Ur&cis22965 WORLD BANK OPERATIONS EVALUATION DEPARTMENT SUMMER 1998 N U M B E R 1 7 1 Post-Con lict Reconstruction: Uganda Case Study Summary pO S ST-COL ONIAL FVIENTS IN IUG(AND A ARE MNOST EASIL LDIVISIBLE into four pcriods cori-csponcdiig to the dominant political reginmes: the newlv indepenident government of Obote from 1 963-71; the Anin Era, 1971-79; Obote 11, 1980-85; and the National Resistance Movvemnent (NRM), 1986 to the present. Trhe NRM assLimend power in JanlLuar-y 1 986 to face a shattered economy and inflation ra,ing at an annual rate in excess of 240 percent. The NRM1 embarked on a stabilization and structural adjustment programi in 1987: the priority being to restore macro- economic stability and bring, down inflation. While this goal proved eluLsive until the 1 992-93 fiscal year, wheni government adopted a strict cash budget rule aimed at preventing printing of money to finance deficits, subsequent results have received international recognition. Inflation has been below 10 percent, and economic growth rates have averaged 6.4 percent a year for eight years. This progranm was assisted by the Bank and other donors. The Bank's Influence in Brief closely coordinated with international World Bank involvement in the reconstruc- donors. The Bank's role was key in tion efforts of Uganda has been particularly strengthening the Ministry of Finance and comprehensive. In the first five years after the Central Bank, removing the monopoly the conflict (1987-92), the Bank supported of the Coffee Board, assisting in sugar reha- approximately 25 lending operations bilitation, and rebuilding the country's amounting to more than US$1 billion, and roads. Despite good performance in 2 World Bank Operations Evaluation Department reforming and rebuilding the economy, Bank involvement The exchange rate was partially liberalized following a could have been improved in several respects: insufficient major effort in consensus building by the government. attention to consensus building; excessive use of condi- The single most important mechanism of predatory tax- tionalities; and most important, a seriously dysfunctional ation, the Coffee Marketing Board monopoly, was emphasis on raising taxation. The Bank's performance removed. Asian property confiscated under Amin was was relatively poor in social sectors, particularly in returned as a condition of SAL I. This restored the rule strengthening health and education institutions. Invest- of law, gradually removed the confusion over urban ment in the social sectors was often premature, usually property rights, which may have become a binding con- implemented through weak ministries and too often straint on investment, and provided a powerful signal to showed inadequate forethought given to the nature of the the international community that the government was services the Bank was trying to support. serious in its commitment to recovery. In each of these In the first five years after the conflict (1987-92), reforms the government chose to incur substantial short- Bank support focused on assisting the government to term political costs in the hope of long-term benefits. achieve economic stability and promote long-term eco- The third episode, post-1992, demonstrated one of nomic growth. the most successful involvements of the World Bank in Other Bank efforts in Uganda addressed urgent development. The economy has grown rapidly, with pri- social concerns with economic or human capital conse- vate investment rising to levels at which growth is sus- quences, such as primary education and targeting vul- tainable, and preliminary analysis of recent household nerable groups; encouraging Ugandans outside the survey data show a likely substantial reduction in country to return to take up the task of rebuilding the poverty. As the May 1997 CAS emphasized, however, nation; and reconstructing social and physical infra- the benefits of this economic growth were not spread structure. The entire portfolio from 1987 to 1997 was evenly across the country, with the north in particular, focused on reconsrruction and rehabilitation (although lagging behind. this would not be apparent from the project titles, or Despite good performance in reforming and from project documentation). rebuilding the economy, Bank involvement could have been improved: there was insufficient attention to con- Results on the Ground sensus building; excessive use of conditionalities; and a Aidt Coordination dysfunctional emphasis on raising taxation especially in Donors and the government appreciated the Bank's view of the government's history of predatory taxation. lead in aid coordination, noting its close relationship The Bank did not always exert its potential compara- with the IMF, its interest in partnership, and its prepa- tive advantage (for example, in the power sector), nor ration of accurate planning data as key advantages. did it fully use its coordination leverage to create either Coordination with respect to particular sectors or an overall strategy for reconstruction or a sector-by- programs was less evident. sector plan. NGOs were less enthusiastic about the Bank's coor- dination. The Bank corrected this shortcoming through Ri2L7Lu lfftV,ST/!;' <7 7 C ! its well-used public information center in the Uganda The Bank launched four projects in 1988 for health, resident mission: however, several interlocutors, includ- sugar, technical assistance (TA) and public enterprises. ing some Bank staff, have urged a more dynamic infor- These were followed in 1989 by telecommunications, mation strategy addressing the Ugandan public. railways and education. Of these seven, the two which seem to have had the most effect on reconstruction were Rebutildcing the Economy TA and sugar. The two projects together cost only $43 The Bank first supported an adjustment program in million and yielded high pay-offs. They were precisely the Obote II period. This first, albeit briefly, successful appropriate for a post-war transition because they stabilization program in Africa, fell apart in 1985 as rebuilt human capital in the civil service and restored a result of the spending pressures brought on by the private business confidence. The TA built a group of civil war and the limited commitment of the political competent economists within the core ministries, and leadership. By 1986 few signs of this adjustment pro- put data collection systems in place. Gradually it devel- gram remained. oped a team of specialists with the understanding of The second episode of adjustment lending covers short-term changes in the economy needed to manage the period up to March 1992. Although government policy reforms while maintaining macroeconomic stabil- commitment during this period was half-hearted, there ity. The sugar project was important because it enabled was significant progress in some areas in 1989-90. the rehabilitation of Uganda's foremost private business Pr~cis 3 concern, the Madhvani Group. The return of Madhvani both were well-manifested in Uganda. The first is the to Uganda pioneered the influx of Asian skills and capi- real-time duration of recovery, which may typically tal which are now helping to transform the economy. require at least two decades of sustained effort, with the The two infrastructure projects, railways and risk of war a recurrent reality. The second timetable is telecommunications, each had a component of organi- set by donor concerns, which may be guided by different zational improvement as well as the purchase of equip- objectives, and manifests itself through programs which ment. The railways had a monopoly in the transporta- do not necessarily consider the long recovery process. tion of coffee. This directly supported inefficiency in the Government has to observe both timetables, balancing railways, and had serious implications for the efficiency the political expediencies of short-term measures to pro- of road haulage. Once the monopoly was removed in vide security and boost confidence against the needs for 1993, the scale of business in road haulage increased longer-term recovery. sufficiently to induce new entry to the activity, breaking a cartel which had kept costs high. Thc Banzk's ISt itflttiefl,i A rram.oenzc'nts Regarding Bank processes and institutional arrange- R\ucuzilidin71, Huiu a.ui/ . l Cal(/ital ments, project design did not fully reflect the need in Bank performance was relatively poor in the social sec- Uganda for a flexible, process-oriented project design. tors, particularly in strengthening health and education This was particularly evident in the social sectors, institutions. The post-conflict period required major where the Education and Health Ministries were too health sector reforms: these fell short of needs. Educa- weak to accommodate spending, and where superven- tion investment was equally disappointing, with only an ing events like decentralization and renewed conflict estimated 37 percent of funds reaching schools. There changed priorities. was too much dependence on the existing bureaucracy, Changes in key resident mission staff, task man- and not enough use made of NGOs. agers, and government staff were disruptive. Bank staff The Northern Uganda Reconstruction Project, were not always familiar with working in conflict coun- begun in 1992, aimed to redress the imbalance in recov- tries nor with the international relief and rehabilitation ery assistance available to northern districts. It has been system. Staff resources and time were concentrated in criticized for achieving few results, and has been gener- Kampala; this inevitably limited understanding and con- ally characterized as "too little, too late." Its successor tact with international and local NGOs. project will need to address the complexities of operat- ing, at least in part, in a conflict zone, with the likeli- Conclusion hood of parallel relief and rehabilitation activities. Close collaboration between the government and the Demobilization in Uganda was initially delayed international community, and strong government own- for the wrong reasons (microsecurity) and then begun ership, has given Uganda's recovery the reputation of at an inappropriate time considering macrosecurity a "model reconstruction." While the Bank has demon- factors. While the Bank might have counseled greater strated generally good performance in reforming and caution, the decision was political and remains with rebuilding the economy, several areas remain in need government. Regarding process, demobilization was of improvement. clearly a success. Bank performance in the social sectors has been rel- Where Bank projects were not sequential, many atively poor, and should be improved through effective were too short to address the projected length of recov- partnerships with NGOs better equipped to implement ery. Post-war recovery rests on two different timetables: social programs. OED Study Series Precis Order Form EvalLiatioll and Development: The Institutional Dimension (1998) Complete this coupon and return to: 1997 Aninual Reviewv of Development Effectiveness (1998) The World Bank India: The Dai ry Revolution 1I 9981 Operations Evaluation Department Partnerships & Knowledge Programs (OEDPK) The World Bank's ExpeTience with Post-conflict Reconstruction (1998) 1818 H Street, N.W Financial Sector Reform: A Review of World Bank Assistance (1998) Washington, D.C. 20433, U.S.A. Rebuilding the Mozambique Economy (1998) Attention: Editor-in-Chief Agricultural Extension and Research: Achicvements and Problemis in National Systems (1997) There is no charge for mailing Precis. FIor quicker service, Fiscal Management in Adjustment Lending Hl99 7i call (202) 473-2372 or fax this completed order form to (202) 522-3125. E-mail address: ecampbellpage@worldbank.org Reforming Agriculture: Thc \Xkrld Bank Goes to Market (1997) QUANTITY TITLE PRECIS # Paddy Irrigation and WNater Management in Southeast Asia (1997) 1995 Evaluationi ResuIlts (19971 I Zamiibia CoUntry Assistan c Reviesv: Turning anl Econiiomy Around (1997) The Aga Khan Rural Support Program: A Third Evaluationi (1996) Leniding for Electric Powver in SLub-Saharan Africa (1996) Industrial Restructuring: World Bank Experience, Future C.hallenges (1996) Social Dimensions of Adjustment: NVorld Bank Experience, 1980-93 (1996) PLEASE PRINT CLEARLY 1994 Evaluation Results (1996) Ghana Country Assistance Review: Name A StLudy in Development Effectiveness (1995) Evaluiation anid Development: Address - Proceedinigs of the 1994 World Bank Conferenice ]1995) Developing Induistrial Technology: Lessons for Policy and Practice l 995) City_ State The World Banik anid Irrigation (1995) 1993 Evaluation Results (1995) Postal Code Structural and Sectoral Adcjustmcnt: World Bank Experience. 1980-92 1995) Country Gender Issues in World Bank Lending (1995) Telephone The World Bank's Role in Human Resouirce Development in Stib-Saharan Africa: Education, Training, and Technical Assistance (1994) 1992 Evaluation Results (1994) OED Precis Issued in 1998 NUMBER New Lessons from Old Projects: The Workings of Rural Development in Northeast Brazil 153 (rassroots Organizatnons for Resource (1993; contains summaries in French, Portuguese and Spanish) Management in the Philippines 154 Sustaining Rural Water Svstems: The Case of Mali Wtvorld Bank Approaches tco the Environment in Brazil (1993; contains summaries in Frenich, Portuguese, and Spanish) 155 Tsvo Projects in One: Lessons from Jamaica 156 Best Practices in Urban Developmnent: Learning from Brazil Tfrade Policy Reforms under Adjustment Programs (1992) 157 Reducing Flood Hazards and Traffic Congestion in Tunisia NW'orld Bank SuIpport for Industrialization 158 Agriculture in Hungary in Korea, India, and Indonesia (1992) 159 Transport in Thailand Population anid the World Bank: 160 Brazil: Rural Roads Implications from Eight Case Studies (1992) 161 Cote D'Ivoire: Countrv Assistance Review The Aga Khan Rural Support Program in Pakistan: 162 Kenya: Geothermal Energy Second Iiterim Evaluation 1990) 163 Annual Review of Development Effectiveness Book sales available from: 164 Rebuilding the Mozambique Economy The World Bank 165 Borrower Survey P 0 Box 960 Herndon, VA 20172-0960 166 Financial Sector Reform LUSA 167 Philippines: Country Assistance Reviesv Fax: 7013) 661-1501 168 India: The Dairy Revolution Tel: (703) 661-1580 169 Post-conflict Reconstruction Overview Interinet: http://wwsvnvvorldhank.org 170 Country Study: Bosnia From the World Bank homepage, select publications. 171 Country Study: Uganda F.-imail: picCaworldbank.org 172 Country Study: El Salvador Precis The World Bank 's Experience in Post-conflict Reconstruction: Uganda Please address comments and inquiries to the Editor-in-Chief, Case Study, by Alcira Kreimer et al., Report No. 17769, May 4, 1998. 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