UTILISATION OF THE DISTRICT WATER AND SANITATION CONDITIONAL GRANT (DWSCG) BY SELECTED DISTRICT LOCAL GOVERNMENTS

Transcription

1 T H E R E P U B L I C O F U G A N D A OFFICE OF THE AUDITOR GENERAL info@oag.go.ug UTILISATION OF THE DISTRICT WATER AND SANITATION CONDITIONAL GRANT (DWSCG) BY SELECTED DISTRICT LOCAL GOVERNMENTS A REPORT BY THE AUDITOR GENERAL D E C E M B EBY UGANDA R, POLICE 2 0FORCE 1 5A REPORT BY THE AUDITOR GENERAL VALUE FOR MONEY AUDIT REPORT ON THE IMPLEMENTATION OF THE EXPRESS PENALTY SCHEME (EPS) 1

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3 THE REPUBLIC OF UGANDA UTILISATION OF THE DISTRICT WATER AND SANITATION CONDITIONAL GRANT (DWSCG) BY SELECTED DISTRICT LOCAL GOVERNMENTS A REPORT BY THE AUDITOR GENERAL DECEMBER, 2015

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5 AUDITOR GENERAL AUDITOR GENERAL S MESSAGE 31 st December 2015 The Rt. Hon. Speaker of Parliament Parliament of Uganda Kampala VALUE FOR MONEY AUDIT REPORT ON UTILISATION OF THE DISTRICT WATER AND SANITATION CONDITIONAL GRANT BY SELECTED DISTRICT LOCAL GOVERNMENTS In accordance with Article 163 (3) of the Constitution of the Repulblic of Uganda 1995 (as amended), I hereby submit my value for money audit report on the audit undertaken on the Utilisation of the District Water and Sanitation Conditional Grant by selected District Local Governments. My office intends to carry out a follow up at an appropriate time regarding actions taken in relation to the recommendations in this report. I would like to thank my staff and the Consultants who undertook this audit, and the staff of Ministry of Water and Environment, and the districts for the assistance offered to my staff during the period of the audit. John F. S. Muwanga AUDITOR GENERAL

6 TABLE OF CONTENTS TABLE OF CONTENTS 6

7 TABLE OF CONTENTS LIST OF TABLES...iii LIST OF FIGURES...iii LIST OF PICTURES...iii LIST OF ABBREVIATIONS AND ACRONYMS...iv EXECUTIVE SUMMARY...vi CHAPTER ONE 1.0 INTRODUCTION Background Motivation Description of the audit area Objectives of the audit Scope of audit...4 CHAPTER TWO 2.0 AUDIT METHODOLOGY Sampling Data collection Assessment of value for money...8 CHAPTER THREE 3.0 SYSTEMS AND PROCESS DESCRIPTION Roles and responsibilities of key players Process description...12 CHAPTER FOUR 4.0 FINDINGS, CONCLUSIONS AND RECOMMENDATIONS Procurement planning Procurement of works, goods and services Capacity of the Procurement and Disposal Units (PDUs) Contract implementation Condition of facilities...26 i

8 TABLE OF CONTENTS 4.6 Effectiveness and impact of the facilities to the communities The allocation formulae Planning and budgeting Disbursement of grant funds Utilisation and accountability for disbursed funds Reporting...49 CHAPTER FIVE 5.0 VALUE FOR MONEY ANALYSIS Procurement Contract implementation Social impact and sustainability Financial management Overall assessment...56 APPENDICES APPENDIX I:Organisational/Management Structure of the Grant...58 APPENDIX II: Documents reviewed...58 APPENDIX III: Contracts executed outside the procurement plan...59 APPENDIX IV: Time between procurement requisition and contract signing...60 APPENDIX V: Compliance to the allocation guidelines...61 APPENDIX VI: Details of Budgeted funds versus Actual funds released...63 APPENDIX VII: Partially & unimplemented activities in 2012/ APPENDIX VIII: Time taken to transfer funds from the General fund to the Water...68 APPENDIX IX: Unimplemented and partially implemented activities...71 APPENDIX X: Unjustified Rollover of contract obligations...78 APPENDIX XI: Unverified Payments / Expenditure...79 APPENDIX XII: Delay of payment to Suppliers/ Consultants / Contractors...85 APPENDIX XIII: Allocation Formulae...87 ii

9 LIST OF TABLES Table 1: Showing total Grant disbursements...4 Table 2: Detailing time required for different activities of the procurement proces...19 Table 3: Showing staffing levels of the PDUs...20 Table 4: Showing Distribution of types of facilities implemented under DWSCG in the contracts reviewed...22 Table 5: Showing distribution of the facilities amongst the sample districts...22 Table 6: Summarizing water quality observations from field visits...34 Table 7: Showing level of compliance to grant allocation guidelines...49 Table 8: Showing receipt dates for grant funds by districts...41 Table 9: Highlighting cases of over spending on some budget lines...43 Table 10: Showing cases of Diversion of grant funds...45 Table 11: Showing cases of under absorption...47 Table 12 Showing delays in the payment of Suppliers / Consultant / Contractors...48 Table 13: Showing Budget and Actual releases for 2012/ Table 14: Showing Budget and Actual releases for 2013/ Table 15: Showing Budgeted Funds and Actual Funds releases for 2014/ LIST OF FIGURES Figure 1: Showing key processes in implementing DWSCG activities...14 Figure 2: Showing time taken from procurement requisition to contract signing...19 Figure 3: Showing Budget and Actual releases for 2012/ Figure 4: Showing Budget and Actual releases for 2013/ Figure 5: Showing Budget and Actual releases for 2014/ Figure 6: Showing time taken to transfer funds from General Fund account to Water account...42 Figure 7: Showing Delays in submission of Quarterly performance reports...49 LIST OF PICTURES Picture 1: Showing un fenced borehole in Napak...26 Picture 2: Showing Poor quality workmanship around a borehole in Amuria...27 Picture 3: Showing Water seepage below a spring slab in Bundibugyo District...38 iii

10 LIST OF PICTURES Picture 4: Showing constructed spring with no fence and cut off drain in Kibuku District...28 Picture 5: Showing rain water harvesting tanks constructed in Kiruhura...29 Picture 6: Showing rain water harvesting tanks constructed in Kalungu...29 Picture 7: Showing Kagamba Valley tank in Rakai District with an eroded inlet and low water volume...30 Picture 8: Showing Shallow wells at Kabinda valley dam yielding water of poor aesthetic quality...30 Picture 9: Showing a tap stand with no service meter for Kashare piped water supply system in Mbarara...31 Picture 10: Showing reservoir tank for Kagonya piped water supply with no meter...31 Picture 11: Showing incomplete tank support structure for abandoned works in Moyo...31 Picture 12: Showing a roll of HDPE pipes in the bush in Moyo...32 Picture 13: Showing water borne toilets constructed at Sanja Rakai & Ndeija, Mbarara...32 Picture 14: Non-functional water sources...33 Picture 15: Showing non-functional Public Latrine in Kapala RGC, Gogonyo Pallisa,...37 Picture 16: Showing non-functional Public Latrine in Moru-Okobo RGC Pallisa...37 ABBREVIATIONS AND ACRONYMS CAO Chief Administrative Officer DLG(s) District Local Government(s) DWD Directorate of Water Development DWSCG District Water and Sanitation Conditional Grant FY Financial Year GoU Government of Uganda JWESSP Joint Water and Environmental Sector Support Program LG Local Government MoFPED Ministry of Finance, Planning and Economic Development MoWE Ministry of Water and Environment OAG Office of Auditor General ToR Terms of Reference TSU Technical Support Unit U2, U3 Types of Borehole Hand Pumps VFM Value for Money iv

11 EXECUTIVE SUMMARY The Government of Uganda provides the water and sanitation conditional grant to 111 districts to support the implementation of water and sanitation services and infrastructure in the rural areas. Article 10 of the joint financing agreement between the Government of the Republic of Uganda and the Development Partners concerning the Joint Water and Environmental Sector Support Program (JWESSP) requires at least one performance Study such as a value for money Study to be carried out every two years under the JWESSP for investments under the conditional grant on a sample basis for District Local Governments. In order to fulfil this condition, the Ministry of Water and Environment (MoWE) requested the OAG to undertake a VFM study of the DWSCG. The main objective of the study was to assess the economy, efficiency and effectiveness with which funds under the District Water and Sanitation Conditional Grant have been utilised. The study covered 20 (twenty) districts selected from the 111 districts in Uganda for the period 2012/13FY, 2013/14FY and 2014/15FY. The overall approach and methodology adopted involved consultations and engagement with district officials and user communities, MWE/ DWD and a review of the documentation availed by the stakeholders. The findings of the study has been categorized in sections covering the procurement processes, implementation of the approved projects, assessment of the effectiveness and impact of the installed facilities to the communities as well as tracking the utilisation of DWSCG funds. KEY FINDINGS 1. The Study noted good procurement practices by the districts which included regular preparation of procurement plans, general compliance with PPDA guidelines at all stages of the procurement cycle, and the presence of valid contracts signed between the local governments and the contractors before commencement of works; 2. The disbursement of Grant funds was generally in tandem with the budget with the exception of 2012/13 where no funds were received in the fourth quarter. The releases to the districts were for amounts in excess of 98% of their annual budgets; 3. Water quality tests were done for boreholes in all districts and for piped water supply systems in Kalangala and Mbarara districts evidenced by the satisfactory test results carried out in NWSC laboratory; 4. Water sources constructed were generally functional except for instances in Mbale, Kaberamaido and the non-functional tap heads in Bundibugyo; 5. Community participation in the identification of the needs was evidenced as was their participation in baselines studies. v

12 KEY WEAKNESSES The study however also identified areas that can be improved if the government is to obtain value for money for the investments made as part of the DWSCG. These weaknesses can best be addressed through a collaboration of all the Key stake holders and implementers of the grant. Notable areas identified for improvement and action include: PROCUREMENT OF SERVICE PROVIDERS 1. No procurement requisitions were raised for eleven (11%) per cent of the sampled procurements undertaken implying that in these cases goods, services and works procured were not tagged to detailed statements of requirements or specifications from the user department; 2. There were cases where procurements that were never planned for were under taken by districts. This is irregular and negates the purpose of the planning process. In undertaking these procurements the districts also irregularly diverted resources without obtaining approval from the MoWE; 3. Some districts i.e. Bundibugyo and Kamwenge executed works using Force account method of procurement without first obtaining a waiver from PPDA contrary to the procurement rules and regulations. While using this method of procurement the districts also irregularly deposited public resources on personal accounts of district employees without any justification which exposes grant funds to misuse. 4. There was a lot of time wasted during the procurement process mainly due to delays in commencement of the process and in other cases a lot of time is wasted from the time procurement requisitions are made to the time contracts are awarded. Cases were cited in Luwero, Kibuku and Kitgum where the entire process spanned in excess of 200 days; 5. An evaluation of the capacity of the PDUs to handle the procurement activities revealed that the PDUs are not adequately staffed, funded and equipped. This greatly affected the efficiency with which they handle procurements. Several of the districts are operating t between 33%and 66% of the approved staff structure; 6. The funding available for the PDUs should be increased to make it commensurate with the workload of the functions. Several of the district PDU budgets were an average of 5% of the district s approved budget; and 7. The records keeping function of the PDU was lacking. Unavailability of complete procurement files was experienced all the time rather than being an exception; CONTRACT IMPLEMENTATION 1. The boreholes and shallow wells visited in all districts had a number of defects including incomplete soak pits with stagnant spill water which are not only unsightly but also are mosquito breeding sites leading to the spread of malaria and other environmental hazards, poor or no fencing around boreholes for the protection of the borehole installation, poor quality of metallic suction pipes reported by the DWOs affecting the quality of the water. Boreholes water had a high iron content evidenced by the brown staining of the slab and smell of rust; 2. Works for the GFS in Mbale and Bundibugyo districts comprised majorly of extensions of pipelines to new areas. There was no evidence of design reports and drawings, showing that the necessary water demand estimation and topographical surveys of the supply areas were carried out nor was there evidence of hydraulic design vi

13 computations. 3. Typical designs of protected springs were not followed in the districts of Bundibugyo, Kamwenge, Mbarara and Kibuku. No cut off of drains and fencing were constructed at the sites of the protected springs. One of the protected spring in Bundibugyo has serious seepage around the masonry works with very low yield - an indication of poor construction to contain the spring water for better yield; 4. Valley tanks for Water for Production visited in Rakai District had construction flaws in the levels of the spillway and the tank embankment that cause flooding around the valley tanks and inlets. These were not constructed with erosion protection lining. Evidence that geotechnical investigations and surveys and hydraulic design were undertaken was not available. The functionality of the design of the shallow well system at the valley tanks intended for domestic water supply of yielding water of reasonable quality was not convincing; 5. In Mbarara District, construction of works for the piped water supply system commenced before obtaining approval from DWD. DWD deferred the designs with comments which should have been addressed before construction. No evidence of approval of designs was seen for Moyo and Kalangala districts for their piped water supply system. Absence of approval of designs would contribute to poor and substandard designs and construction works. Construction works for Moyo piped water supply system are not complete because of abandonment of site by the contractor. 6. No commissioning and handing over documents were seen. Copies of Completion Certificates were available in only Mbarara, Pallisa and Kamuli districts. Most districts regarded the drilling reports by the contractors as completion reports. Supervisors should also prepare and have on record completion report for each contract; 7. No evidence of pressure testing of the installed pipelines for pipe water supply systems as required for quality assurance was seen; 8. Instances of poor quality water were cited in the districts of Moyo (Foul smelling water, coloured water and faecal material in the water), Nebbi, Gulu, Napak, Mbale (all with faecal material), Gulu, Luwero (mineral contents); and 9. Gulu, Rakai and Kitgum experienced instances of low quantities of water arising out of low underground water potential. FINANCIAL MANAGEMENT 1. The allocation formulae used for the distribution of the grant proceeds has been in use from a period in which the sector has been able to identify the following major weaknesses: insufficiency of the funds allocated to the rehabilitation component; absence of recognition of the performance levels of the districts, the formulae is not linked to the performance; lack of accurate values of the variables of the formulae; and, the perception that the application of the formulae yields inequitable distribution of the grant proceeds. Whereas these have led to a review of the formula during the FY2014/15 to guide the grant s implementation during the FY2015/16, this is facing challenges at policy level where MoFPED is aiming at introducing a single grant formula for all of the sector grants; 2. During the implementation of the approved work plan activities, a number of districts do not follow the resource allocation guidelines. Out of the districts that formed the sample, during 2012/13, 30% did not abide by the guidelines as was the case during 2013/14. The rate of non-compliance dropped to 15% during 2014/ There were delays noted in the release of vii

14 grant funds. Funds earmarked for the quarter were received by the districts at the end of the first month following the end of the quarter and at times during the second month following the end of the quarter. Delayed disbursement of funds is compounded by additional delays in the transfer of funds from the District General Fund account to the District Works and Technical Services account. Whereas such transfers should take a maximum of five working days, the study found that there are districts that take more than thirty days to effect the transfers. Such delays also contribute to delayed payments to service providers and seeming failure by the district to fully absorb the grant proceeds, resulting in unspent balances at the end of the financial year. 4. The study identified instances where some of the districts used grant funds for activities other than those activities for which the grant funds were disbursed. Cases established ranged in value from <UGX500, 000 to >UGX260, 000,000. In Kamwenge, it was observed that funds are used to meet prior year obligations for amounts in excess of UGX100, 000,000. This impacts on the activities planned for subsequent years given that this amount of funds is made unavailable to the year s approved activities; 5. Instances of under-absorption of the grant proceeds within the appropriation period, by the districts, were established. For the three years ended FY , from the sampled districts, the under absorbed amount was UGX 897,878,010; 6. Delays in the payment for goods and services to Suppliers / Consultants / Contractors were observed. In some cases such delays exceeded 100 days with some noted for exceeding 180 days; 7. Payments amounting to UGX1, 911,363,595 were made during the period under review however, there may not have been value for money attained since there were no payment vouchers availed for verification and in other cases the payments were incompletely vouched. They lacked third party supporting documents; 8. Cases of inconsistencies between the information presented in the cumulative performance reports and information contained in the primary financial documents like cashbooks, ledgers, vote books and bank statements - noted in Mukono, Amuria, Bundibugyo, Kamwenge, Luweero, Mbarara, Kitgum, Kalungu and Napak. VALUE FOR MONEY ASSESSMENT Based on the assessment undertaken using the Value for Money assessment tool developed, the overall performance of the districts in procurement of service providers, Contract implementation and Financial Management of the Grant is summarized in the table below. OVERALL DISTRICT S PERFORMANCE FOLLOWING THE VFM ASSESSMENT District Name Procurement (Score %) Financial Management (Score %) Contract Implementation (Score %) Average (Score %) Ranking Grading % Grading KITGUM PALLISA MBALE MBARARA NAPAK KABERAMAIDO GULU NEBBI KIBUUKU GOOD 45% viii

15 LUWEERO RAKAI KALANGALA KAMULI KIRUHURA KAMWENGE MOYO AMURIA KALUNGU BUNDIBUGYO MUKONO SATISFACTORY 40% FAIR 15% Conclusion Eighty five per cent (85%), of the sampled districts achieved satisfactory value for money for the periods, 2012/13, 2013/14 an 2014/15. The District water and Sanitation conditional grant has therefore to a large extent supported the implementation of water and sanitation services and infrastructure in the rural areas. However, there is need to address the weaknesses identified by the study in order to ensure rational and sustainable utilisation of water resources for social economic development of the country. KEY RECOMMENDATIONS PROCUREMENT 1. The user departments should endeavour to prepare and submit procurement requisitions to the PDUs in a timely manner to facilitate the procurement process; 2. Districts should ensure that all reallocations are approved by the Ministry of Water and Environment as guided by the DWSCG guidelines and desist from undertaking procurements outside the approved procurement plan; 3. The Local Governments comply with regulations governing procurement methods as detailed in the local government PPDA rules; 4. The Local Governments should desist from depositing public funds on employee s personal accounts; 5. The Local Governments should endeavour to expedite the procurement processes for timely implementation of planned activities; 6. Districts are advised to adhere to guideline 7 of the DWSCG guidelines and start on the procurement processes early enough to avoid delays in implementation of activities; 7. The districts should liaise with the Ministry of Public service to ensure that the PDUs are fully staffed and should also prioritise the procurement and disposal unit during resource allocation; CONTRACT IMPLEMENTATION 1. For the construction of boreholes Soak pits should be properly constructed filled with hard-core stones and covered with backfill material, Boreholes should be provided with reasonably secure fencing for the intended protection and Boreholes having poor quality metallic suction pipes should have them replaced; 2. For the construction of Valley tanks, detailed investigations and surveys necessary for the proper design of the valley tanks should be carried out and duly approved by DWD as ix

16 stipulated in the Sectoral Specific Schedules/ Guidelines. Water quality tests should be routinely carried out to ensure safety of water from the shallow well at the valley tanks; The design of the shallow well at the valley tanks intended for domestic water supply needs to be revisited because of the doubtful quality of water yielded. 3. For piped water supply systems, designs of the piped water supply systems in Moyo and Kalangala should be submitted to and approved by DWD, Moyo District should re-tender to have the incomplete works completed and the intended objectives of the water supply system realized and, Bulk meters and service meters should be appropriately installed for metering of water supply, usage and management. 4. Necessary tests on completion of works should be carried out for quality assurance of the installations. Also records of commissioning and handover documentation should be kept for proof of acceptance of the works by the owner; and 5. Completion certificates should be prepared and issued for confirmation that the contractor completed his obligations under the contract and proof of the acceptance of the works by the owner. 4. Effort is required to ensure that the funds that were diverted are fully recovered by the grant and put to use for the intended purposes; and 5. Payments should be vouched and adequately supported before payment is effected. OVERALL CONCLUSION Eighty five per cent (85%), of the sampled districts achieved satisfactory value for money for the periods, 2012/13, 2013/14 an 2014/15. The District water and Sanitation conditional grant has therefore to a large extent supported the implementation of water and sanitation services and infrastructure in the rural areas. However, there is need to address the weaknesses identified by the study in order to ensure rational and sustainable utilisation of water resources for social economic development of the country. FINANCIAL MANAGMENT 1. As effort is made to create new water and sanitation facilities, effort should also be made to maintain the existing sector infrastructure and this should be reflected through a realignment of the formulae to give more prominence to the Operations and Maintenance component. 2. For the realization of an equitable share of grant proceeds, recognition should be made for those districts that are not performing to the desired national minimum standard and the grant resources should be directed to ensuring that they achieve this minimum. 3. Grant funds should be disbursed in time for implementation of planned activities. Districts should always ensure that funds are transferred from the District General Fund account to the Water account as soon as possible. x

17 1 CHAPTER ONE CHAPTER ONE 1

18 CHAPTER ONE INTRODUCTION 1.1 BACKGROUND The Government of Uganda currently provides the water and sanitation conditional grant to 111 districts to support the implementation of water and sanitation services and infrastructure in the rural areas. The grant provides funding for the following components: Rural Water Supply Facilities, Software activities for Rural water supply and sanitation, Rehabilitation of boreholes and Piped water schemes, Construction of sanitation facilities, and, Supervision, monitoring and DWO operational costs. Districts prepare annual work plans and budgets that are approved by the Ministry of Water and Environment (MOWE). The grant is disbursed by the Ministry of Finance, Planning and Economic Development (MOFPED) directly to the districts on a quarterly basis. The approved work plan and budget act as the trigger for the first disbursement; districts submit quarterly progress reports that act as a trigger for the subsequent disbursements. Construction of water supply systems, like protected well springs and shallow wells, is virtually standardised, while consultants are hired to design and/or supervise the construction of boreholes and piped water systems (including gravity flow schemes). The procurement process, as well as the contract management, is carried out solely by the districts. 1.2 MOTIVATION Clean water has been recognized world over as a key basic necessity for all citizens. The UN General Assembly in July 2010 recognized the right of every human being to have access to sufficient water. Between litres per person per day must be physically accessible (within 1,000 meters of the home) and be made safe, acceptable and affordable (i.e. less than 3 per cent of household income). 1 Similarly, Government of Uganda (GoU) recognizes the importance of access to clean and safe water as well as sanitation facilities. The government in an effort to improve access to safe water set the rural water coverage target at 77% by the year 2014/ In order to meet this target, the Government together with other Development Partners is committed to supporting the implementation of water and sanitation activities in rural areas. 3. In line with this UGX.161 Billion was allocated to the various districts as part of the District Water and Sanitation Grant (DWSG) between 2012/ /15). 1 United Nations website, Overview of Global issues-water 2 NDP 2010/ /15 3 Write up from MWE (project background) 2

19 According to MOWE, a number of weaknesses have been noted in the utilisation of the DWSCG, such as waiting until the full amount of money required has been transferred into LGs bank accounts before embarking on the procurement processes. This avoidable practice delays the procurement process and results in poor budgets and physical performance of the grant. 4 Article 10 Section (II) of the Joint Financing agreement between GoU and the Development Partners concerning support to JWESSP requires that at least one performance audit be carried out every two years on the investments under the Joint Partnership Fund (JPF) on a sample basis for Local Governments spending. In light of the above, the Office of the Auditor General undertook a review to assess the utilisation of the District Water and Sanitation Grant (DWSCG) by the implementing local governments. 1.3 DESCRIPTION OF THE AUDIT AREA General description The District water and sanitation Grant (DWSCG) is part of the wider Joint Water and Environment Sector Support Programme by the Government of Uganda (GoU) and other Development Partners to ensure that citizens have access to safe water and sanitation. This grant is mainly used for improvement of water and sanitation in rural areas and grant proceeds are disbursed to districts on a quarterly basis. The grant is used by the districts for; construction of rural water facilities (not less than 70% of the receipts), rehabilitation of boreholes and piped water schemes (up to 13% of the receipts), construction of sanitation facilities (up to 8% of the receipts), software activities for rural and water supply and sanitation (up to 8% of the receipts) and supervision and monitoring of DWO operations (up to 6% of the receipts) Objectives of the grant DWSCG supports the wider JWSSP strategic objective which is to support the Water and Environment Sector to achieve its targets and improve its efficiency through consistent, harmonized sector programme that is aligned to government objectives, policies and service delivery modalities. The specific objectives include: To improve functionality of water sources. To promote appropriate technology for rural water supply. To improve sanitation and hygiene practices. To support local governments and other stake holders Activities undertaken using the Grant The Grant is used for by the beneficiary Local Governments for; Construction of Rural Water Supply Facilities. Software activities for rural water supply and sanitation. Rehabilitation of boreholes and Piped water schemes. Construction of sanitation facilities. Supervision and monitoring of the activities of the district water office. 4 Request for a VFM audit on the utilisation of the DWSCG 3

20 1.3.4 Organization Structure The district water and sanitation conditional grant is implemented by the Ministry of Water, Ministry of Finance, Development partners, together with the beneficiary Local Governments. The strategic aspects of the grant are managed by the Ministry of water and environment together with the sector development partners, while operational aspects are managed by the Local governments through the District water officers and the District Water and Sanitation Coordination Committees. A detailed structure is attached in Appendix I Grant Disbursements (Funding) A total of UGX 161 Billion was released by MoFPED to the 111 districts as the grant funds over the 3 year period under review. Out of this, 30.8 Billion was received by the 20 districts that comprise the sample of this study. The distribution of this is shown in Table 1 below: Table 1: Showing total Grant disbursements Period 2012/ / /15 Total Amount (Billions) Amount received by Sample Districts (Billions) (UGX) Amount received by all Districts in Uganda (Billions) (UGX) Source: Analysis of total annual release figures from MoFPED. 1.4 OBJECTIVES OF THE AUDIT The main objective of the study was to assess the economy, efficiency and effectiveness with which funds under the District Water and Sanitation Conditional Grant have been utilised. The specific audit objectives to assess the 3Es were: To track the flow of DWSCG funds from the treasury to the district local governments, suppliers, consultants and contractors who were awarded the contracts (economy & efficiency); To assess the compliance of local governments with the procurement regulations as applicable to local government (compliance); To assess the contract management of awarded contracts, as well as the actual implementation (efficiency, effectiveness); To assess and obtain reasonable assurance, that the water projects under implementation have been done with reasonable quality and cost, and in accordance with design specifications (economy); To assess the impact and sustainability of the water infrastructure to the communities (effectiveness). 1.5 SCOPE OF AUDIT The study covered 20 districts which were selected from the total of 111 districts in Uganda. The study covered a period of three financial year of 2012/13, 2013/14 and 2014/15. 4

21 2 CHAPTER TWO CHAPTER TWO 5

22 CHAPTER TWO AUDIT METHODOLOGY The audit was conducted in accordance with the International Organization of Supreme Audit Institutions (INTOSAI) Performance Auditing Standards and the Performance Auditing guidelines prescribed in the Office of the Auditor General (OAG) VFM audit manual. The standards require that the audit be planned in a manner which ensures that an audit of high quality is carried out in an economic, efficient and effective way and in a timely manner. 2.1 SAMPLING A sample of 20 districts was selected out of the 111 beneficiary Local governments. Sample selection was based on the performance assessment done by the Ministry of water Technical support Units (TSUs), which supervise the Local governments in the different regions of the country. The worst and the best performing district in each of the TSUs were selected based on the performance of the DWSCG in the financial year 2014/15. This analysis yielded 16 districts of the 20 districts that formed the sample size and these included: Gulu, Kalangala, Kamuli, Kalungu, Luweero, Mbarara, Napak, Nebbi, Bundibugyo, Kaberamiado, Kibuku, Kiruhura, Kitgum, Moyo; Mukono; and, Rakai. Two (2) additional districts were selected based on the amount spent on the Water Supply and Facilities component of the grant. The districts selected in this category were Mbale and Pallisa districts. The remaining two (2) district of Amuria and Kamwenge were randomly selected completing the sample of twenty (20) districts. 2.2 DATA COLLECTION The following data collection methods were used to gather audit evidence Document review The team obtained and reviewed documents relating to the district water and sanitation conditional grant. This was done to obtain an understanding of the grant. Some of the documents reviewed include the DWSCG guidelines 2012/13, conditional grant utilisation agreement between the MoWE and the Local Governments, water and environment sector performance reports. A detailed list of documents reviewed is attached in Appendix ii Interviews A total of Eighty three (83) interviews were conducted with various stake holders to obtain an understanding of the Operations, systems and challenges of implementing the DWSCG activities. The persons interviewed are summarised below. Twenty water officers (persons in charge of the water section) in each of the twenty sampled districts. Twenty district officers in charge of financial management of the grant. Twenty assistant water officers in charge of sanitation or persons in charge of sanitation for each of the twenty sampled districts. 6

23 Twenty officers in charge of procurements (PDUs) in the twenty sampled districts. Three officials from the Ministry of Water and Environment Physical inspections and observation Physical visits were done to a sample of water and sanitation facilities constructed by the local governments in the three year period under review. The following procedures were undertaken to answer the audit objectives as highlighted below: Tracking the Flow of Funds from the Treasury to the LGs, and through to the Suppliers, Contractors and Consultants who were awarded Contracts. The team reviewed documents and interviewed the financial managers to assess if the districts undertook proper planning and budgeting for the grant activities, the team also examined the functionality of the allocation formula used to allocate grant funds to the different districts, the accuracy and timeliness of the flow of funds from the treasury to the General Fund accounts of the local governments and how long it takes to pay service providers by the districts. The team verified the accuracy and authenticity of payments made using grant funds in order to make an assessment of the economy, efficiency and effectiveness with which the funds are utilized. Assessment of the Compliance of Local Governments with Procurement Regulations as applicable to Local Governments The team interviewed key District Local Government officials and reviewed Procurement files availed and key documents relating to procurement. Where information was not available and could not be obtained it was noted as such. Assessment of the Contract Management of Awarded Contracts, as well as actual Implementation In order to assess contract management for awarded contracts and actual implementation, the team reviewed processes and procedures of contract administration, how districts managed variations in cases where there were variations to signed contracts. The team also undertook measurements to verify if the value of works paid for was commensurate to the value of works undertaken. Assessment to obtain reasonable assurance that the Water Projects under implementation have been done with reasonable Quality and Cost; and in accordance with Design Specifications. The team undertook an assessment of the timeliness of the start and completion of works, the capacity of the local governments to supervise contractors to ensure that the works are done with due regard to quality and quantity. The team examined if the works undertaken conformed to the specifications detailed in the contract agreement and in line with approved designs. Assessment of the Effectiveness, Impact and Sustainability of the water structures to the communities. The team assessed the sustainability of the implemented activities, the capacity of the communities to co fund towards implementation of grant activities. Functionality of the water facilities constructed in the sampled local governments was also examined. The team interviewed beneficiaries to obtain their perception of the grant and the level of service delivery as a result of investments made using grant funds. 7

24 2.3 ASSESSMENT OF VALUE FOR MONEY The assessment of the existence of Value for Money in the utilisation of the DWSCG adopted the following key definitions of Economy, Efficiency and Effectiveness Economy: Economy has been determined by the assessment of the following: The bidding documents, the bidding process and bid evaluation The actual and budgeted costs; Contract and actual installations quantities ; Variations Compliance to recommended funds payment approaches VFM in this regard is assessed using ranges of score determined as follows. % Score Economy Assessment Less than 25% Poor 25 50% Fair 50 75% Satisfactory Greater than 75% Good Efficiency: Efficiency was accessed on the following processes: Planning and approval process; Procurement process; Implementation; Financial management; and, Commissioning / handover process. Each aspect of the above processes was scored according to the corresponding assessment as follows: Score Assessment 3 Yes / Seen / Complied / Available / Satisfactory 2 1 Yes / Seen / Complied / Available / Not Satisfactory / with MINOR comments Yes / Seen / Complied / Available / Not Satisfactory / with MAJOR comments 0 No / Not Available / Not Seen 8

25 The efficiency for the audited contracts was assessed based on the total score as follows. Score Assessment % Score 0 Poor Less than 25% 1 Fair 25 50% 2 Satisfactory 50 75% 3 Good Greater than 75% Effectiveness: The effectiveness of the inspected water facilities was determined based on the following issues: Quality of the installation / works; Functionality / Utilisation of the facilities; Quality of water as reported by the user community; Operation and Maintenance considerations. Effective utilisation of the grant funds Effectiveness also considered activities from the procurement requisition to contract management in regards to compliance with the LG PPDA regulations; Each issue was assessed and given a score as follows. Score Assessment % Score 0 Poor Less than 25% 1 Fair 25 50% 2 Satisfactory 50 75% 3 Good Greater than 75% 9

26 3 CHAPTER THREE CHAPTER THREE 10

27 CHAPTER THREE SYSTEMS AND PROCESS DESCRIPTION 3.1 ROLES AND RESPONSIBILITIES OF KEY PLAYERS There are a number of key stakeholders involved in the process of ensuring that the District Water and Sanitation Conditional Grant (DWSCG) activities are implemented. These include: Ministry of Water and Environment (MWE) The Ministry through the Directorate of Water Development (DWD) is the lead agency responsible for managing water resources, as well as coordinating, regulating and monitoring all water and sanitation activities. The Ministry also provides support services to local Governments in form of technical assistance through the Technical Support Units (TSUs) to ensure that water facilities remain operational. The Ministry further provides strategic regulation and direction for the water sector through formulation of policies, regulations and guidelines, ensuring that the sector performance goals are achieved. MWE specifically: Ensures that acceptable (realistic, achievable) Annual Work Plans are prepared by the Districts that conform to the Grant guidelines; Ensures that acceptable (within the budget ceiling provided by MWE) corresponding Budgets are prepared by the Districts that conform to the Grant guidelines. Ensures that acceptable reports (quarterly, semi-annual and annual) are prepared by the Districts that conform to the Grant guidelines. Provides approvals to Districts for changes in the Work Plan where the proposed changes have a cumulative shift in resources of more than 10% of the approved budget within 30 days The Ministry of Finance, Planning and Economic Development (MFPED) The Ministry of Finance is responsible for the allocation and disbursement of the grant proceeds to the respective implementing entities. The Ministry also plays a key role of coordinating planning and reporting to donors. The Ministry also provides guidelines for the utilisation of resources disbursed to different government entities Donor Community/Development Partners The Development Partners in the Water and Environment Sector provide substantial support to Government of Uganda in form of capital development funding for the sector. The biggest portion of District Water and Sanitation Conditional Grant funding is received from the donors/ development partners Local Governments/Districts The local governments/ districts are the key implementers of the DWSCG activities. Local Governments undertake planning, budgeting, resource allocation, procurements, contract management and community mobilization. They also monitor and provide data to the Ministry of Water used in assessing the progress in the achievement of the wider water sector goals. 11

28 Specifically districts: Develop the Annual Work Plan in accordance with the Grant Guidelines, and with MWE Policy, to address the needs of the poor citizens in the District. Develop the corresponding Budget within the budget ceilings provided by MWE. Implement the Work plan, plan and report, on the use of funds, monitor activities and post public notices in accordance with the Grant Guidelines, and the General Guidelines for the Planning and Operation of Conditional Grants. Report on a quarterly progress Report, Cumulative progress report and budget requests to MWE by the 5th of the first month after the close of the quarter to qualify for release of funds for the subsequent quarter, as specified in the Grant Guidelines and General Guidelines. Seek technical assistance from MWE or any other party in position to provide the necessary support. On receipt on technical assistance, the District will act on this assistance and make effort to overcome any problem in implementation. Obtain approval from MWE for changes in the Work Plan where the proposed changes have a cumulative shift in resources of more than 10% of the approved budget Community (ies) These are the direct users and therefore the beneficiaries of the investments made by the local governments using the DWSCG. The user communities actively participate in the planning process by submitting their community water requirements for consideration and incorporation in the annual district work plans and budgets. The communities constitute water user committees for each water source which are charged with ensuring that the water source remains functional at all times. The communities also contribute towards the maintenance of the constructed water sources, thereby making a contribution to sustainability of the constructed facility. 3.2 PROCESS DESCRIPTION There are a number of processes undertaken by the major stake holders to ensure that the grant objectives are achieved. The key processes for implementing the grant activities include; Planning All activities to under the grant commence with the planning. Throughout the year communities make requests for water services to the district through the District Water Officer. Once the requests are received they are evaluated and prioritized, given the limited available funds allocated to the district by MFPED. The District Water Officer in consultation with other stake holders prepares the annual district water work plans and budgets. These work plans build on lessons learned from previous experiences to ensure that targets in the work plans are realistic and achievable. These work plans are presented to the Technical Planning Committees of the district (TPC), and to the MWE for review and approval. The plans are then incorporated in the district annual work plans and budgets and presented to the full district councils for approval. The approved work plans become the basis for allocation of resources for the financial year. Together with the approved work plans and budgets, the local governments and MWE sign a memorandum of understanding detailing the responsibilities of each party and commitment to ensuring that the planned targets are achieved Procurement of Service Providers Procurement of service providers is done by the local governments following the public procurement rules, regulations and guidelines. The 12

29 procurement process starts with preparing a procurement plan by the Procurement and Disposal Unit (PDU) based on the approved work plans. The districts proceed with the processes of bidding, evaluation of bids, and contract award up to contract signing with the procured service providers. According to the guidance from the MWE, local governments commence on the procurement process up to the point of the award of the contract, immediately after the approval of the district budgets by the district council. Signing of the contract is done after confirmation of the availability of funds to undertake the activities. This is intended to reduce the time delays caused by the procurement processes. The final phase in the procurement processes is contract management which involves all processes aimed at ensuring that the contractor procured delivers the goods and services according to the terms of the contract and to the satisfaction of the district Implementation and Supervision of works Siting, Drilling of boreholes and supervision of works was undertaken using two approaches. In some cases the investigation surveys for siting and supervision of construction of boreholes were carried out by consultants under separate services contracts, while in other cases they were carried out by the contractors under the Turnkey contracts. In these cases supervision was done by the District Water Officer as appointed by the Accounting Officer. Turnkey contracts were opted to transfer the responsibility of the borehole siting and the risks of dry boreholes to the contractor who does not get paid in such instances thereby not incurring loss of money Funds Disbursement and Utilisation Disbursement of funds is done by the Ministry of Finance Planning and Economic development. DWSCG funds are disbursed by the MFPED directly to the local governments on a quarterly basis. Disbursements are supposed to be made after a district submits accountability for the utilisation of the previous disbursements. Funds disbursed are only utilised for activities for which they are budgeted and therefore all local governments are expected to have a system in place to ensure that all disbursed funds are used for DWSCG activities. Payment to contractors by the district is done in line with the local government finance and accounting rules, regulations and guidelines Reporting Part of the grant conditions and guidelines require the local governments to regularly report to MoWE, the status of implementation of the approved grant activities. The District Water Officer prepared progress reports which are submitted to the MoWE on a regular basis. The local governments are required to submit: Quarterly progress reports (at the end of each quarter); Semi-annual progress reports (for the activity period ended 31 st of December); Annual reports (for the activity period ended 30 th June). Copies of these reports are also submitted to MFPED. The district water officer - as part of the internal reporting mechanisms of the district, also makes regular reports to the council about the implementation of planned activities Monitoring and Evaluation Monitoring includes all activities that involve regular collection and analysis of information to assist timely decision making. Evaluation by the different stakeholders on the other hand is the examination of the planned, on-going or continuing activities with the objective of establishing the extent to which the original district water objectives are achieved. Each Local Government should monitoring and evaluation framework/system which enables the 13

30 district to track, analyse, assess and report on the progress, service delivery performance and results of all activities undertaken using the DWSCG. Monitoring and evaluation is a continuous process throughout the year. Figure 1: Showing key processes in implementing DWSCG activities 14

31 4 CHAPTER FOUR CHAPTER FOUR 15

32 CHAPTER FOUR FINDINGS, CONCLUSIONS AND RECOMMENDATIONS This chapter presents the audit findings, conclusions and recommendation made for the improvement in the utilisation of the District Water and Sanitation Conditional Grant. 4.1 PROCUREMENT PLANNING Regulation 62 (1) of the Local Government Public Procurement and Disposal Regulations 2006 requires the Local Government to prepare procurement plans annually. It was established that except for the districts of Kamuli, Rakai and Moyo where we were not able to ascertain whether the procurement plans for FY 2012/13 were prepared since the approved copies were not availed. All the districts prepared annual procurement plans for the period under review. Without approved procurement plans there is a risk of the districts procuring unplanned or unnecessary goods and services. Recommendation All local governments should endavour to plan for procurement activities before they are undertaken. 4.2 PROCUREMENT OF WORKS, GOODS AND SERVICES Requisitions: According to Regulation 65 of the Local Government PPDA Regulations, 2006, procurement requisitions should include the works, services or supplies required, their estimated value and confirmation of availability of funding which funding should take into account the total acquisition cost. Through review of the procurement files, it was established that eleven per cent (11%) of the 99 cases reviewed did not have any requisitions attached; in three of the sampled requisitions, the accounting officers never confirmed availability of funding. From interviews with district officials, lack of procurement requisitions was attributed to laxity by the user departments to prepare and submit the requisitions to the procurement and disposal units (PDU). In some cases, the PDU was forced to commence the procurement process without requisitions in order to avoid delays in implementing planned activities. Since the requisitions give a clear detail of the specifications, drawings required for any works and goods, terms of reference for services and an estimated cost of the works, goods and services, making procurements without details such as drawings, estimated cost of works, detailed statements of requirements, and scope of works may compromise quality and quantity of works since the user needs are not clearly defined. 16

33 Recommendation The user departments in the local governments should endeavour to prepare and submit procurement requisitions to the PDUs in a timely manner to facilitate the procurement process Planning The approved procurement plans form the basis for all procurement activities to be undertaken by a procuring and disposing entity for a given period. To enhance orderly execution of annual procurement activities, the plans must be adhered to. Review of procurement documents and files of different local governments revealed cases of procurements that were undertaken without being planned for. From interviews, these procurements are from savings made on other activities. It was however noted that there was no evidence of approval of these reallocations from Ministry of Water and Environment. The practice of reallocating funds from one activity to another without approval by the Ministry of Water is irregular and contrary to the Guidelines. Procurement of un planned activities negates the whole purpose of procurement planning by the local governments which is intended for systematic allocation of funds. This may also lead to unnecessary or non-priority purchases by the districts.details of unplanned procurements are attached in Appendix iii Recommendation The local governments should in future ensure that all reallocation are approved by the Ministry of Water and Environment as guided by the DWSCG guidelines and desist from undertaking procurements outside the approved procurement plan Method of procurement According to the Local Government PPDA Guideline 2008, and in line with Regulation 32 (3) of the Local Government PPDA Regulations, 2006, the following methods are provided for procurement of goods, works and services; Open domestic bidding, Selective bidding, Micro procurements and community purchase. Any other method other than the above requires a waiver and approval from PPDA. Audit established that Bundibugyo and Kamwenge executed procuments amounting to UGX.192,761,460 and UGX.64,571,498 respectively using force account method of procurement without seeking approval from PPDA as required. Force account is a method where the Procuring and Disposing Entity (PDE) procures materials and undertakes the works with the supervision of a technically qualified staff in this case, both the District Engineer and the District Water Officer. According to the district officials interviewed, the force account method was used because it is perceived as convenient and cheaper compared to opening the procurements to competition. There was however no evidence to show that this method was cheaper compared to the other methods. It was also noted that while using force account as a method of procurement, these districts irregularly deposited grant funds on personal accounts of district staff which exposes the grant funds to misuse. 17

34 Use of force account limits competition and therefore the districts have limited options on the best way to achieve planned activities. Depositing funds on personal accounts is contrary to established financial management procedures for public funds and exposes these funds to misuse. Recommendation The Local Governments should comply with the PPDA regulations governing procurement methods s and desist from depositing public funds on employees personal accounts Timeliness of the Procurement process Section 7 (i) of the conditional grant utilisation agreement annexed to the DWSCG guidelines 2012/13 requires all Local Governments to immediately start the procurement processes once the district councils approve budgets but only sign agreements upon receiving funds. This is intended to reduce delays in implementation of services resulting from delays in the procurement process. This implies that the procurement process should commence in July after approval of district budgets in June. Audit established that in most of the local governments, procurement activities commenced either in September or October, i.e. two or three months late. This was mainly caused by: districts waiting for receipt of funding (first quarter releases) to commence the processes and delayed submission of procurement requisitions from user departments. This results into failure to execute procurements in time and leads to rolling over activities to the following years. In other cases it resulted in irregular splitting of procurements in order to achieve the planned activities in a short time. For example, this practice of splitting procurements was noted in Luwero in 2012/13 and 2013/14 and Rakai for 2012/13 and 2013/14. In the case of Luwero, during the FY2012/13, the procurement plan had an activity for the construction of shallow wells which were 22 in number, to be undertaken under open bidding procurement method as a single procurement transaction. However during the implementation this activity was split into 6 procurement transactions each under selective domestic bidding. Splitting of procurements is contrary to regulation 64 (1) which prohibits intentional avoidance of a particular method of procurement. It also affects capacity of the districts to absorb funds. Recommendation Districts should start on the procurements early enough to avoid delays in implementation of activities Duration of the procurement cycle Good practice requires that procurement of service providers is done in a timely manner in order to optimise service delivery. For this analysis the team assumed that an efficient local government would require at most sixty (60) days to complete a procurement of a service provider /contractors (from procurement requisition to contract signing) as broken down in Table 2 below. 18

35 Table 2: Detailing time required for different activities of the procurement process No Procurement activity Maximum no of days required 1 Approval of bid documents 5 2 Advertising for cases of open bidding 15 3 Evaluation of bids 5 4 Approval of evaluation reports 2 5 Notice of best evaluated bidders 10 6 Approval/ clearance from Solicitor General 14 7 Contract signing 3 8 Any other activities that may be necessary 6 Total required days 60 Source: OAG assumption for an efficient Procurement duration The team analysed time taken between the date of receipt of the procurement requisition and the date of contract signing. Twenty seven (27) procurement files from fifteen (15) of the twenty (20) sampled districts were analysed to establish how much time districts took to sign a contract with selected service providers. From the analysis as shown in Figure 2 below, only two (2) i.e. 7% procurements were made within sixty (60) days; some procurements took up to 200 days as was noted in Luwero, Kibuuku, and Kitgum districts. Refer to Appendix iv for detailed analysis. Figure 2: Showing time taken from procurement requisition to contract signing Source: OAG analysis of sample procurement records. From interviews with district officials, delays were attributed to delays in approval of procurement methods, approval of bidding documents, approval of evaluation committees and evaluation reports, challenges in mobilizing evaluation teams given the fact that there is usually no facilitation for such activities and the teams are adhoc for specific evaluations. Delays in execution of the procurement processes translate into delays in the project implementation. 19

36 Recommendation The Local Governments should endeavour to expedite the procurement processes for timely implementation of planned activities. PDUs should be proactive in ensuring that approvals for elements of the procurement cycles are submitted to the contracts committee for approval at the same time to eliminate delays in obtaining the required approvals. Local Governments should identify ways of motivating members of the adhoc teams that are formed to evaluate. 4.3 CAPACITY OF THE PROCUREMENT AND DISPOSAL UNITS (PDUS) PDU Staffing Section 93 of the Local Government Act, 2006 (as amended) requires every district to have a Procurement and Disposal Unit staffed at appropriate level and headed by a Procurement Officer who is also a secretary to the district contracts committee. It was established that only four (20%) of the twenty sampled districts were operating at full capacity, while nine of the districts visited were operating at 33% of the approved structure as illustrated in Table 3 below. Table 3: Showing staffing levels of the PDUs District Approved staff structure Filled Vacant % of approved structure filled Mukono Luwero Moyo Nebbi Kitgum Gulu Kaberamiado Napak Amuria Mbale Pallisa Rakai Kalungu Bundibugyo Kamwenge Kiruhura Mbarara Kibuku Kamuli Kalangala Source: OAG analysis of staffing levels for PDUs in the sampled districts 20

37 From interviews with district officials understaffing was caused by a moratorium to the districts from the Ministry of Public Service stopping them from making additional recruitments as a way of controlling the wage bill unless a waiver is granted. In other cases such as Kitgum and Moyo districts, although the positions had been advertised, the districts failed to attract qualified persons due to distance and remuneration. Understaffing of the PDUs overwhelms the available staff and results into inefficiency in the procurement and disposal unit. Recommendation The Local Governments should liaise with the responsible ministries that is; Ministry of Public Service and the Ministry of Finance, Planning and Economic Development to ensure that these critical positions in the PDU are fully filled Funding for PDU activities The approved work plans of the respective PDUs form part of the parameters for performance measurement for these units. For approved work plans to be realized they should be adequately funded in order to facilitate achievement of planned targets/ activities. Audit established that procurement and disposal units in the sampled districts were underfunded and as a result could not perform as expected. It was observed that the budget for PDU activities in most of the local governments was less than five per cent (5%) of the total district budget. The only source of additional funding for PDUs activities was a portion of the local revenue collected by the districts. In some cases, there was no allocation of funds to the PDU as noted in Rakai, Bundibugyo, and Kamwenge during the period under review. The PDUs therefore had to rely on other sectors for operations like photocopying, and other office requirements. From interviews with district officials underfunding for procurement activities was attributed to meagre local revenue collected by the districts and limited prioritization of the procurement and disposal units by the districts. This in turn curtails operation of the PDUs and affects their ability to perform efficiently and effectively. In most cases, the PDUs were not able to have complete procurement files with bidding documents, payment document and contract management reports. In other cases some critical activities like advertising for bids were delayed. It also impacted on the level of tooling and equipping of the PDUs. In Mbarara it was noted that the officers in the PDU rely on computers from other departments to access IFMS. In Kaberamaido, the computers were non-functional. In Mukono and Moyo, only one of the computers is functioning. Rakai had no computer at all. Photocopiers and printers were similarly non-functional in Pallisa and Napak and not available in Mbale and Luwero. Lack of adequate storage space and facilities was also noted in all the 20 districts sampled. Recommendation The local governments should give more priority to the PDU given the fact that most of the local government expenditure is directly linked to procurement activities. Efforts should be geared towards making additional funds available to the PDUs. 21

38 4.4 CONTRACT IMPLEMENTATION The facilities implemented under the DWSCG in the 20 districts are shown in Table 4 below. Table 4: Showing Distribution of types of facilities implemented under DWSCG in the contracts reviewed Water Supply Sanitation Facilities Type of Facility Boreholes installed with U2/U3 hand pump 59% Protected Spring 7% Shallow wells installed with U2 hand pump 7% Piped Water Supply System 5% Rain Water Harvesting Tank 5% Gravity Flow Schemes 2% Valley Tank 2% VIP Latrine 4% Water Borne Toilet 4% Lined Latrine 3% ECOSAN 2% Source: Analysis of Technology Mix of the Districts that comprise the sample Percentage 87% 13% Eighty Seven per cent (87%) of the contracts reviewed were of water supply facilities and thirteen per cent 13% of sanitation facilities. The majority of the water supply systems were boreholes including both deep and shallow boreholes installed with either a U2 or U3 hand pump. All the above facilities are point facilities except the gravity flow schemes and the piped water supply system that extend over a large area. The distribution of the above type of facilities in the 20 districts is shown in Table 5 below: Table 5: Showing distribution of the facilities in the sample districts Type of Facility No. of Districts Districts where implemented Name of Districts Boreholes installed with U2/U3 hand pump Protected Spring 5 16 Luweero, Moyo, Nebbi, Kitgum, Gulu, Kaberamaido, Napak, Amuria, Mbale, Pallisa, Rakai, Kalungu, Kiruhura, Mbarara, Kibuku, Kamuli Mbale, Bundibugyo, Kamwenge, Mbarara, Kibuku Shallow wells installed with U2 hand pump 5 Kalungu, Kamwenge, Kiruhura, Mbarara, Kalangala Piped Water Supply System 3 Mbarara, Moyo, Kalangala Rain Water Harvesting Tank 4 Kalungu, Kamwenge, Kiruhura, Kalangala Gravity Flow Schemes 2 Mbale, Bundibugyo Valley Tank 1 Rakai VIP Latrine 4 Kalungu, Bundibugyo, Kibuku, Kamuli Water Borne Toilet 2 Rakai, Mbarara Lined Latrine 1 Kiruhura 22

39 ECOSAN 1 Kamwenge Source: Analysis of Technology Mix of the Districts that comprise the sample Engineering Design In order to have good designs for water facilities, a number of design requirements must be fulfilled as detailed in the table below. Type of Facility Boreholes and shallow wells Protected Spring Design Requirements Hydrogeological surveys for siting Drilling process Test pumping Water quality tests and analysis Installations specifications Siting Yield assessment Checking of pollution points that could affect water quality Facility design Piped Water Supply System Water resources/hydrological studies Water quality tests and analysis Demand estimation of the supply area Topographical surveys Hydraulic computations and designs of system components Design review of existing installations It is a requirement in Section 3.6 of the Sectorial Specific Schedules / Guidelines, May 2012 for the Water and Sanitation Sector of MWE that all designs undertaken by Districts for piped water systems should be submitted to DWD for approval before construction works begins. Rain Water Harvesting Tank Gravity Flow Schemes Valley Tank Tank sizing based on : Water demand assessment Rainfall pattern Roof catchment area Water resources/hydrological studies Water quality tests and analysis Demand estimation of the supply area Topographical surveys Hydraulic computations and designs of system components Design review of existing installations Geotechnical investigations, topographical surveys, hydrological surveys and hydraulic designs Water Borne Toilet Estimation of waste water flow, System design and sizing of components, VIP Latrine Determination of number of users, Lined Latrine Sizing of toilet facility ECOSAN It is also good practice to have Feasibility Study and Design reports prepared including 23

40 all investigations, technical, social, environmental and design computations of the design requirements with a project design brief, specifications and drawings. The team established that; All districts had their respective borehole drilling reports with the exception of Moyo for the Contract No. MOYO539/WRKS/13-14/ A typical design for the protected springs was available in the districts of Bundibugyo, Kamwenge, Mbarara and Kibuku. In Mbale and Bundibugyo Districts that had GFS, works comprised majorly of extension pipelines to new areas. There was no evidence of design reports and drawings to show that design activities were undertaken for the pipeline extensions. Absence of designs may result into substandard and inadequate installations. For the valley tanks constructed in Rakai District, there was no evidence of the design studies having been undertaken. Absence of designs may result into substandard and inadequate installations. In Mbarara, Moyo and Kalangala districts construction of works commenced before getting approval by DWD. Absence of appropriate design and design approval could contribute to poor and substandard designs. Inadequate and inappropriate sizing of the water supply system installations. For water sources similar to that of Kalangala i.e. Lake Victoria, the water treatment works should comprise aeration, coagulation/flocculation, clarification, filtration and disinfection units as justified by the raw water quality tests and analysis according to the MWE/DWD Water Supply Design Manual. Kalangala water supply system only comprised filtration and disinfection. This casts doubt on the ability of the treatment work to treat water to the required quality. Designs for sanitation facilities were undertaken by the District Water Officer in respective districts. Typical design drawings were available but without design reports. Provisions for people with special needs should be put into consideration for future designs and hand washing facilities should always be provided. Without design reports, it is difficult to confirm that all necessary design procedures for the respective facilities were undertaken. Recommendations Detailed investigations and surveys necessary for the proper design of the water supply and sanitation facilities should be carried out and where necessary should be duly approved by DWD as stipulated in the Sectorial Specific Schedules/Guidelines 2012/13, May Feasibility Study and Detailed Design reports should be prepared for records and professional practice Contract Management PPDA Regulation 119(2) requires that a user department nominates a contract supervisor. In addition, PPDA Regulations 46(1)(b) requires that contract management records properly kept. Contract Administration Except for Mbarara and Kamuli districts, no contract management files were seen for all contracts reviewed. Absence of contract management records hampers assessment of adequacy of contract management system and skills. Payment Certification 24

41 Payment for boreholes based on the form of contract was made as follows: For lump sum contracts, a lump sum payment was made for each functional borehole in the contract. Measurement was based on the functional borehole unit. For admeasurement contracts, quantities determined for one borehole were multiplied by the number of borehole units in the contract for the total amount of payment. This method of measurement for payment is prone to unrealistic payments considering the varying depth of the boreholes. No evidence of measurements for the admeasure contracts seen. Handover Process No handover documents in form of Take over Certificates were seen in all the sampled contracts contrary to the conditions of contract. This is due to laxity of contract managers to enforce this contractual provision. Without handover reports, it is not possible to establish how much time the contractor took to complete works and if any liquidated damages were charged where applicable. Water quality tests These were done for boreholes in all districts and for piped water supply systems in Kalangala and Mbarara districts at completion as evidenced by the satisfactory test results carried out in NWSC laboratory. It was noted from discussions with the water officers that routine water quality test were not being carried out. Routine water quality tests are necessary for confirmation of the quality of water being supplied to the users to avoid health risks. Works components For quality assurance purposes, pressure tests are required to ensure that the installed pipes can carry the system working pressures. No evidence that pressure testing was done for the installed pipelines for pipe water supply systems in Kalangala and Mbarara districts as required for quality assurance. Completion Certificates It is good contract management practice to have the completion certificate issued as proof of completion of contractual obligations by the contractor and acceptance of the works by the owner. Copies of Completion Certificates were available for only Mbarara, Pallisa and Kamuli districts. Other districts attributed failure to have completion certificates to lack of standard format for completion certificate. Completion report Good contract management requires that on completion of works and contracts, completion reports should be properly prepared and kept. The team however noted that most districts regarded drilling reports by contractors as completion reports instead of having proper completion reports. 25

42 Recommendations: Contract management files should always be opened and maintained by the user department for records and future reference. Necessary test on completion of works should be carried out for quality assurance of the installations. Records of handover documentation should be kept for proof of acceptance of the works by the owner. Completion certificates should be prepared and issued for confirmation that the contractor completed his obligations under the contract and proof of the acceptance of the works by the owner. MWE should provide a standard format of a completion certificate to guide the districts. Supervisors should also prepare and have on record their completion report for each contract. 4.5 CONDITION OF FACILITIES The quality and workmanship of the works visited was fairly good with the exception of the defects noted for the various facilities below. Boreholes and Hand Dug Shallow Wells The following defects and issues were observed at the boreholes and shallow wells visited in all districts except where noted otherwise. Incomplete soak pit with stagnant spill water which are not only unsightly but also mosquito breeding site leading to the spread of malaria and other environmental hazards. Poor or no fencing around boreholes for the protection of the borehole installation as shown in Picture 1 below. Provision of fencing around boreholes is part of the community contribution. Failure of its realization was due to inadequate community mobilization. In Moyo dwarf brick walls are being constructed in replacement of the temporary wooden fencing. In Amuria poor workmanship was observed as illustrated in Picture 2 picture below; Picture 1: Showing un fenced borehole in Napak Source: OAG pictures taken during field inspection. 26

43 Picture 2: Showing Poor quality workmanship around a borehole in Amuria Source: OAG pictures taken during field inspection. Poor quality metallic suction pipe reported by the Water Officers affects the quality of the water because of the pipe rust which affects the colour and smell of water. Pallisa district however had the boreholes installed with upvc pipes to avoid this problem. The water officers complained of the poor quality pipes on the market and the recommended stainless steel pipes which are very expensive. For a number of boreholes, the water was high in iron content evidenced by brown staining of the borehole slabs. The complaint of high iron content was also reported by the user communities and confirmed by the District Water Officers. The high iron content is majorly due to geological formation in the earth strata of the borehole location. This resulted in abandonment of a number of water sources by the communities. Recommendations: Soak pits should be properly constructed filled with hard-core stones and covered with backfill material with adequate supervision and contract administration by the Project/ Contract Manager. Boreholes should be provided with reasonably secure fencing for the intended protection through adequate community mobilization. Boreholes with poor quality metallic suction pipes should have them replaced with PVC pipes. This should be done with adequate supervision by the Water Officers. Specifications for the suction pipes should be for PVC pipes that are corrosion proof for future borehole installations. Protected springs Whereas typical designs were available for the protected springs, they were never followed during the construction of springs in Bundibugyo, Kamwenge, Mbarara and Kibuku and no reason was provided. The following observations were also made during field visits; No cut off drains around the protected springs No fencing for the protection of the water point Seepage under the slab affecting the yield of the protected spring an indication of poor construction to contain the spring water in Bundibugyo 27

44 Picture 3 and Picture 4 below illustrate the above observations. Picture 3: Showing Water seepage below a spring slab in Bundibugyo District (Kanabitetu Spring) Source: OAG pictures taken during field inspection. Picture 4: Showing constructed spring with no fence and cut off drain in Kibuku District Source: OAG pictures taken during field inspection. Without the above installations, the water source is prone to pollution. The above concerns could be attributed to lack of adequate supervision and contract management. Recommendations Guidelines should be followed for proper design and construction of the protected springs with adequate contract management by the contract manager. Rainwater harvesting tanks Rainwater harvesting tanks were constructed in Kalungu, Kamwenge, Kiruhura and Kalangala districts. The works for the tanks visited were generally of good quality as seen in the pictures below. 28

45 Picture 5: Showing rain water harvesting tanks constructed in Kiruhura Source: OAG pictures taken during field inspection. Picture 6: Showing rain water harvesting tanks constructed in Kalungu Source: OAG pictures taken during field inspection. Valley tanks Two valley tanks were visited and the following observations were made: None of the tanks was found to be having functional volume of water. Poor control of the levels of the spillway and the tank embankment leading to possible flooding of the tank surrounding areas. This was attributed to poor design and lack of adequate supervision. Tank inlets were not provided with erosion protection lining to avoid erosion gullies in the inlet. This was attributted to poor designs. The functionality of the design of the shallow well system at the valley tank intended for domestic water supply is doubtful and needs to be reviewed since the shallow well yeilds water of poor quality. 29

46 Picture 7: Showing Kagamba Valley tank in Rakai District with an eroded inlet and low water volume Source: OAG pictures taken during field inspection. Picture 8: Showing Shallow wells at Kabinda valley dam yielding water of poor aesthetic quality Source: OAG pictures taken during field inspection. Recommendations Detailed investigations and surveys necessary for the proper design of the valley tanks should be carried out and duly approved by DWD as stipulated in the Sectoral Specific Schedules/Guidelines 2012/13, May Water quality tests should be routinely carried out to ensure safety of water from the shallow well at the valley tanks. Tank inlets should be provided with erosion protection lining to avoid gullies in the inlet. The design of the shallow well at the valley tanks intended for domestic water supply needs to be revisited because of the doubtful quality of water yielded. Piped water supply system The works contract No. MOYO539/WRKS/13-14/00008 of the piped water supply system in Moyo was terminated because of abandonment of site with uncompleted works by the contractor. Long exposure to the sun light of the plastic pipes left on site could affect the quality of the pipes and may render them unsuitable for use in the system creating a loss in that regard. Piped water systems in Mbarara and Kalangala also lacked service meters. 30

47 Picture 9: Showing a tap stand with no service meter for Kashare piped water supply system in Mbarara Source: OAG pictures taken during field inspection. Picture 10: Showing reservoir tank for Kagonya piped water supply(kalangala) with no meter Source: OAG pictures taken during field inspection. Photograph of the abandoned works in Moyo is presented pictures Picture 11 and Picture 12 below. Picture 11: Showing incomplete tank support structure for abandoned works in Moyo Source: OAG pictures taken during field inspection. 31

48 Picture 12: Showing a roll of HDPE pipes in the bush in Moyo Source: OAG pictures taken during field inspection. Recommendations: Designs of the piped water supply systems in Moyo and Kalangala should be submitted to and approved by DWD. Moyo District to re-tender to have the incomplete works completed and the intended objectives of the water supply system realized. Bulk meters and service meters should be appropriately installed for metering of water supply and usage and management. Sanitation Facilities A sample of the sanitation facilities visited were generally well constructed and visiually, the works were still holding at the time of visit as shown in Picture 13 below; Picture 13: Showing water borne toilets constructed at Sanja Rakai & Ndeija, Mbarara Source: OAG pictures taken during field inspection. Recommendations: Provisions for people with special needs should put into consideration for future designs. Hand washing facilities should always be provided. Location of public toilet should ensure unrestricted accessibility by the public. 32

49 4.6 EFFECTIVENESS AND IMPACT OF THE FACILITIES TO THE COMMUNITIES The grant has had a positive contribution towards extensiopn of water and sanitation services to rural areas according to respondents interviewed. Th eaudit aso examined the impact of grant activities to the livelihoods of the beneficiaries. The findings are highlighted below; Functionality All sources visited were functional save for two boreholes and valley tanks in Rakai District; and five tap stands in Bundibugyo. In Bundibugyo, ten sources were visited out of which five had non-functional tap heads. The community attributed the non-functionality of the tap heads to the quality of taps being used by the district. The district however, attributed it to mishandling of the taps by the public. Failure to ensure proper functionality of the water sources denies people access to clean and safe water. It also leads to a waste of water in cases where tap heads are non-functional and water left to flow uncontrolled as shown in the Picture 14 below: Picture 14: Non-functional water sources Water left flowing in Bundibugyo Non functional tap stand in Bundibugyo Source: Photographs taken in Bundibugyo Quality of water From interviews with water users and physical observations during site visits, the quality of the water was found to be generally acceptable with few communities complaining of iron in the water, change in colour and a foul smell of the water as shown in the Table 6 below. 33

50 Table 6: Summarizing water quality observations from field visits S/N District Borehole 1 Moyo 2 Nebbi, Gulu, Napak 3 Mbale 4 Gulu, Luwero, 5 Kaberamiado (especially at the lake belts), Rakai, Kiruhura and Kamuli. Kibuku and Mbarara 6 Luwero, Kalungu, Kitgum Kendi logoba parish Onyire Obongi Town council Boreholes and boreholes in the IDP camps(napak) Nshangale Village Muyembe Source: Observations from field inspection & interviews with water users. Water Quality observations. The water had a foul smell Water was found to be coloured. The water turns yellowish after fetching. In some cases the water was found to contain Faecal matter The water turns yellowish after fetching. Water initially had particles (Turbidity) The water was high in mineral contents The water was Saline Rusty water due to iron content The water officers attributed faecal contamination of some of the sources to the proximity of the boreholes to latrines which allows for seepage. The change in colour and foul smell could be attributed to the high iron and manganese content in the water. The poor quality of water has resulted in some boreholes being abandoned and/or used for other activities like watering of their animals other than domestic use Quantity of water available The audit noted that the majority of the water sources had adequate and constant water supply apart from a few cases. For example there was a problem of low underground water potential affecting quantity of water produced in Gulu, Rakai and Kitgum districts. Some boreholes in Napak were unable to meet the requirement of 25 litres per person per day because the yield was very low. In the districts of Kiruhura, Mbarara, Kamwenge and Kamuli there was intermittent flow of water. The intermittent flow and congestion at the water sources was attributed to poor borehole utilisation practices i.e. poor pumping in most beneficiary communities and lack of preventive maintenance. This resulted into users taking a long time in collecting water for their domestic use resulting into some of them abandoning the water source because of frustration Availability Time open Most sources were available all the time with the exception of Bundibugyo where the water was controlled downstream and the taps were opened after every two days. The water flow in Bundibugyo was controlled as a result of vandalism of the pipes for the gravity flow scheme. This resulted into congestion and long queues once the taps were opened. 34

51 Recommendations Districts should: Devise appropriate technologies that can cater for water stressed area and the population increase as opposed to point water sources. Strengthen the role of the care taker to guard against vandalism and mishandling of the sources especially boreholes. Continuously sensitize the community on the proper use and maintenance of water sources. Consider chlorination as a way of treating faecal contaminated water as practiced in Pallisa and Kibuku. Ensure that contractors use durable parts for construction of water systems Sustainability of the water sources As a way of ensuring sustainability of water sources constructed, communities are charged with the responsibility of demanding for, planning, contributing a cash contribution to, operating and maintaining water facilities. In addition, they are required to establish a water user committee (WUC) for each water point and ensure that a monthly contribution of between is made as user fees to cover the costs of maintaining the water sources. The audit established that the communities participation in various aspects of sustainability was good however in some areas there was need for more participation; Community Involvement The audit found that indeed communities are involved in planning by way of participating the consultations and baseline studies. It was noted that the districts used a bottom up approach for identifying water source beneficiaries. Communities submit their water needs through their respective sub-counties which later forward the requests to the districts for consideration and incorporation in the district work plans and budgets. In addition communities are actively involved in baseline surveys, household data collection and morbidity of sanitation related diseases. There is however need to scale up mobilization of the communities for them to embrace and actively participate in O & M activities. Capital contribution towards construction of water facilities. The community is also required to make cash contribution towards the capital cost of the water source. The amount of funds to be contributed depends on the technology type to be used are shown below; S/N Type of Technology Community Cash contribution per Source (UGX) 1 Springs. Small Medium Ex large 45,000 45, ,000 2 Deep Borehole 200,000 3 Shallow well 100,000 4 Borehole rehabilitation 90,000 5 Gravity flow scheme 45,000 per Tap 6 Valley Tanks and Dams Not Specified Source: DWSCG Guidelines 2012/13 35

52 The audit found that in most cases communities did not make capital contributions towards the construction of new water sources. This was mainly because the local governments did not collect this contribution and in other cases the communities were hesitant to contribute due to poverty according to the members interviewed. It was noted non-contribution to capital cost did not stop the districts from providing the service. This however negatively affects the spirit of community ownership of the facilities and directly affects sustainability. Existence and Functionality of Water user committees The DWSCG guidelines require that every water facility must have a functional water user committee. The water user committees are responsible for managing the water source on behalf of the community. It was established that although at commissioning of new sources most sources had functional water user committees, the committees after some time became non-functional. The reasons for the inactivity of WUC include: All districts acknowledge that voluntarism, on which WUC are based has failed to work and committee members need some form of motivation. Districts explained that although people are aware that the work is voluntary, they still expected to be rewarded. Most of the committee members lacked adequate training to empower them to execute their different roles and responsibilities. This affects their capacity to organise and adequtely maintain the facilities. Non functionality of the water user committees greatly affects the management and Maintenance of the water facilities when they break down thereby affecting sustainability. Collection of User fees The audit established that communities in all the districts sampled were hesitant and reluctant to pay user fees for operation and maintenance of water facilities. The reasons advanced for not paying include: Some think the fees set are high. Lack of accountability for collected fees. This is perceived to be a government investement and therefore must be free. Lack of adequate sensitization Sanitation and Hygiene Part of the grant to the districts is meant to implement sanitation activities aimed at improving the sanitation of the beneficiary communities. This is used for mainly construction of toilets in Rural Growth centres and carrying out sensitization of communities on better hygiene practises. Athough the latrines were constructed using the grant, inspections revealed that some of the latrines remained unsed. This was attributed to lack of fulltime caretakers and in other cases the public s un willingness to contribute towards maintenance of the facilities. In other cases some community members were not aware of the existence of such facilities. Failure to use the facilities puts to waste the investments made in construction of the toilets and ensuring that the communities have access to better sanitation facilities and services. Picture 15 and Picture 16 below show some of the toilets that were found to be out of use. 36

53 Picture 15: Showing non-functional Public Latrine in Kapala RGC, Gogonyo Pallisa, Picture 16: Showing non-functional Public Latrine in Moru-Okobo RGC Pallisa Source: OAG pictures taken during field inspection. Source: OAG pictures taken during field inspection. Recommendations The districts should scale up mobilization efforts to encourage more community participation in management of the water sources Encourage the locals to pay water user fees and capital contributions towards construction of new facilities. Strengthen water user committees for example through training Ensure that sanitation facilities that have been completed are used. 4.7 THE ALLOCATION FORMULAE For the DWSCG, MoWE developed the formula, taking into consideration the following variables: the population density; the existing water and sanitation coverage in a district; the possible technology mix that can be used to provide water and sanitation services; and, the recurrent costs faced by a district in the provision of water and sanitation services. Though the above scientific approach dates back to 2006 and has been in use since, it has been faulted for laying emphasis on the need to extend the coverage of the provision of the sector services at the expense of the competing need to cater for the Operations and Maintenance. Consequently, whereas new investments have been realized, the existing and old investments suffer in the absence of regular maintenance. Another shortcoming of the formula has been cited as the absence of a link between the formula and the performance of a given district. The sector Strategic Investment Plan (SIP) aspires to a minimum coverage of 77% per district in the rural areas. Whereas indicators exist at sector level to measure the achievement of this target, there is no correlation between the performance and subsequent allocation. It is desirable that where a district has achieved this minimum, resources are directed to those districts that have not registered the minimum.the risk of pursuing this course of action is that it may lead to stagnation of growth in the very same districts from which funds are being re-allocated. 37

54 Additionally, the availability of the accurate information on variables cited above poses a concern to the application of the formula. A case is made of the projected population levels used in the formula which have been outpaced by the actual growth in populations. In its current form, the formula is perceived as inequitable by the communities. In light of the above and other shortcomings, the MoWE reviewed the formular during the period 2014/15, for implementation during the period 2015/16 and thereafter. The MoWE is also aware of the effort by MoFPED to harmonize the administration of all grants using a single grant formula. Recommendations As effort is made to create new water and sanitation facilities, effort should also be made to maintain the existing sector infrastructure and this should be reflected through a realignment of the formulae to give more prominence to the Operations and Maintenance component. For the realization of an equitable share of grant proceeds, recognition should be made for those districts that are not performing to the desired national minimum standard and the grant resources should be directed to ensuring that they achieve this minimum. The results of the recent revision of the allocation formulae should be allowed to be implemented for at least one financial period to confirm that intended outcomes are achieved, before the policy of harmonizing all water sector grants into a single grant formula is implemented. 4.8 PLANNING AND BUDGETING Budgeting Regulation 17 of the Local Government Financial and Accounting Regulations requires all local governments to formulate, approve and execute budgets and plans. Furthermore, districts are required to submit an annual work plan and budget to MoWE / DWD (and a copy to MoFPED) for the activities to be carried out under the District Water and Sanitation Conditional Grant (DWSCG). It was established that the districts complied with this regulation. The team noted that all the districts under review undertook the budgeting process and formulated annual budgets as required by the regulations and the guidelines. The budgets were also presented to the MoWE for approval as required Planning and allocation of resources Guideline 4.2 of the District Water and Sanitation Guidelines 2012/13 states that local governments are advised that the DWSCG may be allocated as follows: a) Rural Water Supply Facilities not less than 70%; b) Software activities for rural water supply and sanitation up to 8%; c) Rehabilitation of boreholes and Piped water schemes up to 13%; d) Construction of sanitation facilities up to 3%; e) Supervision, monitoring and DWO operational costs up to 6%. In the MOU signed between the implementing districts and the Ministry of Water and Environment, it was agreed that these limits continue to form the basis of allocation of grant resources between the different grant activities. Additionally, guideline 4.12 of the same guidelines requires all local governments to obtain approval from the MOWE for any allocation of more than 13% for rehabilitation activities. Guideline 4.15 also provides for a maximum allocation of Uganda Shillings 32 million for supervision and monitoring activities where 6% of the budget is less than Uganda Shillings 38

55 32million. The purpose of these allocation guidelines is to enable investment decisions at District level to be driven by investment priorities. It was however established that during planning and allocation, a number of local governments never followed this guidance as given in the guidelines. We noted cases where allocations were made beyond the recommended limits and in some cases below the minimum limits as summarized in Table 7. Details of the level of compliance are attached in Appendix V. Table 7: Showing level of compliance to grant allocation guidelines Investment Areas Water supply facilities Software Activities Rehabilitation of water sources Sanitation Hardware 2012/ / /15 Number of Compliant Districts Number of Compliant Districts Number of Compliant Districts Operational Costs Total Districts analysed Source: Analysis of MOWE data and a review of the District reports *There was no data for Luweero district for 2012/13. * There was no data for four for 2013/14 (Moyo, Amuria, Luweero, Kalangala). Interviews with water officers attributed this to the small limits for allocation, especially for rehabilitation and monitoring activities. According to the water officers since the communities do not contribute much towards the rehabilitation of the water sources as initially envisaged, 13% allocated towards rehabilitation of water facilities remains meagre. The cost of monitoring and supervision has also been increasing over time primarily due to the increase of fuel prices. There is huge demand for sanitation hardware on the other hand and the funding provided specifically for sanitation and hygiene (about UGX 5 million) per quarter is not sufficient. This sometimes forces the local governments to allocate more than is recommended. Since expenditure is guided by the allocation in most cases, investments in various aspects of the grant is therefore not made as initially envisaged. This is turn affects the achievement of sub component targets of the grant. Recommendation In light of the causes advanced by the local government for non adherence to the guidelines, the local governments should work together with the Ministry of Water and Environment to come up with realistic budget allocation guidelines and ensure that they adhere to the guidelines set if the targets are to be achieved. 39

56 4.9 DISBURSEMENT OF GRANT FUNDS Funding for approved budgets Approved budgets provide a basis for utilisation of resources. For budgets to be effective however, they must be funded (financed) so that the activities planned as detailed in the work plans and budget can be implemented. The study established that with the exception of 2012/13 where no funds were received in fourth quarter due to budget cuts across all local governments, districts sampled received more than ninety eight (98) per cent of their annual budgets as detailed in Appendix VI. In some cases the districts received the full budget. Figure 3, Figure 4 and Figure 5. below illustrates levels of funding of the approved budgets for the period under review. Figure 3: Showing Budget and Actual releases for 2012/13 1E BUDGET ACTUAL Source: OAG analysis of releases data from MoFPED and total Receipts by Districts Figure 4: Showing Budget and Actual releases for 2013/ BUDGET ACTUAL Source: OAG analysis of releases data from MoFPED and total Receipts by Districts 40

57 Figure 5: Showing Budget and Actual releases for 2014/15 Source: OAG analysis of releases data from MoFPED and total Receipts by Districts Failure to disburse funding for the last quarter of 2012/13 was partly responsible for partial and in some cases non-implementation of a number of activities in the different districts as detailed in Appendix VII. Recommendation The practice of fully funding the budgets is commendable and should be maintained to foster achievement of planned activities and realization of the overall grant objectives Timeliness of the disbursements Timely and regular disbursement of funds is critical in realizing the implementation of planned activities as a way of ensuring that the overall grant objectives are achieved. Disbursements to district by MoFPED From review of documents from both MoFPED and districts, it was established that it takes on average a month before quarterly releases are received by the districts. Funds are received on the district general fund account at the end of the first month or at the beginning of the second month of each quarter. Table 8 below shows dates on which grant funds were received on most of the district s General Fund accounts for districts sampled for the study. Table 8: Showing receipt dates for grant funds by districts PERIOD Q1 Q2 Q3 Q4 12/13 10 th August 5 th November 15 th February N/A 13/14 12 th August 28 th October 28 th January 28 th April 14/15 22 nd July 31 st October 27 th January 29 th April Source: Analysis of district general fund accounts and release documents from MoFPED 41

58 From Table 8 above, it can be concluded that for each of the financial years there was no actual implementation for the months of July, October, January and April. Recommendation The Ministry of Finance should endeavour to make the quarterly releases of funds to the Local Governments at the start of each quarter. When this is not achieved, it adversely affects the timely implementation of the planned activities Inter account transfers between the District General Fund and the Water Account Delays were also noted in transferring funds from the District General Fund account to the District Works and Technical services (Water and Engineering sector) account. Under the current EFT method of transfer of funds used by the districts, it requires forty eight (48) hours to transfer funds between accounts in different banks. In cases where the accounts are in the same bank, it takes at most twenty four (24) hours. For the purpose of the analysis the team provided for three extra days for the internal district processes, for example making the necessary requests and obtaining the necessary approvals to ensure that the transfer is effected. It would therefore require at most five (5) days to transfer funds from the District General fund account to the Water account for a district which is efficient. Analysis of 112 transfers from fifteen of the twenty districts sampled for the study however revealed that only thirteen (13) per cent of the transfers were effected within five days, forty eight (48) per cent of the transfers were effected between six (6) and fifteen (15) days, thirty one (31) per cent of the transfers were effected between fifteen (15) and thirty (30) days, while eight (8) per cent of the transfers analysed required more than 30 days as shown in Figure 6 below; Details of the analysis are appended in Appendix VIII. Figure 6: Showing time taken to transfer funds from General Fund account to Water account Source: OAG analysis of release documents from MoFPED and district bank statements The reason provided for the delays was the district internal processes required to effect the transfer of funds from one district account to another. These processes include, requisition for transfer of funds, approval of the request or validation by the accounting officer and finally issuing the instructions to the bank to effect the transfer of funding. 42