Document of The World Bank IMPLEMENTATION COMPLETION AND RESULTS REPORT (IDA-41420, IDA-H1990, TF-55172) ON A GRANT AND CREDIT

Transcription

1 Public Disclosure Authorized Public Disclosure Authorized Public Disclosure Authorized Public Disclosure Authorized Document of The World Bank Report No: ICR IMPLEMENTATION COMPLETION AND RESULTS REPORT (IDA-41420, IDA-H1990, TF-55172) ON A GRANT AND CREDIT IN THE AMOUNT OF US$ MILLION (GRANT: US$112.5 MILLION, CREDIT: US$ MILLION) TO THE REPUBLIC OF UGANDA FOR POVERTY REDUCTION SUPPORT CREDITS (PRSCs) 5, 6 and 7 June 29, 2010 Poverty Reduction and Economic Management Unit II Africa Region

2 CURRENCY EQUIVALENTS (Exchange Rate Effective June 25, 2010) Currency Unit = Uganda Shillings 1.00 = US$ US$ 1.00 = 2250 FISCAL YEAR July 1-June 30 ABBREVIATIONS AND ACRONYMS AGO Accountant General s Office AG Auditor General BoU Bank of Uganda CAS Country Assistance Strategy CEM Country Economic Memorandum CFAA Country Financial Accountability Assessment CHOGM Commonwealth Heads of Government Meetings CPAR Country Procurement Assessment Report DFID Department for International Development (UK) DPP Directorate of Public Prosecution DWD Directorate of Water Development EFMP Economic and Financial Management Project EIA Environmental Impact Assessment EMIS Education Management Information Systems ESR Education Sector Review ESW Economic Sector Work FINMAP Financial Management Accountability Program GAVI Global Alliance for Vaccines and Immunization GDP Gross Domestic Product GNI Gross National Income GOU Government of Uganda HIPC Heavily Indebted Poor Countries IDA International Development Association IDP Internally Displaced Person IFMS Integrated Financial Management Systems IGG Inspector General of Government IMF International Monetary Fund IMR Infant Mortality Rate IPSAS International Public Sector Accounting Standards JAR Joint Annual Review JAF Joint Assessment Framework JARD Joint Annual Review of Decentralization JBSF Joint Budget Support Framework JSA Joint Staff Assessment LGDP Local Government Development Project M&E Monitoring and Evaluation MAAIF Ministry of Agriculture, Animal Industry and Fisheries MDG Millennium Development Goals MFI Micro Finance Institutions MLHUD Ministry of Lands, Housing and Urban Development MoES Ministry of Education and Sports MoFPED Ministry of Finance, Planning and Economic Development MoH Ministry of Health MoLG Ministry of Local Government MoPS Ministry of Public Service MTTI Ministry of Tourism, Trade and Industry MTEF Medium Term Expenditure Framework NAADS National Agricultural Advisory Services NACS National Anti-Corruption Strategy NAPE National Assessment of Progress in Education NARS National Agricultural Research Organization NDP National Development Plan NER Net Enrolment Rate NGO Non-Governmental Organization NEMA National Environmental Management Agency NIS National Integrity Survey OAG Office of Auditor General OPM Office of the Prime Minister PAF Poverty Action Fund PEAP Poverty Eradication Action Plan PFA Prosperity for All (Bonna Baggagawale) PEFA Public Expenditure and Financial Accountability PER Public Expenditure Review PFM Public Financial Management PMA Plan for Modernization of Agriculture PPDA Public Procurement and Disposal of Asset PRGF Poverty Reduction and Growth Facility PRSC Poverty Reduction Support Credit PSD Private Sector Development

3 PSIA PRSP SWAp SWG UBOS TB Poverty and Social Impact Assessment UJAS Uganda Joint Assistance Strategy Poverty Reduction Strategy Paper UNDP United Nations Development Program Sector Wide Approach UPE Universal Primary Education Sector Working Group USE Universal Secondary Education Uganda Bureau of Statistics WfP Water for Production Tuberculosis Vice President: Obiageli Katryn Ezekwesili Country Director: John McIntire Sector Manager: Kathie Krumm Task Team Leader: Young Chul Kim ICR Team Leader: Paul Wade ICR Primary Author: Richard Carroll, Karen Hendrixson

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5 UGANDA Poverty Reduction Support Credits 5-7 CONTENTS Data Sheet A. Basic Information B. Key Dates C. Ratings Summary D. Sector and Theme Codes E. Bank Staff F. Results Framework Analysis G. Ratings of Program Performance in ISRs 1. Program Context, Development Objectives and Design Key Factors Affecting Implementation and Outcomes Assessment of Outcomes Assessment of Risk to Development Outcome Assessment of Bank and Borrower Performance Lessons Learned Comments on Issues Raised by Borrower/Implementing Agencies/Partners Annex 1 Bank Lending and Implementation Support/Supervision Processes Annex 2. Summary of Borrower's ICR and/or Comments on Draft ICR Annex 3. List of Supporting Documents MAP i

6 A. Basic Information Program 1 Country Uganda Program Name Uganda Poverty Reduction Support Credit 5 Program ID P L/C/TF Number(s) IDA-41420,IDA- H1990,TF ICR Date 06/29/2010 ICR Type Core ICR Lending Instrument DPL Borrower Original Total Commitment GOVERNMENT OF UGANDA USD 135.0M Disbursed Amount USD 137.0M Implementing Agencies Office of the Prime Minister Cofinanciers and Other External Partners Program 2 Country Uganda Program Name Uganda Poverty Reduction Support Credit 6 Program ID P L/C/TF Number(s) IDA ICR Date 06/29/2010 ICR Type Core ICR Lending Instrument DPL Borrower Original Total Commitment GOVERNMENT OF UGANDA XDR 83.3M Disbursed Amount XDR 83.3M Implementing Agencies Office of the Prime Minister Cofinanciers and Other External Partners Program 3 Country Uganda Program Name Seventh Poverty Reduction Support Credit (PRSC7) Program ID P L/C/TF Number(s) IDA ICR Date 06/29/2010 ICR Type Core ICR Lending Instrument DPL Borrower REPUBLIC OF UGANDA Original Total XDR 125.0M Disbursed Amount XDR 125.0M i

7 Commitment Implementing Agencies Office of the Prime Minister Cofinanciers and Other External Partners B. Key Dates Uganda Poverty Reduction Support Credit 5 - P Process Date Process Original Date Revised / Actual Date(s) Concept Review: 01/27/2005 Effectiveness: 05/24/2006 Appraisal: 10/24/2005 Restructuring(s): Approval: 01/17/2006 Mid-term Review: Closing: 11/30/ /30/2006 Uganda Poverty Reduction Support Credit 6 - P Process Date Process Original Date Revised / Actual Date(s) Concept Review: 10/04/2006 Effectiveness: 06/14/2007 Appraisal: 02/07/2007 Restructuring(s): Approval: 04/26/2007 Mid-term Review: Closing: 11/30/ /30/2008 Seventh Poverty Reduction Support Credit (PRSC7) - P Process Date Process Original Date Revised / Actual Date(s) Concept Review: 09/28/2007 Effectiveness: 12/09/2008 Appraisal: 01/14/2008 Restructuring(s): Approval: 05/06/2008 Mid-term Review: Closing: 11/30/ /30/2009 C. Ratings Summary C.1 Performance Rating by ICR Overall Program Rating Outcomes Risk to Development Outcome Bank Performance Moderately Satisfactory Substantial Moderately Satisfactory ii

8 Borrower Performance Moderately Satisfactory C.2 Detailed Ratings of Bank and Borrower Performance (by ICR) Overall Program Rating Bank Ratings Borrower Ratings Quality at Entry Moderately Unsatisfactory Government: Moderately Satisfactory Quality of Supervision: Moderately Satisfactory Implementing Agency/Agencies: Moderately Satisfactory Overall Bank Overall Borrower Moderately Satisfactory Performance Performance Moderately Satisfactory C.3 Quality at Entry and Implementation Performance Indicators Uganda Poverty Reduction Support Credit 5 - P Implementation QAG Assessments Indicators Performance (if any) Potential Problem Quality at Entry Program at any time No (QEA) (Yes/No): Problem Program at any Quality of No time (Yes/No): Supervision (QSA) DO rating before Satisfactory Closing/Inactive status None None Rating: Uganda Poverty Reduction Support Credit 6 - P Implementation QAG Assessments Indicators Performance (if any) Potential Problem Quality at Entry Program at any time No (QEA) (Yes/No): Problem Program at any Quality of No time (Yes/No): Supervision (QSA) DO rating before Closing/Inactive status Moderately Satisfactory None None Rating: iii

9 Seventh Poverty Reduction Support Credit (PRSC7) - P Implementation QAG Assessments Indicators Performance (if any) Potential Problem Quality at Entry Program at any time No (QEA) (Yes/No): Problem Program at any Quality of Yes time (Yes/No): Supervision (QSA) DO rating before Closing/Inactive status Moderately Satisfactory None None Rating: D. Sector and Theme Codes Uganda Poverty Reduction Support Credit 5 - P Sector Code (as % of total Bank financing) Original Actual Central government administration General agriculture, fishing and forestry sector General education sector General water, sanitation and flood protection sector Health Theme Code (as % of total Bank financing) Administrative and civil service reform Education for all Nutrition and food security Public expenditure, financial management and procurement Rural services and infrastructure Uganda Poverty Reduction Support Credit 6 - P Sector Code (as % of total Bank financing) Original Actual General agriculture, fishing and forestry sector 5 5 General education sector General public administration sector General water, sanitation and flood protection sector Health iv

10 Theme Code (as % of total Bank financing) Education for all Health system performance Other accountability/anti-corruption Public expenditure, financial management and procurement Rural policies and institutions Seventh Poverty Reduction Support Credit (PRSC7) - P Original Sector Code (as % of total Bank financing) Actual Central government administration General agriculture, fishing and forestry sector 9 9 General education sector 9 9 General industry and trade sector 9 9 Health 9 9 Theme Code (as % of total Bank financing) Administrative and civil service reform Education for all Public expenditure, financial management and procurement Regulation and competition policy Rural policies and institutions E. Bank Staff Uganda Poverty Reduction Support Credit 5 - P Positions At ICR At Approval Vice President: Obiageli Katryn Ezekwesili Gobind T. Nankani Country Director: John McIntire Judy M. O'Connor Sector Manager: Kathie L. Krumm Kathie L. Krumm Task Team Leader: Dino Leonardo Merotto Young Chul Kim ICR Team Leader: Paul Wade ICR Primary Author: Richard J. Carroll Karen Hendrixson v

11 Uganda Poverty Reduction Support Credit 6 - P Positions At ICR At Approval Vice President: Obiageli Katryn Ezekwesili Hartwig Schafer Country Director: John McIntire Judy M. O'Connor Sector Manager: Kathie L. Krumm Kathie L. Krumm Task Team Leader: Dino Leonardo Merotto Young Chul Kim ICR Team Leader: Paul Wade ICR Primary Author: Richard J. Carroll Karen Hendrixson Seventh Poverty Reduction Support Credit (PRSC7) - P Positions At ICR At Approval Vice President: Obiageli Katryn Ezekwesili Obiageli Katryn Ezekwesili Country Director: John McIntire John McIntire Sector Manager: Kathie L. Krumm Kathie L. Krumm Task Team Leader: Dino Leonardo Merotto Young Chul Kim ICR Team Leader: Paul Wade ICR Primary Author: Richard J. Carroll Karen Hendrixson F. Results Framework Analysis Program Development Objectives (from Program Document) Building on six preceding PRSCs, PRSC7 is the third and final operation in a programmatic development policy lending series to support Uganda's third Poverty Eradication Action Plan (PEAP). The PRSC has been a core element of the Bank's support for Uganda, supporting four pillars of the PEAP: Economic Management (pillar 1); Enhanced Production, Competitiveness and Incomes (pillar 2); Good Governance (Pillar 4) and Human Development (pillar 5). Note: Results indicators are presented more comprehensively in Text Tables 5, 6, 7, 8 and 9, and are arranged according to program pillar. In the tables below, the final actual value for the indicator is recorded for PRSC 7 only, as it is the final operation in the series. Revised Program Development Objectives (as approved by original approving authority) No revisions (a) PDO Indicator(s) vi

12 Uganda Poverty Reduction Support Credit 5 - P Original Target Baseline Values (from Indicator Value approval documents) Indicator 1 : Value (quantitative or Qualitative) Formally Revised Target Values Actual Value Achieved at Completion or Target Years Maintain macroeconomic stability consistent with rapid private-sector led growth and sustained poverty reduction GDP growth of GDP growth of 5.2%; 7% per year; fiscal fiscal deficit at 11.3% deficit to 8.2% of of GDP; inflation 2.4% GDP; maintain inflation below 5% Date achieved 06/30/ /29/2008 Comments (incl. % achievement) Indicator 2 : Better educated Ugandans via increased primary enrollment Value (quantitative or Qualitative) Primary enrollment was 87% for boys and 86.4% for girls Primary enrollment of 90% for boys and 89% for girls Date achieved 06/30/ /30/2008 Comments (incl. % achievement) Uganda Poverty Reduction Support Credit 6 - P Original Target Baseline Values (from Indicator Value approval documents) Indicator 1 : Value (quantitative or Qualitative) Formally Revised Target Values Actual Value Achieved at Completion or Target Years Macro economic stability consistent with rapid private sector led growth GDP growth of GDP growth of 5.2% 7% a year, fiscal (PEAP), Fiscal deficit deficit to 8.2% of at 11.3% of GDP GDP, maintain (PEAP), and, inflation inflation below 5 at 5.7 % % Date achieved 06/30/ /30/2008 Comments (incl. % achievement) Indicator 2 : Private Investment as share of GDP Value (quantitative or Qualitative) 17% 19% (based on 2013/14 target of 21%) Date achieved 06/30/ /30/2008 Comments vii

13 (incl. % achievement) Indicator 3 : Value (quantitative or Qualitative) Better educated Ugandans via improved quality of primary education 45% of primary 3 34% of primary 3 pupils (boys 44%, pupils (boys 33%, girls girls 47%) 35%) achieved the achieved the desired levels of desired levels of competence in literacy competence in literacy Date achieved 06/30/ /30/2008 Comments (incl. % achievement) Indicator 4 : Healthier Ugandans Value (quantitative or Qualitative) 83% of children immunized (DPT3); 24.4% of deliveries in health care centers 90% of children immunized (DPT3); 40% of deliveries in health care centers Date achieved 06/30/ /30/2008 Comments (incl. % achievement) Indicator 5 : Public Financial Management Strengthened Value (quantitative or Qualitative) 99% of 51% of Ministries/Local Ministries/Local Governments Governments preparing preparing regular regular financial financial statements in statements in accordance with accordance with financial regulations financial regulations Date achieved 06/30/ /30/2008 Comments (incl. % achievement) viii

14 Seventh Poverty Reduction Support Credit (PRSC7) - P Original Target Formally Actual Value Baseline Values (from Revised Achieved at Indicator Value approval Target Completion or documents) Values Target Years Indicator 1 : Macro economic stability consistent with rapid private sector growth Value (quantitative or Qualitative) GDP growth of GDP growth of 5.2% 7.0%; fiscal deficit (PEAP); fiscal deficit at to 8.2% of GDP; 11.3% of GDP; and and inflation inflation at 5.7%. maintained below 5 %. 7.1% Date achieved 06/30/ /30/ /30/2008 Comments (incl. % achievement) Achieved target Indicator 2 : Private Investment as share of GDP Value 19% (Based on (quantitative or 17% 2013/14 target of 20.5% Qualitative) 21%) Date achieved 06/30/ /30/ /30/2008 Comments (incl. % achievement) Achieved Target Indicator 3 : Public Financial Management strengthened Value (quantitative or Qualitative) 99% of 51% of Ministries/Local Ministries/Local Governments Governments preparing preparing regular regular financial financial statements in statements in accordance with accordance with financial regulations financial regulations 99% Date achieved 06/30/ /30/ /30/2008 Comments (incl. % achievement) Achieved Target Indicator 4 : Better educated Ugandans via improved quality of primary education 45% of primary 3 34% of primary 3 pupils (boys 44%, Value pupils (boys 33%, girls girls 47%) (quantitative or 35%) achieving the achieving the 44.5% Qualitative) desired levels of competence in literacy desired levels of competence in literacy Date achieved 06/30/ /30/ /30/2008 Comments (incl. % Nearly achieved target ix

15 achievement) Indicator 5 : Value (quantitative or Qualitative) Healthier Ugandans 83% of children immunized (DPT3); 24.4% of deliveries in health care centres 90% of children immunized (DPT3); 40% of deliveries in health care centres 85% Date achieved 06/30/ /30/ /30/2008 Comments (incl. % Target not achieved achievement) Indicator 6 : Inflation (headline) Value (quantitative or 2.4% <5% 14.2% Qualitative) Date achieved 06/30/ /30/ /30/2008 Comments (incl. % achievement) Target not achieved Indicator 7 : Percent of Wetlands under Sustainable Management Plans Value (quantitative or 7.5% 20% NA Qualitative) Date achieved 06/30/ /30/ /30/2008 Comments (incl. % No evidence of improvement in this indicator. achievement) (b) Intermediate Outcome Indicator(s) Uganda Poverty Reduction Support Credit 5 - P Original Target Indicator Baseline Value Values (from approval documents) Indicator 1 : Increased access to credit Credit to Credit to the the private Value private sector sector was (quantitative or targeted to be 7.1% of Qualitative) 10.4% of GDP by GDP in FY2007/08 FY2003/04 Date achieved 06/30/ /29/2008 Comments (incl. % achievement) Formally Revised Target Values Actual Value Achieved at Completion or Target Years x

16 Indicator 2 : Value (quantitative or Qualitative) Date achieved 06/30/ /30/2008 Comments (incl. % achievement) Pupil:teacher ratio lowered; pupil:classroom ratio lowered 54:1 pupil:teach 50:1 pupil:teacher er ratio; ratio; 77:1 pupil: 85:1 pupil: classroom ratio classroom ratio Uganda Poverty Reduction Support Credit 6 - P Original Target Values (from Indicator Baseline Value approval documents) Indicator 1 : Reduced corruption Transparen cy Internationa l Corruption Perceptions Index: 2.5 (higher number indicates Value lower (quantitative or perceived Qualitative) corruption) Note: this indicator is used pending result from the new National Integrity Survey Date achieved 06/30/2005 Comments (incl. % achievement) Formally Revised Target Values Actual Value Achieved at Completion or Target Years xi

17 Seventh Poverty Reduction Support Credit (PRSC7) - P Original Target Formally Values (from Indicator Baseline Value Revised approval Target Values documents) Indicator 1 : Reduced Corruption Value (quantitative or Qualitative) Transparen cy Internationa l Corruption Perceptions Index: 2.5 (higher number indicates lower perceived corruption). Note; this indicator is used pending results from the new National Integrity Survey 2.5 Actual Value Achieved at Completion or Target Years Date achieved 06/30/ /30/2008 Comments No improvement in index. Target was not established. (incl. % achievement) G. Ratings of Program Performance in ISRs Uganda Poverty Reduction Support Credit 5 - P No. Date ISR Archived DO IP Actual Disbursements (USD millions) 1 06/30/2006 Satisfactory Satisfactory /04/2006 Satisfactory Satisfactory Uganda Poverty Reduction Support Credit 6 - P Actual Date ISR No. DO IP Disbursements Archived (USD millions) 1 12/19/2007 Satisfactory Moderately Satisfactory xii

18 2 07/14/2008 Moderately Satisfactory Moderately Satisfactory Seventh Poverty Reduction Support Credit (PRSC7) - P No. Actual Date ISR DO IP Disbursements Archived (USD millions) 1 09/16/2008 Moderately Satisfactory Moderately Satisfactory /30/2009 Moderately Satisfactory Moderately Unsatisfactory /25/2009 Moderately Satisfactory Moderately Unsatisfactory H. Restructuring (if any) xiii

19 1. Program Context, Development Objectives and Design (this section is descriptive, taken from other documents, e.g., Program Document/ISR, not evaluative): 1.1 Context at Appraisal (brief summary of country macroeconomic and structural/sector background, rationale for Bank assistance) The second series of Poverty Reduction Support Credits (PRSC 5-7) was implemented in 2005 in the context of strong macroeconomic growth and political stability. Since 1986, Uganda had benefited from almost two decades of continuous per capita income growth. In the 1990s, this broad-based growth accelerated, with real annual per capita GDP growing by an average of 3.2 percent. While economic growth slowed somewhat prior to the start of this series of operations in 2005, it was still strong at 4.5 and 5.8 percent, respectively, in 2003 and 2004, and per capita GDP growth was 1.2 percent and 2.4 percent in those years. Consistent implementation of stable macroeconomic management and pro-poor, market-friendly, structural policies underpinned Uganda s economic success. This trend continued during the subsequent period of PRSC 5-7. In those years real GDP grew on average by 8.1 percent per annum and real GDP per capita by 4.8 percent. The rapid and broad-based economic growth helped the official poverty rate decline from 56 percent in 1992 to 39 percent in The 2005/06 National Household Survey measured a further poverty rate decline to 31 percent in While more recent estimates of poverty rates are not yet available ((with the exception of the Northern region), in light of the sustained and significant real GDP per capita growth during the second series of PRSCs it is very likely that the poverty rate continued to decline in this period. Non-income measures of welfare also improved for all groups over the period. Net primary enrolment rates for girls in the poorest quintiles increased from 41 percent in 1992 to 77 percent in 2002/03, with progress in both rural and urban areas. The proportion of poorest households with access (within 3 km) to a primary school increased from 82 percent to 89 percent over the same period. Access to safe drinking water rose from 50 percent in 1999/00 to 61 percent in 2002/03. These results were achieved despite a number of shocks, including prolonged drought, a severe energy shortage, and the adverse impact of high and volatile oil prices. Notably, despite these shocks the macroeconomic environment in Uganda remained largely stable. Politically, Uganda had also entered a period of stability. Since the National Resistance Movement (NRM) led by Yoweri Museveni, took power in 1986, Uganda embarked on a sustained period of economic and political renewal, including pro-market reforms and political liberalization. Following the expulsion of the Lord s Resistance Army (LRA), northern Uganda is secure and there have been no major security incidents since While the area has missed out on two decades of growth and poverty reduction, economic activity has resumed. Finally, there has been a move towards multi-party democracy, with multi-party elections held in 2006, although there has been no change of power through elections. The country s remarkable growth performance, however, has not resulted in a significant structural transformation of the economy. Compared with other countries that have experienced such long episodes of sustained growth, Uganda remains more reliant on subsistence agriculture and correspondingly less on high-productivity manufacturing. Despite the overall decline in poverty, there was also a steady increase in urban-rural and regional inequality. The Gini 1

20 coefficient 1 increased from 0.35 in 1997 to 0.41 percent in 2006, reflecting, in part, the pattern of growth in the country which created opportunities in urban areas in the center and west, while leaving behind wide stretches in rural areas and the north and east. In particular, war-affected northern Uganda has the country s highest rate of income poverty. While poverty reduction in the northern region was marginal until 2005, the regional poverty rate declined further in recent years - from 61 percent in 2005/06 to 57 percent in 2008/09. However, it is still almost three times that of the Western region (2005 estimate). The PRSCs were the Bank s principal tool for supporting Uganda s economic transformation and its poverty reduction efforts. PRSC 5-7 were implemented in support of Uganda s third Poverty Eradication Action Plan (PEAP-3), approved by the Cabinet in November PEAP-3 restated Uganda s ambition to become a middle income country within 20 years, and set out targets for key strategic results in income poverty and inequality, improved human development, and increased GDP growth. 3 PRSC 5-7 followed the first series of PRSCs (PRSC 1-3), which were implemented in support of PEAP-2. 4 PRSC 4, originally envisaged to be the first operation in a second series of PRSCs (i.e., PRSC 4-6), beginning in 2005, was in fact implemented as a stand-alone operation and the last of the series of PRSCs in support of the second PEAP. 5 This second series of PRSCs built directly on the first series of operations. They extended the earlier focus on health, education, and water sector programs (since PRSC 1); public sector management and anti-corruption and a rural growth agenda (since PRSC 2); and gender, infant, and maternal mortality, and results orientation (PRSC 4). PRSC 5-7 continued support in these areas, while deepening the emphasis on growth through further elaboration of the rural development agenda, and through policies that supported non-farm employment and income growth. The PRSC program was at the center of the Bank s support for Uganda as spelled out in the Uganda Joint Assistance Strategy (UJAS), a harmonized program of donor support linked to the third PEAP and developed jointly with Uganda s development partners (DPs) in In reflection of the mutuality of these documents, the UJAS was presented jointly to the Board with PRSC 5. The first two PRSC operations (5 and 6) in this programmatic development policy lending series were both one-year, single tranche operations, with disbursement taking place at project effectiveness based on the Government s satisfactory accomplishment of prior actions. PRSC 7 1 The Gini coefficient is a standard measure of income inequality, which considers the distribution of national income among the population. This indicator ranges from zero (perfectly equal income distribution) to one (one household has all of the income). Uganda s level of inequality is about average for Sub-Saharan Africa non-mineral exporting economies. 2 The PEAP is Uganda s Poverty Reduction Support Program (PRSP). The first PEAP, prepared in 1997, provided the model for the PRSP approach and received international praise. The first PEAP was revised and updated in 2000 (PEAP II), and again in 2004 (PEAP III, covering the period 2005 to 2008). PEAP III was extended for two years, to June 2010, owing to delays in preparing its successor, the National Development Program. 3 The joint Bank/Fund assessment of the PEAP III concluded that it constituted a comprehensive and well-balanced strategy to achieve accelerated growth and poverty reduction, while candidly recognizing the challenges facing the country. Joint IDA-IMF Staff Advisory Note, Report No: UG, p 8. 4 PRSC 1 (FY2001) was a credit for SDR million ($150 million equivalent; PRSC 2 (FY2003) was a credit for SDR million ($150 million equivalent); PRSC 3 (FY2004) was a grant for SDR 106 million ($150 million equivalent); and PRSC 4 (FY2005) was a grant for SDR million ($150 million equivalent). 5 It was originally intended that PRSC 4, 5, and 6 would be aligned directly with, and provide support to, the implementation of the third PEAP. The preparation of that PEAP was delayed, however, and PRSC 4 was implemented as a follow-on to PRSC 1-3 and in alignment with the second PEAP in order to ensure the continuation of predictable resource flows to the budget, while also ensuring that the medium-term program supported by the PRSC 4, 5, and 6 would be consistent with the third PEAP. 2

21 was designed as a two-tranche operation over two years in order to adapt to the delay in replacing the third PEAP with the Government s follow-on program, the National Development Plan (NDP) and to ensure better alignment with this plan. The two-tranche design was also intended to facilitate harmonization with other development partners budget support and alignment with the government budget cycle. 1.2 Original Program Development Objectives (PDO) and Key Indicators (as approved) The original PDO for the PRSC 5-7 was: The proposed grant/credit is a core operation to finance implementation of selected strategic objectives of Uganda's Poverty Eradication Action Plan/Poverty Reduction Strategy Paper (PEAP/PRSP). The PRSC has been a core element of the Bank s support for Uganda, supporting four pillars of the PEAP: Economic Management (Pillar I); Enhanced Production, Competitiveness and Incomes (pillar 2); Good Governance (Pillar 4), and Human Development (Pillar 5). The overriding theme of the series was to support the Government in providing better services and to create a better policy environment for economic growth and poverty reduction. PRSC 5 had a limited number of PDO indicators: Maintain macroeconomic stability consistent with rapid private sector-led growth and sustained poverty reduction, as measured by GDP growth and inflation. (Fiscal deficit as a percentage of GDP was also added under PRSC 6). Better educated Ugandans via increased primary enrollment, as measured by primary enrollment for boys and girls. In addition, there were two intermediate outcome indicators: Increased access to credit, as measured by credit to the private sector as a percentage of GDP. Pupil:teacher ratio lowered and pupil:classroom ratio lowered. During PRSC 5 implementation, the Bank was still working to ensure that the results framework for the PRSC series was fully aligned with the PEAP-3 matrix, as was requested by the Government of all donors, and the Government was still in the process of defining medium-term outcomes. Consequently, a more comprehensive set of PDO indicators was established under PRSC 6 and PRSC 7. Accordingly, under these operations, three more PDO indicators were added, for a total of five: Private investment as a share of GDP. Public financial management (PFM) strengthened, as measured by the percentage of ministries/local governments preparing regular financial statements in accordance with financial regulations. Healthier Ugandans, as measured by percentage of children immunized (DPT3) and percentage of deliveries in health care centers. In addition, under PRSC 6 and PRSC 7, the two intermediate outcome indicators above (i.e., access to credit and pupil:teacher/classroom ratios) were dropped, and the following was added: Reduced corruption, as measured by the Transparency International Corruption Perceptions Index. 3

22 1.3 Revised PDO (if any, as approved by original approving authority) and Key Indicators, and Reasons/Justification There were no revisions to the PDO. A number of the indicators, however, were modified between PRSC 5 and PRSC 6, as discussed below in Section 3, Relevance of Objectives, Design, and Implementation). 1.4 Original Policy Areas Supported by the Program (as approved): This series of operations supported four out of five pillars of the Government s third PEAP. As the strategic objectives below show, the policy areas of PRSC support varied widely from fiduciary strengthening to improved water supply and sanitation and from social service delivery to improving the business environment. PEAP Pillar 1: Economic Management. The strategic objective was to maintain macroeconomic stability consistent with rapid private sector led growth. PEAP Pillar 2: Enhance Production, Competitiveness And Incomes. Strategic objectives supported by the PRSCs were: (i) efficient and competitive private sector; (ii) increased and more efficient agricultural production, including increased marketing and increased access to land titling; (iii) strengthened environment and natural resource management, including improved forest resources and water resource management; and (iv) strengthened financial sector in support of increased production of goods and services. PEAP Pillar 4: Good Governance. Strategic objectives supported by the PRSCs were: (i) strengthened legal and justice systems, including increased efficiency in commercial justice; and (ii) strengthened public sector management and accountability, including PFM and procurement, reduced corruption, improved public sector performance, and strengthened Local Government (LG) system for service delivery. PEAP Pillar 5: Human Development. Strategic objectives supported by the PRSCs were: (i) a better educated society, including increased access to and quality of primary, secondary and tertiary education; (ii) healthier Ugandans, including improved utilization and quality of health care, improved access to maternity services, improved family planning, and improved children access to immunization care; and (iii) improved water and sanitation systems, including improved access to safe water supply and sanitation and improved water facilities maintenance. 1.5 Revised Policy Areas (if applicable) There were some revisions in the policy areas. As discussed below, the GoU shifted its emphasis from service delivery to infrastructure (roads and energy) during the latter part of the series to reflect the growing acuteness of transport and energy constraints on development, as was documented in the 2007 Uganda Country Economic Memorandum (CEM). The objective strengthened legal and justice systems (Pillar 4) was dropped under PRSC 6. Also under PRSC 6, the objective of strengthened public sector management and accountability was tightened to public financial management strengthened. In addition, the objective of strengthened environment and natural resource management (Pillar 4) was dropped under PRSC 7. 4

23 1.6 Other significant changes (in design, scope and scale, implementation arrangements and schedule, and funding allocations) There were a number of significant changes in the funding allocations for these operations, as well as to the date of effectiveness of PRSC 7: (i) The financing for PRSC 5 was reduced by 10 percent (from US$150 million to US$135 million) because the prior action on budget execution was only partially met. This reduction was consistent with the principles agreed to between the GoU and its DPs. 6 (ii) Financing under PRSC 6 was similarly reduced to $125 million (from a base amount of $150 million), again owing to the fact that some earlier envisaged prior actions were only partially met, chief among them the budget prior action because the public administration expenditure and defense expenditure ceilings were again breached in FY2006/07 and FY2007/08. (iii) Although PRSC 7 was originally designed as a single credit operation, it was subsequently divided into an exceptional two-tranche operation, combined with an increase in total funding to US$200 million, thereby enabling two separate tranches of SDR62.5 million (US$100 million equivalent) for FY2007/08 and FY2008/09, respectively. The rationale for this change was twofold: it would facilitate budget planning for FY2008/09 by improving the predictability of PRSC resources, and it would also align the PRSC better with the new Joint Budget Support Framework (JBSF), thereby enabling the next PRSC series to fully conform to the Paris Principles of donor harmonization. 7 Notably, a two-tranche operation also enabled the Bank to signal more clearly that the amount of the first tranche had been reduced to US$100 million (from US$150 million) owing to relatively weak performance in meeting the prior actions, as the public administration expenditure ceiling was again repeatedly breached and the amendment of the Public Procurement and Disposal of Assets (PPDA) Act (for the first tranche) was significantly delayed. (iv) The delays by the GoU in approving PRSC 7 necessitated an extension in effectiveness (the Board date of approval was May 2008, but approval by Parliament did not occur until December 2008). As a result, the predictable disbursement of the US$100 million first tranche into the FY07/08 budget was not achieved. (v) Finally, for the second tranche of PRSC 7, there were again delays by the Government in submitting the proposed amendments to the PPDA Act to Cabinet. (The revised Act was submitted in February 2009, and reviewed by Cabinet in July 2009, rather than January 2008, as initially conceived under PRSC 6, and subsequently revised to September 2008 by the GoU.) Consequently, the second tranche of PRSC 7 was released in September 2009, rather 6 Under the Principles for Determining Prior Actions developed between the GoU and DPs under PRSC4, there were three possible responses when prior actions were not satisfactorily met: (i) a reduction in support; (ii) a delay in the program, and (iii) the release of the credit in tranches. These principles were complementary and subordinate to the agreed Partnership Principles between Government of Uganda and its Development Partners, signed in Previous PRSCs tended to disburse toward the end of the respective budget year to retroactively finance spending that had already taken place. 5

24 than as expected in November 2008, thereby again usurping the objective of a predictable disbursement of funds. Initially, the amount of funds was expected to be on the order of US$450 million for three years (average of US$150 million per year); as a result of these changes, actual support was US$460 million over four years (average of US$115 million per year). Thus, while the amount of assistance provided in each operation was reduced owing to poor performance, the total amount disbursed under the series was actually larger than anticipated, owing to the two tranches provided under PRSC 7 and the decision to increase (and decrease) each tranche. Table 1 provides a timeline of activities to track the progression of the PRSC 5-7 series and related events. Table 1: Timeline of PRSC-Related Activities Date Activity 2003 Donor endorsement of PEAP Partnership Principles 11/2004 Cabinet Approves Third PEAP 2005 UJAS starts 9/2005 PRSC 4 Closing 12/2005 PRSC-5 Board Approval 5/2006 PRSC 5 Effective 11/2006 PRSC 5 Closing 3/2007 PRSC-6 Board Approval 6/2007 PRSC 6 Effective 11/2008 PRSC 6 Closing 5/2008 PRSC 7 Board Approval 12/2008 PRSC 7 Effective 12/2008 PRSC 7 Tranche 1 release 9/2009 PRSC 7 Tranche 2 release 11/2009 PRSC 7 Closing 2. Key Factors Affecting Implementation and Outcomes 2.1 Program Performance (supported by a table derived from a policy matrix) Triggers/Prior Actions: Table 2 lists the prior actions for each of the three PRSC operations. There were prior actions for each operation. These prior actions were developed jointly with the GoU in close cooperation with Uganda s other DPs. As seen in the table, a number of prior actions were delayed or only partially met, and consequently, as discussed above, funding was reduced for each PRSC. While the prior actions presented to the Board for PRSC 5 were largely unchanged from those agreed to by the Government and DPs, the triggers for PRSC 6 and 7, by contrast, became tighter and more specific when they were turned into prior actions. 6

25 Table 2: Status of Prior Actions for PRSC 5-7 Anticipated Prior Actions for Prior actions for PRSC5 as discussed PRSC5 as presented to the and agreed with Government and Board of World Bank in partners during identification September, 2004 Pillar 1: Economic Management PRSC 5 1. In the public expenditure review, In the Public Expenditure Review, Government Government has agreed with donors on the has agreed with donors on the Medium Term medium-term expenditure framework Expenditure Framework for 2004/ /07, (MTEF) for 2004/ /07, and has and has executed the 2004/05 budget consistent executed the 2004/05 budget consistent with the budget allocation as appropriated and with budget allocations; adjusted with approval of Parliament. 2. Expenditures for Public Administration in 2004/05 should be within the agreed allocations for budget 2004/05; Pillar 4: Good Governance Submission by the Ministry of Public Service in collaboration with the Ministry of Finance, Planning and Economic Development a Cabinet memorandum on recommendations for controlling the size of public administration and for enhancing cost efficiency and effectiveness in the public sector targeting Health, Education, Agriculture, Water and Community Development and submission to IDA an Action Plan on the implementation of these measures by end of May, Comments Partially met. The provisional outturn for FY2004/05 shows overall budget performance and PAF expenditures on target. Total budget releases for the year performed at 100.6% and the PAF performed at 98.8 %, against a 95% target. Budget releases were evenly distributed over the 4 quarters, and balanced between recurrent and development expenditures. One important element of this prior action went off-track combined expenditure for Security and Public Administration was to be held within the approved budget. While the Security sector performed at 100.2%, Public Administration was above target at 112.9%. Completed. 3. Ministries of Public Service and of Continued. Finance, Planning, and Economic Development jointly commit to an updated pay reform strategy and target salary adjustments for the medium term; Completed. 4. Implementation of the National Anti- Corruption Action Plan commences; Continued. Completed. 5. IGG verifies asset declarations of Ministers and appropriate action is taken by relevant authorities in accordance with the law; 6. Ministry of Finance, Planning, and Economic Development drafts a revised Audit Bill (2002) to ensure adequate operational independence of the Auditor General; 7. Local Government Amendment Bill (Procurement) is tabled in Parliament; IGG verifies asset declarations of Ministers and in Completed. case of breach appropriate action is taken by relevant authorities in accordance with the law by May 2005; Continued. Continued. Pillar 2: Enhancing Production, Competitiveness and Incomes 8. Increased alignment of budget Changed to Satisfactory implementation of core allocations of MAAIF, MTTI, MWHC, undertakings by April 2005 as agreed in the MWLE, MES, MGLSD, MEMD, MFPED October 2004 Joint PMA Annual Review. to PMA review undertakings (2004/05, 2005/06, 2006/07); Completed. Completed. Completed 7

26 Pillar 5: Human Development 9. Satisfactory implementation of the undertakings agreed in the education sector review in November 2003 and confirmed by the 2004 review; 10. Satisfactory implementation of the undertakings agreed in the health sector review in November 2003 and confirmed by the 2004 review; and 11. Satisfactory implementation of undertakings agreed in water and sanitation sector review in September 2003 and confirmed by the 2004 review. Anticipated Prior Actions for PRSC6 as presented to the Board of the World Bank in January 2006 Pillar 1: Economic Management Continued. Continued. Continued. PRSC-6 Prior Actions for PRSC6 as discussed and agreed with Government and partners during pre-appraisal Completed Completed Completed Comments/status In the PER, GOU has agreed with Development Partners on the MTEF for 2005/ /08, and executed the 2005/06 budget consistent with the allocation as appropriated and adjusted with approval of Parliament. In the PER, Government has agreed with donors on the Medium Term Expenditure Framework for 2006/ /09, and has executed the FY2005/06 budget consistent with the budget allocation as appropriated and adjusted with the approval of Parliament and taken remedial action in FY2006/07 budget where major deviations occurred. Pillar 2: Enhancing Production, Competitiveness, and Incomes Partially met Overall budget execution performed in line with approved budget. Expenditures protected under the Poverty Action Fund performed at 99.5 percent, exceeding the 95 percent requirement under the prior action. However, in FY2005/06 public administration overspending amounted to 18 percent. Remedial action agreed on reducing share of public administration spending in total budget by 0.5 percentage points per year during the FY2007/08-FY2009/10 MTEF period. Strengthen the coordinated approach to improve the investment climate, and make satisfactory progress on agreed key investment climate undertakings identified in the PEAP (including reforms in institutions that can impede or facilitate the access of businesses and potential investors to formal registration, land titles, and courts). Satisfactory implementation of core undertakings as agreed in the October 2004 Joint PMA Annual Review and confirmed by the October 2005 review. Pillar 4: Good Governance Ministry of Public Service approves a revised organizational structure for the Accountant General s Office. Strengthen the coordinated approach to improve the investment climate, and make satisfactory progress on agreed key investment climate undertakings identified in the PEAP (including reforms in institutions that can impede or facilitate the access of businesses and potential investors to formal registration, land titles, and courts). Satisfactory implementation of core undertakings as agreed in the October 2004 Joint PMA Annual Review and confirmed by the October 2005 review. Ministry of Public Service approves a revised organizational structure for the Accountant General s Office that will operationalize the Public Finance and Accountability Act of 2003 and enable financial management reforms such as the implementation of the Integrated Financial Management System. The audit bill is ready for cabinet by February Satisfactory progress with implementing measures to improve the effectiveness of Completed Completed. Completed Completed Completed 8

27 Satisfactory implementation of undertakings agreed by the joint government-development partners review of the National Anti- Corruption Action Plan. Tabling before Parliament amended Leadership Code Act strengthening the powers of IGG and its ability to enforce Leadership Code Act. Satisfactory progress in implementing new phase of Public Service Reform Program reflected by accomplishment of the undertakings agreed in the Joint Government and Development Partners Review process. Satisfactory progress in implementing updated pay reform strategy as reflected by: (i) Establishment of independent Public Sector Compensation Board; (ii) Budget for wage bill in FY 2006/07 and its execution to reflect pay reform strategy s policy targets; and (iii) At least shilling 30 billion reduction in verified pension arrears. Satisfactory progress on core undertakings agreed by the Joint Annual Review of Decentralization (JARD) 2004 action plan, including: (i) Development of a comprehensive policy framework for decentralization; (ii) Review of MoLG mandate and structure; strengthening supervision and inspection of local governments (including contracts committees); and development of a conducive local taxation regime. Pillar 5: Human Development Satisfactory implementation of the undertakings agreed in the education sector review in November 2004 and confirmed by the 2005 review. Satisfactory implementation of the undertakings agreed in the health the public procurement system by January 31, Satisfactory implementation of the National Anti-Corruption Action Plan as the framework to assess progress in the fight against corruption continues The IGG commits to achieving the activities as specified in the agreed results matrix. These are aimed at: reducing the incidence and experience of corruption measured by the national integrity survey; introducing special anti-corruption courts to expeditiously deal with cases of a corrupt nature; and clearing the backlog of cases under IG. Satisfactory progress in implementing new phase of Public Service Reform Program reflected by accomplishment of the agreed undertakings. Submission of an inception report for a study to assess the feasibility of control of the size of the public service and integrating staffing and wage bill issues into the budget process. Satisfactory progress on core undertakings agreed by JARD 2004 and JARD 2005, including: (i) the Ministry of Public Service to review the mandate and structure of the Ministry of Local Government, or in the interim provide appropriate additional staff to the ministry as a stop gap measure to address low capacity in the ministry to deliver on its mandate; (ii) Ministry of Local Government to identify an alternative source of revenue for local governments, to be approved by the government during FY2006/7; (iii) Ministry of Finance Planning and Economic Development to provide compensation to local governments for revenue losses related to the abolition of graduated tax (Ush 45 billion); and (iv) Government has submitted a bill to Parliament to promote organized urban development and human settlement replacing the existing Town and Country Planning Act of Satisfactory implementation of the undertakings agreed in the education sector review in November 2004 and confirmed by the 2005 review, and of the undertakings agreed in the 2005 review and confirmed by the October 2006 review. Satisfactory implementation of the undertakings agreed in the health sector Partially met. Partially met. Steady progress on TOR for consultancies to support the process to establish the anti-corruption court and to clear case backlog under IG has been agreed. DfID has committed funding for these consultancies. Recruitment of consultants underway. Completed. Completed. Partially met The government committed to implement alternative revenue measures recommended by the study in FY2007/08. Supplementary financing planned in 2 nd half of 2006/07 to secure the remainder (Ush 20bn) funding for local governments. Completed Completed. 9