various  stages  of  project  preparation.    In  many  cases,  effectiveness  delays  increased  the  risk  of  subsequent  implementation  difficulties  and  need  for  thorough review or restructuring, as project relevance, priorities and appropriateness of design are  likely to decline over time.  However, given that parliamentary approval is required for all credits in  Uganda,  projects  under  the  new  CAS  should  anticipate  effectiveness  delays  in  the  project  implementation  plan  and  task  teams  should  encourage  involvement  of  major  stakeholders  at  the  design stage.   129. Economic  rate  of  return  for  investments.  Among projects evaluated by IEG, assessments  of economic rate of returns (ERR) were carried out for five projects.19  Findings show that all five  projects  had  an  ERR  within  the  margin  planned  from  the  outset,  with  four  projects  showing  a  higher ERR than anticipated.  130. M&E  issues  at  national,  CAS  and  project  level.  The Government focused on building the  necessary  capacity  for  monitoring  and  evaluation  of  the  PEAP  through  the  development  and  implementation  of  the  National  Integrated  Monitoring  and  Evaluation  Strategy  (NIMES).    Several  mechanisms were put in place including the creation of the National M&E Technical Working Group  to coordinate and improve the quality and use of M&E across Government, and the organization of  an Annual Policy Implementation Review (APIR) process to assess progress in the implementation  of  the  PEAP.    However,  major  challenges  in  tracking  the  progress  on  PEAP/UJAS  indicators  (and  thus the CAS indicators) appeared during CAS implementation, due to lack of baselines, timeliness,  and  frequency  of  indicators.    At  the  project  level,  monitoring  progress  on  outputs  and  outcomes  remains a challenge.  Monitoring and evaluation assessments and training were undertaken during  the  CAS  period,  and  project  teams  were  advised  to  retrofit  their  results  frameworks  to  refine  objectives and indicators, and improve project M&E systems.  However, for a few projects or APLs  with  several  phases  (designed  prior  to  the  CAS  period  assessed),  shortcomings  regarding  the  quality of the results frameworks were still observed, according to IEG ICR evaluations.                                                                18 Of the 17 national projects under implementation at the start of FY10, only seven were declared effective within the  required 90 days from signing of the financing agreement.  19 Second Local Government Development Project, Second Economic and Financial Management Project, Roads  Development Phase 1 and 2, and Power Project 4.  ‐ 115 ‐    131. Only  one  Country  Portfolio  Performance  Review  (CPPR)  took  place  during  this  CAS  period in December 2007.20  The CPPR contributed to improved project performance and dialogue  with the Government.  The Joint Portfolio Review of December 2007 identified weaknesses of the  Bank’s  portfolio  in  Uganda,  remedies,  agencies  responsible  for  actions,  and  a  timeline  for  implementation.    The  weaknesses  identified  included:  i.  inadequate  project  identification,  preparation and designs; ii. shortcomings in quality of results frameworks; iii. procurement delays;  iv.  inefficient  and  expensive  services  of  the  Bank  of  Uganda  (the  central  bank);  and  v.  local  knowledge and insights are often disregarded by the Bank.  The CPPR pointed to five key areas that  need continuous follow up:   i. compliance with project readiness criteria; ii. more effective project  management;  iii.  improved  procurement  management;  iv.  accelerated  implementation  of  an  anti‐ corruption framework; and v. strengthening M&E and results management in the Government and  the  Bank  ISR  process.    Project  coordination  units  were  set  up  within  relevant  government  ministries,  and  they  regularly  discuss  cross‐cutting  project  implementation  issues  and  follow‐up  actions  from  the  CPPRs.    The  Bank  has  increased  focus  on  governance  and  anti‐corruption  (GAC)  both  at  project  level,  sector  level  and  the  national  level.    Still,  the  Bank  could  have  done  more  to  follow up on the recommendations from the CPPR and review progress against the action plan.   132. A  Gender  Audit of the country portfolio was completed in June 2007.  The audit revealed  that  while  almost  a  third  of  the  Bank  projects  active  at  the  time  directly  addressed  the  most  pressing  gender  issues  in  the  country,  a  large  number  of  projects  do  not  systematically  integrate  gender  concerns  in  their  design.  The  Gender  Audit  Report  provided  recommendations  on  gender  awareness  and  capacity  building  among  project  staff,  application  of  gender  analysis  in  project  design  and  implementation  (including  M&E  frameworks)  and  strengthening  institutional  accountability  for  gender  mainstreaming  in  Bank  operations  (including  representation  on  project  beneficiary  groups,  integration  in  PAD,  and  use  of  gender  disaggregated  data).  Recommendations  were followed up in subsequent operations where relevant.  133. Financial Management. Ratings for safeguards and fiduciary aspects were satisfactory and  no  projects  had  any  substantial  issues  to  be  raised  regarding  safeguards  and  fiduciary  issues.  However, a few cross‐cutting issues in financial management are affecting implementation: i. Bank  of  Uganda’s  (BoU)  services  are  not  fully  satisfactory.    A  few projects  still  receive  bank  statements  with errors and there are instances of delays in crediting funds disbursed by the World Bank to the  projects’ special accounts.  BoU is at an advanced stage in procuring a new banking software system  to address this issue; ii. Internal audits.  Most projects that are mainstreamed within ministries do  not have their activities integrated into work plans of internal audit units to review their internal  control systems and ensure their adequacy.  The Office of the Auditor General, in collaboration with  the Bank, conducts annual financial audits and issues management letters to accompany the audits,  highlighting  the  internal  control  and  accountability  issues  therein.    In  case  of  risks  identified  and  requiring value for money or forensic audits, these are also commissioned.  134. The implementation of  procurement  streamlining  has significantly progressed during the  CAS period, but a number of challenges remain.  The focus on building a regulatory framework and  the  assignment  of  an  additional  Procurement  Specialist  at  the  World  Bank  Country  Office  strengthened procurement management in the Bank’s portfolio in Uganda.  However, procurement  delays  for  many  projects  have  resulted  in  late  delivery  of  the  required  items  (goods,  works  and  consulting services) to the intended beneficiaries, particularly in infrastructure sectors. Such delays  slow  down  project  implementation  and  are  due  to  a  combination  of  factors,  including:  i.  weak  project  management  oversight  and  procurement  capacity  among  project  staff;  ii.  challenges  associated  with  the  unique  and  innovative  nature  of  some  contracts,  e.g.  in  the  energy  sector;  iii.  inadequate  technical  skills,  and  iv.  poor  project  management.  The  Bank  will  continue  to  address                                                                20 Previous CPPRs in Uganda were completed in 2001 and 2005. A new CPPR for Uganda was completed in early CY10.  ‐ 116 ‐    these  challenges  through  support  via  specialists  based  in  the  country  office,  hiring  of  additional  consultants for complex projects, and introducing performance evaluation of project managers and  coordinators to improve results.  135. The  safeguards  portfolio  review  carried  out  in  FY09  found  environmental  and  social  risks of the portfolio well managed, with a high degree of compliance with the safeguards policies.  The  shortcomings  identified  through  the  review  included:  i.  weak  capacity  in  some  counterpart  agencies;  ii.  environment  assessment  mis‐categorization  of  several  projects;  and  iii.  safeguards  understaffing,  although  capacity  to  manage  safeguards  in  country  was  enhanced  by  posting  additional  safeguards  staff  in  the  Country  Office.    It  was  also  observed  that  while  safeguards  concerns are included during project preparation, there is limited supervision and follow up during  implementation,  partly  due  to  understaffing.    On  the  social  safeguards  side,  lack  of  a  national  resettlement policy continues to pose a challenge.  136. In  conclusion,  the  Bank  delivered  a  larger  lending  program  with  fewer  projects  than  projected in the CAS.  Apart from minor gaps in project preparation and supervision, the quality of  project  implementation,  outcomes  and  portfolio  performance  was  generally  satisfactory  and  cost  effective.  The  Bank  delivered  more  IDA  support  to  the  energy,  education  and  social  protection  sectors, and less through PRSCs and to the transport sector than planned; however, this was partly  explained  by  the  Bank’s  flexibility  in  responding  to  changing  client  priorities.    While  portfolio  performance  was  generally  good,  there  is  still  room  for  improvement  in  addressing  quality  of  project preparation and effectiveness delay issues, and ensuring efficient project implementation.    Box 5: Bujagali Inspection Panel Case  One major safeguard issue during this CAS was the Bujagali Inspection Panel Case. Responding to a request in  March 2007 from the National Association of Professional Environmentalists (NAPE), a Ugandan non‐ governmental organization, the Inspection Panel investigated the World Bank’s compliance with its  operational policies on potential environmental, economic, and social impacts.  The Panel found the Bank in  compliance with several policy provisions, including assessing project impacts on fisheries, establishing a  dam safety panel, issuing land titles to project‐affected people, and completing a baseline hydrologic data  series.  It also found a number of cases of non‐compliance such as assessments of project alternatives and  cumulative impacts, exclusion of Lake Victoria from the project’s area of influence, and in the assessment of  project costs, risks, and impacts on electricity tariffs.  The Panel commended the Bank for its work on  conserving the Kalagala Falls area as an environmental offset to the Bujagali project, responding to the  Panel’s earlier investigation. On December 12, 2008, the Board of Directors discussed the Inspection Panel  Report and the Management Response to the report.  The Board noted that the Bank should remain engaged  in Uganda’s energy sector, and some Board members expressed that the Bujagali project was an example of  an improved World Bank Group approach to infrastructure projects, and a commitment to address  associated economic, environmental, and social dimensions of development projects.  Members eventually  approved the range of actions set forth in the Management Response and the additional actions that  management intends to undertake in view of the Inspection Panel investigation and Board deliberations.21                                                                    21   The Bank team agreed on a Management Action Plan that includes: timely implementation of a sustainable  management plan for Kalagala Falls; updating and implementation of a cultural property management plan; and  undertaking an enhanced socio‐economic study to support and fully achieve livelihood restoration.  Management will  undertake these actions in consultation with the Government of Uganda, affected people and the project sponsor.  In  addition, management will develop guidance on how to address environmental and social safeguard issues in legacy  projects that suffer from interruptions in implementation, such as in the Bujagali project.  The Management Action Plan is  currently being implemented.  ‐ 117 ‐    IDA NON‐LENDING  137. The CAS contains two different sets of projections for ESW delivery: one indicates 27 ESWs  to be delivered over the period while the other mixes TAs, ESWs, and technical memoranda such as  the  JSAN  and  DSAs.    This  makes  it  difficult  to  accurately  assess  the  delivery  of  ESWs  against  CAS  targets. However, a manual count indicates that a total of 20 ESWs and three TAs were planned for  the  CAS  period,  while  at  the  end  of  the  CAS  period,  a  total  of  20  ESWs  and  nine  TAs  had  been  delivered.  138. There  were  some  delays  in  delivery  Figure   6   –   Delivery   of   Economic   Sector   Work,   FY06 ‐ 09   of  AAA, as shown in Figure 6 and in Annex 3,  with  12  of  the  planned  ESWs  delivered  in  the  8 latter part of the CAS period.  In addition, some  7 ESWs  were  not  produced  as  outlined  in  the  6 CAS,  and  several  ESWs  not  included  in  the  original CAS were delivered.  Two ESWs were  5 dropped  after  having  incurred  significant  4 costs.    In  some  cases,  delays  in  delivery  may  3 have  a  negative  impact  on  the  impact  of  the  analytical  work  and  also  provides  a  weaker  2 foundation  for  lending  operations  meant  to  1 follow up on ESWs.   0 139. ESWs conducted during the CAS period  2006 2007 2008 2009 have  generally  been  relevant  and  of  high  Planned  ESWs Delivered  ESWs     quality.22    Improvements  can  be  made,  however,  in  timing,  dissemination  (especially  of  ESWs  with  cross‐sectoral  relevance),  planning  of  the  output,  and  coordinating  with  Government  and  other  development  partners.    The  Country  Economic  Memorandum,  along  with  the  Public  Expenditure  Reviews  of  2007  and  2008,  helped  shape the policy dialogue with the Government and assisted in identifying priorities and strategic  directions for GoU and Bank interventions.  This is evidenced by the CEM and PERs being cited in  various GoU policy and planning documents.   140. Nine TAs funded by the Bank budget were completed during this CAS.  Technical assistance  was mostly provided to complement existing operations and often focused on one particular event  or product, including Presidential Investor Round Table events, technical reforms, and support to  policy  reforms  (PRDP,  ICT  Policy).    Future  CASs  would  benefit  from  a  clear  outline  of  timing,  content and priority of TAs.   141. The  relevance  and  timeliness  of  ESW  vis‐à‐vis  the  dialogue  with  the  client,  as  well  as  the  direct  impact  of  ESW  findings  and  recommendations  on  policy  reforms,  are  both  indications  that  the  non‐lending  program  was  performing  well,  despite  some  products  that  were  not  sufficiently  followed up in the client dialogue, and some planned ESWs not delivered.  IDA INSTRUMENTS  142. As described in detail in earlier sections, the PRSCs showed declining performance over the  CAS period.  For example the slow progress on reforms under the latest  PRSC7 indicates that the  speed and effectiveness of implementation of the PRSCs and prior actions have been reduced.                                                                22 No formal evaluations or reviews have been carried out of ESWs on Uganda completed FY06‐FY09.  ‐ 118 ‐    143. The relatively high number of APLs in projects delivered during the CAS period (five out of  17)  is  a  sign  of  the  willingness  and  interest  of  the  Bank  and  GoU  to  engage  in  phased,  long‐term  reform programs in the energy, transport, and education sectors.  144. During  this  CAS,  Uganda  also  scaled  up  the  implementation  efforts  by  piloting  Output  Based  Aid  in several projects.  This has proven to be a successful endeavor in terms of delivering  results, as further outlined in Box 6.  Box 6: Output­Based Aid in Uganda:  Targeting Support to Reach the Poor  Output‐Based Aid (OBA) involves performance‐based subsidies that are channeled through a service  provider after the provider has delivered pre‐agreed outputs to targeted populations.  This is intended to  increase transparency and the efficiency in use of funds.    In no other IDA country has this results‐based public funding targeting mechanism been used more widely  than in Uganda.  Implementation of these OBA schemes began during the CAS period.   The ICT component of ERT I included $10.5m in OBA subsidies contributed by IDA with the objective to  accelerate access to voice telephony in rural areas, provide internet access in district headquarters, and  establish rural multipurpose tele‐centers at schools and hospitals.  The project has largely been  considered a success, with coverage expanding (e.g. over 10,000 public and private phones installed in  previously un‐served sub‐counties), and average cost per minute of various services in rural areas  decreasing by almost 50%.   On energy, ERT I and ERT II both include OBA programs to increase rural electrification.  While ERT I  focused on (largely GEF‐funded) off‐grid photo‐voltaic systems funded through an OBA approach, ERT II  includes grid and mini‐grid based expansion to poor households through an OBA subsidy.   On health, KfW and GPOBA jointly funded an OBA scheme of $7.3m ($4.3m through the Bank‐ administered GPOBA grant). This scheme aims to provide 110,000 safe deliveries and provide  treatment for 35,000 patients with sexually‐transmitted diseases.  The first healthy babies were  delivered under this scheme in FY09.   On water, a $3.2m grant was provided by GPOBA to improve access to piped drinking water in small  towns.  The project involved competitive bidding by local private operators, which resulted in clear  efficiency gains including several “zero subsidy” bids whereby the lowest bidder plans the required  expansion through private financing recouped through the tariff.  In 2008, a $2.6m GPOBA grant was  provided to the NWSC, for expansion of pro‐poor yard taps and stand‐posts into slum and peri‐urban  areas of Kampala to be spearheaded by NWSC's Urban Pro‐Poor Branch.  By FY09, over 25,000  residents in Greater Kampala received improved access through the scheme.  Valuable lessons have been learned, not only for Uganda, but for the WBG more widely, including:   For OBA to work, service providers must have access to affordable finance to “pre‐finance” output  delivery.  More work is needed in this area, especially in IDA countries.   OBA schemes in basic services involve working with local private (including NGO) providers; sufficient  time and capacity building must be considered, especially with pilots.    Bank fiduciary systems can work with OBA, but greater knowledge sharing is needed.  TRUST FUNDS  145. The  CAS  did  not  include  a  description  of  the  application  and  strategic  use  of  trust  funds,  despite the portfolio containing several large trust funds at the beginning of the CAS period.  The  following is therefore based on an assessment of trust funds implemented during the CAS period.  146. Over  the  CAS  period,  the  Uganda  program  included  disbursements  from  48  trust  funds  (including IFC trust funds) providing more than $47m in grants, cf. annex 7.  More than half of the  trust funds were Bank executed, but in terms of volume, 91 percent of the trust fund commitments  ‐ 119 ‐    and  disbursements  were  recipient  executed.  The  majority  of  trust  funds  were  closely  linked  to  lending operations and thus aligned with the Government’s priorities.   147. Trust funds focused mainly on: i. environment and sustainable energy (GEF); ii. piloting of  output‐based  aid  in  health  and  water  supply  (GPOBA);  iii.  support  through  the  MDRP  to  demobilization  and  reintegration  of  ex‐combatants  from  the  conflict  in  northern  Uganda;  iv.  support to prepare Uganda’s response to avian flu; and v. support to strengthening the monitoring  and evaluation system of the PEAP.   Trust funds also contributed to the completion of various AAA  during  the  CAS  period,  including  the  CEM  and  the  report  on  Land  Policies  in  northern  Uganda,  a  study on sanitation, a Poverty and Inequality study, and a NUSAF Impact Evaluation report.    148. Projects  that  integrated  major  trust  funds  in  design  and  implementation  include  LVEMP,  ERT I, NUSAF, Emergency and Demobilization and PAMSU. Of the trust funds closed, five were rated  by  implementation  completion  memoranda  or  ICRs.    Three  were  rated  moderately  satisfactory  in  development  outcome,23  and  two  were  rated  satisfactory.24    Assessments  did  not  reveal  cross  cutting  lessons  learned  in  terms  of  the  use  of  trust  funds,  but  focused  on  the  effectiveness  and  outcomes within each project.   149. Looking forward, the new CAS should ensure that trust funds are integrated in the strategic  framework, including the results framework, for Bank assistance to the country, both on the lending  and the non‐lending side.   REGIONAL PROJECTS, TRUST FUNDS, AND AAAS  150. While acknowledging the importance of regional integration for Uganda’s development, and  including  regional  projects  as  part  of  the  lending  program,  the  CAS  did  not  in  detail  assess  the  implications  of  and  opportunities  for  regional  integration  and  how  to  address  this  strategically  under the CAS; nor did the CAS include regional indicators in the results framework.   151. During the CAS period, there were five regional operations involving Uganda.  Commitments  amounted to $475m, of which IDA contributions from Uganda amounted to $55m, cf. Annex 2 and  Annex 8.  During the CAS period, one regional project closed (LVEMP), two projects were approved  (East  Africa  Trade  and  Transport  Facilitation  Project  and  LVEMP‐2),  one  project  slipped  (East  Africa Regional Power Project) and one was dropped (RCIP).  By the end of FY09, one project was  rated  satisfactory and the other three were rated  moderately  satisfactory.  Two additional regional  operations  including  Uganda  are  in  the  pipeline  for  FY10  (East  Africa  Agriculture  Productivity  Project and East Africa  Health Systems Strengthening), and at least another two regional projects  are in the pipeline for FY11‐13.    152. Three  regional  trust  funded  projects  were  implemented  in  the  areas  of  agriculture,  HIV/AIDS,  and  water  resources.  In  addition,  various  trust  funded  projects  supporting  activities  under  the  Nile  Basin  Initiative  amounting  to  more  than  $66m  were  implemented  during  the  CAS  period, including training, capacity building and institutional support (cf. Annex 10).   153. Three regional ESWs and two regional TAs were delivered during the CAS period, mainly in  the areas of supporting EAC integration (cf. Annex 9).                                                                  23 GEF Lake Victoria Environmental Management Project; Strengthening Civil Society and Government Partnership in  monitoring Public Expenditure (IDF); and Amnesty Commission Special Project For Repatriation, Rehabilitation,  Resettlement and Reintegration of Reports in Uganda (MDRP).  24 GEF Energy for Rural Transformation and PRSP‐Uganda; Capacity Building For Decentralized Community Based  Participatory Development Planning and Budgeting.  ‐ 120 ‐    154. While  achieving  results,  regional  operations  have  been  facing  significant  implementation  challenges due to coordination complexities both in projects and in handling many different clients  simultaneously. This has often resulted in delays to project implementation and in preparation of  new  projects.    Considering  the  importance  of  regional  integration,  these  challenges  need  to  be  addressed under the new CAS.  MIGA, IFC AND WBI  155. Over  the  CAS  period,  IFC  focused  on  development  of  financial  markets,  infrastructure,  agribusiness, support to the privatization program, and MSME development jointly with the World  Bank.  The total IFC portfolio for Uganda as of August 2009 amounted to $202m, of which support  to  the  Bujagali  Hydro  Power  Project  is  by  far  the  largest  activity  ($130m  loan).    IFC  committed  a  $25m  loan  to  Umeme,  the  Uganda  electricity  distribution  company,  to  assist  its  expansion  of  the  distribution network, increase connections and reduce technical losses.  Uganda is one of the pilot  countries in the IFC/IDA MSME initiative, which supports access to finance, business development  services, and business enabling environment.  IFC has also acted as an advisor to the Governments  of  Kenya  and  Uganda  regarding  privatization  of  the  joint  Kenya‐Uganda  railway  line,  and  committed  $32m  for  the  railways  concession.  This  initiative  has  not  been  completed  and  is  expected to be carried forward under the next CAS as part of a wider regional strategic engagement  on infrastructure development in East Africa, including railways.  IFC provided technical assistance  to local banks to develop housing finance skills and provided $16m loans to assist the growth of the  mortgage  and  term  finance  for  SMEs,  of  which  $2m  was  dedicated  to  women  entrepreneurs.    IFC  also  provided  trade  finance  support  to  Orient  Bank  and  a  risk  sharing  facility  to  a  microfinance  institution to access funding from Citibank.  Box 7: Summary of IEG Evaluation of IFC Activities in Uganda 1999­200825  Between 1999 and 2008, IFC invested $187m in 10 projects in Uganda, including, power,  telecommunications, financial sectors and small investments in agribusiness and education. IFC’s main  contribution has been in telecommunications where it helped restructure the sector and expand access to  mobile communications. In addition, IFC provided assistance to the government to improve or create  regulations in insurance, leasing and mortgage sectors and helped its clients to introduce new financial  products. However, limited success was seen in the power sector, improving SMEs’ access to financing and  developing housing finance. IFC’s experience in Uganda was characterized by strong government  commitment to policy and institutional reform, a judicial mix of advisory services and investments and a  close and well established relationships between IFC staff and clients.  The main challenges for IFC going forward are: i. to promote more broad‐based growth by increasing its  support for non‐financial sectors; ii. to maintain its support of the financial sector so that banks develop  capacities to lend to SMEs and promote other underserved segments of the economy.  IEG recommends that  IFC: i. finds new ways to reach small businesses; ii. remains engaged as an advisor in privatization  transactions for a period after completion of the initial transaction; iii. considers the establishment of a field  presence in smaller, high risk countries that have undertaken significant reforms and established favorable  business environments; and iv. capitalizes on new opportunities presented by increasing south‐south  investment flows.    156. MIGA’s  portfolio  in  Uganda  consists  of  three  projects  for  which  the  Agency  has  issued  guarantees to investors incorporated in Bermuda, Luxembourg and St. Kitts & Nevis.  The projects  are in support of the agribusiness and infrastructure sectors in Uganda and have a combined gross  exposure of $158m.  MIGA continued the cooperation through a technical assistance program with  the  Uganda  Investment  Authority  (UIA)  to  identify  new  projects.    MIGA  has  worked  consistently                                                                25 Cf. chapter 8 in the IEG joint Country Assistance Evaluation, Uganda 2001‐2007.  ‐ 121 ‐    with  Uganda  Investment  Authority  on  various  capacity  building  programs  over  the  years.  In  addition,  Uganda  is  one  of  the  countries  covered  by  MIGA’s  Africa  enterprise  benchmarking  program,  a  program  which  is  linked  to  the  Bank’s  investment  climate  assessment.  Building  on  enterprise benchmarking program results, MIGA is working with UIA to secure donor funding for  an investment outreach program.  157. Uganda  continues  to  be  an  active  participant  in  WBI  programs,  averaging  over  800  participants  annually over the past five years.  Multi‐year  activities will continue in such areas  as  support  to  oversight  institutions  (media  and  parliament)  and  economic  competitiveness  (public  private partnership and financial sector management).  In addition, in FY09, WBI has implemented  activities  in  local  governance,  water  and  rural  development,  science,  technology  and  innovation,  carbon  finance,  south‐south  dialogues  with  Brazil  on  cluster  development,  and  climate  change.  Regional  programs  in  areas  such  as  health  and  climate  change  have  also  been  attended  by  participants from Uganda.  158. Coordination  between  the  Bank,  IFC,  and  MIGA  should  be  improved  during  the  new  CAS.   Several  of  the  key  challenges  facing  Uganda,  notably  infrastructure  investments,  deepening  of  financial markets, commercialization of agriculture and water and sanitation, provide opportunities  for the three institutions to complement each other in providing support to the client.  CLIENT SURVEYS  159. A Client Survey was completed in 2008.  The survey had 306 respondents and a response  rate  of  56%,  with  respondents  representing  government  officials,  media,  private  sector,  civil  society,  developments  partners  etc.    A  large  majority  of  respondents  think  the  Bank  considers  its  primary  priority  in  Uganda  as  ‘ensuring  macro‐economic  stability  consistent  with  rapid  growth’,  followed  by  infrastructure,  private  sector  growth,  and  strengthening  public  sector  management.   This is well aligned with identified development priorities in Uganda.  However, when asked which  areas  the  Bank  should  focus  on  in  Uganda,  stakeholders  point  to  infrastructure,  agriculture,  community empowerment, and private sector growth before identifying ensuring macro‐economic  stability consistent with rapid growth.   160. Outside of government, stakeholders are not positive about the Bank’s effectiveness in the  country.  While in some areas (e.g. infrastructure, growth and agriculture) the Bank’s work is highly  appreciated, stakeholders are less positive in the areas of governance, corruption and empowering  communities.    These  findings  suggest  that  the  Bank  needs  to  become  more  effective  at  demonstrating and communicating results achieved in Uganda.  COUNTRY DIALOGUE AND AID COORDINATION  161. The Bank enjoys a strong policy dialogue with the Government, underpinned by the Bank’s  analytical work and significant engagement in key sectors for development.  This is demonstrated  by  government  requests  for  sector  investment  lending  operations  in  areas  covered  by  public  expenditure reviews.  In addition, the Bank is frequently called upon to provide brief policy notes  and other inputs to the ongoing policy debate.  162. As  chair  of  the  development  partner  coordination  and  harmonization  forum,  the  Local  Development Partners’ Group, the Bank contributes to constructive dialogue between development  partners as a group and the Government.  With more than 40 development partners (DPs) active in  Uganda and DPs contributing significant amounts to the government budget and as a share of GDP,  the  development  partner  coordination  apparatus  is  rather  large.    Nonetheless,  sector  dialogues  ‐ 122 ‐    between the Government, development partners and other stakeholders are formalized through a  range of sector working groups, technical working groups etc.  163. The WB is working closely with the Government and other DPs in designing a Joint Budget  Support Framework (JBSF) that is aligned to the budget cycle and sector processes. At the core of  this is a multi‐annual Joint Assessment Framework (JAF) focusing on efficiency in public spending  and enhanced service delivery, in support of the Government’s own value for money agenda.  164. While GoU‐DP dialogue at sector/thematic levels is generally rather constructive, it could be  strengthened at the higher level.  In particular, there is scope for improving the effectiveness of aid  if  the  Government  took  leadership  in  outlining  rules  and  guidelines  for  the  provision  of  development assistance and the role and responsibilities of DPs in the country.  With the support of  development  partners,  the  National  Development  Plan  has  a  chapter  on  the  Government’s  Aid  Policy, which is intended to provide the foundation and framework for improved aid coordination.   With DPs signing up to GoU’s Aid Policy, it will practically replace the need for a UJAS‐2.  165. The  most  recent  Paris  Declaration  Monitoring  Survey  (2008)  refers  to  Uganda  as  a  front‐ runner on aid effectiveness.  Although there is room for improvement, progress is recorded on all  Paris Declaration indicators.  The Ownership dimension of the Paris Declaration scores the highest  mark  (High)  of  the  five  dimensions,  for  the  PEAP’s  role  as  an  operational  strategy.    Given  the  arguments put forward in this report, with the PEAP having become a largely irrelevant framework  for  policy  implementation,  the  basis  for  this  rating  is  not  entirely  clear.    Nonetheless,  the  main  lesson learned in the area of country dialogue and aid coordination is that the Bank should critically  assess to what extent the new National Development Plan provides a reliable framework for policy  implementation in Uganda before the next CAS is uncritically aligned with the NDP.  While this may  not be fully known at the time of drafting the new CAS, the CAS Progress Report must assess this  issue and, if necessary, realign the CAS at that stage.  V.  L ESSONS  L EARNED AND  I SSUES TO BE  A DDRESSED BY THE NEXT  CAS  General   Lessons   and   Issues   to   be   Addressed   166. A joint strategy, elaborated with other development partners, is neither a necessary nor a  sufficient condition for  more  effective  aid.  Rather than spending resources on elaborating a joint  strategy, efforts should be devoted to developing an operational framework for alignment with the  national  development  strategy,  for  allowing  dynamic  changes,  and  for  harmonization  and  coordination  amongst  development  partners.    The  Joint  Budget  Support  Framework  (JBSF)  currently being finalized is an example of such an operational framework.  167. Full alignment with an incomplete and/or irrelevant national development strategy should  be avoided.  A careful assessment of the completeness and strategic relevance of the new National  Development  Plan  should  guide  the  formulation  of  the  next  CAS  for  Uganda.    While  a  full  assessment of the relevance of the new   168. The impact of a CAS may be reduced in cases where there is no or limited selectivity.  The  Bank  should  consider  increased  focus  in  a  limited  number  of  sectors.    Due  to  inertia  in  implementation of the ongoing portfolio, greater selectivity will not be achieved from the beginning  on the new CAS.  Yet, rather than ensuring Bank presence in each and every sector, selectivity might  improve the effectiveness of the program, possible combined with AAA in sectors where no lending  is taking place.  169. Credible,  concise  and  realistic  results  frameworks  for  the  CAS  and  for  individual  projects  are  important  for  planning,  monitoring  and  budgeting  purposes,  including  realistic  targets  for  ‐ 123 ‐    PRSCs  with  their  relative  short  life‐cycle.    If  links  between  the  results  framework  of  individual  projects  and  the  CAS  are  not  established,  operations  are  unlikely  to  contribute  effectively  to  the  CAS’ overall objectives.  170. Successful  reforms  depend  on  strong  sector  involvement.    Therefore,  reforms  supported  under  PRSCs  should  be  linked  to  sector  strategies  or  specific  sector  investment  operations.    A  corollary to this insight is that long term sector reform issues should not be addressed exclusively  through  APLs  or  SILs.    Reforms  may  still  be  pursued  through  the  PSRCs  in  areas  where  the  Bank  does  not  have  lending  operations,  as  long  as  sector  challenges  are  effectively  addressed  by  other  development partners.  171. Delays to effectiveness (notably Parliamentary approval) have affected the performance of  the  Bank  portfolio  throughout  the  CAS  period.    These  delays  are  largely  considered  to  be  exogenous; if that is in fact the case, they should at least be anticipated at the project design stage.   In addition, the Bank should encourage early involvement of relevant stakeholders during project  design.  172. On lending types and policy reforms: i. the Bank should avoid implementing phased APLs in  parallel,  to  allow  for  incorporation  of  lessons  learned;  ii.  policy  reforms  should  not  be  combined  with SILs as this tends to delay project implementation.  173. To maximize the impact of the Bank’s non‐lending activities, all ESWs will need a plan and a  budget for dissemination activities, as well as a plan for follow‐up to the conclusions reached and  advice provided.  174. Portfolio  performance  reviews  are  only  useful  to  the  extent  that  follow‐up  actions  are  agreed to, followed up and eventually implemented.  A more careful approach to the design of CPPR  events is needed in order to increase relevance of reviews and ensure timely implementation.  Sector   Specific   Lessons   and   Issues   to   be   Addressed   175. For  continued  successful  economic  management,  focus  on  binding  constraints  to  future  growth needs to be maintained.  With continued pressure on social services from the rapidly rising  population, increased  efficiency in service delivery and  a reduction of public administration costs  are  key  components  to  be  addressed.    Oil  revenue  management  poses  another  risk  (and  opportunity) for continued macroeconomic stability.   176. The success of direct Bank involvement in the agriculture sector will depend on a credible  policy  and  institutional  framework  for  the  sector,  which  remains  outward‐oriented  and  is  not  influenced by political patronage considerations.  Further, progress in the agriculture sector needs  a  cross‐sectoral  approach  including  better  rural  roads,  greater  access  to  electricity  and  communication infrastructure, more marketing infrastructure and better access to finance in rural  areas.  177. The  Bank  will  need  to  address  the  Government’s  limited  absorptive  capacity  in  infrastructure investments and address the relatively high unit costs of roads to justify continued  lending  to  the  sector.    Therefore,  in  the  next  CAS,  the  Bank  should  be  looking  at  how  the  Government  can  enhance  the  effectiveness  and  transparency  in  the  use  of  funds  allocated  to  the  infrastructure sector.  178. Environment and natural resources programs need better integration in other development  efforts  to  reach  desirable  and  sustainable  results,  but  this  may  not  necessarily  involve  Bank  interventions in case other DPs are active in the area.  179. The  Bank  must  adopt  a  clearer  framework  with  actionable  governance  indicators  and  tracking mechanisms in support of the GAC agenda under the new CAS.  Not least in the run up to  ‐ 124 ‐    general  elections  in  2011,  the  Bank  will  need  to  consider  its  role  vis‐à‐vis  other  development  partners with respect to advancing the GAC agenda in Uganda.  180. Lessons from the CAS highlight that PRSCs may not always provide the optimal instrument  for addressing health specific problems.  Further, the CAS program for the sector was not realistic  and commensurate with the interventions undertaken.  181. Addressing  the  population  issue  should  be  embedded  in  a  broader  cross‐sectoral  framework  looking  not  just  at  health  and  family  planning,  but  also  focusing  on  youth  unemployment, skills training, and public service delivery.  182. The  PRSCs,  mainly  focusing  on  macro  level  reforms  across  financial  and  social  sectors,  do  not  seem  to  be  the  best  available  instrument  for  influencing  change  regarding  the  community  development  component  of  the  PEAP.    In  retrospect,  using  the  existing  interventions  on  decentralization  and  public  sector  reforms  could  have  provided a  much  more  direct  and  possibly  more effective intervention.      ‐ 125 ‐    Acronyms   AAA  Analytic and Advisory Activities  MDRP  Multi‐Country Demobilization and Reintegration  AF  Additional Financing  Program  APIR  Annual Policy Implementation Review  MDTF  Multi‐Donor Trust Fund  APL  Adaptable Program Loan  MFIs  Micro Finance Institutions  ARD  Agriculture and Rural Development (sector board)  MIGA  Multi Investor Guarantee Agency  ARTP‐2  Second Agricultural Research and Training Project  MoWE  Ministry of Water and Environment  ARVs  Antiretroviral drugs  MoWT  Ministry of Works and Transport  BoU  Bank of Uganda  MSMEs  Micro‐, Small‐, and Medium‐sized Enterprises  BUDS  Business Uganda Development Scheme  MTEF  Medium Term Expenditure Framework  CAE  Country Assistance Evaluation  NAADS  National Agricultural Advisory Services Project  CAS CR   Country Assistance Strategy Completion Report  NARO  National Agricultural Research Organisation  CAS PR  Country Assistance Strategy Progress Report  NARS  National Agricultural Research System  CAS  Country Assistance Strategy  NEMA  National Environment Management Authority  CEM  Country Economic Memorandum  NIMES  National Integrated Monitoring and Evaluation  CIFA  Country Integrated Fiduciary Assessment  Strategy  COMESA  Common Market for Eastern and Southern Africa  NPV  Net Present Value  CPI  Consumer Price Index  NUPER  Northern Uganda Public Expenditure Review  CPIA  Country Policy and Institutional Assessment  NUSAF  Northern Uganda Social Action Fund  CPPR   Country Portfolio Performance Review  OBA  Output‐Based Aid  CSO  Civil Society Organization  PAF  Poverty Action Fund  DHS  Demographic and Health Survey (2006)  PAMSU  Protected Areas Management and Sustainable Use  DPL  Development Policy Lending  Project  DSA  Debt Sustainability Analysis  PEAP  Poverty Eradication Action Plan  DTIS  Diagnostic Trade Integration Study  PEFA  Public Expenditure and Financial Accountability  EAC  East African Community  PER  Public Expenditure Review  ECOWAS  Economic Community of West African States  PFA  Prosperity for All  ED  Education (sector board)  PFM  Public Financial Management  EFMP‐2  Second Economic and Financial Management Project  PHRD  Policy and Human Resource Development Fund   EMCBP‐2  Second Environmental Management and Capacity  PIC  Public Information Center  Building Project  PIRT  Presidential Investors Round Table  EMT  Energy, Mining and Telecommunication (sector board)  PMA  Plan for Modernization of Agriculture  ENR  Environment and Natural Resource  PP  Power Project  ENV  Environment (sector board)  PPAR   Project Performance Assessment Report  ERL  Economic Recovery Loan  PRDP  Peace Recovery and Development Plan (for northern  ERR  Economic Rate of Return  Uganda)  ERT  Energy for Rural Transformation  PRSC  Poverty Reduction Support Credit  ESW  Economic Sector Work  PRSP  Poverty Reduction Strategy Paper  FIRST  Financing Sector Reform and Strengthening Initiative  PS  Public Sector (sector board)  FY  Fiscal Year (WB, GoU: July 1 – June 30)  PSCP‐2  Second Private Sector Competitiveness Project  GAC  Governance and Anti‐Corruption  PSFU  Private Sector Foundation Unit  GAVI  Global Alliance for Vaccines and Immunizations  PSIA  Poverty and Social Impact Analysis  GDP  Gross Domestic Product  PSRP  Public Service Reform Project  GEF  Global Environment Facility  PUSRP  Privatization and Utility Sector Reform Project  GoU  Government of Uganda  RDP  Road Development Program  GPOBA  Global Partnership on Output‐Based Aid  RDS  Rural Development Strategy   HIPC  Heavily Indebted Poor Countries  ROSC  Report on the Observance of Standards and Codes  HPPG  Harmonized Participatory Planning Guide  RSISP  Road Sector and Institutional Support Project  ICA  Investment Climate Assessment  RVR  Rift Valley Railways  ICR  Implementation Completion Report  SACCO  Savings and Credit Cooperative Organization  ICT  Information and Communication Technology  SIL  Specific Investment Loan  IDA  International Development Association  SMMRP  Sustainable Management of Mineral Resources Project  IDP  Internally Displaced Person  SO  Strategic Objective  IEG  Independent Evaluation Group  SP  Social Protection (sector board)  IFAD  International Fund for Agricultural Development  SWAp  Sector‐Wide Approach  IFMIS  Integrated Financial Management Information System  TA  Technical Assistance  IMF  International Monetary Fund  TAL  Technical Assistance Loan  ISR  Implementation Status Report  TR  Transport (sector board)  JARD  Joint Annual Review on Decentralization  UACP  Uganda AIDS Control Project  JSAN  Joint Staff Assessment Note  UBOS  Uganda Bureau of Statistics  KfW  Kreditanstalt fur Wiederaufbau  UCSCU  Uganda Cooperative Savings and Credit Union  KIIDP  Kampala Institutional and Infrastructure Development  UD  Urban Development (sector board)  Project  UJAS  Uganda Joint Assistance Strategy  LG  Local Government  UPPET  Uganda Post Primary Education and Training  LGDP‐2  Second Local Government Development Project  UPSPEP  Uganda Public Service Performance Enhancement  LGMSDP  Local Government Management and Services Delivery  Program   Project  URA  Uganda Revenue Authority  LRA  Lord’s Resistance Army  UWA  Uganda Wildlife Authority  LVEMP  Lake Victoria Environmental Management Project  UWEC  Uganda Wildlife Education Centre  M&E  Monitoring and evaluation  WB  World Bank  MDG  Millennium Development Goal  WSP  Water and Sanitation Program  MDRI  Multilateral Debt Relief Initiative  ‐ 126 ‐    Annex 1: Summary Table of the Uganda CAS Completion Report (UJAS 2006­09)  UJAS Outcomes,  Status at Target  Bank Specific Inter‐ Progress on PEAP outcomes  Strategies and  Bank Group  Lessons Learned Indicators, Targets  Date (FY2008)26  mediate Results27   and Bank Contribution  Actions  Assistance  Pillar 1: Economic Management  Bank Contribution: Satisfactory  Strategic Objective 1.1: Macroeconomic Stability Consistent with Rapid Private‐sector Led Growth    Result: Achieved  Bank Contribution: Satisfactory  1.1.1  Fiscal deficit  Fiscal deficit reduced  Uganda Revenue  Progress: Macroeconomic  Improved revenue  Lending  (a) Strong analytical work  reduced from 11.3%  to 5.1% of GDP  Authority modernized  stability maintained and almost  mobilization and PFM  PRSC 5‐7  should continue to  of GDP to 8.2%   (IMF; FY2008)  (IT, tax admin processes  all targets met.  PAF expenditures  Reinforcing of struc‐ provide the basis for  Private Sector  1.1.2  Increase dome‐ Revenues increased  and methods) by 2007  consistent with PEAP priorities.  tural and institutional  Competitiveness 2  policy dialogue. Each  stic revenue from  to 12.8% of GDP  Agreement on MTEF  Bank Contribution: PRSC prior  reforms through PRSCs  sector needs to focus on    efficiency to derive value  12% of GDP to 13.2%  (IMF; FY2008)  2006/2007‐2008/2009  actions underpinned public  Financial systems  and annual budgets   financial management reforms.  AAA  for money in public  1.1.3  Reduce public  Public exp. reduced  reforms (including  Policy dialogue mainly through  PER 2007  spending and allow for  exp. from 23.9% of  to 17.9% of GDP  PAF expenditures and  microfinance)  the PRSC instruments and robust  (Education)  improved prioritization  GDP to 21.8%  (IMF; FY2008)  donor projects   Improvement of the  recommendations from analytical  within government.  consistent with PEAP  investment climate  PER 2008 (Health)  1.1.4  Inflation main‐ Inflation at 7.3%  work contributed to a continued  priorities   CEM  tained below 5.0%  (BoU; FY08 average)  prudent fiscal and overall  Reduce infrastructu‐ Reduce government’s  re and other export,  PEFA 2009  1.1.5  Private sector  Private sector credit  macroeconomic policy  fiscal deficit to reduce  growth bottlenecks  credit up from 7.1%  increased to 11.2%  framework in Uganda.   PSIA studies  issuance of treasury  of GDP to 10.4%  of GDP (IMF; FY2008)  Discussions on reforms of the  Support for improved  bills thus freeing up  1.1.6  Reduce ratio of  Net present value of  pension system were initiated,  debt sustainability  resources for private  net present value of  external debt/exports  sector lending.   but no major reform was  Appropriate mix of  external debt/exports  reduced to 46.7%  completed.   grants/credits in all  Pension system reform  from 305% to 238%  (IMF/WB; 2007)  Bank operations  Pillar 2: Enhancing Production, Competitiveness, and Incomes Bank Contribution: Moderately satisfactory  Strategic Objective 2.1: Increased Private Sector Competitiveness    Result: Partially achieved  Bank Contribution: Moderately satisfactory  2.1.1  Private sector  Private sector  National trade policy  Progress: Some.  WTO Bill  Improve investment  Lending  (a) The Bank should  investment rises from  investment at 18.2%  implemented by 2006  gazetted in preparation for  climate through sup‐ Regional Trade  support the GoU in  17% of GDP towards  of GDP (IMF;  World Trade Organi‐ submission to Parliament in 2008.  port to the Medium  Facilitation project  institutionalizing PPP with  21% by 2013/1428  FY2008)  zation Bill submitted to  Matrix to operationalize National  Term Competitive‐ East Africa Trade  a legal framework.   Parliament by mid‐2006  Trade Policy was developed.  ness Strategy  and Transport              Facilitation                                                                        26 Data on status are the latest available for the target date (2007/08) or as indicated.  27 A subset of policy actions from the PEAP Policy Matrix. However, as raised in the main text, these were not consistently tracked, monitored or revised to reflect Bank interventions.  28 Medium target was planned to be developed, but this was never done.  ‐ 127 ‐    UJAS Outcomes,  Status at Target  Bank Specific Inter‐ Progress on PEAP outcomes  Strategies and  Bank Group  Lessons Learned Indicators, Targets  Date (FY2008)26  mediate Results27   and Bank Contribution  Actions  Assistance  2.1.2  Value of  Value of exports at  Taxation and licensing  Bank contribution: African Trade  Support measures to  AAA (b) The Bank should  exports increases  17.7% of GDP (IMF;  policies and practices  Insurance Agency established;  reduce costs of doing  Diagnostic Trade  support capacity building  from 12.1% of GDP to  FY2008)  streamlined by mid‐ GoU‐private sector dialogue  business  Integration Study  in public sector  16.1% by FY1436  2006  supported (PIRT); support to  institutions involved in  establishment of the land and  Strengthen regional  Options for  integration  Strengthening EAC  facilitating private sector  company registries and the credit  Support to the  Integration  development.  reference bureau.  Financial  deepening efforts supported by  national trade policy  Investment Cli‐ IFC’s mortgage support program.  and integration  mate Assessment  Strategic Objective 2.2: Increased and more Efficient Agricultural Production    Result: Not achieved  Bank Contribution: Moderately satisfactory  2.2.1  Agric. production  Average growth rate  NARS established by  Progress: Low agricultural growth  Support to the  Lending  (a) Support to animal and  growth rate of above  FY2003‐08 was 1.1%  2006  rate.  Several outcome target  implementation of  NAADS  plant disease control, re‐ 2003 value of 3.8%  (NDP draft)  NAADS extended to:  indicators were not monitored  the PMA  gulatory services, water  Agricultural  2.2.2  Proportion of  Not monitored  499 sub counties/37 di‐ and data not readily available.  Removal of con‐ for production, sector  Research and  marketed agric. output  stricts by 2006; 640/45  Bank contribution: Sector policy  straints to agriculture  statistics and M&E crucial  Training  grows from 20% to‐ by 2007; 900/53 by ‘08  reforms (PRSC prior actions),  and non‐farm private  to increase agric. growth   Avian Flu  wards 70% by FY14  National land policy:  provision of investment  sector performance  (b) Cross‐sectoral support  resources and knowledge and    required to complement  2.2.3  Proportion of  Not monitored  consultations under‐ Support country  total value of agric.  taken by mid‐2006;  advice. Reforms were not fully  wide scale up of  AAA  policy and lending activi‐ output exported rises  cabinet approval by  successful in creating a  NARS and NAADS  Agriculture PER  ties of the Bank: rural  mid‐2007; implemen‐ harmonized institutional  roads, access to electricity,  2.2.4  Proportion of  Not monitored  Support to national  Sustainable Land  tation by mid‐2008  framework for interventions.   communication, marke‐ households with land    resource regulatory  Management  Bank interventions also provided  ting infrastructure and  titles for agriculture  Licensed private forest  agencies and  support to: i. establishment of  East Africa  finance in rural areas are  production increases  plantations covering:  development of an  the NARS; and ii. expansion of the  Regional Grain  urgently needed.   from < 1% to 1.5%  >10,000ha by mid‐2006;  adequate policy  NAADS program to cover all sub‐ Trade  (c) Regional trade should  2.2.5  Proportion of  Not monitored  >15,000ha by mid‐2007;  framework  counties.   be integrated in projects  households with gene– >25,000ha by mid‐2008  and analytical work   ral land titles increa‐ ses from 12% to 17%  Strategic Objective 2.3: Increased and Sustainable Fisheries Production    Result: Partially achieved  Bank Contribution: Unsatisfactory  2.3.1  Fishery sector  Annual growth rate  National Fisheries  Progress: Rapid sector and export  Support initiative to  N/A  N/A  growth rate above  at 7% (UBOS29;  Authority established by  growth rates, yet unlikely to be  improve regional  2003 value of 3.8%   average 2003‐08)  mid‐2006  sustainable.  National Fisheries  sustainable natural    Authority was not established.     resource                                                                29  Unless otherwise indicated, “UBOS” refers to the UBOS 2009 Statistical Abstract.  ‐ 128 ‐    UJAS Outcomes,  Status at Target  Bank Specific Inter‐ Progress on PEAP outcomes  Strategies and  Bank Group  Lessons Learned Indicators, Targets  Date (FY2008)26  mediate Results27   and Bank Contribution  Actions  Assistance  2.3.2  Value of fish  Value of fish exports  Bank contribution: Neither  management  exports rises above  at US$124m (UBOS;  lending nor non‐lending support  (fisheries, wetlands,  2003 values of US$88  2008)  to SO2.3, although it was inclu‐ mining, forests)  million  ded in the Bank specific program.  Strategic Objective 2.4: Increased and more Efficient Production of Non‐agriculture Goods and Services    Result: Partially achieved  Bank Contribution: Moderately unsatisfactory  2.4.1  Proportion of  Not monitored  Incorporation of strate‐ Progress: Some, on those  N/A  Lending  N/A  value of production    gy for MSMEs in revised  outcome indicators that were  Private Sector  of MSMEs increases    Medium Term Competi‐ available.   Competitiveness 2  2.4.2  Less time spent  Not monitored  tiveness Strategy   Bank contributions: Bank  Sustainable  by MSMEs in    National Tourism Stra‐ interventions contributed to  Management of  obtaining licenses  tegy and Business Plan:  several outcomes, including  Mineral Resources  2.4.3   Increased  Increase from 512,000  developed by 2006;  reducing the time to register a  Project  number of tourists  (2004) to 844,000  Implemented by 2007.  property; time to register a    visiting Uganda  (2008) (UBOS)  Mining Regulations Bill:  business; new registrations; and  support to MSMEs under the  AAA  Cabinet approval by  2.4.4  Increased  GDP contribution  Business Uganda Development  2006; Parliament enact‐ N/A  contribution to GDP  increased by  33% in  Scheme (BUDS).    ment by 2007; Imple‐   from mining and  real terms from  mentation by 2008  quarrying   FY05‐FY08 (UBOS)  Strategic Objective 2.5: Strengthened Infrastructure in Support of Increased Production of Goods and Services    Result: Partially achieved  Bank Contribution: Moderately satisfactory  2.5.1  Proportion of  65% of unpaved and  Maintenance of  Progress: Limited progress and  Support road  Lending  (a) Implement projects in  national roads in  71% of paved natio‐ 18,000km/Rehabilita‐ some deterioration registered  rehabilitation,  Transport:  sequence to include  good condition rises  nal roads were in fair  tion of 1,500km of  (the roads indicator fluctuates  maintenance, and  lessons learned  Road  from 75% to 100%  to good condition  district roads by mid‐ every year partly due to weather  upgrading  (b) Intermediate triggers  Development  (UNRA; 2008)  2006  impact).    Support private  should be defined to im‐ Projects 1‐3  2.5.2  Proportion of  8% of rural house‐ Uganda National Roads  Bank contributions: In the road  power generation  plement reform program;   Road Sector  rural households with  holds with access to  Authority:  statute  sector, the Bank contributed to  investment plan  (c) APL may not be appro‐ Institutional  access to electricity  electricity (UBOS  enacted by mid‐2006;  establish and upgrade network of  Support the multi‐ priate instrument in roads  Support   increases from 3% to  2007 Household  operational by mid‐ urban and rural roads.  RDPs  donor regional  sector (difficult to agree  8%  Survey; 2007)  2007  contributed to a reduction in  IFC Loans to Rift  power program  with GoU on compre‐ average travel time and transport  Valley Railways  2.5.3  Freight carried  Freight carried by  Rural electrification  Support the railway  hensive reform program)  by rail rises from  rail decreased to  schemes under various  and vehicle‐operating costs.   East Africa Trade  concessioning  (d) Bank interventions in  863,000 tons per year  585,000 tons in 2008  donor projects  Further, the Bank provided  and Transport  process  the roads sector should  to 1,565,000 tons per  (Uganda Railways  implemented  support to the establishment of  Facilitation Project explicitly seek to address  year  Cooperation)  throughout UJAS period  the Uganda National Roads    the Government’s limited  Authority.    ‐ 129 ‐    UJAS Outcomes,  Status at Target  Bank Specific Inter‐ Progress on PEAP outcomes  Strategies and  Bank Group  Lessons Learned Indicators, Targets  Date (FY2008)26  mediate Results27   and Bank Contribution  Actions  Assistance  At least 30 megawatts  In energy, Bank operations were  Energy: absorptive capacity in  renewable energy:   successful in contributing to  Power Project 4  infrastructure invest‐  ‐ connected to main  improved financial viability,  Power Sector Dev’t  ments and address the  grid by end‐2007  expanding the quantity and  Project  high unit costs of roads.   ‐ supplying the main  quality of power as well as  Privatization and  (e) In energy, policy  grid by end‐2008  increasing access to electricity.   Utility Sector  reforms should not be  Bank interventions in the railway  Reform Project  combined with SILs as this  sector (two IFC loans) did not  Energy for Rural  tends to delay project  progress due to severe financial  Transformation 1   implementation. Sector  and operational difficulties as a  Bujagali Private  reforms better addressed  result of mismanagement at RVR.   Power Generation  under the PRSC dialogues.  Guarantee  Strategic Objective 2.6: Strengthened Environment and Natural Resource Management Regime in Support of Sustainable Production of Goods and Services    Result: Not possible to assess  Bank Contribution: Moderately unsatisfactory  2.6.1  Increase in  Not monitored  Preparation of interim  Progress: Incomplete data on  Support national  Lending  (a) Environmental issues  proportion of forest  business plan for ENR  baselines, target values and  regulatory agencies  Protected Areas  and concerns, including  land covered by  by 2006; integration of  status makes it difficult to assess  Management and  climate change, are  sustainable forest  the ENR sector invest‐ to which extent this SO was  Sustainable Use   closely linked to  management plan  ment plan (SIP) into the  achieved.  sustainable natural  Environmental  from 2‐3%  budget by 2007; imple‐ Bank contribution: Bank lending  resource management.   Management  2.6.2  Proportion of  Not monitored  mentation of the ENR  operations in support of this  To be effective and  Capacity Building  wetlands with  resources SIP by ‘08  objective contributed to the  achieve the desirable  Districts/sectoral agen‐ Lake Victoria  results sustainable, ENR  sustainable manage‐ strengthening of institutional  cies mainstream envi‐ Environmental  programs need better  ment plan increased  capacity of the main regulatory  ronmental concerns in  Management  integration in other  from 7.5% to 20%  bodies in the ENR sector  policies and programs:  including NEMA, UWA and  AAA  development efforts to  2.6.3  Decrease in  Not monitored  have the desired impact.  14/15 by mid‐2006;  UWEC.    environmental  Governance of  28/25 by mid‐2007;     degradation  NRM (dropped)  36/30 by mid‐2008  Strategic Objective 2.7: Strengthened Financial Sector in Support of Increased Production of Goods and Services    Result: Achieved  Bank Contribution: Satisfactory  2.7.1  Increase in  4.3 million clients by  MFIs supported for rural  Progress: MFIs served 4.3m    Lending   number of clients  end 2007 (Uganda  outreach and capacity  clients in 2008, almost a five‐fold  Private Sector  served by micro  Microfinance  building between  increase over just five years.    Competitiveness 2  finance institutions  Industry Assessment,  AAA  Business Culture Fund  Bank contributions: PSCP‐2 and  ROSC; Financial  (MFIs) from 900,000  2008)  to improve business  analytical work (remittances,  Sector Study;   by end 2003  and financial skills in  sector reforms etc.) in support of  UK‐Uganda Trade  rural areas established   a strengthened financial sector   Corridor ‐ 130 ‐    UJAS Outcomes,  Status at Target  Bank Specific Inter‐ Progress on PEAP outcomes  Strategies and  Bank Group  Lessons Learned Indicators, Targets  Date (FY2008)26  mediate Results27   and Bank Contribution  Actions  Assistance  Pillar 3: Security, Conflict Resolution and Disaster Management Bank Contribution: Satisfactory  Strategic Objective 3.1: Protection of Persons and their Property through Elimination of Conflicts and Cattle Rustling, Resettlement of IDPs, and  Strengthened Disaster Management     Result: Achieved  Bank Contribution: Satisfactory  3.1.1  Reduced  Since mid‐2006  Program for reintegra‐ Progress: Significant progress  Support dialogue  Lending    number of civilian  there have hardly  tion of ex‐combatants  reflecting the improvement in the  between the  Northern Uganda  casualties from  been any direct  into civilian life  security situation in northern  government and LRA  Social Action Fund  conflict (killed,  civilian casualties of  developed by 2006  Uganda.  Increased economic  Support  Emergency  wounded, abducted)  insurgency conflict in  National policy on con‐ activity in the region.  implementation of  Demobilization  (no baseline)  Uganda itself  flict prevention deve‐ Bank contributions: The Bank  the 2004 Defense  and Integration   3.1.2  Increased  By May 2009, 67% of  loped by 2006 and  interventions were successful in  Review    number of  the peak IDP camp  implemented by 2007  contributing to improved  Support for  returnees/reporters  population had  livelihoods among the affected  AAA  National Security Policy  demobilization and  that are resettled  returned to village of  operationalized by 2006  households in Northern Uganda,  reintegration  Land PSIA  (peak IDP camp  origin, while 13%  providing reinsertion support to  (Northern Uganda)  Joint defense review with  Support for return of  population: 1.86m by  were in transit sites  ex‐combatants, and providing  Northern Uganda  EAC conducted by 2007  IDPs in the North  end 2005)  (UNHCR).  recommendations for the GoU on  Public Expenditure  and recommendations  Support for child  By late 2007, 95% of  status and gaps on resource flows  Review  implemented by 2008  victims, IDPs, and  reporters (total  to the North, as well as  National Policy on IDPs  recommendations for the PRDP.  refugees  15,310) were  translated and  The intermediate results linked to  Development of local  resettled (WB  distributed by 2006  policy reforms, defense reviews  monitoring capacity  project reports)  Social and economic  and proved to be outside the  Integration of  3.1.3  Reduced  Number of IDPs in  influence and control of the Bank  reintegration plan for  disaster  number of internally  camps or transit  and unrelated to operations,  IDPs coordinated and  preparedness and  displaced people  sites reduced from  although the Bank played an  monitored by 2008  mitigation measuring  (IDPs)  1.84m (end 2005) to  important role in the  622,000 (May 2009)  Database on IDPs  in existing  developed by mid‐2006  development of PRDP.  frameworks  (UNHCR)  Pillar 4: Good Governance  Bank Contribution: Moderately unsatisfactory  Strategic Objective 4.1: Strengthened Legal and Justice Systems    Result: Partially achieved  Bank Contribution: Moderately unsatisfactory  4.1.1  Reduced crime  Crime rate at 23   Strengthen and  Progress: Some, but none of the  Support widening  Lending  The Bank must adopt a  rate from 30   (Uganda Police  decentralize Justice,  targets were met.  General  access to justice  PRSC 5‐7  clearer framework with  (incidents per 10,000  Force: Annual Crime  Law and Order  perception of growing corruption  Support to Justice,  indicators and tracking  Private Sector  people) to 20  Report; 2008)  institutions to improve  and GoU failure to pursue high‐ Law and Order sector  mechanisms in support of  Competitiveness 2    access to justice  profile corruption cases.   the GAC agenda under the  ‐ 131 ‐    UJAS Outcomes,  Status at Target  Bank Specific Inter‐ Progress on PEAP outcomes  Strategies and  Bank Group  Lessons Learned Indicators, Targets  Date (FY2008)26  mediate Results27   and Bank Contribution  Actions  Assistance  4.1.2  Decreased  Commercial court  throughout UJAS period Bank contributions: Support to  AAA  new CAS.  In the run up to  growth rate of  case backlog growth  Promote coordination  the setting up of the Anti‐ Legal and Judicial  general elections in 2011,  commercial court  rate at 17 (per month)  initiatives among  Corruption Division of the High  Sector Assessment   the Bank will also need to  case backlog from 30  (Annual Progress Re‐ Justice, Law, and Order  Court, improvements in the  consider its role vis‐à‐vis  (per month) to 10  port for JLOS; 2007)  Sector institutions  commercial court system, and  other development  4.1.3  Businesses  61% of businesses  throughout UJAS period  improve overall access to justice.   partners with respect to  satisfied with com‐ satisfied with  Five commercial laws  However, projects were delayed  advancing the GAC  mercial courts increa‐ commercial court  passed by Parliament by  and achievements did not match  agenda in Uganda.  ses from 30% to 70%  system30   mid‐2006  the Bank’s ambitious program.  Strategic Objective 4.2: Strengthened Public Sector Management and Accountability    Result: Not achieved  Bank Contribution: Moderately unsatisfactory  4.2.1  Proportion of  71%  timely submis‐ Reorganization of Acc.  Progress: Uganda experienced an  Support implementa‐ Lending  (a) Long term engagement  ministries/LGs  sions for FY08 (97%  Gen.’s Office by 2007  increase in the perception of  tion of the IFMIS in  PRSC 5‐7  for continuity and  preparing regular  of central govern‐ All LGs prepare financial  corruption, evidenced by several  government  convergent of Bank and  Economic and  financial statements  ment institutions;  statements for FY06   large scale cases. LG revenues  Assess quality,  development partner  Financial Manage‐ in accordance with  59% of LGs)  IFMIS to 10 agencies,  deteriorated as the Graduated  coverage and  support is critical for  ment Project 2  financial regulations  LGs by ‘07, all agencies  Tax was abolished.  An increased  efficiency in services  governance reforms. The  (from 51% to 100%  and more LGs by ‘08  number of LGs prepared financial  Local Government  Bank has been engaged in  Implementation of  Development  by 2013/2014)  Leadership Code Act  statements in accordance with  decentralization/LGs in  National Strategy to  Project 2  4.2.2  Decreased  Perceived incidence  (revised) presented to  financial regulations.  Uganda since 2000. For  Fight Corruption   perceived incidence  of corruption  Parliament by mid‐2006  Bank contribution: Improved  Public  Bank to be effective, it  Verification of asset de‐ Support to accounta‐ Performance  needs to use a  of corruption (measu‐ increased across  Government planning, budgeting  clarations by ministers   bility CSOs and media  Enhancement  combination of Bank  red by National  sectors (National  and financial management, and  Integrity Survey) from  Integrity Survey III;  Strategic plan for natio‐ assisted Government to develop,  Support implemen‐   instruments (PRSCs,  32% to 12%  2008)  nal statistical system  publish and roll‐out the HPPG,  tation of the Public  Investment lending, AAA)  AAA  simultaneously and in a  adopted by 2006  implement the Fiscal Decentrali‐ Service Reform  4.2.3  Higher  35.3% of public  PEFA  complementary manner.  100% of PEAP indicators  zation Strategy; and contributed  Program (2005‐09)  proportion of public  satisfied with public  reported by mid‐2008  to ensuring compensation of LGs  Support CSOs in  Civic Engagement  (b) Bank support towards  satisfied with public  service delivery (Na‐ Application of HPPG:  for taxes abolished.   policy engagement  and Social  improved accountability  service delivery  tional Service Deli‐ mechanisms for monit‐ Bank support towards improved  accountability  suffered from the lack of  very Survey; 2008)  Enhance LG financial,  oring developed by  accountability suffered from the  institutional and  studies of accountability  4.2.4  LG revenue as  LG revenue as share  2006; monitored by ‘08  and corruption to inform  lack of studies of accountability  human capacity  share of LG Budget  of LG Budget at 4%  PRSC policy dialogue,  Fiscal Decentralization  and corruption to inform PRSC  increased from 6% to  (JARD; 2008)  Support to decentra‐ even if the issue was  Strategy rolled out to LGs  policy dialogue, even if the issue  9%31  lization policy  covered indirectly in PERs.   Operationalization of  was covered indirectly in PERs.   new LG structures (2006)                                                                30  National Integrated Household and Business Survey on Demand, Use and Access to JLOS Services in Uganda; 2007.  31  Medium target was planned to be developed, but this was never done.  ‐ 132 ‐    UJAS Outcomes,  Status at Target  Bank Specific Inter‐ Progress on PEAP outcomes  Strategies and  Bank Group  Lessons Learned Indicators, Targets  Date (FY2008)26  mediate Results27   and Bank Contribution  Actions  Assistance  Pillar 5: Human Development  Bank Contribution: Moderately satisfactory  Strategic Objective 5.1: Better Educated Ugandans    Result: Partially achieved  Bank Contribution: Satisfactory  5.1.1  Increased  Primary enrollment  Curriculum  Progress: Satisfactory progress  Support Education  Lending  Bank interventions in the  primary net enroll‐ at 95.3%/91.4%  development for  was noted for education, and  Investment Plan  PRSC 5‐7  education sector in the  ment from 87%/86%  (boys/girls)32   primary education:  several targets were met  (ESIP)  next CAS should focus on  Makerere Pilot  (boys/girls) to 90%   finalized by mid‐2006;  (enrollment). Low completion  Support the  quality of education,  Decentralized  5.1.2  Increased pri‐ Primary completion  roll out implementation  rates remain a problem due to  implementation of  ensure clear  National Service  mary completion rate  rate at 50%/44%  by mid‐2008  high dropout rates.  the Higher Education  measurement of learner  Delivery  from 60%/44% (boys/  (boys/girls)   Minimum primary  Bank contributions: Overall, the  Strategic Plan  proficiency, support  Millennium  partnerships with the  girls) to 74%/64%  teachers’ wage level:  Bank successfully contributed to  Science Initiative  private sector to reduce  5.1.3  Increased post  Post primary gross  enhanced towards UGX  progress in the sector, including  200,000/month by  curriculum development for  Post Primary  the cost and increase  primary gross  enrollment rate at  efficiency of education  2006; reached by 2008  lower primary teacher salaries  Education and  enrollment rate from  27.9%/22.4%  service delivery, and  increase, construction of seed  Training Program  20%/17% (boys/girls)  (boys/girls)  60 seed secondary  secondary schools, and improved    efforts to track and  to 30%/25%  schools constructed by  curriculum emphasis for science  address education unit  mid‐2008  AAA  5.1.4  Increased  Senior 4 completion  and technology. The PER 2007  costs and quality gaps.  completion rate of  rate increased to  Improved curriculum  PER 2007  Further, interventions  helped identify crucial gaps and  senior 4 rate from  23% (gender specific  emphasis for science  (Education)   should include strategies  challenges in the sector and  20%/17% (boys/girls)  data not available)  and technology in  for school‐to‐work  provided important input to the  to 26%/23%   tertiary education by  transition and skills  policy dialogue with GoU in terms  mid‐2007  training.  5.1.5  Improved  Tertiary enrollment  of how to address weaknesses.  tertiary enrollment  increased to 5%  from 4% to 5.5%  Strategic Objective 5.2: Healthier Ugandans    Result: Partially achieved  Bank Contribution: Moderately unsatisfactory  5.2.1  Reduced Infant  Infant mortality rate  Continued joint  Progress: Uganda did not achieve  Support to  Lending  (a) PRSCs may not always  Mortality Rate from  (per 1,000 live births)  implementation of the  significant progress on most of  reproductive health,  PRSC 5‐7  provide the optimal  88 to 68  at 76 (DHS33; 2006)   Revised National  the health indicators during the  family planning,  instrument for addressing  HIV/AIDS Control  5.2.2  Lower maternal  Maternal mortality  Framework for  UJAS period and only few PEAP  malaria control,  health specific problems,  Program  mortality rate (per  rate (per 100,00  HIV/AIDS throughout  outcome targets were met.  community health  and the CAS program for  UJAS period  Maternal mortality as well as  services, and the    the sector was not  100,00 deliveries)  deliveries) at 435  from 505 to 354  (DHS; 2006)  Indoor residual spraying  child morality remains high. At  provision of skilled    realistic and                                                                32  Data for SO5.1 are from the Joint Education Sector Annual Review Report for 2007/08.  33  Demographic and Health Survey.  ‐ 133 ‐    UJAS Outcomes,  Status at Target  Bank Specific Inter‐ Progress on PEAP outcomes  Strategies and  Bank Group  Lessons Learned Indicators, Targets  Date (FY2008)26  mediate Results27   and Bank Contribution  Actions  Assistance  5.2.3  Population un‐ 16% of population  strategy: finalized by  the current pace, Uganda is  health workers  AAA  commensurate with the  dernourished redu‐ undernourished  mid‐2006; implemented  unlikely to meet MDG 4 (child  Support for the  CIDA Health  interventions undertaken.  ced from 19% to 5%  (DHS; 2006)  by mid‐2007   mortality) and 5 (maternal  implementation of  Systems Support  This was particularly true  5.2.4  Reduced HIV  7.0% HIV prevalence  Emergency obstetric  health), but will most likely  the “Three Ones”  when GoU’s priorities  PER 2008 (Health)  prevalence rate from  rate (AHSPR34;  care strategy imple‐ achieve MDG 6 (combat  (one national  during the CAS changed  6.2% to 5%  2007/08)   mented by mid‐2007  HIV/AIDS, malaria).   HIV/AIDS  towards productive  Bank contribution: Bank  coordination  sectors. In response to  5.2.5  Increase in  OPD utilization  Human resource policy  interventions were not fully  authority, one  this and to GoU demands,  utilization of out‐ stagnant at 0.8  for health care staff  effective in achieving the targets  agreed HIV/AIDS  the Bank is now preparing  patient department  (AHSPR; 2008/09)  finalized and  set and actions planned, which,  framework, and one  a standalone health sector  (OPD) from 0.9%  implementation  among other things, included  M&E framework)  project.   initiated by mid‐2007  5.2.6  Approved posts  56%35 of approved  support to reproductive health,  through the National  (b) It is important to set  filled by formally  posts (AHSPR;  family planning, malaria control,  Strategic Framework  realistic indicators and  trained health workers  2008/09)  and provision of skilled health  for HIV/AIDS  targets; often the  (from 68% to 90%)  workers.  tendency is to select  Support to Health  5.2.7  Increased in  26% of facilities  Research  outcome indicators that  facilities without any  without drug stock  are upstream in the result  drug stock outs36  outs (AHSPR;  chain and cannot be  from 40% to 60%  2008/09)  directly influenced  5.2.8  Deliveries in  40% of deliveries in  through the interventions   health care centers  health care centers  from 24.4% to 50%  (AHSPR; 2007/08)  5.2.9  Demand for  Demand met  family planning  reduced from 27% to  services met37  24% (DHS; 2006)  5.2.10 Children  5.2.10 85% children  immunized (DPT3)  immunized (DPT3)  from 83% to 90%  (AHSPR; 2008/09)                                                                    34 Annual Health Sector Performance Report 2009.  35 Staffing norms were revised upwards in 2006/07.  36 Chloroquine, fansidar, measles vaccine, Depo Prevera, ORS, and cotrimaxole.  37 Medium target was planned to be developed, but this was never done.  ‐ 134 ‐    Strategic Objective 5.3: Improved Access to Safe Water Supply and Sanitation    Result: Partially achieved  Bank Contribution: Moderately satisfactory  5.3.1  Increased  Rural 63%, Urban  3,700 new water  Progress: Some but short of    Lending  (a) Need for additional  percentage of  61% (Water and  systems serving 950,000  UJAS/PEAP targets. However,  PRSC 5‐7  focus on Northern  population using safe  Environment Sector  people in rural areas  Uganda is on track to meet or  Uganda: The Bank should  AAA  water from  Performance Report  throughout UJAS period  exceed water MDG targets.  support GoU in  55%rural/65% urban  2009)  Sanitation Study  undertaking increased  In small towns: 3,500  Bank contribution: Support  to 90% rural/100%  new water connections  through the PRSCs to LGs helped  capacity building for  urban  by 2006; 4,000 by 2007  exceed CAS targets (protected  service delivery and  5.3.2  Improved  Rural 62%, urban  springs, boreholes drilled and  infrastructure  In large towns: 12,500  percentage of  74% (Water and  new wells constructed). Specific  development in the  new water connections/  population using  Environment Sector  outcomes were achieved,  North.   133 new sewerage  sanitation facilities  Performance Report  connections by mid‐ including reaching almost two  (b) A clear budget line for  from 56% rural/65%  2009)  2006; 13,000 new water  million additional people in rural  sanitation is needed in the  urban to 80%  connections/139 new  areas with water connections,  national budget to  rural/100% urban  sewerage connections  achieving higher than planned  address increasing  5.3.3  Increased  82% rural water and  by mid‐2007; 13,500  results in new number of  demand and insufficient  percentage of rural  sanitation facilities  new water connections/  connections in rural and urban  resource availability. The  water and sanitation  functional (Water  146 new sewerage  areas, and introducing debt write  pro‐poor strategy should  facilities functional  and Environment  connections by mid‐ off for National Water and  be implemented and  from 70% to 85%  SPR 2009)  2008  Sewerage Cooperation.   progress reported.   Strategic Objective 5.4: Revitalized Community Development Function    Result: Not achieved  Bank Contribution: Moderately unsatisfactory  5.4.1  Increased  888 community  Community mobilize‐ Progress: Limited progress on  Mainstream social  Lending  (a) PRSCs not optimal  number of filled  development worker  tion and empowerment  one indicator although less than  development and  PRSC 5‐7  instrument for supporting  community  posts filled (FY2009)  strategy operationalized  50% of established posts are  protection concerns  CD interventions.    development (CD)  by mid‐2006  filled. No real progress towards  across health,  Integration of CD in a  worker posts (from  strategic objective.  education and water  AAA  wider set of Bank  Equal Opportunities  732 base case)  Commission: Policy  Bank contribution: Bank  & sanitation  Civic Engagement  interventions more  5.4.2  Proportion of  Not monitored  submitted to cabinet by  contributed to this outcome  Assist the  and Social  feasible and relevant.  functional  mid‐2006; Established  through PRSC policy dialogue.  implementation of  Accountability  (b) The Bank should con‐ community  by mid‐2007  Only limited progress was noted  orphans and  sider whether, in the con‐ management  National Gender Policy  in actual implementation of  vulnerable children  text of prioritization of  38 policies, mainly due to financial  policy and the  interventions, it is  committees   submitted to cabinet by  mid‐2007  constraints and administrative  community  relevant to commit itself  delays.   empowerment and  to subsectors such as CD.  mobilization strategy                                                                  38  No baseline available.  ‐ 135 ‐    Annex 2: Planned Lending Program and Actual Deliveries FY06-FY09 (including regional projects) Planned Actual FY Projects in CAS Plan Type Result IDA IDA US$ (m) US$ (m) 2006 Millennium Science Initiative SIL 20 30 Actual Poverty Reduction Support Credit 5 (PRSC-5) DPL 150 135 Actual1 Public Service Enhancement Reform (UPSPEP) SIL 70 23 Actual2 Thermal Power Generation SIL 0 0 Dropped EAC Transport/Trade (Regional) SIL 10 9 Actual Regional Communications Infrastructure (Regional) SIL 0 0 Dropped Subtotal FY06 250 197 2007 Kampala Institutional Infrastructure and Development Project APL 30 34 Actual (FY08) Local Government Management and Services Delivery Project APL 50 55 Actual (FY08) Poverty Reduction Support Credit 6 (PRSC-6) DPL 150 125 Actual1 Lake Victoria Environmental Management Project 2 (Regional) APL 20 9 Actual (FY09) Private Power Generation SIL 0 0 Dropped Power Sector Development Project SIL 300 New Private Power Generation (Bujagali) N/A 0 New3 Subtotal FY07 250 523 2008 National Roads Management SIL 50 0 Dropped Energy Rural Transformation 2 APL 50 75 Actual (FY09) Poverty Reduction Support Credit 7 (PRSC-7) DPL 150 200 Actual Community Development Fund APL 0 0 Dropped4 Agriculture Research & Training (Additional Financing) AF 12 New Program for Control of Avian Flu ERL 10 New Subtotal FY08 250 297 2009 Roads Development 4 APL APL 50 0 Dropped5 Poverty Reduction Support Credit 8 (PRSC-8) DPL 150 0 Moved to FY10 Natural Resource Management SIL 20 0 Dropped East Africa Regional Power Project (Regional) SIL 30 0 Slipped to FY10 Sustainable Management of Mineral Resources (Add. Financing) AF 5 New Post Primary Education and Training Program APL 150 New Northern Uganda Social Action Fund 2 (NUSAF-2) SIL 100 New Environmental Management Capacity Building II (Add. Financing) AF 15 New Subtotal FY09 250 270 6 TOTAL (FY2006-09) 1,000 1,287 Notes: = New project not originally in the CAS 1 PRSC-5 and PRSC-6 were reduced due to concerns about continuous overruns on public administration budget. 2 UPSEP was reduced from $70m to $23m following restructuring. 3 Private Power Generation was an IDA guarantee of $115m provided as part of the wider investment in Uganda's energy sector. 4 Community Development Fund was converted into NUSAF-2 5 Roads Development Phase 4 was dropped and integrated in the Transport Sector Development project scheduled for delivery in FY10. 6 The CAS 2006-2009 stated that all allocations will be determined annually on the basis of the performance based allocation system. The above is a presentation of planned versus final commitments during the CAS period.       ‐ 136 ‐    Annex 3: Planned Non-lending Program and Actual Deliveries FY06-09 FY Analytic and Advisory Activities in CAS Plan Type Result 2006 Diagnostic Trade Integration Study (DTIS) ESW Actual Financial Sector Follow up ESW Actual Country Economic Memorandum ESW Actual (FY07) Land Poverty and Social Impact Analysis (PSIA) - Northern Uganda ESW Actual (FY08) Public Expenditure Review ESW Dropped Poverty Social Impact Assessment (PSIA) - Local Tax Reform ESW Dropped PRSP/Poverty ESW Dropped Tanzania/Uganda Harmonization Policy Note ESW Dropped Debt Sustainability Analysis (DSA) DSA Actual Uganda Insolvency ROSC ROSC Actual Options for Strengthening EAC's Trade Integration TA Actual (FY08) Pedagogy Assessment (TA) TA Actual 2007 Public Expenditure Review (Education) ESW Actual CIDA Health Systems Support ESW Actual Country Portfolio Performance Review CPPR Actual (FY08) Investment Climate Assessment (ICA) ESW Actual (FY09) Country Integrated Fiduciary Assessment (CIFA) ESW Integrated into PEFA ESW Private Sector Development ESW Integrated into ICA Financial Sector Strategy ESW Dropped PRSP/Poverty ESW Dropped Northern Uganda Public Expenditure Review (PER) ESW Actual Investor Round Table TA Actual Northern Uganda Conflict Management TA Actual 2008 Public Expenditure Review (Health) ESW Actual (FY09) Financial Sector Strategy ESW Actual (FY09) Poverty and Inequality - Sharing Growth ESW Actual (FY09) Governance of Natural Resource Management ESW Dropped Sustainable Land Management PER ESW Actual Country Economic Memorandum - Follow up ESW Actual Sanitation ESW ESW Actual Civic Engagement and Social Accountability ESW Actual UK-Uganda Trade Corridor ESW Actual (FY09) Investors Round Table (TA) TA Actual (FY09) Uganda Pension Reform (TA) TA Actual 2009 Public Expenditure and Financial Accountability (PEFA) Assessment ESW Actual Agriculture Sector Public Expenditure Review ESW Actual Human Development Report ESW Dropped Land and Irrigation (FY08) ESW Slipped to FY10 Support to Post-primary Education (TA) TA Actual Justice Sector Assessment (TA) TA Actual Technical Support to Northern Uganda (TA) TA Actual Notes: = New deliverable not originally in the CAS   ‐ 137 ‐    Annex 4: Selected Indicators of Bank Portfolio Management and Performance (FY06-09) Indicator 2006 2007 2008 2009 Number of Projects under Implementation* 21 18 17 16 Average Implementation Period (years) 4.4 5.5 4.8 4.3 Realism 100% 0% 83% 100% Number of Problem Projects 1 0 5 2 Ratio of Problem Projects 5% 0% 28% 13% Proactivity 80% 100% 0% 100% Commitments at Risk 8% 12% 27% 15% Number of Projects at Risk 1 2 6 2 Ratio of Projects at Risk 5% 11% 35% 18% Number of Risk Flags 8 28 23 28 Number of Overage Projects 1 3 1 3 Disbursement Ratio 22% 25% 28% 30% Ratio of Projects with Slow Disbursement 19% 11% 18% 19% Portfolio Management 2006 2007 2008 2009 Country Portfolio Performance Review No No Yes No Supervision Resources ($, '000) $2,309 $1,893 $1,950 $1,637 Average Supervision Cost per Project ($, '000) $110 $105 $115 $88 Memorandum Items Since FY80 FY 06-09 Project evaluations by IEG (number) 77 9 Projects evaluated by IEG (amount, $ millions) 3,839 527 IEG-evaluated Projects rated U or HU (number) 32% 0% IEG-evaluated Projects rated U or HU (amount) 36% 0% Notes: * Excludes regional projects U: Unsatisfactory HU: Highly Unsatisfactory       ‐ 138 ‐            Annex 5: Projects that Exited the Uganda Portfolio during FY06-09   Commit- Undisbursed Project Closing Development Implementa- Exit Lending Approval Closing Date Problem # Risk Project Name ments Balance Age Extension Objective tion Progress Year Instrument Date (Actual) Project Flags ($ million) ($ million) (Years) (Months) Rating Rating 2006 Lake Victoria Environmental Management SIL 7/30/1996 12/31/2005 16.6 0.5 9.4 No 36 MS S 1 Project (FY97) GEF Lake Victoria Environmental SIL 7/30/1996 12/31/2005 13.2 0.0 9.4 No 36 MS S 0 Management Project (FY97) PRSC5 (FY06) DPL 1/17/2006 11/30/2006 135.0 0.0 0.4 No 0 S S 0 2007 Second Economic and Financial   TAL* 11/30/1999 12/31/2006 48.6 0.1 7.1 No 36 S S 1 Management Project (FY00) HIV/AIDS Control Project (FY01) APL 1/18/2001 12/31/2006 47.5 0.2 6.0 No 0 MS S 2 Makerere Service Delivery Pilot Project INN LN** 3/26/2002 12/31/2006 5.0 0.0 4.8 No 12 S S 1 (FY02) PRSC 6 (FY07) DPL 4/26/2007 11/30/2007 125.0 0.0 0.2 No 0 MS MS 1 2008 Roads Development Phase 1 (FY99) APL 6/29/1999 6/30/2008 91.0 6.2 9.0 No 42 S S 3 ‐ 139 ‐  Power Project 4 (FY02) SIL 7/3/2001 3/31/2008 62.0 0.0 6.7 Yes 39 MU MU 1 Road Sector Institutional Support Technical TAL* 9/9/1997 12/31/2007 30.0 0.8 10.3 No 84 S S 1 Assistance Project (FY98) Road Development Phase 2 (FY02) APL 7/3/2001 6/30/2008 64.5 1.1 7.0 No 24 S S 1 Local Government Development Project 2 SIL 5/29/2003 12/31/2007 125.0 0.0 4.4 No 6 S S 1 (FY03) 2009 Second Agricultural Research and Training SIL 1/6/1999 6/30/2009 38.0 0.2 10.2 No 42 S S 1 Project (FY99) Energy for Rural Transformation (FY02) APL 12/13/2001 2/28/2009 49.2 0.5 7.2 No 30 S*** S*** 1 GEF Energy for Rural Transformation APL 12/13/2001 2/28/2009 12.5 0.8 7.2 No 30 S S 0 (FY02) Northern Uganda Social Action Fund (FY03) SIL 7/23/2002 3/31/2009 100 0 6.9 No 12 S S 0 * Technical Assistance Loan ** Learning/Innovative Loan *** Latest ISR not approved by sector MU: Moderately Unsatisfactory MS: Moderately Satisfactory S: Satisfactory       Annex 6: ICR/IEG Ratings for IDA Projects that Exited the Uganda Portfolio during FY06-09   Overall Bank Overall Exit Sustainability Quality of Bank Project Outcome Rating Performance Borrower Quality at Entry Year Rating Supervision Rating Performance ICR IEG ICR IEG ICR IEG ICR IEG ICR IEG ICR IEG 2006 Lake Victoria Environmental Management S MS L L S S # S # S # S Project (FY97) PRSC5 (FY06) N/A* N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A 2007   HIV/AIDS Control Project (FY01) MS MU # # S MS MS MS MS MS S S Second Economic and Financial Management S S # # MS MS S MS MU MU S S Project (FY00) Makerere Service Delivery Pilot Project (FY02) S S # # S S S S MS MS S S PRSC 6 (FY07) N/A* N/A # # N/A N/A N/A N/A N/A N/A N/A N/A ‐ 140 ‐  2008 Roads Development Phase 1 (FY99) S S # # MS MS MS MS MU MU MS MS Road Sector Institutional Support Technical MS MS # # MS MS MS MU MS MS MS S Assistance Project (FY98) Road Development Phase 2 (FY02) S S # # MS MS MS MS MS MS MS MU Local Government Development Project 2 S S # # S S S S S S S S (FY03) Power Project 4 (FY02) MS MU # # S MS S S S MS S S 2009** Energy for Rural Transformation (FY02) S # # # S # S # S # S # Northern Uganda Social Action Fund (FY03) S # # # S # MS # S # S # * No ICR available for PRSC 5-7, as this is a DPL series with PRSC-7 ending November 2009. ** No IEG ratings for projects exiting in FY09 by the time of completing the CAS CR.         Annex 7: Active Trust Funds FY06-FY09 (excl. debt relief funds)   Disbur- Grant Disbur- Grant Fund Execu- Closing CAS Fund Fund Name sements Amount sements Agreement Trust Fund Program Link to CAS deliverable Status tion Date Pillar (US$) (US$) (%) Date TF055795 Uganda Poverty and Inequality Analysis Closed Bank 178,341 178,341 100% 9/28/2005 12/31/2008 Environmentally and Socially Sustainable Dev ESW: CEM 1 TF056009 Country Economic Memorandum Closed Bank 407,853 407,853 100% 12/9/2005 2/28/2008 Africa Poverty Reduction and Economic Man ESW: CEM and PER 08 1 TF055172 Statistical Master Plan for Uganda Closed Recipient 138,550 138,550 100% 11/18/2005 3/31/2007 Statistical Capacity Building Program PRSC5 1 TF054472 Housing Sector Study and Assessment Closed Recipient 45,652 45,652 100% 8/11/2004 12/31/2006 IFC TA Trust Funds N/A 2.1 TF054518 Housing Sector Study and Assessment Closed Bank 25,096 25,096 100% 12/2/2004 12/31/2006 IFC TA Trust Funds N/A 2.1 TF054537 Housing Sector Study and Assessment Closed Bank 66,831 66,831 100% 12/6/2004 12/31/2006 IFC TA Trust Funds N/A 2.1 TF090535 Uganda Investor Outreach Program Closed Bank 434,899 436,645 100% 6/21/2007 8/31/2009 IFC TA Trust Funds IFC: Outreach 2.1 TF092686 Expanding Access to Housing Finance Closed Bank 246,257 -743 0% 8/15/2008 6/30/2009 FIRST TA Access to Housing Finance 2.1 TF091554 Mainstreaming Gender in Access to Finance Component in PSCP2 Active Bank 32,784 39,300 83% 1/31/2008 6/15/2009 Gender Trust Funds PSCP-2 2.1 TF092516 African Small and Medium Size Enterprises - Uganda Active Bank 53,377 569,202 9% 7/1/2008 6/30/2010 IFC TF N/A 2.1 TF051985 Uganda Village Phone Closed Bank 0 0 0% 5/8/2007 12/31/2007 IFC TA Trust Funds N/A 2.1 TF090359 Non Life Insurance Technical Reserving Pilot Closed Bank 124,814 137,500 91% 6/7/2007 9/30/2008 FIRST N/A 2.1 TF093674 Renewable Energy - Powered Milk Coolers Active Recipient 100,000 200,000 50% 4/10/2009 10/1/2011 GEF IA Agriculture 2.2 TF092903 Recharging Fees for Lamps can buy Hours of Solar Light Active Recipient 159,730 199,662 80% 1/26/2009 4/29/2010 Public Private Infrastructure Advisory Fund ERT 2.5   TF093559 Road Safety Management Capacity Review Active Bank 31,864 80,000 40% 3/1/2009 1/31/2010 Global Road Safety Program Transport Sector Dev't Project 2.5 TF093453 Bus Rapid Transit Conceptual Design Active Bank 10,821 279,000 4% 12/10/2008 12/31/2009 Public Private Infrastructure Advisory Fund Roads Development 3 2.5 TF024839 Rural Electrification Technical Assistance Closed Bank 162,982 162,982 100% 11/21/2000 12/31/2005 IFC TA Trust Funds ERT 2.5 TF050569 West Nile Electrification project Active Recipient 5,742 3,900,000 0% 5/29/2002 12/31/2012 Carbon Fund ERT 2.5 TF053318 Capacity Building to support Carbon Finance Transactions Closed Recipient 82,784 82,784 100% 4/21/2009 3/5/2008 PHRD ERT 2.5 TF050371 GEF2: Energy for Rural Transformation Project Closed Recipient 11,633,575 11,633,575 100% 11/16/2009 2/28/2009 Global Environment Facility ERT 2.5 TF028318 GEF1 Uganda Lake Victoria Environment Management Project Closed Recipient 13,147,366 13,197,000 100% 9/10/1996 12/31/2005 Global Environment Facility Lake Victoria 2.6 TF051204 GEF2 Protected Areas Management and Sustainable Use Project Active Recipient 7,767,081 8,000,000 97% 9/16/2002 6/30/2010 Global Environment Facility PAMSU 2.6 TF051477 PHRD-Lake Victoria Environmental Management Project/Phase 2 Closed Recipient 686,205 686,205 100% 2/10/2003 2/9/2007 PHRD Lake Victoria 2.6 TF056883 Uganda Nile Basin Reforestation Project Active Recipient 0 1,084,067 0% 6/30/2006 12/31/2017 Carbon Fund N/A 2.6 TF091665 Northern Uganda Peace Recovery and Development Fund Active Recipient 495,000 1,656,900 30% 4/24/2008 6/30/2010 Development Grant Facility NUSAF 3 TF092059 Bank Support to Uganda Demobilization and Reintegration Project Active Bank 164,982 240,000 69% 4/22/2008 6/30/2010 Free Standing Emergency and Dem 3 TF092061 Uganda Emergency Demobilization and Reintegration Project Active Recipient 2,300,543 2,850,000 81% 8/15/2008 6/30/2010 Free Standing Emergency and Dem 3 TF092991 NUSAF Youth Opportunities Program Impact Evaluation Active Bank 169,882 309,860 55% 10/6/2008 6/30/2010 Strategic Impact Evaluation NUSAF 3 TF093863 Support to Uganda Demobilization and Reintegration Project Active Bank 35,280 300,000 12% 1/1/2009 6/30/2010 Free Standing Emergency and Dem 3 ‐ 141 ‐  TF094355 SIEF Impact Evaluation of Youth Opportunities Program Active Bank 0 100,000 0% 5/15/2009 8/31/2010 Gender Trust Funds NUSAF Impact evaluation 3 TF053729 Amnesty Commission - Resettlement and Reintegration of Reporters Closed Recipient 4,143,066 4,143,066 100% 5/16/2008 6/30/2007 MDRP Emergency and Dem 3 TF055571 German Poverty and Social Analysis Fund - Uganda Closed Bank 24,319 34,319 71% 8/4/2005 1/31/2007 Free Standing ESW: Northern Ug. Land Policy 3 TF051963 Capacity Building for Decentralized Community Based Participatory Planning and Budgeting Closed Bank 267,002 267,002 100% 4/15/2009 9/30/2006 Poverty Reduction Strategy Trust Fund N/A 4.2 TF094730 Governance in the New Uganda CAS: Capturing Opportunities and Mitigating Risks Active Bank 111,903 215,000 52% 6/25/2009 4/30/2010 Governance Partnership Facility Programmatic Governance TA 4.2 TF054178 Strengthening Civil Society and Government Partnership in Monitoring Public Expenditure Closed Bank 97,896 97,896 100% 11/17/2008 9/19/2007 Institutional Development Fund N/A 4.2 TF056783 Strengthening the Monitoring and Evaluation System of the Poverty Eradication Action Plan Active Recipient 447,070 495,000 90% 6/27/2006 12/25/2009 Institutional Development Fund IDF Strengthening Monitoring 4.2 TF090755 Uganda Reproductive Health Active Recipient 1,039,454 4,300,000 24% 10/23/2007 12/31/2011 Output Based aid Individual project 5.2 TF092919 Avian and Human Influenza Preparedness and Response Project Active Recipient 0 2,000,000 0% 10/10/2008 6/30/2011 Avian-Human flu TF Avian Flu - Lending 5.2 TF058176 Strengthening the Avian Influenza Control and Human Preparedness and Response Plan Closed Bank 93,321 93,321 100% 3/7/2007 6/30/2008 Avian-Human flu TF Avian Flu Project 5.2 TF094463 Private Water Service Delivery Access to Finance Active Bank 34,267 74,810 46% 5/20/2009 9/30/2009 Public Private Infrastructure Advisory Fund IFC: Water Sector Reform 5.3 TF094527 Impact Analysis of Water Sector Policy and Investments in Uganda Active Bank 32,437 108,000 30% 6/8/2009 6/30/2010 Water Partnership Program Impact Evaluation WSS 5.3 TF057882 GPOBA -Uganda Small Towns Active Recipient 608,060 1,069,000 57% 2/12/2007 12/31/2011 Output Based aid Individual project 5.3 TF054705 Water and Sanitation Program Closed Bank 497,749 497,749 100% 1/29/2005 3/31/2008 Water and Sanitation Program ESW: Sanitation Study 5.3 TF091510 GPOBA W3 - Kampala Water Connections for the Poor Active Recipient 166,867 2,527,100 7% 2/19/2008 12/31/2011 Output Based aid Individual project 5.3 TF054630 External Funding of a Program Officer Position in Uganda Closed Bank 579,711 579,711 100% 2/17/2005 2/29/2008 Single Purpose Trust Fund N/A N/A TF094036 Employment, Poverty and Inequality in Uganda Active Bank 41,961 150,000 28% 3/20/2009 6/30/2010 Belgium Poverty Program ESW: Poverty and Inequality N/A TF050633 Strengthening Quantitative, Qualitative and GIS Based Poverty Monitoring in PRSP Closed Bank 261,347 261,949 100% 3/1/2002 12/30/2005 Statistical Capacity Building Program N/A N/A TF056814 Uganda: Lake Victoria Trust Fund Closed Recipient 289,573 289,573 100% 6/29/2006 6/30/2009 Multi Donor Trust Fund For Lake Victoria 2 Lake Victoria 2 N/A TOTALS 47,444,293 64,209,757 74% Active by end of FY09 13,809,105 30,746,901 45% Annex 8: Regional Projects FY06-FY09 Net Commitment Uganda IDA All Closing Project Name Uganda Allocation Approval Countries Date (US$m) (US$m) (US$m) Uganda - Lake Victoria Management Project (LVEMP 1) 43.6 16.6 16.6 FY97 12/31/05 3A - Trade Facilitation Project SIL (FY01) 122.5 20.0 20.0 FY01 6/30/11 3A - HIV/AIDs Great Lakes Initiative APL (FY05) 20.0 N/A N/A FY05 10/31/10 East Africa Trade & Transport Facilitation Project (FY06) 199.0 26.4 8.8 FY06 9/30/11 Lake Victoria Management Project (LVEMP 2) 90.0 27.5 9.2 FY09 6/13/13 Total 475.1 90.5 54.6     Annex 9: Regional AAA involving Uganda, FY06-FY09* Output Task Name Delivery Countries Involved ESW East African Community Strategy FY06 EAC Countries ESW East Africa Financial Integration FY06 EAC Countries Mauritius/COMESA TA Regional Multi-Disciplinary Center of Excellence (RMCE) FY07 and SADC countries Strengthening Food Security in Southern and Eastern Africa EAC, COMESA, ESW FY09 through Trade Liberalization and Regional Integration SADC countries COMESA and ECOWAS Infrastructure Fund Structure and COMESA countries, TA FY09 Management ECOWAS Countries * Not included in UJAS/CAS     Annex 10: Regional Trust Funds FY06-09* Regional Net Commitment Project Name Organization for All Countries Approval Supported (US$m) Inter-Governmental Authority on Development (IGAD) IGAD 14.5 FY07 Regional HIV/AIDS Partnership Program MDTF activities and Nile Basin Initiative NBI ** IDA investments MDTF to support agricultural research through ASARECA ASARECA*** 50.0 FY08 Africa Agricultural Marketing Program COMESA 3.8 FY08 * Not included in UJAS/CAS ** Approval year depends on sub-project *** Association for Strengthening Agricultural Research in Eastern and Central Africa Breakdown of Nile Basin Initiative involving Uganda Regional Net Commitment Project Name Organization for All Countries Approval Supported (US$m) Nile Transboundary Environmental Action Project NBI 17.0 FY03 Institutional Strenghening and Scaling Up NBI 3.3 FY03 Applied Training NBI 14.5 FY04 Socio-Economic Development and Benefit Sharing NBI 6.5 FY06 Nile Basin Initiative Institutional Strenthening Project NBI 24.0 FY09 Regional Agricultural Trade and Productivity Project NBI 1.0 FY09     ‐ 142 ‐    IBRD 33504R3 U GA N D A DISTRICT CAPITALS DISTRICT BOUNDARIES UGANDA NATIONAL CAPITAL INTERNATIONAL BOUNDARIES RIVERS MAIN ROADS RAILROADS This map was produced by the Map Design Unit of The World Bank. The boundaries, colors, denominations and any other information shown on this map do not imply, on the part of The World Bank Group, any judgment on the legal status of any territory, or any endorsement or acceptance of such boundaries. 30°E 32°E 34°E 0 25 50 75 100 Kilometers SUDAN 0 25 50 75 Miles To Juba To Faradje 4°N 4°N Moyo KA ABO NG KAABONG KOBOKO YUMBE KITGUM K E N YA Yumbe Kaabong YO Koboko Adjumani Kitgum MO Maracha I MARACHA AN M A D le KOTIDO KOTID O JU Ni Arua PAD ER Kotido To t Ac r Lodwar Albe G ULU hw UA ARU A Kilak Ok o k ABIM a Gulu O ra AMURU Abim Moroto an DE DEMM. RE . R E P. Nebbi BB I NE BBI Nile LIR A LIRA Lo ch om OYAM Victoria Lira MO ROTO MOROTO OF O CO F C ON O N NGO GO GO Bulisa Oyam AMURIA APAC KATAKWI 2°N DOKOLO Nakapiripirit 2°N BULISA Apac Amuria Katakwi To MASIND I MA SIN DI Dokolo Beni Lake Kaberamaido Lake NAKAPIRIPIRIT Kwania Lake Salisbury Opeta AMOLATAR rt Masindi KABERA- be Soroti Siti Amolatar NAK MAIDO SOROTI Kumi KAPCHORWA AS Al Hoima ON Lake Kyoga Kapchorwa Kafu G KUMI ke HOIMA O BUKWO La Nakasongola PALLISA K AY U N G A Sironko Bukwo KAMULI LA i Nkus Pallisa SIRONKO KIBOGA NAKASEKE KALIRO Budaka Mbale Kamuli Mt. Elgon (4321 m) To K I BA KIB AA LE A LE Kiboga NAMU- Kaliro Bunia BUNDIBUGYO TUMBA MANAPWA Kibale Luwero Butaleja Fort Bubulo BUDAKA LUWERO Kayunga IGANGA Busiki LE Bundibugyo Portal Nakaseke MBALE Kyenjojo Tororo ARO Mubende To JINJA Bugiri TORORO Nakuru KYENJOJO Iganga MU UBBE N D E MITYANA Wakiso END BUTALEJA KAB Busia Margherita Peak Mityana Mukono Jinja (5110 m) KAMWENGE KAMPALA BUSIA KASESE Kamwenge Mpigi KAMPALA Kasese To Katonga MP IG IGII Kisumu Lake SEM 0° George IBANDA B A Sembabule WAKISO 0° KIRUHURA BU Ibanda MASAKA MAYUGE BUGIRI LE Lake Masaka MUKONO BUSHENYI Kiruhura Edward Kalangala RU K To Beni Bushenyi MBARARA K E N YA UNG Mbarara Isingiro Rakai KALANGALA IRI KANUNGU Rukungiri Ntungamo RAKAI Kanungu ISINGIRO NTUNGAMO KISORO KABALE Kisoro Kabale Lak e Vic toria To Goma TANZ TAN ANI Z AN IA IA To Kigali To Nyakanazi TANZANI TA A NZA NIA RWAND RWA N D RWAN DAA 32°E 34°E AUGUST 2008