PROGRAM INFORMATION DOCUMENT (PID)
                               CONCEPT STAGE

                                                                                  August 25, 2015

                                                                               Report No.:   99473
 Operation Name                      Uganda - First Fiscal Decentralization, Governance, and
                                     Service Delivery DPO
 Region                              AFRICA
 Country                             Uganda
 Sector                              General education sector (20%); Health (20%); General
                                     public administration sector (40%); Sub-national government
                                     administration (20%)
 Operation ID                        P155393
 Lending Instrument                  Development Policy Lending
 Borrower(s)                         Uganda
 Implementing Agency                 Ministry of Finance, Planning, and Economic Development
 Date PID Prepared                   August 5, 2015
 Estimated Date of Appraisal         February 26, 2016
 Estimated Date of Board             April 4, 2016
 Approval
 Corporate Review Decision           Following the corporate review, the decision was taken to
                                     proceed with the preparation of the operation.


       Key development issues and rationale for Bank involvement

First Fiscal Decentralization, Governance, and Service Delivery Development Policy Operation
(DPO) is the first of the two DPOs to support the selected policies related to strengthening fiscal
decentralization framework, improving governance, and enhancing public services. The
operation will mark return to development policy financing for Uganda after implementation of a
High-Level Action Matrix aimed at strengthening economic governance and public financial
management, and will build on the momentum created by its implementation. The operation’s
design will reflect a joint decision of the Government of Uganda and the World Bank that use of
development policy lending will be more selective and will support high-priority governance or
sectoral reforms, documented in the Uganda Country Assistance Strategy Progress Report.
Uganda has restored sound macroeconomic framework after an episode of macroeconomic
instability in 2011-12, and maintaining this framework will be an essential precondition for
approval of this operation.


       Proposed Objective(s)

The development objective of the proposed DPO series is to support implementation of policy
reforms aiming at enhancement of fiscal decentralization framework and improving selected
dimensions of governance and service delivery. The operation will support implementation of
the strategic objective of the Second NDP “Strengthen Mechanisms for Qualit y, Effective and
Efficient Service Delivery�.


       Preliminary Description

The DPO series is expected to be designed around two pillars. The first pillar, Enhancing Fiscal
Decentralization, will focus on improving equity and efficiency of intergovernmental fiscal
transfers to the district governments, and on implementing institutional changes to enhance fiscal
decentralization framework. The second pillar, Promoting Good Governance for Better Service
Delivery, will focus on enhancing public financial management and procurement for better
service delivery, and on creating opportunities for enhanced transparency and citizen
engagement to improve accountability for results.

While the government policies related to these pillars are wide-ranging, the proposed DPO series
will focus on a targeted set of critical policy actions. Experiences of the past budget support
operations in Uganda demonstrate that focus on some key distortions will be critical to prioritize
the government’s efforts in light of limited institutional capacity and implementation gaps. This
will maximize the chances for achieving significant and lasting results. The policy actions will
be chosen based on relevance, timing for implementation and coordination with other donors’
activities.


       Poverty and Social Impacts and Environment Aspects

There are no adverse distributional effects anticipated from the policies supported by the
operation, but many reforms are expected to bring benefits to the poor and lagging areas. The
fiscal decentralization reforms are designed to improve the quality of services across the board
but vulnerable groups who predominantly rely on public social services will benefit the most
without necessarily disadvantaging other groups, as horizontal inequities in provision of public
services are supposed to be decreased. The reforms on public financial management,
procurement, accountability and anti-corruption lay the foundation for transparency and
accountability that will be crucial for Uganda to succeed in improving public service delivery.
Other measures are related to institutional reforms to improve the efficiency and effectiveness of
government spending to the benefit of all people.

The operation is not expected to have any significant environmental effects. Minor effects may
arise from changes in allocation of resources to public investments in infrastructure by local
governments as a result of intergovernmental fiscal transfers’ reform, but environmental risks are
low.
       Tentative financing

Source:                                               ($m.)
BORROWER/RECIPIENT                                       0
International Development Association (IDA)             90
Borrower/Recipient
IBRD
Others (specify)
                                              Total

        Contact point
World Bank
Contact: Anton Dobronogov
Title: Senior Economist
Tel: (202) 473-4464
Fax: (202) 614-1285
Email: adobronogov@worldbank.org
Borrower
Contact:
Title:
Tel:
Email:

       For more information contact:
The InfoShop
The World Bank
1818 H Street, NW
Washington, D.C. 20433
Telephone: (202) 458-4500
Fax: (202) 522-1500
Web: http://www.worldbank.org/infoshop