Documentof The WorldBank FOROFFICIAL USEONLY ReportNo. 39938-UG REPUBLICOFUGANDA JOINT IDA-IMF STAFFADVISORY NOTE ON THE POVERTY REDUCTION STRATEGY PAPER ANNUAL PROGRESSREPORT May 31,2007 This document has a restricted distribution and may be used by recipients only in the performance o f their official duties. Its contents may not otherwise be disclosed without World Bankauthorization. FOROFFICIAL USE ONLY INTERNATIONAL DEVELOPMENT ASSOCIATION AND INTERNATIONALMONETARY FUND REPUBLIC OF UGANDA PovertyReductionStrategyPaperAnnualProgressReport Joint StaffAdvisoryNote Preparedbythe Staffs o fthe IMFandIDA Approved byRobert Corker and MarkPlant (IMF) Obiageli Ezekwesili (IDA) May 31,2007 I.INTRODUCTIONANDSUMMARY 1. Background.InMay2005, the Government ofUgandapublishedits thirdPoverty Eradication Action Plan (PEAP) for 2004/05 to 2007/08. The current biennialPoverty Status Report, which was completed in2006, i s the mainvehicle through which the Government monitors progress andoutcomes of implementation o fthe PEAPpolicies andprogrammes.It i s the fourth Poverty Status Report (PSR) to bepublishedsince the launcho f the first PEAP in1997, andcoversprogressintheimplementation ofthe PEAPthrough end-2005. An addendumreports on the more recent findings ofthe 2006 NationalHousehold Survey. In addition to the biennial PSR, the Government is developing an Annual PEAP Implementation Review (APIR) to regularlyreport on progress inimplementation o fthe PEAP, and as a result, update the Results andPolicyMatrix. The Staffs are providing feedback on the PSR for consideration bythe authorities duringthe remainder o fthe PEAP period. The final APIR report is expectedlater in2007. 2. Process.Starting inlate 2005, the PSRwas preparedby five teams covering each of the five pillars o f the PEAP-economic management; enhancingproduction, competitiveness and incomes; security, conflict resolution anddisaster preparedness;good governance; and This document has a restricted distribution and may be used by recipients only in the performance o f their official duties. Its contents may not be otherwise disclosed without World Bank authorization. - 2 - human development. The teams comprised representatives o f the relevant sector ministries, government agencies, andcivil society organizations. The document, which was finalized in August 2006, has benefited from several rounds o f consultations with stake holders. The Staffs are encouraged bythe consultative process o f the PSRpreparation. 3. Progress.All inall, the Staffs o fIDA andIMFthinkthat the PSRdoes an effective job o freviewing the implementation o fthe PEAP through the 2004/05 fiscal year. Uganda's thirdPEAP(finalized in2004) was meant to usher a shift inpolicy focus from recoveryto sustainable growth and structural transformation. Inthis context, it would have been useful for the PSRto have included some discussion on the extent to which this shift instrategy has started to happen. The Staffs look forward to the forthcoming APIR report to address this, and also to consider the extent to which the new strategy is bearing fruit. The Staffs welcome the progress inseveral areas reportedinthe PSR. Inparticular, strongmacroeconomic management remains the cornerstone for Uganda's investment and growth. Improvements in physical access to primaryeducation, health andwater and sanitation are encouraging. However, there are also a number o f challenges. The quality o f life indicators including life expectancy and infant and maternalmortality, although improving, are still generallypoor. Regional disparities inaccess to social and economic services also remain large. Agricultural growth, especiallyinthe crops sub-sector remains low. And the prevailing infrastructure gaps-energy shortages and poor transport infrastructure-are constraining growth. These challenges, which are acknowledged inthe PEN, need to be addressed forcehlly ifgrowth is to reach the PEAPobjective o f 7 percent and ifthe benefits are to be shared more widely. 11. POVERTY STATUS 4. Accomplishments.The latest UgandaNational Household Survey(UNHS3) published inlate 2006 shows the national poverty rate to have declined to 31percent by 2005/06, from 56 percent in 1992/93 and 38 percent in2002/03. This sharp drop inthe national poverty rate was somewhat unexpected, coming at a time when real GDP growth had slowed slightly. The news is no less welcome though. It suggests that the country is well on - 3 - its way to meeting the MillenniumDevelopment Goal on poverty reduction. The Government i s to be commended for this achievement. With the findings o f the survey only made available inlate 2006, the PSR does not include any discussionon this. The findings o f the UNHS3 have instead been attached as an addendum to the PSR. It will be important for future reviews to undertake an in-depth look at the factors underlying the sharp turnaround in poverty outcomes andhow it could be sustained. 5. Regionaldisparities.The less rosy side o fthe Household Survey's findings is the continuing strong regional disparity inpoverty reduction. The West and Central regions have done well since the start ofthe Uganda's reformprogram, with poverty declining by some 60 percent since 1992/03. Incontrast, the decline inpoverty inthe North has been very modest-17 percent. The lackluster progress inthe North is attributed to the vicious cycle that has gripped that part o f the country: rebelactivity thwarting economic activity and limitingpoverty reduction; and the dire povertythat hasresulted, further fueling conflict. The recent peace initiative will hopefully put an endto this vicious cycle. Expectations of an end to hostilities have already encouraged large numbers o f displaced persons to return to their homes. Itwill be important for the Government to buildon this promising start and quickly put inplacemechanisms to enhance social andinfrastructureservice delivery. 6. Demography.Uganda's highpopulationgrowthrateisnotedas achallengeto sustained growth and meeting the PEAP targets. Uganda's population i s currently estimated at over 28 million, and with a growth rate o f about 3.5 percent in 2006, the population i s projected to double by2025. The countryhas one o fthe highestfertilityrates (about 7 children per woman) and predominantly young population (almost 50 percent is below 15 years) and thus high dependence burden (111 dependants per 100 working population). It is noted that high populationgrowth i s aggravating poverty andinequality, puttingpressureonthe landandleading to environmental degradation. The Staffs think that it is important for the Government to internalize the challenge o fhighpopulation growth andpromotepolicies to reduce the fertility rate. Inparticular, without strongcommitment to expandingaccessandimproving reproductive health and family planningservices, the plannedimprovement inservice delivery inthe health - 4 - and education sectors is not going to materialize. The actions identified inthe PSR to improve women's economic opportunity (employment expansion, facilitatingwomen's entrepreneurship andstrengtheningtheir landrights) needto beprioritized bothas part o fthe sustainable growth and structural transformation agenda, and as a core contributor to lowering fertility. 111. MACROECONOMIC DEVELOPMENTS 7. Growth.The economyhas been subjected to a number o fshocks inrecent years, including a severe drought which has adversely affected both agriculture andhydroelectric power production. The recovery inthe terms o f trade over the last 4 years is still insufficient to reverse the decline suffered over the 5 years to 2001/02. Against this backdrop, the slightly lower GDP growth over the 6 years to 2005/06 was perhaps unavoidable. The PSRidentifies as the overriding challenge for poverty reduction the needto reverse this trend and raise growth from the current level o f around 5% percent to the PEAP objective o f 7 percent, and proposes a range o fpolicyresponses. But the recommendations are not prioritized. Inthe Staffs' view, the main constraint to higher growth at the current juncture is the infrastructure deficit. The need to enhance the country's infrastructure i s highlighted, but could have been accorded muchmore prominence. Improvements inthe roadnetwork-particularly, extension o f good quality roads to strategic areas such as along the northern corridor-and increased and more affordable electricity supplywould do muchto unleash a strong supply response. 8. Policies. The Government deserves credit for sustaining the strong macroeconomic record inthe face o fthe manyrecent shocks. Fiscal consolidation has continued, albeit at an appropriately slower pace than earlier envisaged on account o fthe need to increase funds to alleviate the energy crisis. Monetary and exchange rate policies have been effective, allowing Ugandato withstand fluctuations inthe terms o f trade and aid inflows while maintaining international competitiveness. The PSR includes a full andcomprehensive review o f these macroeconomic developments and trends through 2004/05. As the document notes, on the fiscal side, the key challenge for the remainder o fthe P E Nperiodwill be reorienting expenditures towards the productive sectors. As long as overspending inPEAP non-priority areas such as public administrationpersists, this reorientation will not be possible or will take place at the expense o f the medium-term consolidationplans. The Staffs note with appreciation Uganda's efforts to develop and implement "gender and equity budget guidelines" inpriority sectors, and encourage the authorities to pursue this work as part o f the effort to improve the poverty focus and effectiveness o f public spending. IV. AGRICULTURE 9. While agriculture i s the dominant sector and the largest source o f employment, its growth rate, especially the food crop sub-sector, over the past three years i s estimated to have been very low.' Thus, policies geared to promote agricultural growth require special priority. Further progress inthe implementation o fthe 7 pillars o f Planfor Modernizationo f Agriculture (PMA) and rollout to all districts is needed to promote agricultural development. Restructuring o f the Ministryo f Agriculture, Animal Industry andFisheries i s needed so as to improve implementation of the sectoral programmes andto provide better guidance to Local Governments. An agriculture and livestock census is needed so as to provide information on the areas on which the Government programs inthe rural areas should focus. Inaddition, The Government needs to move more rapidly to finalize the LandUse Policy and expedite the registration o f landso as to ensure protection o f ownerhser rights, especially for women. In addition, the highrate o f environmental degradation is negatively affecting agricultural production andhousehold income. These issues will need to be addressedinthe remainder o f the PEAPperiod. The low estimatedgrowthratesfor agricultureare at odds with the sharp declinein estimatedpoverty,mostlyaccounted for by the drop inrural poverty,usingthe latestnationalhouseholdsurvey data. Analysisis underwayto better understand andreconcilethese seemingly conflicting trends. - 6 - V. HUMAN DEVELOPMENT 10. Service delivery. The PSRreports continued improvements inaccess to social services inthe period 2003-2005. In addition, the improved utilization o fthe health sector budget interms o f equity, andrecognition o f sanitation as a cross-cuttingpriority for the health, education and water sectors are noted. While there is no update on the health sector outcome indicators, large improvements are reportedina number o f input andoutput indicators, including proportion o f approvedposts filled bytrained health workers, availability o f drugs at health facilities, increased utilization o f outpatient services, immunization anddeliveries at public andthe private-not-for-profit health centers. The Universal Primary Educationprogramme is said to be greatly appreciated by communities, especially bypoor peoplebecause o f increased access and improved school physical facilities. 11. Quality. However, improvements inthe quality o f services have been more limited, as evidenced by low primary school retentionrates, poor outcomes inlearning achievement, low life expectancy, highchild andmaternal mortality, and highincidence o f stunting among children under five. Limitedsupervision and the poor quality o f service delivery, especially in the rural areas, andthe highpopulation growth rates contribute to these low outcome indicators. Long distances to service delivery centers are another reason for limitedaccess andthus poor outcomes. The Government will, therefore, need to payincreasedattention to improving the quality o f social services by ensuring value-for-money and strategic investmentsto enhance service provider capacity. The Government will needto review the roles and effectiveness o fthe education andhealth inspectors at boththe Central andLocal G o v e m e n t levels. These lessons are also very important as the Government implements the Universal Secondary Educationprogramme, which was launched at the beginning o f 2007. 12. Jobs. The PSRnotes that while Uganda's unemployment is fairly low (3.2 percent), underemployment i s widespread. It is estimated that about 65 percent o f adults are engaged in activities where they work less than40 hours per week. The Government will need to - 7 - strengthen efforts to promote employment growth, including passing o f the draft employment policy, revision o f labor laws andpromoting labor-based programmes inlocal construction. VI. GOVERNANCE REFORMS 13. Progress ingovernance areas remains mixed. Onthe political side, the Government conducted bothnational and sub-national elections between February andMarch 2006, completing the transition from a movement system to multi-partydemocracy. However, there has been more limitedprogress inprosecuting cases o f corruption and ensuring transparency inpublic procurement. While progresshasbeenmade inbuildinganinstitutional andlegal framework for fighting corruption, the anti-corruption agencies lack sufficient resources, expertise, organizational capabilities and the independence to fully implement the anti- corruption agenda. Progress inimplementing the recommendations o fvarious Commissions o f Inquiry, including the most recent inquiry on the Global Fundfor the fight against AIDS malaria andtuberculosis, has beenvery slow andwarrants specific actions. The recent ad hoc landallocations andother investor-specific incentives(including provision o fpublic landand financing) risk weakening the mandate o fthe institutions charged with promoting investment. Thus, anationally agreedpolicy o fincentives for investors needs to be debated and implementedina transparent manner. The Staffs reiterate the need for a clear demonstration o fthe Government's commitment to implementing governance reforms, combating corruption andpromoting institutional development. VII. PEAPMONITORING 14. New process. The current PSRand the earlier ones have provided an effective system o f monitoring progress inthe implementationo f the PEAP, but it has not been as inclusive as it couldbe.The Governmenthas now institutedanAnnual PEAPImplementationReview (APIR)process, which is more inclusive andresults-oriented. The APIR aims to update the PEAPmatrix with the latest indicators. It is envisioned that the PEAPResults andPolicy Matrix will be updated on annualbasis through the APIR process. Once the APIR methodologyhas matured, the APIR will examine how the annual budget has been utilized to - 8 - fund the PEAPresults inthe previous fiscal year andhow future Government spending will support agreed PEAPpriorities. The first APIR is expected this year, andwill replace the PSR. The Staffs look forward to this. VIII. RISKSANDISSUES FORDISCUSSION 15. There are a number o f risksthat might constrain future growth andpoverty reduction efforts. First, infrastructure gaps are constraining growth. The Government will need to address the large infrastructure gaps, especially inroads and energy inorder to sustain the momentum o f growth andpoverty reduction. Second, Uganda's population growth and fertility rates are high, constraining service delivery. The Government needs to implement actions that address reproductive health and education for women. Third, the 20-year insecurity inthe Northhas resulted inmassive displacement, reducedproduction and complications inservice delivery. There are signs o fhope that the current peace talks inJuba will end ina negotiatedsettlement. The Government will needto mobilize resources to implement the proposedPeace, Recovery and Development Plan for the North. Fourth, slow progress inthe implementation o f anti-corruption strategies because o f the limited capacity and independence o f the anti-corruption agencies pose a challenge to the transparent and efficient use o fpublic resources. Fifth,the Government will need to curb the growth o fpublic administration expenditures and match a focus on expanding access to services with increased attention to quality and efficiency. Telephones:Mlnlster; Ministryof Finance,Planning Kampala243054 (L 232370 Office; and Economic Development Kampala23470019 (IO IlneS) P.O.Box 8147 Telex: Fax: Kampala230163 61170 Kampala. Telegram: "FINSEC" Uganda In any correspondenceon thls subject pleasequote No. THE REPUBLIC OF UGANDA 17 May 2007 The ManagingDirector InternationalMonetaryFund Washington D.C. The President The World BankGroup Washington D.C. Dear Sirs: Re: Uganda Poverty Status Report, and Addendum with 2005/6 Poverty Numbers Pleasefind attached, for your information, Uganda's PovertyStatus Report, which was completedin2006. Thereportwas preparedthrough aconsultativeprocess, led by the Ministry of Finance, Planningand EconomicDevelopment, but involving stakeholders from civil society, academiaanddevelopment partners.The report summarises progressinthe implementationofthe PovertyEradicationAction Plan (PEAP) duringthe period200314-2004/5. Also attached is the UgandaNationalHouseholdSurvey report, which provides poverty numbersfor 2005/06. This report was conducted by the UgandaBureauof Statistics. ingand EconomicDevelopment *W O R L D B A N K 1 7 MAY 2007 *1 I RECEIVED 1 THE REPUBLICOF UGANDA Ministryof Finance,Planningand EconomicDevelopment !?O.Box8147, Kampala Table of Contents List of Tables.................................................................................................................. List of Figures................................................................................................................. 6 Foreword......................................................................................................................... 8 9 Acronyms andAbbreviations ....................................................................................... Executive Summary...................................................................................................... 10 15 Chapter 'l:Introduction........................................................................................... 30 1.1 Background ....................................................................................................... 30 1.2 Methodology ..................................................................................................... 30 1.3 The Poverty Context ......................................................................................... 31 1.3.1 Poverty Trends .......................................................................................... 31 1.4 The Structure ofthe Rep0rt............................................................................... 34 Chapter 2: Economic Management.................................................................. 35 2.1 Economic Management Performance 36 2.1.1 GDP Growth ............................................................................................. ..................................................................... 36 2.2 Domestic RevenueMobilization............................................................................. 2.1.2 Macroeconomic Performance ................................................................... 37 38 2.3 Financial Sector ...................................................................................................... 2.2.2 Implications of East African CustomsUnion on Domestic Revenue..............39 2.2.1 Reforms inRevenueCollection andAdministration ....................................... 39 39 2.3.1 Developments and Reforms inthe Financial Sector 2.3.2 Banking Sub-sector.......................................................................................... ........................................ 39 40 2.3.3 Non-bank Financial Institutions................................................................ 40 2.3.4.Pension Reform ................................................................................................ 41 2.3.5 Financial Services Extension .................................................................... 41 2.3.6 Microfinance Outreach............................................................................. 41 2.3.7 Savings Mobilizationthrough Cooperative Movement 41 2.4 Investment and Trade .............................................................................................. ............................ 42 2.4.1 Growth inInvestment ...................................................................................... 42 2.4.2 Investment ClimateRegulatory Framework .................................................... 42 2.4.3 Private Investment Constraint.......................................................................... 43 2.4.4.1Uganda's Trade Agenda inthe Global Context ................................................. 2.4.4 Trade Policy ..................................................................................................... 43 43 2.5 Export and Import Performance .............................................................................. 44 2.5.1 Export Sector ................................................................................................... 2.5.2 Import Sector ................................................................................................... 44 45 2.6 Regional Integration 45 2.6.1The EastAfrican Community ........................................................................... ................................................................................................ 45 2.6.2 Common Market for Easternand SouthernAfrica.......................................... 45 46 2.7 Main Emerging Issues............................................................................................. 2.6.3 ACP-EU Cotonou Agreement.......................................................................... 47 Chapter 3: Enhancing Production, Competitiveness......................... 49 and Incomes................................................................................................................ 49 3.1 Introduction ....................................................................................................... 49 3.2 Outcome Performance ...................................................................................... 50 2 3.3 Agricultural Production andFood Security ...................................................... 52 3.3.1 Agriculture inthe national economy ......................................................... 52 3.3.2 Crops ......................................................................................................... 53 3.3.3 Livestock................................................................................................... 54 3.3.4 Food Security andNutrition...................................................................... 3.3.5 KeyPolicy andInstitutionalReforms inthe Agricultural Sector ............. 55 56 3.4.1 Land .......................................................................................................... 56 3.4.2 Forestry ..................................................................................................... 59 3.4.3 Fisheries .................................................................................................... 61 3.4.4 Wildlife andTourism................................................................................ 64 3.4.5 Minerals .................................................................................................... 64 3.4.6 Water......................................................................................................... 65 3.4.7 Wetlands ................................................................................................... 66 3.4.8 Environment Management ........................................................................ 67 3.5 Service deliveryfor agriculture andrural development ................................... 68 3.5.1 Agricultural Extension Services ............................................................... 68 3.5.2 Agricultural ResearchandTechnology Development.............................. 71 3.5.3 Energy....................................................................................................... 72 3.5.4 Physical Infrastructure and Services ......................................................... 74 3.5.5 RuralFinance............................................................................................ 77 3.5.6 Marketing andAgro-processing ............................................................... 80 3.5.7 Agricultural Education .............................................................................. 80 3.6 Competitiveness and Trade............................................................................... 82 3.6.1 Uganda's Overall Competitiveness Status................................................ 82 3.6.2 Private Sector Competitiveness ................................................................ 84 3.6.3 Strategic Exports Programme ................................................................... 86 3.6.4 Science, Technology and Industrialization ............................................... 89 3.6.5 Micro, Small and MediumScale Enterprises ........................................... 91 3.6.6 Competitiveness inregional and international trading ............................. 92 3.7. Labour and employment ................................................................................... 93 Chapter 4: Security, Conflict Resolution and Disaster96 Management.......................................................................................................... 96 4.1 Introduction ....................................................................................................... 96 4.2 Outcome Performance ...................................................................................... 97 4.2.1 RebelInsurgency, Terrorism andOrganisedCrime ................................. 98 4.2.2 Cattle Rustling andDisarmament ............................................................. 99 4.2.3 AuxiliaryNigilante Forces...................................................................... . . . . 100 4.2.4 Regional Security .................................................................................... 101 4.3 Defence ReformProgramme 102 4.4.1 Introduction ............................................................................................. .......................................................................... 104 4.4.2 Progress, Challenges and Opportunities ................................................. 105 4.4.3 Conflict Resolution Forum ..................................................................... 106 4.4.4 Amnesty, Reconciliation andRe-integration.......................................... 106 4.5 Disaster PreparednessandResponse .............................................................. 110 4.5.1 InternallyDisplacedPersons (IDPs) ....................................................... 110 4.5.2 JDPPolicy............................................................................................... 111 3 4.5.3 Transition to Recovery Programme (TRP) ............................................. 112 4.5.4 RefUgees.................................................................................................. 113 4.5.5 EarlyWarning Services .......................................................................... 113 4.6 Post Conflict ReconstructionRecovery 4.6.1 NorthernUganda Recovery andDevelopment Programme ...................114 .......................................................... 114 4.6.2 Karamoja DisarmamentProgramme ....................................................... 115 4.6.3 National Strategic Planfor Karamoja..................................................... 116 4.6.4 Restocking Programme ........................................................................... 116 4.6.5 NorthernUganda Social Action Fund(NUSAF) .................................... 117 4.6.6 Mainstream Sector-level Interventions.................................................. 118 Chapter 5: Good Governance........................................................... 119 5.0 Introduction ..................................................................................................... 119 5.1 Outcome Achievements .................................................................................. 120 5.1.1 Democracy andPolitical Governance..................................................... 120 5.1.2 HumanRights ......................................................................................... 125 5.1.3 Justice Law and Order (JLOS) ................................................................ 127 5.1.4 Accountability and TransparencyinPublic Life .................................... 133 5.1.5 Public Financial Management................................................................. . . 140 5.1.6 Recommendations for further strengtheningthe Sector ......................... 5.1.7 Transparent andEfficientPublic ExpenditureThrough Auditing ..........145 145 5.1.8 Decentralization ...................................................................................... 146 5.1.9 Public Sector Management ..................................................................... 149 5.1.10 National IntegratedMonitoring andEvaluation Strategy....................... 151 Chapter 6: Human Development.................................................... 154 6.0 Introduction..................................................................................................... 154 6.1 Health.............................................................................................................. 155 6.1.1 Trends inHealthOutcomes andOutputs 2002 -2005 ........................... 155 6.1.2 Health Outputs 2001/02 to 2004/05 ........................................................ 156 6.1.3 Other Performance Indicators ................................................................. 164 6.1.4 Challenges for policy implementation .................................................... 165 6.1.5 KeyAreas requiringPolicyAction ......................................................... 168 6.1.6 KeyPolicyRecommendations 6.2 Education ........................................................................................................ ................................................................ 169 170 6.2.1 PrimaryEducation .................................................................................. 170 6.2.2 Post- PrimaryEducation ......................................................................... 173 6.2.3 Policy developments............................................................................... 176 6.2.4 KeyPolicyRecommendations., .............................................................. 177 6.3 Water and Sanitation ....................................................................................... 178 6.3.1 RuralWater Supplyand Sanitation......................................................... 178 6.3.2 UrbanWater Supply andSanitation....................................................... 184 6.3.3 Sanitation................................................................................................ 187 6.3.4 KeyPolicyRecommendations ................................................................ 189 6.4 Social Development ........................................................................................ 190 6.4.1 Gender ..................................................................................................... 190 6.4.2 Community Mobilization andEmpowerment ........................................ 190 6.4.3 Social Protection ..................................................................................... 192 4 6.4.4 Challenges for Policy Implementation ............................................................. .................................................... 193 6.4.5 KeyPolicies Recommendations 194 6.5 Population Growth.......................................................................................... 194 6.5.1 Policy Recommendations ........................................................................ 194 Chapter 7: Public Expenditure........................................................................... ......................................................................................................... 197 7.1 ProgressinFundingPEAP Priorities.................................................................... 7.0 Introduction., 197 198 7.1.1 MTEF Sector Ceilings ................................................................................... 198 7.1.2 Action Fund .................................................................................................. .......................................................................... 199 7.2 Emerging Issues andPnonties.............................................................................. 7.1.3 Budgeting at Sect oral Level. . . 200 205 7.2.1 Challenges ............................................................................................... 205 7.3 TheBudget Strategy ....................................................................................... 208 7.4 Conclusion and recommendations........................................................................ 7.3.1 Reorientation of the budget towards productive areas ............................ 209 209 REFERENCES ....................................................................................................... 210 ANNEXES .............................................................................................................. 217 5 List of Tables Page Table 1.1:Reason for Decreasesin Self-RankingWelfare Table: 2.1 Outcome Achievements Table 3.1: Performance inkey outcome indicators for Pillar 2 Table 3.2: Agriculture inthe economy, 2001 - 2004 (in current UShs. billions) Table 3.3: Agricultural sub-sectors' GDP growth rate, 1999/00 to 2004/05 (%, inreal terms) Table 3.4: Production of "traditional" cash crops, 1999to 2004 (volume in tonnes, value in US$m) Table 3.5: HouseholdDistributionby LandArea Owned (%), 2001and 2005 Table 3.6: Trends infishtrade Table 3.7: Percentagedistribution o fhouseholds by distance to the source of extension source in2004 Table 3.8: Trends inpower generation for 2000-2005 Table 3.9: National Roads Condition Profile 2002 - 2004 Table 3.10: Comparison of Interest Rates ChargedbyMFIs (in% pea.) Table 3.11:Main constraints for doing business inUganda -rankedinorderofimportance(2003-2006) Table 3.12: SEP sub sector export earnings (2000/0 1-2004/05) Table 3.13: Occupation types for all menand women in2002/03 Table 3.14: Rates of Unemployed Persons aged 10years and above by Sex and Residence Table 4.1: Outcomes Performance Table 4.2: IDP Populations for Northand NorthEastern Uganda as at July 2005 Table 5.2: Action Takenby Victims of Gender Violence Table 6.1: Health-related Outcome indicators 6 Page Table 6.2: Performance against Health Sector P E N Indicators2001/02to 2004/05 Table 6.3: Essential Medicines and Health Supplies 2001/02 to 2004/05 (US $ per capita) Table 6.4: Health InfrastructureHSSP IPerformance by level as of June 2004 Table 6.5: Cumulative Progress for the Primary Sector 2000-2004 Table 6.6: New entrants to primary education by sex and age in2003 and 2004 Table 6.7: Enrolment patterns o f secondary students inall schools (2000 to 2005) Table 6.8: Number ofbeneficiaries of the bursary scheme by district (2004) Table 6.9: Enrolment trends inBusiness, Technical, Vocational Education and Training (BTVET) Institutions -2000 to 2004 Table 6.10: RWSSplannedand actual achievements inthe last 3 FYs Table 6.11: Provision of PipedWater inIDP Camps Table 6.12: Targets and Achievements for Urban Water Supply and Sanitation (2004/05) Table 7.1: Sectoral Shares IntegratedExpenditure Table 7.2: PAF Expenditures as a Percentageof GoU Discretionary Budget 1987/88-2005/06 Table 7.3: FundingTrends inRoads Sector Table 7.4: FundingTrends inAgricultural Sector Table 7.5: Conditional Grants to Districts Table 7.6: NWR Approved Budget Allocation for SelectedVotes Table 7.7: Total Wage Bill as Proportion of Total GoUBudget 7 List of Figures Page Figure2.1: PercentageShare of Commercial Banks' Credit to the Private Sector by Sector Figure2.2: GrowthinInvestments and Employment Figure2.3: Enterprises that Responded Government Officials have "Intefered" with their Businesses Figure3.1:Uganda's Forest Cover 1980-2005 Figure3-2:Households visited by ExtensionWorkers byRegion in2004 Figure3.3: PercentageDistribution ofHouseholdMembers by Purpose of Loan Figure4.1: Registered Reporters byquarter Figure 5.1:The Extentof the Gender Gap, 2005 Figure5.2: Appreciation of aspectsofdemocracy among the populace Figure5.3: Crime Trend inthe past 10years Figure5.4:Uganda's on Transparency InternationalCorruption Perception Index 1999-2005 Figure 5.5: Performance of the NTRFY 2001/02-2005/06 Figure6.1:OPDNewAttendance inPublic andPNFP unitsover the HSSP I Figure6.2: OPD Utilisation rate by SEcategory inpublic Lower Level Units2001 -2003 Figure6.3:Number of Laboratory confirmed cases ofMeasles and Rubella 2003-2005 Figure 6.4: HIVprevalence rate, 1995-2005 Figure6.5: Percentageof HIVpositivewomen and men age 1549,2004-05 Figure6.6: Rural Water Supply Coverage (1999 to 2005) Figure 6.7: Rural Water Supply Coverage by District@WD-MIS) Figure 6.8: Growth inlarge (NWSC) Town Water Supply Coverage Figure7.1:FundingofPEAPPrioritieswithin Sectors Figure7.2: Trends of GoUBudgetFundingfor the Different Levels of the Health Sector 1999/00to 2004/05 8 Foreword Government resolved to prioritise poverty eradication as the major focus o f its sustained growth and development strategy. To this effect, a national framework-the Poverty Eradication Action Plan (PEAP) was designed and has been under implementation since 1997. To ensure effective implementation o f the PEAP, government has evolved a comprehensive monitoring and evaluation strategy. The Poverty Status Report, i s one o f the instruments through which government systematically monitors progress and outcomes o f implementation o f the poverty reductionpolicies andprogrammes. This year, the Ministry o fFinance, PlanningandEconomic Development incollaboration with sector ministries, government agencies, development partners and civil society organizations have produced the forth Status Report in the series. The Report reviews achievements andchallenges for the period 2003-2005. Iwishtoexpressmyappreciationtoallthosewhoworkedtirelesslytoproducethe document. Ihopethat the findings andrecommendations inthe Report shallbeusedbyall stakeholders to enhance effectiveness o f the PEAP implementation. C.M. Kassami PERMANENT SECRETARY/SECRETARYTO THE TREASURY Ministerof Finance,PlanningandEconomicDevelopment 9 Acronyms and Abbreviations ABC Abstinence, Be Faithful and Use Condoms ABEK Appropriate BasedEducationfor Karamoja ACP African Caribbean Pacific ACT Artesamin basedCombination Therapy ADF Allied DemocraticForce AG Auditor General AGF VI Sixth African Governance Forum AGOA African GrowthOpportunities Act AMPRIP Agricultural Market Promotion and Regional IntegrationProject ANC Ante Natal Care APRM African Peer ReviewMechanism ART Anti-retroviral Therapy ARV Anti-retroviral ASWG Accountability Sector Working Group ASYCUDA Automated Systemof Customs' Data BCC Budget Call Circular BEmOC Basic Emergency Obstetric Care BEUPA Basic EducationinUrban Poverty Areas BFP BudgetFramework Paper BMU BeachManagement Unit BTVET Business, Technical, Vocation Education and Training CAADP Comprehensive Africa Agriculture Development Programme CADER Center for Arbitration and Dispute Resolution CBR Center for Basic Research CCIA COMESA Common Investment Area ccs Commitment Control System CDA Community Development Assistance CDW Community DevelopmentWorker CEDAW Convention of Elimination o f All Forms o f Discrimination Against Women CEmOC Comprehensive Emergency Obstetric Care CET Common Extemal Tariff CGS Competitive Grant System CHANCE The Child Centred Alternative Non-Formal Education Community Based Education CID Criminal Investigations Department CJRP Commercial Justice Reform Programme COMESA CommonMarket for East and Southern A h c a COPE CompletionOpportunities for Primary Education CPI CorruptionPerception Index CRC Convention on the Rights of the Child csos Civil Society Organizations cu Customs Union CYP Couple Years Protection DATICs District Agricultural Training and Information Centres 10 DEI Directorate of Ethics and Integrity DFS District Forestry Services DLT District League Tables DP Democratic Party DPP Directorate of Public Prosecutions DPSF DecentralizationPolicy Strategic Framework DWD Directorate o fWater Development DWSDG District Water and Sanitation Development Grant EAC East African Community EBA Everything-But-Arms ECD Early ChildDevelopment EHD Environmental HealthDivision ELSE NonFormal Education inMubende and Empowering Life-long Skills Education EMHS Essential Medicines and Health Supplies EmOC Emergency Obstetric Care ENR Environment and Natural Resources EPA Economic Partnership Agreements ESA Eastern and Southern Africa ESCC Education Sector Consultative Committee ESP Education Sector InvestmentPlan EU EuropeanUnion FAL Functional Adult Literacy FCC Family and Children's Court FDC Forum for Democratic Change FDI ForeignDirect Investment FDS FiscalDecentralization Strategy FISH HIV/AIDS prevention among fishingcommunities GDP Gross Domestic Product GFATM Global Fundfor A I D S TB and Malaria GLIA Great Lakes Initiative for AIDS HBMF Home BasedManagement of Fever H C Health Centre HFS Health Financing Strategy HDS Health sub-District HSSP Health Sector Strategic Plan IAD Internal Audit Department ICC International Criminal Court ICT Information and CommunicationTechnology IDPS Internally DisplacedPersons IFMS IntegratedFinancialManagement System IG Inspectorate of Government IGAD Inter-GovernmentalAuthority on Development IMR Infant Mortality Rate ITM InsecticideTreated Materials ITN InsecticideTreated Nets JARD Joint Annual Review of Decentralization JLOS Justice, Law and Order Sector KCC Kampala City Council LCC Local Council Court LDC Least DevelopedCountry 11 LDU LocalDefence Units LGDP Local Government DevelopmentProgramme LGDP-I1 Second Local Government Development Programme LGFC Local Government Finance Commission LGSIP Local Government Sector InvestmentPlan LPOS LocalPurchase Orders LRA LordResistance Army LSSP Land Sector Strategic Plan MAAIF MinistryofAgriculture, AnimalIndustryandFisheries MAPS Marketing and Ago-Processing Strategy MDG MillenniumDevelopmentGoal MDRP Multi-Country, Demobilization and Resettlement Programme MFI Micro-Finance Institution MIS Management Information System MMR Maternal Mortality Rate MOD Ministry of Defence MOES MinistryofEducationand Sports MoFPEDMFPED MinistryofFinance, PlanningandEconomicDevelopment MoGLSD MinistryofGender, Labour andSocialDevelopment M o H MinistryofHealth MoLG MinistryofLocalGovernment MOPS MinistryofPublic Service MPP Mediation Pilot Project MSMEs Micro, Small and MediumScale Enterprises MTCS MediumTermCompetitiveness Strategy MTEF MediumTermExpenditure Framework MTOP MediumTermOperationPlan M?TI MinistryofTourism, Trade andIndustry MWLE MinistryofWater, Lands andEnvironment NAADS National Agricultural Advisory Services NACAES National Committee for AIDS Emergency Settings NARO National Agricultural ResearchOrganization NARS National Agricultural Research System NCDC National Council for DisabledChildren NEPAD New Economic Partnership for Africa's Development NEMA National Environment Management Authority NFA National ForestryAuthority NGO Non Governmental Organisation NGP National Gender Policy NPA National PlanningAuthority NRM National ResistanceMovement NSCG Non-Sectoral Conditional Grant NSDS National Service Delivery Survey NSF National Strategic Framework NSPPI National Programme Plan of Interventions NTR Non Tax Revenue NUSAF Northern Uganda Social Action Fund Nwsc National Water and Sewerage Corporation OAG Office of the Auditor General OPD Out Patient Department OPM Office o f the Prime Minister 12 ovc Orphans and Other Vulnerable Children PAF Poverty Action Fund PCY Programme for Children andYouth PEAP Poverty EradicationAction Plan PEARL Programme for EnhancingAdolescent ReproductiveLife PEPFAR President Emergency Plan for AIDS Relief PFAA Public Finance and Accountability Act PHC Primary Health Care PIASY Planto increase awarenessamong parents and community members P M A Plan for Modernization of Agriculture PMTCT PreventingMother to Child Transmission PNFP Privatenot for Profit PPDA Public Procurement andDisposal of Assets Authority PPOA Political Parties and Organizations Act PPP Public Private Partnerships PRA People's RedemptionArmy PWD Persons with Disability RATES Regional Agricultural Trade Expansion Support project RDC Democratic Republic o f Congo R D S Rural Development Strategy RGC Rural GrowthCentre RSDP Road Sector DevelopmentProgramme RWSS Rural Water Supply and Sanitation SACCO Savings and Credit Cooperative SADC Southern Africa Development Community SALWS Small Arms and Light Weapons SDIP Social Development Sector InvestmentPlan SEP Strategic ExportsProgramme SFG School Facilities Grant SIP Sector Investment Plan S N E Special Needs Education SPC Special Police Constable SPHERE Humanitarian Charter and MinimumStandardsinDisaster Response SPS Sanitary and phytosanitary SSA Sub-Saharan Africa SSWG Sanitation Sub-sector Working Group S&T Science andTechnology SWAP Sector wide approach SWG Sector Working Group TBA Traditional BirthAssistant TPIs Technical Partner Institutions TYDRP Ten Year District Roads InvestmentPlan UAC Uganda AIDS Commission UBOS UgandaBureauo f Statistics U C A Uganda Cooperative Alliance UCDA Uganda Coffee DevelopmentAuthority UCE Uganda Commodity Exchange UDHS UgandaDemographic and Health Survey UFW Unaccounted for Water 13 UHRC UgandaHuman RightsCommission UIA UgandaInvestmentAuthority U N B S Uganda National Bureauo f Standards UNCTAD UnitedNations Conference onTrade andDevelopment UNHS UgandaNational Household Survey UNDP UnitedNations DevelopmentProgramme UNMHCP UgandaNational MinimumHealthCare Package UN-OCHA UnitedNations Organisation for HumanitarianAffairs UPC UgandaPeoples' Congress UPDF Uganda People's Defence Forces UPE Universal Primary Education UPF UgandaPolice Force UPPAP UgandaParticipatory Poverty Assessment Process URA Uganda Revenue Authority URC Uganda Railways Corporation URSB UgandaRegistration Services Bureau USA UnitedStates of America USE Universal Secondary Education uwss Urban Water Supply and Sanitation VCT Voluntary Counselling and Testing VFM Value For Money WES Water and Environmental Sanitation WHO World HealthOrganization WRM Water resourcesManagement W R S Warehouse Receipt System WSCG Water and Sanitation Conditional Grant wss Water and Sanitation Sector WTO World Trade Organisation YES Youth Empowerment Scheme 14 Executive Summary Introduction: The Poverty Status Report (PSR) i s a periodic publication on Uganda's poverty status and is one o f the instruments through which government systematically monitors progress and outcomes o f implementation o f the Poverty Eradication Action Plan (PEAP) policies andprogrammes. This PSR i s reviewing the PEAP implementation for the period 2003-2005. Preparation o f the report commenced in October 2005 under the coordination o f the Ministry of Finance, Planning and Economic Development and involved sector ministries, government agencies and civil society organizations. The information used in the write-up was drawn from various sources including sector ministry management information systems; sector public expenditure reviews reports; the Population and Housing census, and national household surveys o f the Uganda Bureau o f Statistics; research findings from academic and research institutions ( within and outside Uganda); andthe Movingout o fpoverty study. Nationally, income poverty figures still stand at 38 percent (2003) with 42 % and 12% among rural and urban dwellers respectively. Of concern i s the increasing inequality among and within regions; as well as betweenrural andurbanpopulations. Abject poverty is still pervasive as access to and use of basic requirements such as sugar and soap were not universal. Infact research into chronic poverty ascertained that almost 20 percent o f Ugandans have been lockedinchronic poverty for the last decade. The Baseline Survey on northern Uganda (2004); the Moving out o f poverty study (2005), the second Gender and Poverty monitoring survey (2005), as well as the LADDER I1study (2005) show a mixed picture inpoverty trends. The findings from the two studies provide cautious grounds for both optimism and pessimism concerning some trends and patterns o f social and economic change occurring in Uganda. Survey on The Moving out o f poverty study showed that 52 percent o f the households reported improved welfare mainly due to accumulation o f assetsparticularly land and livestock. However the northern Uganda indicates a gloomy picture. It shows an increase in income poverty within the region with absolute numbers increasing from 3.3 million in 2002 to 3.9 million in 2004. The increase inpoverty was attributed to increased poverty particularly in the rural areas resulting from prolonged drought, cattle rustling and LR4 attacks that prevented people from tending to their gardens. The Lango sub-region, with the largest number o f poor people had a sharp increase inrural poverty that surpassed the 1992 poverty levels. The survey also shows that poverty in Karamoja is so deep that 80 percent of the people are not meeting their basic requirements. The social indicators in 15 this sub-region, in terms o f health, education, access to safe water and sanitation are the lowest inthe country. Pillar I: Economic Management The central objectives o f Uganda's macroeconomic management are control o f inflation and maintenance o f supportive economic conditions for private sector-led growth. These include a competitive exchange rate for exporters, and steady growth in private sector investment, requiring low and stable interest rates and credit growth for the private sector. The Government has set out explicit targets for macroeconomic management pertaining to GDP growth rate, inflation rate, fiscal deficit, private sector access to credit, external debt and international reserves. Achievements that are on track given the targets are that o f inflation rate, reduction o f fiscal deficit, growth in private sector credit; and international reserves. Growth o f real GDP, averaged 5.5 % per annum with agricultural growth being less than 2% over the period under review. Growth inthe agricultural sector is highly affected by weather conditions as the sector is largely smallholder and i s heavily rain-fed. The erratic and unevenly distributed rainfall is increasingly affecting output, especially o f food crops. Inrecent years, there has also been anincreasing incidence o f crop diseases (coffee and banana wilt) as well as animal diseases. These are being compounded by declining soil fertility on account o f increasing land fragmentation due to population pressure and environmental degradation. The attainment o f the 7.0% GDP growth rate target, therefore, will call for reforms and interventions directed at revamping the growth o f the agricultural sector. The fact that agriculture has very low growth rates i s a pointer to the fact that pro-poor growth is still elusive. This is partly reflected inthe fact that despite increasing per capita GDP growth rates, income inequality inincreasing. The annual inflation target o f less than 5% was achieved over the review period. The volatility over the period was partly due to the rising trend in petroleum products and its effects on the prices o f other itemsvia transport costs. By 2004/05, the fiscal deficit had been reduced to 8.8%, which represents significant progress towards the current long-term target of a budget deficit o f 6.5% o f GDP by 2009/10. Over the period under review, domestic revenue-to-GDP ratio slowly rose by 0.5% to 12.7%. Domestic revenue mobilization is therefore still a bigchallenge because o f the narrow tax base; large informal sector; andpressures to reduce the taxes on account o f investment incentives and socialwelfare concerns. 16 Total private sector credit increased markedly over the period with an average annual growth o f 22%. However, the decline in Commercial banks prime lending rates has been rather sluggish. The trade & other services sector continued to account for over one half o f the outstanding credit, followed by the manufacturing sector, which accounted for between 25-30 percent o f the same. This is a manifestation o f limited agricultural financing. A major vehicle for saving and source o f investable funds that is being re-formed, is the pensions sub-sector. For the poor, the Micro-finance outreach programme has been launched. The adopted strategy is o f supporting member-used and member-owned financial institutions, commonly referred to as Savings and Credit Cooperative Organizations (SACCOs). Despite the many reforms for enhancing private sector investments, the constraints to this sector still persist. Currently, there i s the energy crisis that i s paralyzing all operations. This is worsened by the limited access to financing, high taxes, high utility costs and corrupt public offices. There have been efforts to diversify export markets and some products have successfully penetrated the new markets. Internationalmarkets are important for fish, horticulture and other high value crops. On the other hand, regional markets are becoming increasingly important, especially for the low-value crops (maize, beans, bananas, diary products like milk), manufactured goods (plastics, textiles, batteries, bicycles, aluminum products, mattresses, scholastic materials, etc). It i s clear that even poor small farmers can benefit from the regional markets ifsupported with quality production andbulking. The composition of imports, constituting 14% o f food, has not changed much over the last five years. The fact that Uganda is importing food in large quantities further underscores the importance o f enhancing agricultural sector performance. The emergingissues under this pillar are: The unmet GDP growth rates 0 The declining trend o f agriculturalper capita output, and 0 The rapidrate o f growth o fUganda's population Pillar II: EnhancingProduction,Competitivenessand Incomes Government policy since 2001,has been on increasing incomes o f the poor through higher agricultural growth and increased non-farm employment especially in the rural areas where the majority o f the poor live. Under this pillar, a number o f positive outcomes have been registered inthe marketing o f agriculturalproducts, formation o fBeach Management Units (BMUs), road rehabilitation and movement o f goods by rail, although the achievements generally fall below the targets. Slow or no progress i s noted inthe growth o f the agricultural sector and access to forest products and energy. 17 Agriculture Despite the low growth inagricultural sector, livestock andcash crops have shown the most consistent positive GDP growth rates inthe sector, while the food crops sub-sector has laggedbehind. The performance o f the cash crops' sub-sector's GDP has mirrored closely the fortunes o f the coffee industry- low world prices particularly at the turno f the century saw negative growth in2000/0 1, while the recent increase inprices has ledto a recovery. The poor performance o f the food sub-sector, has resulted into continued problems o fmalnutrition and pockets o f famine and hunger inthe country. The prevailing levels o f childhood under- andmal-nutrition are high,accounting for 40 per cent o f all deaths o f childrenbefore the age o f five. Forestry There is an accelerated rate o f deforestation mainly due to encroachment on protected areas such as Central Forest Reserves, conversion o f forests into crop and grazing land, charcoal burning and over-harvesting o f forest resources, high population growth, ineffective law enforcement sometime due political interference and degazetment o f protected areas. This has a direct negative impact on the livelihoods o f the poor in relation to declining firewood sources, rainfall regime, soil erosion control and related environmental services. Fisheries As was notedunder economic management, this sector is animportant export earner. The total tonnage o f fish export increased from 25,000 metric tomes in 2003/04 valued at US$ 88 million to 39,000 tomes in 2005 earning the country US$ 143 million. The increase in export volumes is directly linked with increased production mainly on the natural water bodies and to some extent commercial fish farms and improved management o f fisheries. The export price for fish i s on a rising trend and export volumes are projected to increase over the medium term. The key challenge i s for both Government and non-governmental organisations to guide fishing communities to translate the good returns from fishing to investments that can improve their welfare on a sustainable basis. Service deliveryfor agriculture and rural development Agricultural extension services The National Service Delivery Survey o f 2004, indicated that about 14 percent o f the households had been visited by an extension worker compared to about 29 percent reported inthe 2000. The NAADS programme has expanded from 100 sub-counties in 16 districts in 2002/03 to 344 sub-counties in 37 districts in 2005/06. In the NAADS districts, the farmers were generally satisfied with the quality o f extension services, particularly those offered by the Government officials and NGOs/CBOs. The quality o f Government extension services was rated as good for both crop and animal husbandry butpoor for fish farming. 18 Energy Despite the current energy crisis, overall access to electricity inthe country has increased from 5% in2001 to 9% at present. Rural coverage has increased from 1%in2001 to the current 4%. To meet the energy demands o f the country, hydropower generation at Jinja was installed although the effective generation capacity at Owen Falls has declined from 260MW in2000 to 215MW currently largely due to the prolonged drought. Government procured an additional 50MW o f emergency thermal generation to partly address the acute shortage. Inaddition, Government is working with the Private Sector to develop small renewable energy prospects. Roads About 80% o f national roads, 60% o f district roads and 20% o f urban roads have been rehabilitated and are in a fair condition. Most community access roads are in a poor condition. Rural areas are poorly served with roads, with only 10%of community access roads in goodfair condition. A Road Fund i s to be established by July 2006 to finance road maintenance. Rural Finance Microfinance outreach stands at only 1.3 million Ugandans mostly residing in urban areas across the country. Although interest rates have been steadily declining over the last 5 years, they remain highalthough comparable to other countries. Such highinterest rates discourage borrowing especially by poor people. Anecdotal evidence suggests that many poor people in rural areas have lost their property to MFIs because o f inability to pay back the loans plus interest resulting into increased poverty. Currently the total loan portfolio o f MFIs to agricultural financing remains extremely low at only 4 percent compared to commerce at 72 percent. Implementation o f the Microfinance Outreach Plan aimed at expanding financial services to the presently underserved areas is ongoing. Recruitment o f Financial Extension Workers whose role is to support establishment and development o f MFIs at every sub- county inthe country has commenced. Competitiveness and Trade CompetitivenessStatus As noted under Economic Management, constraints to the private sector have persisted. To this effect, Uganda's competitiveness inthe business environment when compared to other countries for 2005/06, dipped to 87thposition out o f 117 countries compared to the rankof 80thout o f 102 in2003/04. Despite the slippage noted above, Uganda also enjoys a number o f competitive advantages that make it an attractive destination for doing business. The notable competitive advantages during 2005/06 include: the favourable macroeconomic 19 environment; flexibility o f wage determination; Foreign Direct Investment and technology transfer; the positive effects o f privatization on competition and the business environment; centralization o f economic policy making; the quality o f scientific research institutions; the reduced burden o f government regulation; Government success in ICT promotion andthe local availability o f specialized research andtraining services. A sub-sector that has enhanced private sector competitiveness is the Telecommunications where the national tele-density rate has been dramatic and is projected to continue to expand rapidly. Strategic Exports As noted under Economic Management, diversification led to a dramatic growth in non traditional exports (fish, cut flowers, vanilla, fiesh vegetables, tobacco, maize) and tourism which have off set the decline intraditional exports. The strategic exports sector includes coffee, tea, cotton, cocoa, horticulture, irishpotatoes, fish, beef, and boer goats. Although the SEP interventions were inherently strategic, implementation modalities were not strategic. Areas that need strengthening in order to enhance programme impact include: the poverty focus o f the programme, entry and exit strategies; understanding and meeting the complex product market requirements; pest and disease control; enhancing monitoring and accountability; infrastructure development and ensuringvalue addition. The potential impact o f the programme is also constrained by outstanding debts in the cotton, coffee, tea, cocoa and fish sectors. These debts have significantly reduced the incentives withinthe private sector to operate inthe programme. Scienceand technology Uganda needs to use science and technology more intensively to enhance economic growth and social benefits. Generally this sub- sector remains small, under-funded, unable to keep up with knowledge advances in the global economy and constrained by numerous disincentives and obstacles. There are a number o f reforms aimed at enhancing the integration o f S&T in the development process that were carried out between 2001- 2005. Labour and employment Ugandahas an estimated 346,000 people who are unemployed, with females doubling the males. The unemployment rate for the country i s estimated at 3.2% being higher inurban areas (12%) than rural areas (2%). Unemployment rates are highest among the youth withinthe 20-29 age bracket. Underemployment, where currently employed persons work for less than 40 hours each week, is most widespread affecting 65% o f adults. A numberofinitiatives are at varyingstages o fdesignandimplementationto improve the employment situation in the country. The Draft Employment Policy is still awaiting 20 approval from Cabinet; the Labour laws are being revised; the Government i s promoting labour based programmes inlocal construction. The key emerging issues are: 0 The energy crisis The poor transport infrastructure Highrateo fenvironmental degradation 0 Limitedavailability o fagricultural financing 0 L o w quality o f science and technology, and 0 Widespread under-employment Pillar 111: Security, Conflict Resolutionand Disaster Management Security is a precondition for improved human welfare and one o f the key factors necessary for achieving all the goals o f the PEN. Duringthe review period, Government has implemented a number o f actions to consolidate its achievements and to address outstanding challenges inthe fight against insecurity. Rebel Insurgency Rebel insurgency by the Lord's Resistance Army (LRA)continues to be the leading form o f armed conflict affecting the peace and security o f individuals and families inthe north. Though still very active, the strength o f the LRA is thought to be diminishing. Many o f the group's fighters either surrendered or were killed by the UPDF during the period 2003-2005. This achievement by the UPDF in weakening the strength o f the LRA rebel force obviously needs to be taken with consideration o f fact that a significant number o f LRA fighters are abducted children who are forced into rebellion andbattle, a complex issue acknowledged by the government. Latest figures from Ministry o f Defence indicate that between January 2003 and October 2005, Government rescued over 6,000 children who had been captured and 7,994 adult abductees. Despite the commendable efforts by UPDF in rescuing abducted children, many abducted children remain unaccounted for. UHRC reports that by the end of 2004, out o f the 26,000 children abducted by the LRA, 4,000 were still unaccounted for in NorthernUganda. Cattle Rustling and Disarmament Cattle rustling has displaced large numbers o f persons in Karamoja and the neighboring districts o f Teso sub-region and Kapchonva. Katakwi District is the worst hit by cattle rustlinginTeso, with roughly 88,000 IDPs inover 30 camps. Government's disarmament programme in Karamoja that was started in December 2001 was re-launched in September 2004 following its disruption in 2002. Prior to its disruption, the disarmament exercise had realized the recovery o f more than 10,000 guns through both its voluntary and forceful strategies. Compared with the estimated holdings o f 40,000-50,000 firearms in the possession o f Karimojong warriors. Since the re- 21 launching o f the exercise, achievements made as o f June 2005 included the cessation o f carrying guns openly, restoration of law and order in nearly 70 percent o f previous affected areas with increased arrests andtrails o f criminals, the voluntary recovery o f 900 guns, restoration o f respect for elders inthe community, reduction in arms trafficking and closure o f open arms markets. Auxiliay Forces AuxiliaryForces were recruitedto augment military efforts where UPDFwas thin on the ground. The auxiliary forces comprise o f the Local Defence Units ,the Amuka group, the Arrow Brigade, and the Anti Stock Theft Unit . As o f March 2006, the Uganda Police Force hadrecruited 45% o f the 4,000 auxiliary forces it undertook to absorb. Defence Reform Programme Government embarked on a defence review process in 2001 to provide guidance on the military capability needed for planningo f the defence forces andto provide a policy basis for the transformation of Uganda's defence forces. The first phase o f the reformprogramme involved undertaking a defence review that was was completed in June 2004 with the preparation o f a White Paper. Based on the White Paper, a detailed Corporate Plan to guide the implementation o f the review recommendations was developed andi s under implementation. Conflict Resolution Conflict Resolution refers to a comprehensive process o f preventing or bringing to an end, in a sustainable manner any conflict that disrupts the socio-economic wellbeing of any people, society or country. A range o f conflict resolution and management initiatives were implemented over the review period with varying levels o f success. They include military ceasefires, the Betty Bigombe led peace effort, and religious and CSO led negotiations. Amnesty, Reconciliation and Re-integration Under the Amnesty Act 2001,government made an amnesty provision for fighting rebels willing to surrender and denounce rebellion. The latest statistics (June 2005) from the Amnesty Commission show that since the start o f the Amnesty Law, a total o f 15,115 rebels have taken advantage o f the Amnesty Law and denounced rebellion. The biggest challenge faced by the Commission is inadequate funding leaving a backlog o f 12,000 reporters unsettled. However, the International Criminal Court issued International Arrest Warrants for L M ' s top leadership on October 8th2005 opening the way for their possibleprosecution. 22 Disaster Preparedness and Response Internally Displaced Persons (IDPs) Internal displacement i s a problem that has long existed inUganda and almost all regions o f the Country have been affected by it inone way or another. As o f July 2005, the total number o f IDPs in the Northern and North Eastern region stood at over 1.8 million people distributed across 250 camps. Assessments by various Government and non- government agencies including UHRC reveal that living conditions in IDP camps are very poor. In recognition of the problem of displacement, Government developed an IDP policy that was launched inAugust 2004. Early Warning Systems Earlywarning as a system is the collection and analysis o f information for the purpose o f identifying and recommending strategic options for preventive measures prior to the outbreak o f a calamity or a national disaster. This is an area that is still very weak. Post Conflict Reconstruction/Recovery Northern Uganda Recovery and Development Programme Overwhelming evidence suggests that insecurity inthe North and Northern Eastern parts o f Uganda over the last 15 years is the most important explanatory factor for the high poverty incidence inthe region. The programme aimed at achieving peace, recovery and development inthe northern region will commence implementation inJuly 2006. National Strategic Planfor Karamoja The strategy combines ongoing efforts to encourage the surrender o f weapons with actions to support the development o fKaramoja. Restocking Programme A successful restockingprogramme was initiated and implementedby Government from 2000/01 to 2002/03 to support the reestablishment o f the cattle culture and support communities that had been affected by conflict and lack o f incomes in the Northern and Luwero districts with livelihood opportunities. However, just when the achievements o f the programme were being registered in districts, Government decided to halt the project andstop disbursements. Northern Uganda Social Action Fund (NUSAF) The Northern Uganda Social Action Fund is a community-driven 5-year development project funded by the World Bank, the Government o f Uganda and Communities. The project's development objective is to empower communities in the 18 districts in Northern Uganda by enhancing their capacity to systematically identify, prioritize, and plan for their needs within their own value systems through implementation o f sustainable development initiatives that improve socioeconomic servicesand 23 opportunities, thereby contributing to improved livelihoods by placing money in the hands o f communities. Inthe period August 2004 to September 31, 2005 a total of 2626 sub-projects had been funded under the programme. Of these 615 (23%) have been completed. Of the funded sub-projects, 1,592 are community development initiative sub-projects reflecting active participation o f the service poor; 891 are vulnerable group support sub-projects and 143 are community reconciliation and community management sub-projects. The emerging issues are: 0 Absence o f a functional conflict resolution mechanism 0 Slow implementation o fthe defence reform programme; and 0 Resettlement o fpersons now residing inIDPs Pillar IV: Good Governance. Good governance is an imperative to poverty eradication as it i s to development more generally. The outcomes reviewed under this Pillar refer to political governance; human rights; the legal andjustice systems; and public sector management and accountability. Democracy and Political Governance The term democracy indicates a form o f government where all the state's decisions are exercised directly or indirectly by a majority o f its citizenry through a fair elective process. Areas o f achievement include the continued relatively high degree o f press freedom and freedom o f opinion; move to multi-party politics under which the political elections were held inFebruary 2006; and a constitutional review process that culminated inthe revision o fthe Constitution. Human Rights The state o f human rights in the country continues to improve. However, illegal detentions and use o f torture in some detention centres is a major challenge to the enjoyment o fhumanrights as reportedbythe UHRC. Justice Law and Order CriminalJustice Lack o f access to justice is a defining attribute o f poverty and an impediment to poverty eradication. The sector Strategic Investment Plan focuses on improving access to justice and effectiveness and quality o fjustice. 24 There i s increased reporting o f crime, although this could illustrate increased public confidence. On the other hand, its reduction and management still poses a challenge to the sector ingeneral andthe UgandaPolice Force inparticular. There has been some improvement indelivery ofjustice ina number o f ways. There was a reduction inthe length o f stay on remand; inthe number o f persons staying on remand beyond constitutional period; in time spent on remand after committal; o f time taken to peruse a file by the DPP staff; and a reduction in the number o f files lost between Directorate for Public Prosecution (DPP) and Police arising from improved information management Commercial Justice User satisfaction with the handling o f Commercial cases has improved. However, physical access to Commercial Justice Institutions remains inadequate because the institutions are concentrated inKampala where over 90% o f the Law firms are located. The key reforms under this sub-sector included strengthening the Commercial Court, Inspectorate o f Courts, Company and Land Registries; reforming Commercial laws and regulations and enacting pending bills; and simplifying Court procedures and strengthening Alternative Dispute Resolutionprocedures. Accountability and Transparency in Public Life The National Integrity Survey, (2003), indicates that anti-corruption efforts have yielded positive results although corruption remains a major problem. There was a marked reduction in the reported incidence o f bribery; and a general satisfaction with improvements in specific services: health, education and agriculture despite dissatisfactionbeing expressed with tendering procedures andcontract management. The Survey also indicated that the sectors leading in the incidence o f corruption are the police, health services and the Judiciary, followed by tax collection and local councils. This implies that access to health services andjustice, law and order services which relate to the basic rights of citizens cannot yet be taken for grantedparticularly inrural areas. Public Financial Management Strategic reforms have been conducted aimed at improving the efficiency and effectiveness o fpublic expenditure management processes, to promote accountability and transparency, andthereby enhance the quality o fpublic service delivery. This has led to increased non-tax revenue collection; reduced the creation o f new domestic arrears and created discipline in Financial Management, especially in central votes; tripling o f numbers o f qualified Professional Accountants and Accounting Technicians in Central, Local Governments and Office o f the Auditor General; rapid increase in the flow o f resources to Local Governments and corresponding increases in the associated reporting; and computerization o f the budgeting and accounting functions o f Government in6 pilot Ministries. 25 Decentralisation A joint review in 2004 established that `reality' in the Local Government was not matching with the presumed relationships and a number o f reforms are to be implemented. Public Sector Management Reforms have been concentrated on areas o f creating an efficient Public Service focused on the need for provision o fhighquality services to the public. A major initiative has beenthe establishment o fNIMES aimed at addressing a number o f challenges that include limited flow o f information, weak M&E coordination arrangements, andgaps ininformation andunderutilization o f information. The emerging issues are: H o w state and non-state actors will adopt to an multi-partycontext after 20 years o f the Movement 0 Improving justice, law and order presence, especially in the north where service delivery has for longbeenhindered by conflict Ensuring that the anti-corruption agencies have the technical capacity to implement the anti-comption agenda and non-state actors have the ability to hold leaders accountable Dealingwith the consequences o f declining Local Government Revenue PillarV: Human Development A healthy and well-educated population is both a necessary condition for development and one o f the central objectives o f development. Government is making continued efforts to ensure the sustained improvement o f social service delivery and ultimately the quality o f life for all Ugandans. Health There has been marked improvement in a number o f health sector input and output indicators. Out-Patients Department (OPD) Utilization Abolition of user fees in public health units, with the exception o f private wings in hospitals, led to a dramatic increase in the utilisation o f public health facilities. Studies have shown higherincreases inutilization o fhealth services inpublic facilities among the poorest 20% as compared to the top 20% - so the reform was pro-poor. 26 Immunisation The revitalization o f the national immunisationprogramme has led to remarkable decline inthe incidence ofimmunisable diseases. Deliveries inpublic and PNFP healthfacilities The utilization o f the health facilities for safe deliveries remains low, with the proportion o f expecting mothers who deliver in government and PNFP health units staying stagnant throughout the review period. Poor performance has been attributed to: perceived poor quality o f services in particular lack o f equipment, supplies, water, light and privacy; poor attitude o f health workers; inadequate access to maternity services and cultural barriers with the preference for TBAs andother alternatives insociety. Provision of Human Resourcesfor Health The focus has been on availing appropriately trained health workers especially at the primary health care levels. Between 2001/02 and 2004/05 the proportion o f approved staff positions filled by health workers has risen from 42% to 68%. This has been largely due to recruitment o f healthworkers at the lower level units and general hospitals. HIUAIDS Duringthe past five years, the prevalence ratehas stagnatedbetween 6% and 7%, andthe 2005 sero-survey reported the national prevalence rate at 6.4. There are varied regional differences with the HIV prevalence rate in armed conflict affected mid-north regions o f the country at 9%. Essential Medicines and Health Supplies(EMHS) Emphasis has been the provision o f basic medicines and health supplies at the various levels o f the health system with particular focus on the primaryhealth care level. This i s shown by the increase inspending inEMHS at the local government, andhospital levels. Education Education is not only an important aspect and index for national development, it is also vital for achieving a good quality o f life for the people. Primary Education The total numbers o f children accessing primary education in the country continued to rise although at a decreasing rate. In addition, other indicators for the sub-sector that include teachers on payroll, number o f classrooms, pupil teacher ratio and pupil classroom ratio also continued to improve. Of grave concern, is the high school drop-out rate. National figures indicate a drop-out rate o f approximately 80%, with girls representing the majority o f primary school drop outs. 27 Secondary education Government is committed to increasing access to post-primary education by all children who complete their primary education. To this effect Universal Secondary education will be implemented ,ina phasedway, effective 2007. Higher education In order to increase access to higher education in a bid to meet Uganda's growing demand for skilled manpower, during the period under review the National Council for Higher Education licensed four new private universities o f Kabale; Kumi ;African Bible College University ;and Mountains o f the MoonUniversity. Water and Sanitation Rural access to safe water i s reported at 61.3% and 52% in the wet and dry seasons, respectively. However, there considerable inequity incoverage between districts. The overall coverage o f the 19 large towns served by NWSC now stands at 68%. On the other hand, for the 143 small towns, overall coverage is estimated to be about 36%. Social Development Social Development addresses issues o f social exclusion, inequity, inequality, vulnerability, unemployment and disenfranchisement for different groups such as women, men, youths, children, the unemployed, internally displaced persons, the elderly, andpersons with disability. Achievements include: 0 Revitalization o f the Community development function in Local Governments to improve service delivery, and deepen decentralisation. 0 Rehabilitation and Development o f Public Libraries 0 Extendingfunctional adult literacy programmes to all districts, that has raised the adult literacy rate 0 Initiating social protection activities Population Growth At an average population growth rate o f 3.3% per annum, Uganda continues to experience one o f the fastest rates o f population growth in the world. Unfortunately this issue has not been giventhe due considerationthat it deserves. Emerging Issues include: Inadequate fundingfor the health sector 0 Inadequate coordination o f the project based nature o fthe HIV/AIDS response 28 Poor quality o fUPEresulting inhighdrop-out rates, especially by girl children Extension o f free education services beyond primary education Slow development o f social development policies Highrateofpopulationgrowth Public Expenditure The PEAP has guided the sector-wide approaches to policy reform and investment programming. It has also improved the focus o f Government's three-year rollingMedium Term Expenditure Framework (MTEF) inthe fight against poverty. There has beena slow but consistent government commitment to finance PEAPpriorities with resource allocations to the priority sectors being on track to achieving the projected PEAP targets. PAF designated expenditures continue to be a major tool for targeting public expenditure towards the poor. The emerging issues are: Persistent budget indiscipline within some sectors and therefore unending domestic arrears Limited and unreliable funding o f non-PAF expenditures, some o f which are critical to the enhancement o f effectiveness o fpublic service delivery 0 Reorientation o f expenditures towards productive sectors as opposed to social sectors There is need, therefore to enhance domestic resource mobilization; re-prioritise Government expenditures, set minimum sector allocations and facilitate the development o f Sectors Investment Plans; and rationalize government expenditures as well as address issues on efficiency and effectiveness o f the budget. 29 Chapter 1:Introduction 1.1 Background The Poverty Status Report (PSR) is a periodic' publication on Uganda's poverty status and is one o f the instruments through which government systematically monitors progress and outcomes o f implementation o f the Poverty Eradication Action Plan (PEAP) policies andprogrammes. This report, the forth to be published since the launching o f the PEAP in1997, reviews progress and constraints to implementing the PEAP for the period 2003 to- date. A unique feature and challenge2 about the 2005 PSR is that it covers both the implementation o f the revised PEAP (2001-2003), as well as the current PEAP 2004/5- 2007/8. This PSR will also inform the PEAP 2004 review process scheduled for November- December 2006. 1.2 Methodology Preparation o f the report commenced in October 2005 under the coordination o f the Ministry of Finance, Planning and Economic Development (MFPED) with a half-day stakeholder workshop. At this meeting, MFPED presented an outline for the PSR and participants, working under the five PEAP pillar teams agreed on the schedule for preparing the report. The pillar writing teams were constituted by relevant sector ministries, government agencies andcivil society organizations. The information used in the write-up was drawn from various sources including sector ministrymanagement information systems; sector public expenditure reviews reports; the Population and Housing census ,and national household surveys o f the Uganda Bureau o f Statistics; research findings from academic and research institutions ( within and outside Uganda); andthe Moving out o fpoverty study.3 It was agreed that all pillars address cross cutting issues (gender, population, HIV/AIDS and environment) in their write-ups. However, there would be stand-alone sections on these issues under the relevant pillars too. 'It ~~ ~ * Iti s publishedevery two years. i s a challenge because the structures o f the two documents are different. The PEAP 2000, had four pillars well as the current one has five. The new P E N developed a policy monitoringmatrix that includes indicators o f performance that were absent inthe P E N 2000. Inaddition, the new PEAP has some new areas o f focus that were identified during the course o f implementing the old one. These include the need for having a fully fledged security pillar, as well as the move towards enhanced funding for productive sectors as opposed to the social sectors. T h i s study i s a collaborative undertaking between UPPAPMFPED and the World Bank 30 1.3 The Poverty Context It is evident that Uganda is still one o f the poorest countries inthe world and that there was a very large number o f absolutely poor people. This is shown by the household welfare indicators (Annex 1) that have been derived from the Population and Housing Census (2002) that indicate the following: 1. Forty seven percent o f households had all their members taking sugar at least once a day. All households should be able to consume4 sugar as ability to have basic food and non-food items is an indication o f well-being. 2. Use o f soap for bathing was not universal. Ninety percent o f the households used soap for bathing. 3. Forty four percent o f the households had a blanket for each child. Beddings are part o f clothing requirements that are basic needs. 4. Seventy eight percent o f households had each member with at least two sets o f clothing. This i s the minimumrequirement to ensure that each personhas clothing for home and outside use. 5. Forty three percent o f households had each member with at least a pair o f shoes leaving the majority still bear-footed. The fact that these basic requirements were not universal is a sign o f abject poverty that i s pervasive. In fact research5 into chronic poverty ascertained that almost 20 percent o f Ugandanshavebeen locked inchronic6poverty for the last decade. 1.3.1 PovertyTrends Nationally, income poverty figures still stand at 38 percent (2003) with 42 % and 12% among rural and urban dwellers respectively. Of concern is the increasing inequality among andwithin regions; as well as between rural andurbanpopulations. The Baseline Survey on northern Uganda (2004); the Moving out o f poverty study7 (2005), the second Gender and Poverty monitoring survey' (2005), as well as the LADDER' 11study (2005) show a mixedpicture inpoverty trends. The findings from the two studies provide cautious grounds for both optimism andpessimism concerning some trends and patterns o f social and economic change occurring in Uganda. However the Survey on northernUganda indicates a gloomy picture. The exceptionofsugar consumptionbeing onmedical grounds Researchwas undertaken by the Chronic Poverty Research Centre- Uganda 6 Chronic poverty traps individuals and households insevere and multi-dimensional poverty for several years and is often transmitted across generations. The Moving out ofpoverty study was conducted inthe districts o fKisoro, Masaka, Luweero, Kamuli, Lira and Kabale * The survey was undertaken by the Faculty o f Agriculture, Makerere University This studywas undertaken inMarch-May 2005 by EPRCincollaboration withthe Overseas Development Group. 31 The Moving out o f poverty study showed that 52 percent o f the households reported improved welfare mainly due to accumulation o f assets particularly land and livestock. This i s complemented by the positive trends established by the LADDER I1 study namely: o greater quantity and diversity o f provision inprimary education, health clinics and drug outlets, this expansion being partly public (UPE, public health clinics) and partlyprivate (nursery andprimary schools, drug shops) incharacter; o access to agricultural extension services has improved in sites where NAADS has been rolled out. In particular access to veterinary services has improved where farmers combine together to purchase private services and this has enhanced livestock numbers; o improved rural roads are widely reported; o markets have become more widely prevalent and are held more frequently, and trade has become more dynamic, although not in all locations. This is partly attributed to the spread o f mobile phones, enabling information on prices and availabilities to be widely diffusedwhich has improved both the farm-gate share o f sales prices inmarket centers, as well as marketed farm output; o greater diversity o f non-farm activities in trade, transport and services has occurred; o the sense o f rights and empowerment o f rural citizens, both men and women, is improving. However, these positive trends and patterns are offset by features that are disadvantageous to some citizens, or that raise strategic issues for public policy and poverty reduction efforts: geographical patterns o f social and economic change are uneven re-affirming the concern o f widening inequality country-wide. The Moving out o f poverty study showed that 40% o f households reported worsening welfare particularly in the districts o f Masaka, Lira and Kamuli. The second Gender and Poverty Monitoring survey showed increasing poverty inthe districts o f Pallisa, Tororo and Bundibugyo. The widening inequalities have meant that many o f the service improvements are more accessible to the better o f f than the poor inrural society, especially where these are privatized services requiring payments for services rendered; 0 mean farm size has declined which reflects long run agrarian change in which households will be unable to sub-divide farms further in the future, and rising numbers o f family members enteringthe working age populationwill be landless; renewable natural resources have deteriorated, increasing the vulnerability o f the poorer households that depend on them; the greater participation in exchange and markets noted for some rural areas is less prevalent for low income and poor households who continue to rely mainly on subsistence consumption; 0 the positive changes inpeople's perceptions about rights, their ability to express their views, and to complain to those inauthority is not matched by equivalent changes in 32 the responsiveness of public or elected officials which was stated as staying the same or even deteriorating. The relative importance o f factors that influenced a decrease inwelfare are given inTable 1.1. The study stressed the importance o f agriculture in determining household poverty levels. On one hand, low agricultural yield was identified by households as the second most important factor explaining the decreases inwelfare. 16 percent o f households were worse off because o f low agricultural yields. On the other hand, crop diversification and increased crop production and productivity were singled out as the most important reasons why households were experiencing increased household welfare. These findings underscore the importance o f improving agricultural production and productivity as well as diversification as a means to reducinghousehold poverty. Reasonfor Welfare Ladder ChangeBtagnation % of householdsrankingreason that has madethemworse Worse Job/Loss of Employment 8.5% Low APJiculturalYield 16.0% DeathofAnimal 3.4% Lost a Business 3.1% MFPED, 2006 The northern Uganda survey (2004) shows an increase in income poverty within the region". The absolute numbers increased from 3.3 million in2002 to 3.9 million in2004. The increase inpoverty was attributed to increased poverty particularly inthe rural areas resulting from prolonged drought, cattle rustling and LRA attacks that prevented people from tending to their gardens. The Lango sub-region, with the largest number o f poor people had a sharp increase inrural poverty that surpassed the 1992 poverty levels. The rapid population growth may also have aggravated the poverty situation in the region. Of concern was the increasing income inequality particularly inrural West- Nile; and among persons engaged inagriculture, manufacturing and trade within the other sub- regions. lo This covers 18"old" districts ofKaramoja, Acholi, Lango, West Nile and Teso sub-regions. 33 The northern survey also shows that poverty inKaramoja is so deep that 80 percent o fthe people are not meeting their basic requirements. The social indicators inthis sub-region, in terms of health, education, access to safe water and sanitation are the lowest in the country. This mixed picture o f the multi-dimensional poverty in Uganda, was the basis for the 2002 PEAP revision. The purpose o f this PSR is to review progress in addressing the various concerns o fpoverty. 1.4 The Structure of the Report The PSR has six other chapters, the five relating to the five PEAPpillars namely: Economic Management Enhancingproduction, competitiveness andincomes 0 Security, conflict resolution anddisaster preparedness 0 Good Governance, and 0 Humandevelopment. The sixth chapter reviews public expenditure to ascertain the extent to which P E N priorities are receiving funds from the national budget. 34 Chapter 2: EconomicManagement Denominations in Uganda 2.0 Introduction The central objectives o fUganda's macroeconomic management are two-folds: control of inflation and maintenance o f supportive economic conditions for private sector-led growth. The economic conditions include a competitive exchange rate for exporters, and steady growth inprivate sector investment which require low and stable interest rates and credit growth for the private sector. Major a ~ h ~ e vand~challenges: ~ ~ ~ t s Key A c h i ~ ~ ~ ~ e n t ~ ~ a Inflation averaged 4.0% 9 Reduction inoverall budget deficit by ~ p p r o x i ~ ~ t2epercentage points. l y a Total private sector credit increased ta 7.6% o f GDP in 2004105. 8 ~ ~ t reserves, by end~ofJune 2005, ofnearly 6.5 months of imports. e ~ a ~ ~ ~ ~ Key Chnllerrges: I ~ ~trend of agricu'Itwa1 output. i ~ ~ ~ ~ ~ g Volatile inflation. 9 Highp ~ p u ~ a t irate~of~3.3%~ h ~ o 35 2.1 Economic Management Performance The Government has set out explicit targets for macroeconomic management, and has achieved satisfactory results for a number o f performance indicators as shown in Table 2.1 below. Achievements that are on track given the targets are that o f inflation, reduction o f fiscal deficit, growth inprivate sector credit, and international reserves. Table: 2.1 Outcome Achieveme ts ActualAchieveme ts PerformanceIndicator PEAP Target 2002103 FY 2003104 FY 2004105 2013114 FY FY GDP growthper annumYO 7.0 4.7 5.5 6.2 Reducedfiscal deficit: 6.5 10.4 10.6 8.8 . Fiscaldeficit (YOof GDP). 15.8 12.2 12.7 12.8 Enhancedrevenues (% of GDP). 22.5 22.6 23.2 22.7 Reducedexpenditures (% of GDP). 5.0 2.4 5.0 4.7 Low inflationmaintained: 17.5 7.2 7.5 7.6 .. Increasedprivatesector 13.6 5.5 8.1 7.2 access to finance: PSC(Yo of GDP) Savings(% of GDP) 187.0 302.0 285.0 266.0 . Reducedexternaldebt to sustainablelevels: NPV of externaldebt 5.0 6.2 5.9 6.5 (YOofExport Earnings). Internationalreserves maintainedat a minimumof5 monthsofimports: Source: Ministry of Finance, Planning and Economic Development,1 nk of Uganda and IandaBureau of Sta tics 2.1.1 GDP Growth Growth o f real GDP averaged 5.5 % per annum over the period under review. The improvement in 2003/04 was driven by robust growth in industry and services sectors, 36 which offset the decline in agricultural output. Further improvement in 2004/05 was on account of strong growth in agriculture and industry sectors. Industry and agriculture sectors grew by 10.8% and 1.5% in 2004/05 up from 8.2% and 0.8% in 2003/04, respectively. The attainment o f 7.0% growth rate, therefore, will call for reforms and interventions directed at revamping the growth o f the agricultural sector. Per capita GDP has continued to grow despite the negative impact o f increasing population. In 2004/05, it was UShs.566,000 compared to UShs.471,000 in 2002/03. However, the continued rapid population growth is undermining potential benefits o f the strong growth o f the economy. It means that real per capita income is growing less than the growth in GDP, implying that some o f the benefits o f economic growth are being eroded by the highpopulation growth. 2.1.2 Macroeconomic Performance 2.1.2.1 Inflation The inflation rate averaged 4% p.a. over the period under review, which was well within the target o f 5% p.a. It rose from 2.4% in 2002/03 to 5% in 2003/04 before declining to 4.7% in 2004/05. The volatility was partly due to the increase in world prices of petroleum products and the resultant increase intransport costs. 2.1.2.2 ExchangeRate The exchange rate showed some volatility over the period 2002/03 to 2004/05 fiscal years (FY). Between July 2002 and July 2003, it depreciated from UShs.1,803 to UShs.1,995 per US$1.OO, mainly because o f increasing corporate demand for dollars and the impact o f the Iraq War on oil prices. Towards the end o f the year, B o U intervened in the market byincreasingsales o fforeign exchange. However, these interventions resulted inthe appreciation of the exchange rate to UShs.1,752 inJuly 2004 and UShs.1,748 per US$ inJuly 2005. 2.1.2.3.Interest Rates and Private Sector Credit Interest rates on government securities were also volatile over the period. Interest rates on Treasury Bills (T-Bills) increased steadily during 2002/03 and early 2003/04 as B o U mopped excess liquidityfrom the bankingsystem. To relieve these concurrent pressures in the second half of 2003/04 FY, Government introduced T-Bonds, with longer dated maturities, which resulted in the reduction o f interest rates on T-Bills and volatility in 2004/05, Commercial banks maintained the prime lending rates between 16% to 21% in 2004/05 compared to 18% to 22% in2003/04. Higher interest rates were observed in the Micro- finance institutions (MFIs) whose source o f loanable funds i s from commercial banks. 37 These high interest rates negatively impacts on the poor who form the bulk o f clients o f MFIs. 2.1.3.4 Fiscal Deficit Government was committed to a policy o f gradually reducing the fiscal deficit over the medium-term. The deficit remained more-or-less unchanged at 10.5% o f GDP in 2003/04 compared to 10.4% in 2002/03. However, in 2004/05 FY, there was a remarkable reduction o f 2.1 percentage points to 8.8%. The reduction was much lower than the level projected in the budget. The main reason was that domestic revenues performed above target and expenditures grew relatively slowly. This achievement represents significant progress towards the long-term target o f reducing the budget deficit to 6.5% o f GDPby 2009/10. 2.1.2.5 ExternalDebt Sustainability As a result o fthe change o fthe IDAPoverty Reduction Support Credit (PRSC) from loan to grant in2003/04 and 2004/05, financing o f the fiscal deficit through external loans was significantly lower than programmed. So, new external loans reduced from 4.9% o f GDP in2002/03 FYto 1.9% in2004/05 FY. The biggest contribution to our debt reduction was through the HIPC initiative. HIPC debt relief over the period was US$93m in 2002/03 FY, US$87m in 2003/04 FY and US$83m in 2004/05 FY. These amounts, which would otherwise have been spent on servicing external debts, have been utilized on poverty reduction interventions by Government The above relief led to a decline in the debt stock-to-GDP ratio from 67.0% in 2002/03 FYto 51.4% in2004/05 FY. Combinedwith a rising level o f export revenues, the relief also led to a decline in the net present value (NPV) o f debt stock-to-exports ratio", an important measure o f debt sustainability, from 302.0% in 2002/03 FY to 285.0% in 2003/04, and 266.0% in2004/05 FY. This i s still way above the threshold o f 200.0%. In order to ensure that these funds were protected against any budget cuts, they were ring fenced through the introduction o fthe Poverty Action Fund(PAF). 2.2 Domestic Revenue Mobilization The domestic revenue-to-GDP ratio increased from 12.2% in 2002/03 to 12.6% in 2003/04 and to 12.7% in 2004/05, respectively. The projection for the medium-term is the growth o f 0.5% p.a., which is inline with the government's strategy o f reducing the fiscal deficit to 6.5% by 2013/14. Calculatedusingthe HIPC methodologybasedon a three-year average of exports 38 2.2.1 Reforms inRevenue Collection and Administration Inaneffort to improverevenue collection andinlinewithoveralleconomic reforms and restructuring initiated by government, a number o f reforms were undertaken both in tax policy and administration. These reforms include restructuring o f Uganda Revenue Authority (URA), and liberalization o f tariffs. The restructuring o f URA, particularly the appointment o f a new Board o f Directors and a new management team has yielded positive results interms o f buildinga new image for URA and enhancing performance in revenue collection and service delivery to taxpayers. 2.2.2 Implications of East African Customs Union on Domestic Revenue East African Customs Union (EACU) commenced on lSt February 2005. Inthe financial year 2004/05, the implementation of the E A C U resulted in a loss o f UShs.47 billion as a result of harmonization o f tariffs in the EA region. However, it i s expected that the revenue loss from E A C Uwill reduce inthe medium-term due to the gains from VAT on imports and import duties which are expected to offset the loss from excise duty and import commission. 2.3 Financial Sector 2.3.1 Developments and Reforms in the Financial Sector The banking system has continued to be stable, sound, and resilient. This was due to enhanced supervision o f commercial banks by BoU, consolidation in financial institutions, and better service delivery. These developments have also led to increased public confidence in the financial sector. Deposits held by the commercial banks increased by an average o f 14% per annum. Furthermore, the banks are well capitalized and their non-performing loans-to-total loans ratio have remained below 5%. The regulatory framework was strengthened by the revision o f the Financial Institutions Act (FIA) 1993 in 2004. The new FIA sets out new limits, regulations, compliance requirements andpenalties for commercialbanks. The new measures are inharmony with international best practice as set out in the Basle Core Principles for Effective Banking Supervision. Inaddition, BOUundertook a numberofprogrammes to modernize and strengthen the financial sector. The programmes include the adoption o f risk-based supervision and the conducting o f on-site examinations; the shift from manual to electronic submission o f reports; and the implementation o f the real time gross settlements in February 2005, the Uganda National Inter-bank Settlement System (UNIS). The payments system was 39 further improvedwith the installation of the National Electronic Switchthat allows banks to share their automated teller machines with other banks inthe industry. 2.3.2 BankingSub-sector Total private sector credit increasedmarkedlyover the period, Itrose from 7.2% o f GDP in2002/03, to 7.6% in2003/04. The P E N target by 2007/08 is 10.4%. The trade and other services sector continued to account for over 50% o f the outstanding credit, followed by the manufacturing sector, which accounted for between 25% to 30% (see Figure2.1 below). Figure2.1: PercentageShare of CommercialBanks' Credit to the Private Sector by Sector 70.0 60.0 50.0 40.0 30.0 20.0 10.0 0.0 June2002 June.2003 June.2004 June.2005 0Agnculture Manufacturing 0Trade &OtherServices 0Transport, Electricity &Water Buddingand Construction 0MiningandQparTying Source:Bank of Uganda Survey findings from the commercial banks, which accounted for almost 80 percent o f the private sector credit growth in 2004/05, indicate that the credit accrued to borrowers from all scales o f enterprises: large, smal1,and medium. New products like salary and homeimprovementloans also grew strongly inthe year 2005. 2.3.3 Non-bank FinancialInstitutions Activities of credit institutions continued to grow. Their total assets grew by 14.4%, 16.3% and 26.2% in 2002/03, 2003/04 and 2004/05, respectively. The respective total deposits also grew by 15.5%, 26.1% and 27.6%. Unlike in the commercial banks, the building and construction sub-sector accounted for the largest proportion of credit from credit institutions.This grew by 23.1% in2003/04 and 29% in2004/05. 40 2.3.4.Pension Reform Reform o f the pension system is an explicit policy action outlined in the PEAP. Inline with this, the Budget Speech for the financial year 2003/2004 declared that the monopoly o f the National Social Security Fund (NSSF) would be broken and the pension sector liberalized to stimulate savings and capital market development. Effective November 30, 2005, the B o U temporarily took over the supervision o f NSSF until the necessary regulatory framework for the regulationo f the sector is put inplace. 2.3.5 Financial Services Extension To ensure that the poor can engage directly in economic growth through credit for investment, as well as protect themselves from shocks through effective saving, it has been necessary to broaden the coverage o f these services. Efficiency considerations dictate this must be through alternative mechanisms to the formal financial sector and commercial banks: these include strengthening o f the microfinance institutions and savings mobilisation through cooperative organisations. 2.3.6 Microfinance Outreach To foster effective coordination o f microfinance and its sustainable expansion, Government set up the Microfinance Outreach Plan(MOP) in2003/04 under the auspices o f the World Bank, FAD, DANIDA and Government o f Uganda. This has comprised a number o f initiatives. Firstly, a coordinated approach towards funding capacity building activities has been established, to better address training needs o f institutions and their staff. A coordinatedmechanism for providing grants for rural expansion o f microfinance operations has also been introduced: institutions wishing to expand financial operations into rural areas are assisted to open up branches, given equipment and furniture for improving offices and assisted with grants for training staff members. MOP has also provided an infrastructure o f private sector led extension workers in rural areas, offering community sensitization, education o f potential clients or consumers, business and entrepreneurial training, and savings and credit operation on how people should form savings and credit cooperative organizations. 2.3.7 Savings Mobilization through Cooperative Movement Inabidtobolsterthe levelsofsavingsmobilizationandinvestmentamongthepoorestof the poor, Government adopted the strategy o f supporting member-used and-owned financial institutions, commonly referred to as Savings and Credit Cooperative Organizations (SACCOs) in2005/06. The objective is to assist communities to start and operate these institutions for financial service delivery at the sub-county and subsequently at the parish level. This will comprise support o f creation o f new SACCOs where these are absent, revitalising and restructuring existing but weak SACCOs, and 41 supporting SACCOs that have attained financial sustainability and that are willing to decentralize their services to the parish level. 2.4 Investment and Trade 2.4.1 Growth in Investment Over the period under review, the Government, through UIA,made successful efforts in promoting investments in the country, as depicted by Figure 2.2 below. This trend has contributed to investment in various sectors o f the economy, offering a wide range o f investment opportunities inmining(cobalt, limestone), agriculture (coffee, tea, fruits) and fishing. The recent economic dynamism has also opened up opportunities in manufacturing and services. Figure 2.2: Growth in Investments and Employment I Growthin Investmentsand 3 500- 30000 I25000 199 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 +Total --ePlant Source: UgandaInvestment Authority 2.4.2 Investment Climate/Regulatory Framework There have been efforts to improve the investment climate by addressing the constraints faced by investors. A gender and growth assessment in Uganda, focusing on the gender dimensions o f the investment climate,I2 however, suggests that women remain under- represented within the entrepreneurship sphere and formalized business practice. Moreover, there i s evidence suggesting that lengthy and costly registration and licensing procedures have a disproportionate impact on female headed enterprise^.'^ It i s further noted that: 12World Bank Group (WBG)ForeignInvestment Advisory Service (FIAS) and the InternationalFinance Corporation (IFC) Gender-Entrepreneurshp-Markets(GEM) unit (2003,2005) 13Regulatory Best PracticeProgramme, MFPED (supported by DFID) 42 ' Women perceivethe regulatory burdento be greater than men do. ' Women are "time poor", and therefore less inclined to register and formalize their businesses. Women headed enterprises are much more likely to be subject to harassment and to pay bribes then male headed ones; i.e. women are seen as "soft targets (see Fig. 2.3)14. Figure2.3: Enterprisesthat Responded GovernmentOfficials have "lntefered"with their Businesses Female-headed Enterprises BAll Enterprises Source: UgandaRegulatoryCostSurveyReport, 2004. A pilot project to simplify the trade licensing system suggests that women respond well to simplified, speedy procedures, andwill come into compliance once it becomes feasible for them. By implication, thourgh deregulation and the reform o f the Companies Act and Chattels Transfer Act government ought to facilitate female entrepreneurs. 2.4.3 Private Investment Constraint Private investment and growth have been constrained by a number of factors. These include high interest rates (20%-30%), cost o f utilities (electricity, telecommunication and water) and transport costs. Other obstacles include macroeconomic instability, corruption, anti-competitive or informal practices, crime, theft and disorder, skills and education, o f available workers, customs and trade regulations, access to land. 2.4.4 Trade Policy In 2003/04, Government embarked on a trade policy review process to ensure a comprehensive national trade policy. The process will culminate in adoption o f a trade policy for Uganda. 2.4.4.1Uganda's TradeAgenda in the Global Context l4Source: Consultations with private sector, women's advocacy groups andbusiness associations hostedby PSFU, 17November 2004. 43 The Government sustained trade reforms in order to position herself in the international arena. Accordingly, it continued to implement trade liberalization and privatization policies, and engaged in bilateral, regional and multilateral trade negotiations. Its challenge, however, has been inability to meet the international obligations o f paying subscription fees. 2.4.4.2 African Growth Opportunity Act In order to take advantage of African Growth Opportunity Act (AGOA), Uganda vigorously embarked on the rehabilitation o f the cotton and textile sector, which now targets 130,000 bales. This has made it possible to realise exports o f garment to the U S A worth $900,000 between January to June 2003, generating employment o f over 2000 jobs. It is projectedto reach a target o f over U S A $2m by the end o f the AGOA period. Several U S A enterprises have demonstrated increasing interest in investing in Uganda, whilst the U S A and the Uganda governments have continued to provide the required environment. The interest o f American investors have already been expressed in extraction o f gum Arabic, development o f joint venture in coffee production, and air services. 2.4.4.3 Bilateral Trade Initiatives Over the period under review, Government negotiated trade and investment promotions with a number o f countries particularly the developing and least developed ones; as a South-to-South trade and investment promotion. Joint Permanent Commissions have been established with: 0 The Islamic Republic o f Iran, involving offer o f land by Uganda to Iran; and establishing Trade Points in each other's capitals, credit facilities, a tractor- assembly inUganda; 0 The Republic o f South Africa, encouraging South African investment inUganda; and identifying Ugandan's exportable products to South Africa to redress the trade inbalance infavor o fthe latter; The Republic o f Rwanda, strengthening the brisk trade between the two countries with Ugandaenjoying a favorable trade balances; and The Sudan, Egypt, Libya, Pakistan, India, Algeria and Nigeria, improving trade andinvestmentwith Uganda. 2.5 Export and Import Performance 2.5.1 Export Sector There have been efforts to diversify export markets and some products have successfully penetrated the new markets. International markets are important for fish, horticulture and 44 other high value crops. On the other hand, regional markets have become increasingly important, especially for the low-value crops (maize, beans, bananas, diary products like milk), manufactured goods (plastics, textiles, batteries, bicycles, aluminum products, mattresses, scholastic materials, etc). It i s clear that even poor small farmers can benefit from the regional markets ifsupported with quality production andbulking. 2.5.2 Import Sector Uganda has been importing a wide range o f commodities ranging from food products and simple manufactured household items to heavy machinery and equipment for industrial use. Import items can be broken down in major groups, namely (a) primary products (31% o f the total), and (b) manufactures (69%). Among the most important commodity items in the primary products are food imports (about 14%) and mining imports (14%). Among the manufactures, the most important import items are machinery/transport equipment (27%), chemicals (15%) and other semi-manufactures. The composition o f imports has not changed much over the last five years. The fact that Uganda is importing food in large quantities further underscores the importance o f enhancing agricultural sector performance. 2.6 Regional Integration 2.6.1The EastAfricanCommunity The Protocol establishing the EACU was signed inMarch 2004 and came into force on lSt 2005. January The EACU seeks to achieve a number o f objectives, including liberalization o f intra-regional trade in goods, promotion o f efficiency in production, enhancement o f cross-border trade and investment, promotion o f economic development, diversification and industrialization. Since the signing o f the cooperation agreement, the three countries have attempted to harmonize their fiscal and monetary policies and have signed a double-taxation arrangement, which also provides for joint measures to prevent tax evasion. Other achievements include pre- and post-budget consultations among the Finance Ministers, synchronization o f the budget day in the three countries, regular consultations among central banks, full convertibility o f the three currencies, cooperation in capital and securities regulation, andthe creation o f internal passports. 2.6.2 CommonMarket for EasternandSouthernAfrica The Common Market for Eastern and Southern Africa (COMESA) has become a Free Trade Area, with a market o f over 380 million people. Uganda has a good share o f this market and COMESA i s the second largest destination for Ugandan exports. Uganda's products are, however, becoming uncompetitive in this market because o f our delay to join the FTA where member countries offer Zero tariffs on a reciprocal basis. For example, Uganda's manufactured products in Rwanda, Burundi used to be competitive because o f the short distance from Uganda to these markets compared to Kenya. Such 45 advantage has been eroded by the imposition o f zero tariff o f Kenya's products under the FTA arrangement. Under the provisions of Article 4.l(a) of the COMESA Treaty, the member states undertook among others, to establish a Customs Union, abolish all non-tariff barriers to trade among themselves; establish a common external tariff; and co-operate in customs procedures and activities. Over the periodunder review, the following key programs were undertaken: .. Joint concessioning o f the Kenya and Uganda Railway networks reached advanced stage by opening bids inOctober 2005. Negotiations for establishment o f COMESA Common Investment Area (CCIA) were complete with UNCTAD providing technical assistance. .. Under the program, intellectual property rights assessment inthe region i s complete. Ugandahas ratified the Customs Bond Guarantee Agreement. Trade facilitation programs have been undertaken for example ASYCUDA* and a model One Stop Border Post is to be established at Malaba Border Post. Inthe agriculture sector, programs that enhance agricultural productivity and competitiveness have started under the Regional Agricultural Trade Expansion Support (RATES) project and Agricultural Market Promotion andRegional IntegrationProject (AMPRIP). 2.6.3 ACP-EUCotonouAgreement Under the African, Caribbean and Pacific and the European Union (ACP/EU) Cotonou Agreement, Uganda has enjoyed preferential market access to the European Union. The EUhas become the major destination of Uganda's exports, with a steady increase o f the value o fnon-traditional exports. This is a wealthy market with a higher income per capita income. With some other fifteen countries inthe East and Southern Africa (ESA) region, Uganda has been negotiating with the European Union under the Economic Partnership Agreements (EPAs) for greater European Market accessibility for her products. Government efforts are geared to achieve much more than market access to bring about development and poverty reduction through negotiations with EU under the EPA arrangement. Phase Io f negotiations for Economic Partnership Agreements (EPAs) between the EU andthe ACP group startedinSeptember 2002 andwas provisionally concluded byend o f September 2003. The main objective o f all-ACPEU Phase IEPA negotiations were to define the format, structure, and principles for the detailed negotiations particularly on common cross cutting issues. The main areas for negotiations included market access, services, agriculture and fisheries, trade-related issues, development co-operation and legal issues. In ajoint ACP-EU declaration adopted by the ACP-EU Ministerial meeting at end o f September 2003 bothparties expressed satisfaction with the outcome o f phase I 46 o f EPA negotiations and agreed to continue negotiations on a list o f outstanding issues at the ACP-EU wide level up to the first quarter o f 2004. 2.7 Main Emerging Issues Amidst the above achievements, a number o f issues have emerged across sectors over the period under review. 1. The average GDP growth rate o f 5.5% per annum is well below the target o f 7% required for poverty reduction. There is, therefore, a need to critically re-think the determinants o f pro-poor growth inUganda and address the salient issues. 2. The declining trend o f agricultural output has been one o f the major causes o f lower GDP performance. Inaddition, low agricultural output has also aggravated the volatility o f headline inflation. There is, therefore, a need to immediately and as a matter o f priority address the problems that have caused slower growth in agricultural output; especially the total reliance on rain-fed agriculture, by introducing irrigation schemes appropriately. 3. The rate o f growth o f Uganda's population is putting more pressure on land; through land fragmentation and on the environment in general, as forest reserves are being encroached into for settlement and swamps reclaimed for agriculture. There is, therefore, a need to improve awareness o f the dangers o f environmental degradation as well as firm actions to reduce population growth. 4. The main challenge to revenue mobilization has been the narrow tax base, arising mainly from structure o f the economy. A large section o f the economy is agricultural, contributing about 37.4% o f the GDP, and, to a large extent, subsistence innature. This has been worsened by the abolition o f GT in 2005/06 that was the main source o f local revenues. In addition, a substantial level of businesses in the country is informal and void o f proper financial records and accounts. Other challenges include: limitedtax handles; a poor tax paying culture; andtax administration. 5. Although there have been growth in deposits, total assets, and credit, the financial sector is still small and underdeveloped. As a percent o f GDP, private sector deposits and commercial banks' outstanding credit stood at around 15% and 7.5%, respectively, by the end o f June 2005. By virtue o f the short-term nature o f the bank deposits, credit is also limited to tenors below one year. While banks have been able to extend long-term loans partly funded through APEX lines o f credit channeled through Bank o f Uganda, institutions engaged in long term products like leasingand mortgaging are limited to only two providers. 6. Furthermore, financial intermediation is low and dominated by commercial banks, which are limited in coverage and have maintained high interest rate spreads, partlyon account o f highoperating costs. Measures to improve the coverage and efficiency o f the banking system include licensing microfinance institutions in line with the MDIAct. 7. The Uganda's Companies Act needs to be reformed to include the introduction o f a simple registration form and the abolition o f the requirement for lengthy Memoranda andArticles o f Association. Inaddition, there i s a need to reform the 47 Trade LicensingAct to improve access to licensing, especially by women and the poor. 8. The private sector should be sensitized and supported to focus on exploiting national, regional and international investment and market opportunities that exist under EAC, COMESA, EU,USA and China. 9. In the industrial sector and agro-processing, Uganda should focus on export- oriented investment by establishing Economic Processing Zones based on a Cluster Modelbasedon comparative advantage. 10. Environment is critical in ensuringproductivity and value addition which is the base of competitiveness. The critical variables include: demand conditions, related and supporting industries, factor (input) conditions and firm strategy and rivalry context. 11.There should be concerted efforts to ensure peace throughout the country and good political and corporate governance in order to attract more foreign investments. 48 Chapter 3: EnhancingProduction, Competitiveness and Incomes Traders going to the market 3.1 Introduction The main thrust o f Government policy since 2OOlI5 has been on increasing incomes o f the poor through higher agricultural growth and increased non-farm employment especially in the rural areas where the majority o f the poor live. With the coming into force o f the PEAP 2004, further efforts are geared towards intensifying agricultural production and productivity as a means o f raising household incomes through provision o fpublic goods and services that facilitate the farm and non-farm sectors. The rest o f the chapter reviews progress in improving agricultural production, food security, private sector competitiveness and employment. l5PEAP 2001 49 Major Achievements and Challenges Key achievements I) Exponentialgrowth inthe volume andvalue o fnon-traditional exports ii) Significant increaseinaccess to advisory services inthe NAADS districts iii) Close to 3,000 Ha o f forestry plantations have been established and the supply of qualitytree seeds has increased. iv) Number o f functioning Beach Management Units has increased from 100in2002 to 700presently. Key Challenges i) Widespread food insecurity in areas affected by conflict in north and north- easternUgandaresultinginhighmalnutrition. ii) Agricultural statistics remainhighlyinaccurate andunreliable iii) Keyinfrastructure-particularlyenergyandruralroads-toenableprivatesector development remains largelyinadequate iv) The slow growtho fthe crop sub-sector. v) Poorer households have less access to landand landlessnessis on the increase. vi) Highrate of environmental degradation that is negatively affecting agricultural productionandhousehold incomes. vii) Access to finance - especially long-term financing-remains a major constraint to fanners andprivate sector firms. viii) Widespread under-employment particularlyamongwomen andthe youth. ix) Low quality and quantity of science andtechnology inall sectors o fthe economy. 3.2 Outcome Performance Achievements16of the PEAPindicators over the last 3 years are summarized inTable 3.1. A number of positive outcomes have been registered in the marketing of agricultural products, formation o f Beach Management Units (BMUs), road rehabilitation and movement of goods by rail, although the achievements generally fall below the targets. Slow or no progress is noted in the growth of the agricultural sector and access to forest products and energy. l6The analysisis constrainedby the lack of targets insome sectors as well as reliable data onthe outcome 50 Table 3.1: Performanceinkey ou' ome indicator! for Pi1.ar2 - Performanceindicator Baseline Targe Actual 2002103 20071( 8 Achievements 200415 Increasedprivate sector competitiveness Private Investment as % of GDP 17% 21% Total export as YOGDP 12.1% 16.1% Growthrate o f agriculture 3.8% 1.8% Agricultureproduct marketed as % 20% 48% (crops) of total agriculture production 67% (livestock & livestock products) 90% (fish) Percentageof titled land 12% 17% Value of fish exnorts (US$ million) 88 143 Numberof functioning Beach 100 700 700 Management Units % of landunder forest cover 24Yo 27% Distance traveled by villagers to 0.73km 0.5km 7km(Northern firewood sources districts) Numberoftourists visiting Uganda 254,2 12 1,000,000 512,378 Roads ingood condition 75% 100% 80% national roads 60% district roads 20% urbanroads 10% community access roads % ofruralhouseholdsaccessing 3% 4% electricity Annual tomes of freight carried by 600,000 lmtomes 900,000 tomes rail tomes in 1999 Cumulative storage capacity for 13.lmm3 15.0mm5 13.7mm5 water for Droduction Increaseinirrigation areas 7,600 ha 8,500 ha % ofwetlands with sustainable 7.5% 20% managementplan Numberofclients served by MFIs 1.3m 51 3.3 Agricultural Productionand Food Security 3.3.1 Agricultureinthe nationaleconomy Agri~ulture'~continues to provide a significant share o f the Gross Domestic Product (Table 3.2), 85 per cent o f export earnings, 77 per cent o f total employment (UBoS, 2005[a]) and the bulk o f raw materials used by the mainly agricultural-based industrial sector. Inline with the structural transformation o f the economy, agricultural output as a proportion o f total GDP continues andwill continue to decline. Nevertheless, the current highfigure shows that the sector continues to make a keycontributionto the achievement o f sustained economic growth and the realization o f the PEAP objectives. It i s also a reflection o f the strong comparative advantage in agricultural production that Uganda continues to have. Table 3.2: Agriculture inthe economy, 2001 to 2004 (in current U.Shs. billions) Calendar Total Agricultural Agriculture's share of year GDP GDP the economy (%) 1999 7,998 3,065 38 2000 8,650 3,186 37 2001 9,319 3,134 34 2002 9,90 1 3,076 31 2003 11,667 3,889 33 2004 12,952 4,146 32 Source: Key Economic Indicators, 4th quarter 2001/02, Uganda Bureau of Statistics, July 2002; 55* Key Economic Indicators, 1st quarter 2004/05, Uganda Bureauof Statistics, December 2004; MoFPED, 2004 & 2005. Duringthe period under review, livestock andcash crops have shown the most consistent positive GDP growth rates in the sector, while the food crops sub-sector has lagged behind(Table 3.3). Previous monitoring reports highlighted the poor performance o f the agricultural sector and especially the crop sector with the ultimate result that 70 percent o f the people below the poverty line in 2003 were crop farmersI8. The relatively slow growth o f the crop sub-sector is partly attributable to prolongeddroughts insome periods, loss insoil fertility and highincidence o f pests and diseases insome parts o f the country, and a reduction in farm size and agriculture land'g. The factors constraining food crop production need to be addressed to rejuvenate the performance o f this sector as a means o f further enhancing household incomes and food security. l7 Throughout this paper, 'agriculture' i s takento include both crops and livestock (information onthe fisheries sub-sector can be found inSection3.3.3). U N H S 2002/03, Poverty Status Report 2003, UPPAP 2002. PEAP2004; LADDER study 2006, .UPPAP, 2002. 52 The performance o f the cash crops' sub-sector's GDP has mirrored closely the fortunes o f the coffee industry - low world prices particularly at the turn o f the century saw negative growth in2000/01, while the recent increase inprices has ledto a recovery. 1999/00 2000/01 2001/02 2002/03 2003/04 2004/05 Cash crops 7.0 -4.9 7.4 4.6 0.3 4.8 Food crops 6.1 6.2 3.2 1.2 1.5 0.7 Livestock 3.9 4.4 5.0 4.6 1.1 5.3 Total: 5.9 4.6 3.9 2.3 0.8 1.5 Source: Background to the Budget - fmancial year 2002/03, MFPED, June 2003; Key Economic Indicators, 4th quarter 2001/02, Uganda Bureau o f Statistics, July 2002; 55* Key Economic Indicators, 1st quarter 2004/05, Uganda Bureau o f Statistics, December 2004; Key Economic Indicators, 4th quarter 2004/05, Uganda Bureau o f Statistics, August, 2005 Source: MFPED, 2006 3.3.2 Crops Crops are the dominant source (70 per cent) o f rural household incomes, followed by non-farm activities (approximately one-quarter) and livestock - 5 per cent (IFPRI, 2003). Food crop production predominates, having contributed an average o f two-thirds o f agricultural GDP2' since 2001/02, while cash crops provided a further 11 per cent (UBOS, 2005[b) Approximately 42 per cent o f the sector's GDP is now derived from commodities produced for home consumption, the proportion having declined only slightly since the mid-nineties. Forty-eight per cent o f food crops (by value) are marketed, compared with two-thirds o f livestock and livestock products and almost 90 per cent o f fish. The degree o f integration o f households in the market varies considerably between Districts - with the share o f home produce intotal per capita consumption ranging from only 1.1per cent inKampala, to 49.7 per cent inKibaale(IFPRI, op. cit.). According to a recent survey (UBoS, 2004) beans are the most extensively grown crop21 -beingcultivatedon17percentofallcropplots-followedbycassavaalso 17percent, maize 14 per cent, sweet potatoes 12 per cent and bananas 11 per cent. By contrast, coffee is grown on only 3 per cent o f crop plots. Interms o f the contribution made to the national diet by the principal food crops, root crops provide 32 per cent o f calories (cassava 22 per cent, sweet potato 10 per cent), bananas 30 per cent, cereals 19 per cent, pulses 8 per cent, oil crops 4 per cent, and milk and meat 4 per cent (MAAIF et al., *'*' Which comprises contributions made by the crops, livestock, fisheries and forestry sub-sectors. Interms ofthe proportionoftotalplots underthe crop. Data onthe areas plantedunder eachcrop are not available. 53 1999). Nearly all agricultural output comes from smallholder farmers, with women being prominent. Tea and sugar cane, the bulk of which are produced on large estates, are virtually the only exceptions. However, no single crop dominates national crop output value Table 3.4 provides details o f the production o f "traditional" export crops during the period under review. Sugar production increased significantly over the same period - to 193,151 tonnes, from 133,851 tonnes in 2001. In order to enhance the quality and volumes o f the export crops, the Government is continuing to invest in value adding facilities. Table3.4: Productionof "traditional" cashcrops, 1999to 2004 I I volume I value I volume I value 1Volum I value 1volume I value 1 Source: UBoS, 2005[b]. 3.3.3 Livestock Up-to-date information on the livestock sub-sector is particularly scarce. Nevertheless, it contributed an average o f 13 per cent o f total agricultural GDP between 2001/02 and 2004/05 (UBOS, 2005[b]). Anecdotal evidence suggests that livestock husbandry is becoming increasingly common, with, for example, cattle ownership having increased from 12per cent o f rural households in 1992 to more than one-fifth in2000 - a trend that was common to all regions o f the country (MoFPED, ~ d . [ a ] ) ~It~ has been argued that . livestock are increasingly replacing coffee plantations as a major asset and source o f income for rural households - as a result o f both the fall in coffee prices and the depredations caused by Coffee Wilt Disease (Sserunkuuma, 2001). However, such an increase in both ownership and overall numbers i s not true for all socio-economic groups nor all parts o f the country. For example, civil disturbances 22 Volume figures relate to the procuremenharketing o f the crops which i s a reliable proxy for production (certainly more reliable than using export data, since the former figures are net o f local consumption- direct or for processing). Cotton figures are exports, since local `consumption' has beennegligible during these years. All value data refer to exports. 23The volume o fcoffee exports during the f r s t ten months o f2005 was 9 per cent downon the same months in2004. Invalue terms, exports were 39 per cent higher. 24 This phenomenonhasbeenattributedto ruralhouseholds now using cattle as a store o fwealth, in preference to the past practice o f usingcoffee plantations as their primary asset and source o f income. Coffee wilt disease has beenthe reason for this change. (Sserunkuuma, 2001) 54 combined with cattle rustling and disease have led to a dramatic decrease in livestock numbers innorthern Uganda since the mid-1980s; Gulu and Lira districts have lost over 45 per cent o f their total livestock mass since 1983, including 95 and 68 per cent o f their cattle, respectively (Action Against Hunger, 2005). Inorder to step upproductionandeasemarketingoflivestock andlivestock products, the Government is working with the private sector that has invested in the construction and improvement o f produce markets and fish landing sites and abattoirs; rehabilitation o f 170 livestock marketing facilities in20 districts inthe cattle corridor; construction o f 100 slaughter facilities; and setting livestock andmeat standards. 3.3.4 Food Security andNutrition Inspite of the generally food-secure status of the population, there continues to be problems o f malnutrition and pockets o f famine and hunger in the country. The prevailing levels o f childhood under- and mal-nutrition are high, accounting for 40 per cent o f all deaths o f children before the age o f five. Over 38 per cent o f children under 5 years o f age are stunted (with the rural population being more affected than the urban), 4 per cent wasted and 22.5 per cent underweight. All these indicators reflect either chronic or acute malnutrition. In addition, 10 per cent o f women are undernourished, while micro-nutrient deficiencies (particularly Vitamin A) are common (UDHS, 2000/2001; National Food & Nutrition Council, 2002). Causes o f this include inadequate food intake, ignorance, poverty, taboos andthe highprevalence o fHIV/AIDS. Nutritional problems are also widespread amongst people o f all ages inthose parts o f the north o f the country that are disrupted by the ongoing insecurity. Food insecurity is clearly a major feature among the population in those areas affected by the civil insecurity, in particular those living in Gulu, Kitgum, Pader and Lira Districts, and Karamoja region. Malnutrition rates remain significantly above the national average in all these areas. The number o f nutritionally vulnerable people amounts to more than 2 million at the present time, o f whom 1.4 million are internally-displaced persons living in camps inthe north (FEWS-NET, various). Inthe last few years, Ugandahas witnessed a worrying increase inthe incidence ofdiet- related, chronic, non-communicable diseases such as hypertension, obesity and diabetes, and heart problems. All these challenges suggest a need for Government to vigorously implement the Uganda Food and Nutrition Policy o f 2003 that aims at ensuring food security and adequate nutrition for all Ugandans. Among its key areas o f intervention are: enhancing food supply and accessibility; food processing, preservation, storage and marketing; andnutrition and enhanced quality control. Progress inpolicy implementation has been slow because o f the delays in approval o f the National Food and Nutrition Security Strategy by MAAIF and MOH and finalization andtabling o f the National Food and Nutrition Security Bill to Parliament. These processes need to be quickly expedited to enable effective implementation o fthe Policy. 55 3.3.5 KeyPolicyandInstitutionalReformsinthe Agricultural Sector Several reforms have been undertaken over the past 4 years to remove bottlenecks to implementation o f Government programmes and enhance agricultural performance (Box 3A). The key challenges are the: Lack o f reliable agricultural statistical data. There is urgent need to conduct the planned agriculture and livestock census and improve regular data collection systems within MAAIF. Slow restructuring o f MAAIF, which has slowed down programme implementation in the sector, not only at the national but also at the local government level where guidance is required from the ministry in executing agricultural programmes. 3.4 Environment and Natural Resource Management Environment is key determinant o f human well-being and thus enhancing its quality and quantity and its sustainable management is critical to the realization o f many o f the country's development goals. As environmental quality deteriorates, it is the poorer segments o f society that are affected the most, since their livelihoods and welfare are highlydependent uponthe environment. 3.4.1 Land Landaccess andlandlessness Previous monitoring efforts in the 2002 participatory poverty assessment involving 60 villages in 12 districts highlighted the problem o f limited access to landlandshortage as one o f the most important causes o f poverty in Uganda, both in rural and urban areas. Between 1993 and 2001, land ownership decreased significantly among the middle income and poorest households as this important resource increasingly concentrated in the hands o fthe Recent evidence suggests that this trend o f events has continued to worsen with poorer households having much smaller land sizes and increasingly becoming landless. The rural livelihoods study conducted recently in m a l e , Kamuli and Mubende using panel data26shows that land access in rural Uganda is shrinking especially in densely settled farming areas. The typical farm sizes in 2005 were around 0.5-1.0 H a compared to an average o f 0.75-1.5 H a in 2001 and 1.5-2.0 H a ten years ago. Close to 40 percent o f households inthe sampled districts owned less than 0.5 H a (Table3.5). The decline in farm size has been mainly experienced by households with smaller land size suggesting increasinginequality inaccess to landespecially by the poorer households 25MFPED,2002. 26FrankElliset al, 2006. 56 Box 3A: RecentReformsinthe AgriculturalSector A number o f policies and strategiesrelating to different aspects of the secto?' have been finalised in the past three years, including the National Fisheries Policy, the National Livestock Development Strategy, the National Agricultural Research Policy, the National Tea Development Policy, the Uganda Food and Nutrition Policy and the National Meat Policy. The National Soils Policy is about to be completed. All these policies and strategies are being implemented in the framework o f the Plan for the Modernisation o f Agriculture (PMA). The PMA Evaluation: A detailed evaluation of the P M A in mid-2005 concluded that the basic conceptualisation o f the Plan - that rural poverty i s most effectively addressedthrough promoting the commercialisationo f agriculture and, inparticular, serving as a co-ordinating framework for the provision of support services and public goods in rural areas - remains valid (Oxford Policy Management, 2005). At the same time, however, the study noted, that there has been confusion over the function o f the PMA, highly uneven roll-out of pillars reducing impact, weak coordination at the local government level and insufficient emphasis on some of the identified constraints and weaknesses in implementation that must all be addressed. MAAZF Development Strategy and Investment Plan: The Ministry of Agriculture, Animal Industry and Fisheries (MAAIF) finalised a Development Strategy and Investment Plan (MDS&IP) in late-2005 that highlights the principal public sector investment activities required for agriculture over the medium term. The MDS&IP details how the goals and priorities for agricultural transformation are translated into a plan for public sector activities inthe agricultural sector Rural Development Strategy: In early-2005, the Cabinet agreed on a Rural Development Strategy, which seeks to increase rural household incomes, both through an expansion inthe productivity and production of key agricultural commodities and by facilitating their efficient marketing. Key interventions include support to farmers' groups such as through provision o f input packages, establishment of a parish-level agricultural and social statistics-gathering system and the rehabilitation of three major irrigation schemes. The role of government is to provide both financial and technical support, with the supply of inputs remaining the responsibility o f the private sector. Agricultural Zoning: A Plan for Zonal Agricultural Production, Processing and Marketing was finalized in 2004 with the aim o f addressing the problem of low household incomes by increasing the production, value and profitability o f agricultural production. The country has been zoned into areas o f agricultural and related socio-ecological competitive and comparative advantage, with emphasis on exportable, highvalue agricultural products. MAAZF Restructuring: MAAIF completed its core functional analysis in 2001 but implementation of the main recommendation o f restructuring MAAIF has not yet been implemented. Delays in implementingthe new organization structure cripple the work of the ministry and reduce progress in PMA implementation. Government needs urgently to expedite this restructuringprocess. 27See Footnote 2. 57 Table 3.5: HouseholdDistributionbyLandArea Owned(%), 2001 and2005 Source: Sample surveys o f 266 households in9 villages conducted 2001 and2005 inFrankEllis et al, 2006. Another study conducted in4 districts (Kyenjojo, Nakasongola, Kibale and Gulu) chosen from the four regions o f the country during 200528 indicated that the majority o f respondents (85 percent) do not own the land on which they stay. The reasons for landlessness varied between districts, although the main one was associated with the lack o f proper land regulations and effective land management structures. Other reasons included the way the land is managed and allocated, corruption, poor planning and lack o f capacity to settle landconflicts. Landlessness and conflicts were noted to be acute inKibaale district due to the problem o f a large number o f absentee land lords and the continuous exodus and resettlement o f people from other parts o f the country. Internal displacement and the refugee factor have caused landlessness in Gulu and Kyenjojo while Nakasongola also suffers problems o f absentee landlords. The widespread lack o f access to adequate land has had negative impacts on the production potential and social welfare o f a significant number o f households in Uganda. Lack o f legal ownership o f land has left much land un or under- utilised with the majority o f households engaging in short-term investments with low returns. Inorder to address these challenges, the necessary land regulations need to be put in place and the land management processes strengthened. This will require further improving the land records at all levels o f Government and enabling people to easily access this information. The factors that are responsible for makingpeople landless need to be filly investigated and addressed and the Land Fund should be fully operatonalized to enable the poor access land. LandTitling Overall, only about 15% o f land is in Uganda i s formally registered. A gender baseline survey for the Land Sector Strategic Investment Plan29reveals that the proportion o f land parcels under title (leasehold, freehold and mailo) is only 7.1% among the respondents. This i s insharp contrast to 81.3% o frespondents who have no documentary evidence or a 28 *'MWLE, 2005a. MWLEDraftReport, 2005 58 mere sale agreement. Nationally, only a few women (7%) are registered land owners. A proposed amendment to the Land Act, contained in the Domestic Relations Bill, would make spouses automatic co-owners o f family land. As it stands, the Land Act gives some protection to spouses, with the requirement that the consent o f the spouse must be obtained for the sale or mortgage o f landwhere-from they derive sustenance. To this effect, government needs to ensure that all land in Uganda, irrespective o f land tenure system, is registered. Further, the protection o f women's land rights needs to be strengthened within the legal framework, and it is essential that attendant pending legislations like the Domestic Relations Bill are enacted into law. Pragmatic implementation o f the LSSP and finalization o f the LandUse Policy is essential. The LandFund The LandFundwas established in 1998 to resettle landless people, to enable Government purchase or acquire registered land and assist poor people acquire titles. Although implementation o f the Land Fund has commenced, it i s still facing many challenges as evidenced in the recent study inKyenjojo, Nakasongola, Kibale and Gu1u3Othat need to be addressed: The fee o f 30,000-40,000 shs paid per acre as compensation is so small inrelation to the size andvalue o f land. This has hampered the Government process to acquire land and also deterred the absentee landlords from selling their mailo land rights to Government, The process o f the Land Fundand that o f compensation is so slow and cumbersome such that the impact is not felt on the ground. 0 Fundingis limitedandthis hashampered management andoutreacho fthe Fund. Lack o ftransparency and information inthe management of the Fund Limited outreach to the intended beneficiaries such as the internally displaced persons. 3.4.2 Forestry Forestry contributes 6% o f Uganda's GDP, although this figure excludes aesthetic and environmental values o f forests. Forests provide both products and services that are key insustaining livelihoods, particularlyofthe ruralpoor. Trends The trend in loss o f forest cover clearly shows an accelerated rate o f deforestation in Uganda (Figure 3.1). The National Biomass Study Project (2003) has projected that per capita forest area will decline from 0.3 H a in 1991 to 0.1 H a in2025, ifno efforts to curb and reverse the situation are undertaken. About 50 percent o f all the Tropical High Forests on private landi s degraded, while 15 percent inforest reserves is degraded. Given 30MWLE, 2005a. 59 that most o f the forest loss takes place on private lands, it is more than ever necessary to protect the community forest reserves. Recent estimates suggest that at a low rate o f deforestation, all privately or customarily-owned forests and woodlands could be converted within 62 years; and with a higher rate o f deforestation, the conversion time periodwould be much shorter - 17years (UNDP, 2005). Deforestation is mainly due to encroachment on protected areas such as Central Forest Reserves, conversion o f forests into crop and grazing land, charcoal burning and over- harvesting o f forest resources, high population growth, ineffective law enforcement sometimes due political interference and degazetment o f protected areas (NFA Annual Report, 2005). Increased deforestation has a direct impact on the livelihoods o f the poor inrelation to declining firewood sources, rainfall regime, soil erosion control andrelated environmental services thus exacerbating the status o f the poor. Figure 3.1: Uganda's Forest cover 1980-2005 12,000 10,000 -Bg-8,000 8,000 4 1 9 4,000 2,000 0 1890 1990 2000 2005 Year I Source: NFA and FA0 data; National Biomass Study data; Extrapolationsbasedon National Biomass Study data supplemented by satellite imageries of 2004. The distance travelled to collect firewood especially by women and children has increased between 2002 and 2005. In Lira and Gulu districts, it has increased from 0.9 kmto 7 kmrequiring 8 hours to collect a head load o f approximately 0.25m3 equivalent to 2000 shillings. This head load lasts a family o f 4 for only 3 days of 2 meals per day (World FoodProgramme, 2005). Low firewood availability results into poor quality food intake due to reduced energy for cooking. The districts inthe North and North East have been the most affected by firewood scarcity. Government efforts need to be directed to curbing this negative trend and promoting widespread tree plantingheplanting programmes especially inthe most affected areas. 60 Policy and institutional changes A number o f changes have taken place in the forest sector since 2002. The National Forestry and the Tree Planting Act came into force in June 2003. This provided a legal framework for the divestiture o f the Forestry Department, culminating into the establishment o f the Forestry InspectionDivision (2003), the National Forestry Authority (2004) and the District Forestry Services (2005). As part o f the promotion o f investment in forestry development by the private sector, a Sawlog Production Grant Scheme was established in 2003. The progress made in programme implementation in the forestry sector is summarised inBox 3B. 3.4.3 Fisheries The fish sector continues to play a key role in national development through generation o f export earnings for the nation and income and food especially for households residing near the water bodies. The total tonnage o f fish exports has increased from 25,000 metric tonnes in2003/04 valued at US$ 88 million to 39,000 tonnes in 2005 earning the country US$ 143 million. The increase in export volumes is directly linked with increased production mainly on the natural water bodies and to some extent commercial fish farms and improved management o f fisheries bythe Fisheries Department. The Department has set up community based Beach Management Units (BMUs) to strengthen the management role and its envisaged that once their capacity is fully built, their contribution to increase fish production will be enormous. The growth innumber o f BMUs on all major water bodies has beentremendous from 100 recorded in 2003/04 to 700 by end o f January 2006. The BMU arrangement i s very pro- poor as the communities, through self-management o f fisheries, respond to income generating activities and manage the fishery in a sustainable manner. The operations o f BMUs however are constrained by financing and capacity. Financing options for BMUs exist but there are still being affectedby local government regulations which do not allow BMUs to win tenders where they exist. They could use profits from tendering to finance their activities o f fisheries enforcement, data collection and advisory services. Once these options are explored, BMUs will be more effective and self financing. The capacity o f most BMUs is also not developed to optimum levels. The export price for fish is on a rising trend and export volumes are projectedto increase over the medium term (Table 3.6). 61 Box 3B: Progressinprogrammeimplementationinthe ForestrySector Seed production and multiplication: Under the management o f National Forestry Authority, the National Tree Seed Centre has increased the supply o f quality tree seeds between 2003 and 2005. The sale of tree seeds increased from about 800 Kg in the year 2003104 to over 2,000 Kg in 2004/05. The capacity o f the tree nursery has been expanded from 70,000 to about 1,000,000 seedlings annually, with promising potential to expand further. In total, NFA's nurseries countrywide produced 3.8 million seedlings in 2004/05 (NFAAnnual Report, 2005). District Forestry Services (DFS): Recruitment of District forestry staff has beenundertaken in56 districts existingas of2005. However, the DFSis not yet fully functional dueto limited financial and humanresource capacity. Private Sector Development: 2,900 hectares of forestry plantations have been established valued at 3-48 billion Shillings. Fundingremains a constraint for establishing good quality timber plantations. Establishment of the National Tree will go a long way in providing the needed funds. The SawlogProductionGrant Scheme fund was established to promote private sector commercial tree planting for timber. For every hectare o f good quality trees planted Ushs 600,000 is paid retrospectivelyover 2 - 3 years. Over 40 large scale clients across the country are signed up on the scheme, 30 have plantedtrees equivalent to 1,900 hectares worth 2.28 Billion Shillings. The major constraints are lack o f skills, inadequate capital, access to bank loans and incentives to investment given the long-term nature of forestry business enterprises. The National Forestry Authority introduced competitive bidding in the sale of round wood inforest plantations andraised 3.3 Billion Shillingsinrevenue. Urban Authorities are promoting tree growing inurban areas. Kampala, Entebbe, Mukono, h a , Nebbiurban authorities are among those that have successfully introduced tree planting programmes. Forestry Research: Through the District Agricultural Training and Information Centres (DATIC), FORRI continues to provide information, training and demonstration services to farmers. Fast growing clonal varieties o f eucalyptus are being tried at various centres in the country, incollaborationwith the communities. Forestry Education - The Faculty o f Forestry and Nature Conservation at Makerere Universityand Nyabyeya Forestry Collegehave continuedto provide professional training in forestry to meet professional market demands. Field based training sessions have been organised for privatetree planters by the Sawlog Production Grant Scheme. Priorities in medium term: Strengtheningthe ForestryInspectionDivision; operationalizing the DistrictForestry Services; finalising and implementingthe ForestryRegulations; securing financial sustainability for the National Forestry Authority; promoting commercial forest plantation and industrial establishment; supporting tree improvement and seed source development; supporting the restoration o f the integrity o f natural forests; expanding the Sawlog Production Scheme; establishing the National Tree Fund; securing funding for biomass monitoring and mapping; supporting collaborative forestry management initiatives for poverty eradication andundertakinga comprehensive valuation o f the forest sector. 62 Table 3.6: Trendsinfishtrade Actual I Projected 2002 ~..~ 2003 2004 2005 2006 2007 ~~~~ ~~~ Volume of Catch(000 tonnes) 222 242 249 416 721 1,665 Domestic Consumption (000 tones) 190 209 210 366 649 1,560 Regional Exports (000 tones) 6.88 7.77 8.79 10.98 15.92 23.09 International Exports (000 tones) 25.2 25.1 29.8 38.9 56 82 ExportVolumes(000 metric tones) Regional exports 6.88 7.77 8.79 10.98 15.92 23.09 International exports 25 25 30 39 56 82 Processing ratio (kgraw materiayfillet) 2.5:l 2.5:O 2.5:l 2.5: 1 2.5:l 2.5: 1 Export Price(fob) (US$/&) Regional exports 1.34 1.53 1.63 1.71 1.80 1.89 International exports 3-48 3 3.416 3.685 3.931 4.177 Exportearnings(US$million) Regional Exports 9.2 11.9 14.3 18.8 28.6 43.6 Regional exports share international exports 11% 14% 14% 13% 13% 13% Intirnationai exports 87.6 86.4 101.8 143.2 221.6 341.4 Source: Fisheries Department Records Anecdotal evidence from the Fisheries Department suggests that the proportion o f income received by fishermen and boat owners has increased significantly over the past 3-4 years mainly due to the favourable prices and increasing volumes. The key challenge is for both Government and non-governmental organisations to guide fishing communities to translate the good returns from fishing to investments that can improve their welfare on a sustainable basis. Uganda has made a big step in improving the quality o f fish and fish products for both domestic and international market. Plans are underway to construct 120 landing sites to standard levels for handling fish for both domestic and international market. Further boosting production and the quality o f fish as well the growth o f the fisheries sector will require action to address the following challenges and issues, as identified by the Fisheries Department: reducing the catch o f immature fish that currently accounts for 40 percent o f total catches. stopping illegal, unregulated and unrecorded fish catches that account for 30 percent o fthe current catches protecting fish breeding areas o fwhich currently, 10percent o f the catches is lost. curbing the increasing deterioration o f fish quality and safety increasing fish production from valley dams and tanks, minor lakes, fish cage farms and commercial fish farms. maintaining and guaranteeing fish quality assurance and safety for export strengthening the capacity and effectiveness o f fisheries management institutions such as the upcoming Uganda Fisheries Authority andthe BeachManagement Units strengthening Monitoring Control and Surveillanceboth on water andon land 63 Addressing these challenges necessitates Government to complete and operationalise the reforms that have been initiated aimed at enhancing the fisheries policy and institutional framework. These include the new Fisheries Policy (2004) and the Fisheries Bill (2005) that is before Cabinet. The Fisheries Bill contains the institutional reforms that are necessary to address the main impediments to fish production. Important among these i s the establishment o f the Fisheries Authority and central and community fisheries management structures for strengthening fisheries management to respond to poverty and stimulating economic growth. It i s critical that this Bill i s quickly passed by Parliament to enable implementation o f the reforms to commence. 3.4.4 Wildlife andTourism The promotion o f Uganda as a tourist destination and the proper management o f wildlife and cultural resources have great potential in bringing in additional income into the household, community and national economy. The number o f tourist arrivals has been on an increasing trend from the 205,287 recorded in2001 to 512,378 during 2004/053'. The largest number o f tourists originate from Africa, followed by Europe, America, Asia and other regions. The country, however, is still far from achieving its target o f attracting one million tourists annually that are projectedto bringintotal earnings o fUS$1 billion (each tourist spends on average US$l,OOO). There also other challenges relating to the need to expand and improve infrastructure, accommodation and transport facilities to be able to accommodate the tourist inflows. Several legal and policy reforms are taking place to enhance performance inthe Wildlife and Tourism sector. The outdated Wildlife Act has beenreviewed and efforts to prepare the new Wildlife Act have commenced. Regulations to ensure that international trade in endangered species is properly regulated is before Cabinet. The Tourism Bill i s before parliament to enable to full implementation o f the tourism policy. The Uganda Wildlife Authority prepared a five year strategic planfor 2002-2007. 3.4.5 Minerals Uganda has a variety o f mineral deposits occurring in the different parts o f the country including: copper, cobalt, gold, beryl, bismuth, columbite-tantalite, phosphate, tin, wolfram, clays, glass-sand, feldspar, limestone andmarble. Not much i s known about the nature and quantity o f most o f these minerals as they have not been yet mapped and the sector remains largely under-developed. Inthe past decades, mining activities have been governed by the Mining Act o f 1964 that i s outdated inmanyrespects. Inorder to stimulate investments inthis sector, the Government put inplace a Mineral Policy in2001. This Policy promotes private sector participation inmineral development, aims at strengthening local capacity and improve artisanal and small-scale mining. Inits early stages o f implementation, operationalisation o f this policy has been rather difficult due to the absence o f an enabling regulatory framework. With the completion o f the 31TourismDevelopmentDivisionBFP 2006/07. 64 Mining Regulations, the Mining Act 2003 was operationalised in December 2004 thus replacing the MiningAct o f 1964. As a consequence o f the improvements in regulatory and investment climate, mineral production and value increased four-fold in2004 compared to the 2003 figures. In2004, the minerals produced were worth UGX 86.4 billions as compared UGX 21.2 billions in 2003. The rise in production was largely associated with the good world market for vermiculite, gold and cobalt; the reopening o f the Kasese Cobalt processingplant that has led to increased production o f 65 tons cobalt cathode per month; the increased demand for cement and the installation o f a new machinery by Tororo Cement i n d ~ s t r i e s ~ ~ . With support from a number o f development partners, the Government has put inplace a Mineral Sector Development Programme to address the key challenges in the sector and promote increased sector investments. The following are some o f the priority intervention areas inthe medium term: e Institutional strengthening andhumanresource development; e Compilation o f geological and related geo-information including establishment of information systems and geological maps; e Promotion o fprivate investment inmineral exploration and mine development e Support to the development o f small-scale mininginrural areas. e Capacity building, institutional andregulatory reform e Geothermal exploration and earthquake monitoring 3.4.6 Water The availability o f adequate, clean and safe water to meet the needs o f Uganda's population now and in the future is considered as a major priority by the Government. Recent studies suggest that Uganda's environmental quality is declining. Of concern in the water sector inparticular i s the declining water quantity and reduced storage o f Lake Victoria, the largest fresh water body in Uganda as well as in Africa. Limited rains in recent years have resulted indrastic falling o f lake levels. Increased outflows at the Owen Falls dam for power generation resulted in a further fall in lake levels by about 0.34 m between 2001 and 200433. Other concerns relate to the fast growing industrial sector - especially the fishing and tourism sectors - that require abundant supplies o f good quality water but at the same time discharge vast quantities o fwaste inthe water bodies. The country's socio-economic development calls for a mechanism for pollution control to deal with emerging problems including: Organic andchemical pollution o f Lake Victoria and the Nile Pollutionbytoxic metals and other hazardous chemicals from Kilembe mines Widespread corrosiveness o f groundwater 32MEMD, 2004. 33MWLE, 2005 65 Localized pesticide contamination from crop protection, ticks control and vector control. A Water Permits System has been introducedto regulate andmonitor the exploitation o f Uganda's water resources. It is intended to protect the environment and water resources from being polluted through enforcement o f permits for water abstraction, waste water discharge, bore hole drilling and construction o f hydraulic works. Both the Water Resources Management sub-sector strategy and the National Water Quality Management Strategy have been completed and are soon to be implemented to deal with many o f the emerging challenges. With regardto the Water for Production sub-sector, the main outstanding challenge noted in the 2003 Poverty Status Report was the lack of a policy and strategic plan for this sector. However, since then the Water for Production reform study was completed in 2004 which culminated into the preparation o f the Water for Production Strategy and Investment Plan (2006-2015) that i s awaiting approval by Cabinet. Implementation o f the strategy is expected to commence during 2006. The cumulative water storage to date is estimated at 13.7 million cubic meters. There has been increased access to water for livestock. About 45.7 percent o f the livestock inthe country have easy access to water as o f 2005, a significant rise from 39.6 percent reported in 2002. Provision o f livestock water facilities (dams and valley tanks) has concentrated in the water stressed areas o f Karamoja, Nakasongola, Luweero, Masindi, Mbarara, Sembabule and Rakai districts. 3.4.7 Wetlands Wetlands in Uganda cover almost 30,000 km2 (13%) o f the total area of the country. They provide considerable ecological, social and economic values and benefits. Estimation o f wetland value i s difficult but attempts have been made in the recent past. Examples of attempts include a valuation o f the services provided by the Nakivubo wetland in Kampala: US$ 1.7 million a year. Most o f this value is attributed to water treatment and purification services. In addition approximately US$ 100,000 is estimated to accrue from wetland goods andproducts through crop cultivation, papyrus harvesting, brick making, and fish farming. Inrural areas, households engaged inpapyrus harvesting are estimated to be deriving as much as US$200 a year from their wetland activities. But these benefits are small compared with the value o f the role wetlands' play in water supply. Approximately five million people depend directly on wetlands for their water supply. Using very conservative figures for daily consumption, this means at least 50 million litres a day. At commercial prices for water inrural areas, this amounts to at least US$25 million a year (Wetland Department data). Progress has been registered in a number o f areas relating to prudent planning and management o f wetlands inUganda: 1. Inventories o f all wetlands inUganda have been completed. 11. * . The National Wetlands Information system is now inplace 66 ... 111. 69 districts have been supported in the development and implementation o f district wetland actionplans, through PAF; iv. A draft wetland resourcesbillhas beencompleted v. Two wetland sites have been designated to be o f international importance vi. Government has developed and disseminated resource use guidelines to assist communities to harness the natural resources in wetlands on a sustainable basis (e.g. Compliance Monitoring, Edge gardening, Paddy rice cultivation, Wetlands andthe law) vii. Support i s being extended for the development and implementation o f community based wetland management plans; The following are the main challenges that the Government needs to deal with now and inthemediumterm: Institutional sustainability: ensuring that institutional arrangements that are established - with donor assistance - are not only adequate to the task, but can also be maintained sustainably; Ownership, user rights and access: clarifying and resolving issues o f ownership o f bothwetlands, their products andtheir functions, including obligations with respect to management and use, and questions o f compensation; District capacity: developing managerial, technical, and logistic capability at district level, along with will to mobilise and commit the necessary resources; 0 Community management: proving the validity o f the premise that management o f wetlands - including regulation of use and administration o f regulatory systems and procedures - can be delegated and entrusted to local communities'; Protection o f Vital Wetlands 0 Ensuring that sufficient financing is available to implement the Wetland Sector Strategic Planinthe immediate and long-term future. 3.4.8 EnvironmentManagement Uganda's prospects for development in the foreseeable future will largely depend on the prudent management o f the country's rich environment and natural resource base. The country continues to experience serious landdegradation, deforestation, encroachment on hilly and mountainous areas, wetlands, river banks and lakeshores, over fishing, unsustainable harvesting o f timber, water and air pollution. The costs o f environmental degradation to the country's economy are substantial, conservatively estimated at 4 -12% o f the GDP, due primarily to soil erosion (Converey, 1992 Slade and Weitz (1991). However, recent estimates o f costs o f natural resource degradation inthe country put the costs at 17% o f GDP per year o f which 6% consists o f deforestation and 11% is constitutedby soil degradation (Yaron and Moyini, 2003). The value of soil nutrient loss is estimated at U S $ 625 million per annum (UNDP, 2005). Information from the health sector suggests that over 90 percent o f the disease burden in Uganda is associated with the poor state o f the environment. Environmental hazards such as land slides, drought and floods that commonly occur in many parts o f the country are 67 linked primarily to the mismanagement of the environment and natural resource base. Improvingenvironment management inthe country is therefore essential to reducingthe negative impacts of environmental hazards on the economy in general and the poor in particular. Progress has been made in environmental management in a number of areas (Box 3C). Box 3C: Environmental Management Implementation Status T o strengthen capacity for environmental management, enforcement and compliance, the following have been achieved through the guidance o f the National Environment Management Authority (NEMA): i. 164EnvironmentInspectorshavebeenrecruited,trainedandequipped; ii. Newregulationsandstandardsforenvironmentalmanagementhavebeenputinplace. ... 111. The most environmentpolluting industries are now fully environmentally compliant. iv. 14 districts have been supported to integrate environment plans into their district development plans. District and Local Environment Committees at sub-county level have been operationalised inthe focal districts. v. Guidelines for EL4in 8 key sectors have been developed and issued by NEMA. vi. Policies o f Lead Agencies have been aligned to ensure that they undertake all their roles in environmental management, and at least 15 government institutions have mainstreamed environmentalintheir policies and strategies. Key challenges/future areas of action 0 Ensuring that the growth and poverty reduction programmes do not unduly degrade the environment andnatural resource base. 0 Monitoring and enforcement o f compliance to established environmental laws, regulations and standards. 0 Buildingcapacity at all levelsto cope with existing and emergingenvironmental challenges. 0 Attracting adequate public and private resources for environmentalmanagement. 0 Mainstreaming environmental concerns into the country's development and poverty reduction strategies and budgets. Restoration o f degraded ecosystems. 3.5 Service deliveryfor agricultureand rural development 3.5.1 Agricultural Extension Services Since 2001, the Government has been gradually implementing and expanding the National Agricultural Advisory Services (NAADS) programme to replace the unified extension system that had been in operation since the late 1980s. The NAADS programme i s an innovative public-private agricultural extension service delivery approach. Whereas it is still too early to assess the impact of NAADS, preliminary 68 assessments show that it is working better than the traditional extension system in many aspects. Progress in programme implementation and the key outcomes is summarized in Box 3D. Box 3D: Agricultural Advisory Services Policy Objective: To establish a decentralized, farmer-owned and private sector serviced extensiondelivery system, particularly targeting the poor and women. Expected outcomes I. Increasedaccess and utilisation of agricultural advisory services by farming households; ii. Increased adoption o f more profitable agricultural technologies and farm management ... practices by farm households HI. Increased farm productivity and incomes Status of implementation D The NAADS programme has expanded from 100 sub-counties in 16 districts in 2002103 to 344 sub-counties in37 districts in2005106. D Approximately 12,000 registered farmer groups were participating in the programme by 2004105, having risen sharply from about 5,000 during 2002103. Women comprised about 53% of the group members. By the end of 2004105, 393,000 farm households were estimated to be participating in the programme receiving services in the form of institutional development, technology demonstration, or agricultural advisory services. Outcome 0 Increased farmer empowerment in terms of demand for services, decision making in enterprise selection, management of technology demonstration sites and participating in demonstrations and training (NAADS Baseline Survey, 2004; Adipala et al, 2005; Benin et al, 2005). 0 Access to advisory services has increased inthe NAADSdistricts butremains low nationally. 0 Extension visits were less intense in western and eastern Uganda compared to the northern and central regions. This might be possibly explained by the relatively larger farming community in western and eastern region requiring extension services as compared to the other regions, taking the population sizes into consideration. 0 Reduction inlosses o f livestock andpoultry due to preventable diseases(Frank Ellis, 2006). Challenges 0 Budget limitations 0 Planned "delayering" o f agricultural extension workers that was meant to increasethe pool of competent private sector service providers has not taken place 0 Farmers lack sufficient capital and access to credit facilities. 69 Access and utilization of extension services The findings o f the NSDS conducted countrywide indicate that only about 14 percent o f the households had been visited by an extension worker in 2004 compared to about 29 percent reported in the 2000 NSDS. Visits by extension workers therefore halved between 2000 and 2004 according to the two surveys. The situation differed across regions (Figure 3.2). Annex I1shows the households' level o f satisfactionwith extension services by district. Where services are available, the farmers are generally satisfied with the quality o f extension services, particularly those offered by the Government officials and NGOs/CBOs. The quality o f Government extension services was rated as good for both crop and animal husbandry but poor for fish farming. Efforts must therefore also focus on improving extension services for fish farming. These findings are collaborated by a rural livelihoods study conducted in 9 villages in m a l e , Kamuli and Mubende that found that access to agricultural advice had improved significantly between 2001 and 2005 in the 4 villages benefiting from NAADS while there was no change or deterioration in extension service in the non-NAADS villages. The situation o f widespread dissatisfaction with veterinary services experienced in 2001 had completely reversed as private livestock service providers are now more accessible as long as farmers' groups pay for the service. Loss o f livestock and poultry due to preventable diseases was reported to be on a declining trend. A mixed picture was however reported on crop pests and diseases - for example, farmers the cassava mosaic virus was no longer a problem largely due to the spread o f disease resistant cultivars while the incidence o fbananawilt remains high34. Fig 3.2: Households visited by ExtensionWorkers by Region in 2004 Percentage Central Eastern Northern Western Total Region Source: NSDS, 2005 34Frank Ellis et al, 2006. 70 The findings suggest that although access and utilization o f extension services remains low countrywide, there are improvements in service delivery and outcomes in districts that are covered by the NAADS programme. There is a need therefore to deepen and roll out NAADS inthe unservedareas especially targeting the poor. Inorder to improve the delivery ofextensionservices inthe country, the constraints faced by agricultural extension workers must be dealt with. The most serious constraints reported and ranked by the extension workers are inadequate hnding (30 percent) and inadequate facilities (20 percent). Other serious constraints included delayed funds (16 percent), long distances to farmers (7 percent) and inadequate staff (6.6 percent). Insecuritywas a major concern for service providers inNorthern Uganda. Table 3.7 shows the distance that households cover in order to reach the source o f extension service. Close to a half o f households that received extension services reported to be within 5km reach while more than 20 percent were located more than l O k m away, with those infish farmingbeingmost disadvantaged. Extension Service or = lkm lkm-5km 5km-1Okm >10km Total Crop Husbandry 13.0 41.3 20.3 25.4 100.0 Animal Husbandry 10.7 45.9 24.2 19.2 100.0 FishFarming 9.0 36.4 15.8 38.8 100.0 Other 16.9 24.8 35.0 23.3 100.0 Source: NSDS2004 3.5.2 Agricultural Research and Technology Development In2002,theGovernmentcarriedout acomprehensivereviewoftheNationalAgricultural Research System (NARS). Arising from the review, a new approach focusing on creating a more decentralised and demand-led NARS has been adopted. To operationalize this approach, a National Agricultural Research Policy was produced and approved by Government in 2003. The implementation o f the policy required a new legal framework, and in2005, a National Agricultural Research Act was passed. Other important developments include the following: A research strategy for NARS covering the period2003-2010was produced; NARO has increased its outreach activities and these have resulted in the rehabilitation o f a number o f agricultural research and development centres in other parts o f the country. They include Abi in h a ; Kachwekano in Kabale; Mbarara Centre inMbarara; Mukono Centre inMukono; BulindiinHoima and Ngetta inLira. There is also more involvement o f women and farmers in the governing structures o f the NARS inorder to make the system more needs based. Plan are underway to pilot the Competitive Grant System and establish an Agricultural Research Trust Fund. 71 3.5.3 Energy Energy provision i s central to the socio-economic and rural development o f the country through its support to productive activities and facilitation o f investments in industry, commerce and agriculture, among many other sectors. Status of the energy sector The Government o f Uganda has successfully implemented several reforms aimed at de- monopolising the power sector andmeetingthe energy demands o f the country (Box 3E). Table 3.8 provides the power generation capacity trends duringthe past 5 years. Energy Source Capacity/Generation (MW)* 2000 2001 2002 2003 2004 2005 Owen Falls 260 260 300 265 220 215 Thermal 3 3 3 3 3 53 Total 263 263 303 268 223 265 The main challenge facing the energy sector is the severe power shortage arising the reduced generation capacity due to the prolonged drought andthe increased demand. This has had severe negative consequences on all sectors o f the economy that rely heavily on power as a major input in the production process. Below is an illustration o f the impact created bypower shortages inthe capital city. 72 Box 3E: Energy Policy goal and target: To meet the energy needs o f the Ugandan population for social and xonomic development in an environmentally sustainable manner. The target of the Rural 3lectrification Strategy and Plan-RESP (2001-2010) i s to increase rural electricity access from 1% in 2001 to 10% by 2010. Medium termpriorities To put inplace and implement policies and laws that are favourable to private investment and capital inflow inthe energy sector. .i. To increaseelectricity generationcapacity andaccesstomodemenergywithspecial emphasis to rural electrification and renewable energy development. IV. To promote efficiency inenergy utilisation. Power sector reforms D The process of reforming the power sector was concluded with Government granting a concession to UMEME (a consortium of ESKOM of South Africa and CDC Globleq of UK) to manage the existingpower distribution business inthe country. UMEME will invest USD 65 million inthe next 5 years inthe businessinorder to refurbishthe distribution. D The Rural Electrification Agency (REA) that develops and promotes rural electrification projects i s now inplace. D The Rural Electrification Board, the governing body for REA that controls subsidies for RuralElectrification andRenewable EnergyProjects, has been set up. The Energy Regulatory Authority i s fully operational. The RuralElectrificationFundhasbeenestablished. The Rural ElectrificationMasterPlanis under preparation. Energy demand National demand i s estimated at 330 megawatts with a growth rate of 64% annually that translates into an additional 24 megawatts eachyear. Power generation The country's installed hydropower generation at Jinja i s 300MW. Although an additional 80MW was installed, the effective generation capacity at Owen Falls has declined from 260MW in2000 to 215MW currently largely due to the prolonged drought and the increased demand. Government procured an additional 50MW o f emergency thermal generation to partly address the acute shortage. Government is working with the Private Sector to develop small renewable energy prospects like Kakira Co-generation Plant which will produce 14MW from sugar waste (baggasse) and Wambabya (lOMW), Waki (5.1MW), Musizi (20MW), BuGOYE (1lMW), Nyamabuye (2.2MW), Nshungyezi (54MW), Ishashs(5.5MW) and Nyagak (3.3MW) small hydros. Over 3150 solar PV systems have been installed since 1998 using private sector delivery mechanisms that are provided with subsidies by Government. There are plans to increase generation to meet the current shortfall through the development o f thermal sources and more hydro generation at Bujagali (250MW) and Kuruma (200MW) as well as improvements inthe quality and efficiency of power distribution. Access to electricity: The overall access to electricity in the country has increased from 5% in 2001 to 9% at present. Rural coverage has increased from 1% in 2001 to the current 4%. A total of 235 rural electrification schemes have beenaccomplished since 2001 all over the country. 73 The lack o f or inadequate power interrupts businesses and increases the cost o f doing business with the burden being transferred to the consumer. More investments are needed inthe energy sector to step up the generation capacity while enhancing efficiency inpower distribution. 3.5.4 PhysicalInfrastructure and Services a) Transport The objective o f the Government's Medium Term Transport Sector Policy i s to promote efficient and effective transport services that facilitate the achievement o f the PEAP outcomes and other priorities. The country's transport infrastructure comprises o f road, rail, water and air transport. Roads and Road Safety The road infrastructure, which provides for over 90 percent o f passenger and cargo traffic, comprises 10,800 km o f national (trunk) roads, 27,500 km o f district roads, 4,300 km o f urban roads and approximately 30,000 km o f community access roads. The Government has committed substantial funds to road improvement (mainly national roads) under the Road Sector Development (RSDP1) covering the period 1996/97 - 2005/06 and which has been rolled over into the second phase. The status o f programme implementation in the road sector i s summarized in Box 3F. Table 3.9 shows the condition o f the national roads. Table 3.9: NationalRoads Condition Profile 2002 -2004 (Taken every June) ConditionRating 2002 2003 2004 Good 18% 30% 20% Fair 56% 52% 62% Poor 20% 17% 17% Bad 5% 1% 1Yo There is a backlog inmaintenance o f approximately 20 percent (poor and bad condition) o f the entire network. Over 60 percent o f the national road network i s in a warning condition (fair) - about to deteriorate to poor condition. Because the bulk o f funding to the transport sector has gone to national roads, the district, urban and community access roads are in a poor condition yet they serve the remote rural areas where the majority o f the poor live. More attention should be given to improving the community access roads andbridges to ease movement o f goods inrural areas. A major concern inrecent years is highnumber o f accidents onUganda's roads that have resulted in loss o f lives and extensive damage to property. According to Uganda Police records in 2000, there were 14,384 reported accidents with 1,678 deaths and 10,213 injuries. The number o f accidents has since increased to 17,422 in2004 with 1,995 74 3ox 3F: RoadTransport ?olicyObjective: Provide an efficient, safe and sustainableroadnetworkin supportof marketintegrationandpovertyreduction. Priorityactions Ensuringthat the fullroadnetwork is wellmaintainedandis incondition. i. Developingthelocalconstructionindustry. ii. Buildcapacityofdistrictandurbanlocalgovernmentstoplan,programme, financeand supervise works ontheir roadnetworks. [v. Promoting labour intensive works especially involving women to improve their livelihoods. Statusof implementation About 80% o f national roads, 60% of district roads and 20% of urban roads have been rehabilitated and are ina fair condition (2ndTransport Sector Review Report 2005). Most community access roads are in a poor condition. Rural areas are poorly served with roads, with only 10%of community access roads ingoodfair condition. The Strategy for Sustainable Maintenance of District, Urban and Community Access Roads (DUCAR) was issuedinApril 2005 The TenYear District RoadsInvestment Plan (TYDRIP) i s infinal stages of completion. An attempt has been made to address environmental protection, HIV/AIDS prevention, gender mainstreaming, road safety, occupational health and safety as well as mainstreaming the concerns of personswith disabilities(PWDs) inroadmanagement. Plans are underway to create the National RoadAuthority A Road Fund is to be established by July 2006 to finance road maintenance. Plans are underway to define modalities of the RoadFundand formulate the RoadFundBill. The Government i s soon initiating implementation o f a long-term multi modal transport master plan (15 years) that includes the Transport Master Plan for the Greater Kampala Metropolitan Area. A study to establish a Multi-Sectoral Transport Regulatory Agency that will become operationduringFY2007/2008. Challenges and constraints 0 Traffic growth rate inexcess o frate o f development ofroad infrastructure 0 Roadaccidents are onthe rise as more roads are improved 0 Low technical capacity at the local government level to plan and manage road programmes efficiently and effectively 0 The domestic construction industry is still weak and the framework for Government to support it i s not yet inplace. 0 Overloading on the roads leadingto premature failure of the roadnetwork. 0 Insufficient fundingespecially for roadmaintenance leadingto aheavy backlog. deaths and 11,747 injuries. About 90% o f the fatalities are pedestrians, cyclists and passengers in taxis and buses, most o f whom are low-income earners. Currently, on average 53 accidents occur everyday comprising 6 deaths and 34 injuries. Government 75 needs to step up its efforts in monitoring and enforcing traffic regulations and strengthening the institutions responsible for ensuring road safety. Railways Uganda's railway handlesbetween 30-40% o f Uganda's bulk cargo to and from ports o f Mombasa andDar-es-salaam. The railway system, however, is very old with only 260 km o f the total length o f the railway network (1,350km) in full use. Inthe last few years the Uganda Railways Corporation (URC) managed to rehabilitate 30 km o f the Kampala - Malaba line utilizingEUfunding. As a result o f the above improvements inthe physical infrastructure, rolling stock and institutional management, cargo haulage has grown from below 600,000 tonnes in 1999 to an average o f 900,000 tonnes annually (2ndTransport Review, 2005). The performance o f the URC is not likely to improve appreciably unless substantial investments are made in repairs to the permanent way and rehabilitation o f locomotives/container handling terminal and equipment. The poor condition and inadequacy o f infrastructure and equipments and the lengthy customs procedures and hours o f operation at the border points are major hindering factors to improved performance. The Government i s planning to revitalize the railway sector as the prime, long distance bulk cargo carrier. Progress has been made in joint concessioning o f the railway system between Uganda and Kenya in order to make the infrastructure more attractive to private investors. Plans are at advanced stages o f setting up a Limited liability company to manage Uganda Railway Corporation Assets. Water transport Water transport i s vital in providing low cost access to remote islands in the lakes, connecting the villages along the river banks and supporting the fast growing fishing industry. The principal water transport services demand is on lakes Victoria, Kyoga and Albert. Uganda Railways Corporation (URC) has been operating three wagon ferries on Lake Victoria linking Port Bell to Kisumu (Kenya) and Mwanza (Tanzania). Water transport services have declined over the years. The existing water transport infrastructure i s dilapidated and ferry services are currently unable to operate commercially. The ferries are in poor condition and most o f need replacement. There i s an increasing demand for more ferries to provide transport to link the several important towns across the lakes. Besides, regulation o f water transport activities i s very limited due to lack o f harmonized laws and regulations as well as institutional arrangements. This has resulted into increased marine accidents, water pollution and piracy on Uganda's water bodies. In 2004 alone, a total o f 27 accidents were reported inwhich 94 people perished compared to the previous year 2003 when only 15 cases were reported and 38 people died (2nd Transport Review 2005). 76 A review o f the overall status o f the inlandwater transport and its ability to play its role in the country's transport sector shows that the sub-sector requires substantial support, both inmanagerial and operational terms including: i) The urgent needto repair the lake landingsites infrastructure; ii) Provisionofmoreferries; iii) Improvementinenforcementofwatertransportregulationstoimprovesafety. Air Transport Uganda being a landlocked country, air transport plays a vital and strategic role in facilitation o f trade, investment andregional cooperation. The sector i s solely responsible for export o f perishable agricultural produce particularly fish and flowers. Traffic statistics at Entebbe indicate a rise incargo volumes from 35,000 tonnes to 50,000 tonnes between 2003 and 2005 and a growth inpassenger traffic from 460,000 to 500,000 over the same period. This performance is mainly attributed to the recovery o f tourism. However, the competitiveness o f the air industry is being limited by the high cost o f aviation fuel which in turn renders Uganda's exports less competitive in comparison to those in neighbouring countries. Aviation fuel makes up 36% o f landed transport and transit costs. Other critical challenges relate to the high debt-equity ratio o f the Civil Aviation Authority; lack o f a competitive local airline; lack o f adequate cold storage facilities for perishable exports; the high cost o f maintaining upcountry non-commercial aerodromes and the high traffic growth rate resulting in rapid cargo demand. The navigational systems need to be upgraded. 3.5.5 RuralFinance Government's main policy objective inthis area i s to facilitate the provision o f financial services to the rural population through promotion o f growth o f Microfinance Institutions (MFIs) and Savings and Credit Cooperatives (SACCOs), puttinginplace the appropriate legal and policy framework and capacity building. Attempts have been made under past government managed micro finance programmes such as the Poverty Alleviation Project (PAP), Entandikwa Credit Scheme (ECS) andRural Farmers Scheme to expand outreach butwith limited success due to inappropriate institutional andimplementation modalities. Hence the Microfinance Industryis largely private sector led with a few programmes that are spearheadedbythe Government. Progressinprogrammeimplementation Implementation o f the Microfinance Outreach Plan that aims at expanding financial services to the presently underserved areas i s ongoing. Recruitment o f Financial Extension Workers (Omuhikirwa), whose role i s to support establishment and development o f MFIs at every sub-county in the country has commenced. So far, 48 extension workers have been recruited for the districts o fMbale, Bugiri,Kabarole, Nebbi, Kabale, Mbarara, and Masaka. Plans are underway to recruit more Financial Extension 77 Workers to cover the whole country within the next two years focusing on districts that have no M F I s especially inthe North andNorth East ofthe country. Support in form o f grants has been provided by Government to M F I s for training, purchase o f equipment and to subsidize operational costs. In areas where there are no microfinance operations, communities are being supported to establish viable microfinance institutions. The three main challenges facing the microfinance industry are: the limited outreach o f financial services, highinterest rates and lack o f agricultural financing. Microfinance outreach stands at only 1.3 millionUgandans mostly residing in urbanareas across the country. Although interest rates have been steadily declining over the last 5 years, they remainhighalthough comparable to other countries (Table 3.10). Country CommercialBanks MFI MoneyLender Uganda 18% 20% - 24% - 60% 50% 120% - Indonesia 18% 28% -63% 120%- 720% Cambodia 18% 45% 120%- 180% Nepal 11.5% -18% 18%- 24% 60% - 120% India 12%- 15% 20% - 40% 24% - 120% I Philitmines 24% - 29% 60% - 80% 120%+ BanL'lHdesh I 10% - 13% I 20%- 35% I 180% - 240% Source: MFPED2006 data. Such high interest rates discourage borrowing especially by poor people. Anecdotal evidence suggests that many poor people in rural areas have lost their property to MFIs because o f inability to pay back the loans plus interest resulting into increased poverty. Currently the total loan portfolio o f MFIsto agricultural financing remains extremely low at only 4 percent compared to commerce at 72 percent. This i s largely because agricultural production i s subsistence and unprofitable to interest bearing loans; poor farmer attitude towards modem agricultural practices; marketing of low quantity and poor quality products and the existing loan products not being suitable for agricultural lending. Addressing these challenges will require support to the emergency o f viable enterprises through agricultural research andzoning, value addition andbulkmarketing. Access to and utilizationof formal andinformalcredit During2004, only 18percent o fpeople aged 18years andabove required a loanor credit and out o f these, only 37 percent applied to be provided with The majority (63 percent) who wanted the loans but failed to apply for them cited a number o f hindering factors, the main ones being the lack o f knowledge o f where and how to apply (37.6 percent) and lack o f collateral (23.9 percent). Other reasons which are prevalent inmost districts included the non-availability o f credit facilities within easy reach (16.5 percent) 35National Service Deliverysurvey, 2005 78 andhighinterest rates (13.5 percent). Other people simply didnot need the loans, having other sources o f financing. Inmost districts, the major sources of loans are NGOs, Cooperative Credit Facilities and Banks36.About 23 percent o f the loan beneficiaries during 2004 got the credit from NGOs, followed by 21.2 percent accessing loans from Cooperative credit facilities and 17.3 percent from formal banks. Other sources included community based organizations, relatives and friends and to a lesser extent government institutions. Annex I11shows the main sources o f loans by district. It i s interesting to note that many o f the remote districts, possibly without formal banking facilities like Kalangala, Kamuli, Nebbi, Kabale, KanunguandKamwenge mainlyrely onrelatives or friends andcommunity fhds as the main sources o f credit. A few districts like Kayunga and Mayunge have been infiltrated bymoney lenders who provide the bulko floans. Fig3.3 shows the mainuses made o fthe loans. The most common use made ofthe loans was to set up or expand enterprises - most o f which are small scale given the size o f loans and the terms o f payment. Most households had access to short term loans - repayment within three to six months constituted 52.6 percent o f the total loans and twelve months loans constituted 16.4 percent o f total. The majority o f beneficiaries (79 percent) received loans that were below Ug. Shs 500,000. Fig 3.3:.Percentage Distribution of Household Members by Purpose of Loan Others Household consumer goods & services Health Purposeof loan Education Housing Setting up or expansion of enterprise Agriculturalinputs Purchase of livestock Purchase of agric land 0 5 10 15 20 25 30 35 40 45 50 Percentage These findings suggest that many Ugandans would like to access loans and credit but are unable to due to the key constraints mentioned above. It i s important for Government to trengthen information dissemination mechanisms in order to further sensitize the 36National service delivery survey 2005 79 population, especially those residing in remote rural areas about the existing credit sources. The financing industry needs to be further developed so as to be able to provide diversified products to meet the various needs o f the population and at terms that support both short and long-term investments. 3.5.6 Marketing andAgro-processing Improved access to agricultural input and output markets is essential for increased production and household incomes. As a result o f the liberalisation policy, most marketing and agro-processing activities have been privatised, with Government's role being limitedto undertakingthe necessary policy reforms andproviding public goods and services to facilitate the private sector. Government's approach to marketing and agro- processing i s set out inthe Marketing and Agro-processing Strategy (MAPS), which has been under gradual implementation since 2002, with the outputs and outcomes that re summarized inBox 3G. The private sector has taken lead in the establishment o f a WRS that aims at facilitating commodity marketing by farmers and ease access to trade finance. There is now a small- scale system in operation with non-negotiable receipts. A WRS Bill has been drafted to provide a regulatory framework to support the fbture development o f the system. In addition, the Uganda Commodity Exchange (UCE) is being assisted under the overall PMA framework to improve agricultural marketing. Since it was opened, the UCE has registered 11 contracts for the sale o f maize, simsim, chillies and soybeans. The main challenges are lack o f proper trading procedures, inadequate documentation and lack o f an appropriate legal framework. 3.5.7 Agricultural Education Provision o f Agricultural Education in Uganda i s aimed at improving skills, knowledge, information and attitudes for people to undertake agriculture as a business. The targeted beneficiaries are children inprimary and secondary schools and out o f school youth and adults, especially rural women. The main components are agricultural education in primary schools, functional adult literacy (FAL) and f m schools. Previous monitoring efforts in the PSR 2003 indicated that little progress had been made by 2002 in implementingthe agricultural education component of the PMA because o f lack o f an agricultural education policy and the detachment o f this programme area from the Education Sector Investment Plan. 80 Box 3G: Progressinimplementationof the MarketingandAgro-processing Strategy Several activities have been undertaken by different institutions all aiming at contributing to the implementation and outcomes of the MAPS: 2) Farmers' organisations: There is tremendous growth in farmers organisations offering theirmembers services ingroup marketingof inputsandproducts, agricultural advice andmarket information. Examples are: The Uganda National Farmers Federation (UNFFE) organised in 41 district farmers associations; NUCAFE, a federation o f 100 coffee associations and the Agricultural Productivity Enhancement Program (APEP) composed o f 291 commodity-based producer organisations. b) Cooperatives: There i s now some recovery o f cooperatives with around 2,000-2,500 societies engaged in agricultural marketing activities. Area Marketing Cooperative Enterprises (AMCEs) have been established inmany districts with the support o f MTTIand UCA. c) Outgrowers schemes: Several outgrowers schemes already exist to service agro- processing operations, some are being expanded and others are inthe pipeline. Kaweri outgrower scheme has been established around a large coffee plantation at Kaweri inMubende. The Kaweri model calls for 20,000 farmers to be organised within associations. Invegetable oil development, there are 7,000 - 10,000 households as out growers with group marketing in oil palm development inKalangalaand Bundibugyo districts d) Input marketing: A recent study3'showed that the input market system i s still young in Uganda and i s dominated (48%) by stockists o f crop inputs (seeds, fertilisers and chemicals) and livestock (27%) stockists (veterinary drugs and animal/poultry feeds). Most of these stockists are less than 5 years old inbusiness. The recent Rural Development Strategy (RDS) reintroduces the need to strengthen capacity and support provision to national level input dealers and local input suppliers and dealers. However, limited capital and lack of technical and business training are common problems. e) Marketing and Agro-processing infrastructure: There are many programmes and stand alone projects, mostly private sector driven, that are focusing on improving the quantity and quality of marketing and ago-processing infrastructure in the country. Most investments in this sector are commodity based. The main challenge i s the lack o f access to long-term finance to scale up investments. Market information: Small-scale market information systems (MIS) currently operate through government agencies, commodity traders and donor-financed initiatives. FOODNET collects market information on 28 commodities from 19 districts and disseminates it through weekly radio market news reports, e-mail and phone. It i s estimated that this service reaches 1.7 millionpeople, both farmers andtraders. g) Grades, standards and quality: The UNBS has worked closely with key private sector players to draw up grading standards and quality regulations inrespect of several principal crop and livestock products. National standardshave beenput inplace for maize, meat and honey. 3'ASPSIAPEP emailed 81 Some progress has been made at the policy and institutionallevel since then. The MOES preparedaNationalAgricultural Education Policy, Strategy andInvestmentPlanwith the aim of institutionalising agricultural education in Uganda's formal and non-formal education system. The Ministry submittedthe Policy and Strategy to Cabinet in2004 but up to now they have not yet been approved. Once approval is granted, the strategy will then be incorporated into the Education Sector Strategic Plan. Progress inprogramme implementation i s summarized in Box 3H. The progress made at the various levels o f education i s largely attributable to the increased funding to the sector. According to the PMA evaluation3*, the proportion o f total PMA actual expenditure on agricultural education increasedfrom 1.5 percent in2001/02 to 3.7 percent in2003/04. 3.6 Competitivenessand Trade 3.6.1 Uganda's OverallCompetitivenessStatus The Global Competitiveness Report that is produced every year provides useful insights into the rating of Uganda's competitiveness inthe business environment when compared to other countries. During 2003/04, Uganda ranked 80th out o f 102 participating countries. In2004/05, Uganda was ranked 7gthout of a total o f 104 countries worldwide which was a slight improvement from the previous year. In the most recent rating for 2005/06, Uganda's ranking dipped to 87th position out of 117 countries ~ u r v e y 3 ~ indicative of slippages in maintenance o f a competitive business environment. The five most problematic factors for doing business in Uganda since 2003 are summarized in Table 3.11below. The most binding constraints to doing business inUganda have not changed greatly over the past 3-4, despite the numerous interventions undertaken to addres? these problems. Access to financing remains the most critical constraint to firms that do business in Uganda, followed by corruption and inadequate infrastructure. Other notable competitive disadvantages that were noted inthe 2005/06 survey include low pay and productivity of the labour force, poor quality of electricity supply, poor technologies, the negative impact Table3.11: Mainconstraintsfor doingbusiness inUganda-rankedin order of Source: The GlobalCompetitivenessReportsfor various years by WorldEconomic Forum. 38Oxford Policy Management, 2005 39August0 Lopez-Claros, Micheal Porter andKlaus Schwab, 2005. 82 Sox 3H: Agricultural Education Qgriculturaleducation inprimarily schools 1 The Ministry of Education and Sports (MOES) developed and launched a new Primary Agriculture Syllabus in 2002. The development of this syllabus enabled the MOES to harmonise the new syllabus and curriculum with that o f Primary and National Teachers Colleges. 1 Support has been extended to a total of 6 NTCs, 16 PTCs and 2 Agricultural Colleges to establish micro projects in horticulture, agro-forestry and poultry; and over 2000 Primary schools to establish school gardens and agricultural clubs. The NSCG has also enabled primary schools to establish more school gardens for dem~nstration.~' The MOES also established a partnership with Straight Talk Foundation to produce a newspaper type publication calledFarm Talk distributedto all primary schools inUganda. 4gricultural colleges I The MOES reviewed and revised the certificate and diploma syllabi and curriculum necessary to produce graduates needed by the job market. Rehabilitation o f Bukalasa and Arapai Agricultural Colleges i s still ongoing. DistrictAgricultural Trainingand information Centres (DATICS) The aim o f District Agricultural Training and Information Centres (DATICs) i s to train farmers, . youths and women inpractical skills inthe management of agricultural enterprises. The DATICS have all been equippedto finction as training centres and commercial farms. Currently, the DATICS programme i s implemented in Kabarole, Masaka, Rakai, Tororo and Pallisa. Constituting the five centres, 3 District Farm Institutes were rehabilitated and 2 new ones constructed. Farmer schools were established at each o f these centres with an annual intake averaging 200 young people (39 percent females, 61 percent males). A DATIC adoption study in 200541found that the adoption rate of improved agricultural practices among the graduates of Farmer Schools had significantly increased from 24 percent before training to 69 percent after training and this change was largely attributed to the training the graduates hadreceived at the DATIC Farmer Schools. Challenges . Fundingto Agricultural Colleges remains grossly inadequate. . The Cabinet approval of the National Agricultural Education Policy and Strategy has been very slow, and so has been the integration of the Strategy into the Education Sector Investment Plan. This has ledto a stalling inprogramme implementation. The prioritisation o f agricultural education in the MOES plans and budgets remains low as the primary focus is largely onthe delivery ofuniversalprimary education. of HIV/AIDS, irregular payments in public utilities and wastefulness of government spending. 40MOES, 2004. 41ASPSIDANIDA, 2005 83 Despite the constraints noted above, Uganda also enjoys a number o f competitive advantages that make it an attractive destination for doing business. The notable competitive advantages during 2005/06 include: the favourable macroeconomic environment; flexibility o f wage determination; Foreign Direct Investment and technology transfer; the positive effects o f privatization on competition and the business environment; centralization of economic policy making; the quality o f scientific research institutions; the reduced burden o f government regulation; Government success in ICT promotion andthe local availability o f specialized research andtraining services. 3.6.2 PrivateSector Competitiveness Achieving the government's growth targets will depend on the Government's ability to improve the basic investment climate to reduce risks and barriers to doing business and enhance private sector's competitiveness. Since 2003, some progress has beenrealized in improving the business climate as a direct consequence o f implementing the Medium Term Competitiveness Strategy. The Investment Climate Assessment 2004 report indicates that the overall business climate has improved especially with regard to access to infrastructure, relevance o f government regulations and promotion o f public private partnerships (Also refer to Chapter 2). a) Access to keyinfrastructure Private sector firms have increased access to some o f the key infrastructures, although they remain largely inadequate andinsome instances inefficient. Power: The reliability o f electricity supply has generally improved over the past two years, although quantity and cost remain major challenges. In1998, on average, firms found themselves without power for 84 days per year. This average declined to 39 outages in2003, a significant improvement. Roads: Road access has generally improved countrywide, especially with regard to national and district roads. However, a continuing constraint to business i s the poor condition of feeder and urban roads and the pace at which these conditions are addressed. Low capacity among local contractor to undertake roadworks still remains a challenge to the sector. Greater use needs to be made o f private contractors to improve the efficiency, speed andquality o fmaintenance works. Railways: the poor reliability o f rail services coupled with the inefficiencies at Mombasa port have led to a decline in demand for rail freight. High costs o f rail freight and long delays at the port in Mombasa significantly disadvantage Uganda's export competitiveness for high weight, low value products42. The planned joint concession o f the Railway services that i s underway together with Kenya will hopefully make the railway financially viable and able to meet the growing transport demands cheaply. Telecommunications: The increase in the national tele-density rate has been dramatic and i s projected to continue to expand rapidly. Total tele-density has 42ICA (2004) 84 improved from 0.28 in 1998 to 2.5 per 1,000 people in 2003 with over 600,000 and 59,000 subscribers inthe mobile and fixed networks respectively. This has enhanced private sector competitiveness. b) CommercialJustice and CommercialLaws Commercial Justice is critical to business growth as it builds confidence, ensures property ownership and facilitates contracting. The Commercial Justice Reform Programme has made significant progress in reforming Kampala's Commercial Court. Growing confidence in the commercial justice system has led to an increase in cases being registered at the court (about 50 a month) although the number o f backlog cases remains high.Further attention needs to be placed on providing alternative Dispute Mechanisms for commercial cases to upcountry courts. The Uganda Law Reform Commission has embarked on an amendment process o f crucial laws that affect private sector development. Since 2000, it has forwarded more than 30 laws for legislation in order to improve the business environment. The Companies Bill, Trade Licensing and Registration Bill, The Hire Purchase Bill; Trademarks Bill and Copyright Act have been drafted and await enactment. However the general pace o f law reform remains slow, constraining business operations. There i s need to expedite the process o f passing these laws over the next year. The following are key laws that should be amended to enhance the business environment: Companies Act 1964, The Trade Licensing Act 1969, Health Act 1964, the Workman's Compensation Act and the Law governing insolvency. c) Regulation A low cost regulatory environment is needed to attract domestic and international investment. Some o f Uganda's laws and regulations that govern business are poorly designed, bureaucratic and not in line with international best practice. The Regulatory Best Practice Program is helping create national capacity for regulatory best practice and i s championing the drive to upgrade policy and law makingprocesses to ensure laws are properly analysed andcosted before they are passed. d) LandRegistry Access to landremains a key constraint to private investment. The process o f acquiring a land title remains cumbersome and costly with an inefficient and under sourced land registry. On average it takes 48 days to register property in Uganda (Doing Business: Removing Obstacles to Growth, 2005). There is need to comprehensively review and upgrade the operational system at the Land Registry including the development and implementation o f computerized information management and processing systems and put inplace secure storage facilities for records. e) BusinessRegistration. 85 The current business licensing system imposes high costs on the private sector. It i s important for Government to implement measures to improve and simplify the business registration process at the Registrar General's office inorder to increase the transparency andefficiency, thereby eliminating opportunities for corruption. The Registration Service Bureau Act, 1998, that was designed to provide the Registrar General's office with some autonomy, has beenimplementedto form the Uganda Registration Services Bureau. The pilot project o f Entebbe Municipality to stream line the system o f licensing reduced the cost o f registering by 75 percent and increased business registration, with an estimated four times as many businesses registering in Entebbe the year after the pilot43. This program should be rolled to other local authorities. According the Doing Business 2005: Removing Obstacles to Growth, it takes 36 days involving 17 procedures to start up abusiness inUgandawhich needsto be drasticallyreduced. f) PublicPrivatePartnerships Public private partnerships (PPPs) are becoming an increasingly widely used technique internationally for harnessing private sector resources (including capital, technical expertise and entrepreneurial ability) to support the general development o f an economy. The Government o f Uganda has established structures for public/private dialogue for enhanced growth though they still need to be streamlined and strengthened. Some o f the existing structures such as the Presidential Investors Roundtable (PIRT), the SMART partnership and the Presidents Economic Council (PEC) have different reporting structures and stakeholders with limitedcoordination and monitoring mechanisms. There is need to harmonise, coordinate and strengthen the functional monitoring systems to support the implementation o fthe public private partnerships so that: The views o f the private sector are represented to Government as effectively as possible 0 Private sector advocacy capacity i s enhanced 0 The dialogue between Government and the private sector is enhanced and effective. 3.6.3 StrategicExportsProgramme The Strategic Exports Programme (SEP) is being implemented since 2001 by Government to stimulate value addition investments in selected areas that are likely to have multiplier effects on the economy, and to remove bottlenecks that impede the private sector's ability to take advantage o f emerging trade opportunities like the African Growth Opportunities Act (AGOA) and the Everything but A r m s initiative in the European Union. Eleven commodities with world market prospects are being supported including coffee, tea, cotton, livestock, Irish potatoes, horticulture (fruits, flowers and vegetables), fish, cocoa, Information and Communication Technology (ICT), Agricultural Commodity Exchange and Warehouse Receipt System. The progress in programme 43WorldDevelopmentReport 2005:lOl 86 implementation i s summarized inBox 31. A Value for Money Study of the SEP44hasjust been completed which provides update information on the performance of the programme. There has been a dramatic growth in non traditional exports (fish, cut flowers, vanilla, fresh vegetables, tobacco, maize) and tourism which have off set the decline intraditional exports (Table 3.12). According to UEPB annual report 2004, Uganda's export sector i s growing at a rate o f 9 percent annually and i s worth $665 million. This shows a marked growth from 2000 when it was worth $401million. Table 3.12: SEP sub sector exDort earnings (2000/01- 2004/05) Coffee 109.6 85.2 105.4 114.1 132.5 Fish 66.6 107.5 111.4 118.2 147.62 Cotton 14 18 16.8 42.8 36.1 Tea 35.9 26.8 29.4 39.2 42.7 Cocoa 1.1 1.9 2 7 - Flowers 13.2 15.9 17 27.1 26.9 Beans 2 1.5 5.4 4.8 6.3 Hides & skins 22.7 4.1 5.8 Milk - -19.6 0.12 0.66 -5.9 Export earnings ($m) 451.3 474 507 647 676 Source. Bank o f Uganda & the Uganda Bureau o f Statistics. Box 31: Strategic Exports Programme (SEP) Purpose: SEP aims at stimulating value addition investments in selected areas that spur economicgrowthandremovingimpedimentsto private's abilityto trade competitively. Implementation status Over 70 billion shillings has been spent on the strategic export sectors during 2001-2004 in the following sectors/activities (MTCS, 2004): i. Coffee: Over65mcoffeeseedlings(81percentoftheplanned80m)havebeengivenout to farmers benefiting 340,000 households including Lira, Apac and h a . However, 40- 50 percent o fthe seedlings didnot grow into coffee seedlings. To enhance value, 16wet processing facilities importedbut are not yet utilized. Efforts are ongoing to produce organic coffee for niche markets. ii. Tea:Numberofteagrowershasrisensharplyfrom16.7percentto66.7percentwithin the tea growing areas. Over 300,000 quality clones have been distributed and plantelet ... survival rate i s highvarying between 70-95%. 111. Cotton: Over 15,000 MT o f cotton seed has been distributed to farmers as well as delinting and grading machines. Through farmer orgainsations and cooperatives, farmers have procuredtractor ploughing services. 44MTCS Secretariat, 2004. 87 r. Cocoa: over 1.2m cocoa seedlings have been distributed to farmers but over 40% o f seedlings were wasted due to poor management practices, bad weather and transport problems. y T i. Horticulture dfruits, vegetables, cut jlowers): Over 1.2b shs spent between 2001 and 2003 on seed improvement and multiplication, establishment of mother gardens, distribution o f plantingmaterials, training o f exporters and farmers and support to private producer and exporter firms. Farmers are facing major problems o f pests and diseases, processing, quality control and lack of packaging materials, cold storage and efficient vii. transportation. Irish potatoes: About 101,240 kg of high quality potato seed has been distributed to farmers and 8 high yielding varieties have been released. Pests and diseases, lack o f a tissue culture laboratory and lack o f a clear policy on seedproduction andmarketinglimit ... potato production and utilization. vl11. Fish: Over 28 water bodies (17 dams and 11minor lakes) and about 1000 farmers' ponds have been stocked with fingerlings ofNileTilapia and African catfish. ix. Beef: About 70 Boranbulls have been imported and distributed to farmers in 12 districts. The export potential is limited by the highprevalence o f pests and diseases, prolonged drought, lack o f drugs andtechnical services and costly animals. X. Boer Goats: Over 1200 Boer Goats have been imported from South Africa and distributed to farmers. Main challenges relate to the high prevalence o f pests and diseases, poor advisory services, limited access to water and poor quality community roads. xi, Warehouse Receipt System: Four commodities were traded on the exchange (maize 300mt, Simsim 200mt, Soyabeans 60mt and Redeye chillies 7mt). Bulkingcommodities i s constrained by lack of properly equipped centralized storage facilities, mistrust among farmers and traders and poor information dissemination and communication. xii. ICT: Close to 1000 million shs has been released to Uganda Investment Authority to support ICT related activities. ICT outbound missions have been organized, efforts are underway to promote tele-services outsourcing and support i s going to training IT graduates. The ICT Policy i s inplace, the e-commerce strategy i s about to be completed and a Draft Bill for E-Commerce, E-Evidence and Computer Crime has been drafted for Cabinet action. Impactof programme The visible impact of this programme will only be realizable in the next 3-5 years. Indications from the Value for money study show that many o f the expected outcomes have not been met due to implementation bottlenecks, poor planning and inadequate funding. Although the SEP interventions were inherently strategic, implementation modalities were not strategic. Areas that need strengthening in order to enhance programme impact include: the poverty focus o f the programme, entry and exit strategies; understanding and meeting the complex product market requirements; pest and disease control; enhancing monitoring and accountability; infrastructure development and ensuringvalue addition. The potential impact of the programme is also constrained by outstanding debts in the cotton, coffee, tea, cocoa and fish sectors. These debts have significantly reduced the incentives for private businesses to operate within the programme. This i s an issue that needs to be urgently addressed. 88 A recent review o f the programme has recommended the need to rationalize some o f the activities under the programme with those already under the PMA (including NAADS and MAPS); supporting identification o f interventions with analytical work along the entire market chain and minimizing the production bias in the current activities; greater private sector involvement in the selection, funding and implementation o f the interventions. Commodity sector associations such as Uganda Fish Association (TJFEA) can play an important role in the achievement o f SEP objectives. Future emphasis should be put on supporting such associations so that they can play a leading role inidentifying constraints and implementing the agreed interventions. Interventions under SEP need to become more market focused; simply increasing production levels is no guarantee to the achievement o f increased export earnings. The Agricultural Zonal initiative will contribute to the realization o f the development o f the objectives o f SEP by ensuring the selection o f zonal commodity enterprises based on factors like value addition, profitability, export potential andinfrastructure. 3.6.4 Science, Technology and Industrialization Improvingthe policy environment alone cannot continuously generate growth andwealth inUganda; the country needs to use science and technology more intensively to enhance economic growth and social benefits. Status of Science and Technology Findings from a recent study on the State o f Science and Technology (S&T) inUganda45 reveal that presently, a few pockets o f excellence stand out in the S&T system. Some sectors have achieved exponential growth due to adoption o f S&T even under difficult circumstances. In the ICT sector, the introduction o f mobile phones has resulted in spectacular increase in connectivity. Several institutions are now providing both specialized and basic training in Information Technology. The penetration o f computers intheprivate andpublic sector is fairly high. Efforts have been made within the National Agricultural Research System to produce improved technologies although effective dissemination to the potential users remains a major challenge. The Competitive Grant system i s likely to bring fbndamental changes to the S&T status within the agricultural sector. Within the industrial sector, over 10 companies have been undergoing incubation at the Uganda Industrial Research Institute (URI)inthe sectors ofbaking, dairy h i t s andmeatprocessing. Notable advances have beenmade inHIV/AIDS research andthe use o f herbal medicine to reduce the burden o f disease inthe country. However, the Uganda S&T sector remains generally small, under-funded, unable to keep up with knowledge advances in the global economy and constrained by numerous disincentives and obstacles. There are very few S&T degree programs in universities, 45FredMuhumuzaet al, 2005. 89 medicalhealth institutes and agricultural colleges that provide the bulk o f advanced training in science and technology. The bulk o f tertiary enrolment (83 percent) is arts and humanities rather than sciences. The higher education institutions are hampered by the inadequacy in laboratories and equipment, infrastructure, incentives and qualified personnel to handle science subjects. Within the private sector, only a few firms are beginning to awaken to the potential o f technology based growth. Low education levels o f the workforce inmany cases diminish the possibility to select and use beneficial technologies. A recent study found that the fastest growing firms in Uganda are those in which the managers have high levels o f tertiary education46. Fifty-six percent o f the manufacturing workforce has secondary education or less and education levels are even much lower in small and medium scale enterprises that make up 90 percent o f the private sector. The nexus o f low educational attainment and low technology adoption collate with the low median value added per worker. The products produced in the country are therefore neither technology-intensive nor knowledge rich hence fetching low prices inthe regional andinternationalmarkets. Within the agricultural sector, low levels o f productivity are linked to sub-standard technology use. The Food and Agriculture Organization reports indicate that only 4-5 percent o f irrigable land inUganda is irrigated and fertilizer use is very low at 0.9 kgha. By contrast, small scale farmers in Tanzania use 5.6 kgha and Kenyan farmers use 38 kgha. It i s estimated that over 35 percent o f food grown inUganda is wasted due to lack o f cost effective technologies for preservation, storage and value addition. This limits the ability o f poor households to increase food security and income opportunities. In the commercial agro-industrial sectors, lack o f technological skills and awareness combined with scarcity o f entrepreneurship is holding back segments o f the economy that could contribute to enhanced growth. As part o f the country's strategy to enhance competitiveness and attract investment, the Government needs to step up the quality and quantity o f humanresources in science and technology through targeted support. There i s need to enhance funding to improve the rate o f scientific and technological innovation in all sectors o f the economy and increase the relevance o f the country's S&T capacity. Public-private partnerships should be encouraged to expand the provision o f key technological services. A number o f policy, legal andinstitutional reforms are underway to address some o fthese issues. K e y reforms in Science and Technology During 2001 - 2005, the Government through the National Council of Science and Technology has facilitated a number o f reforms aimed at enhancing the integration o f S&T inthe development process: National policies have been formulated on Science and technology (S&T), Information and Communication Technology (ICT), Biotechnology and Biosafety 46World Bank,2004. 90 and Indigenous Knowledge. Except for the ICT Policy which was adopted in 2003, the rest are awaiting Cabinet approval. Implementation o f the 5 year Strategic Framework for Science and Technology (2005/06 -2010/11) has commenced. The Innovation Fundhas been administered in support o f innovations inthe areas o f HIV/AIDS, traditionalherbal medicine, medical biotechnology, agricultural technologies, electronics, irrigation and science equipment manufacturing. Under the Uganda Millennium Science Initiative, the Government has commenced the process o f reviewing and strengthening the institutional and legal framework as well as capacity for Uganda's S&T system. The National Biosafety Guidelines and Regulations; Framework for Access and Transfer o f Genetic Resources and the Institutional Framework for Intellectual Property Management are all inplace. 3.6.5 Micro, SmallandMediumScale Enterprises The accelerated growth o f MSMEs has the potential to reduce poverty through expanded and more productive employment and their formalisation would increase their access to finance and other services. Government has initiated a number o f efforts to support their growth and sustainability. However MSMEs continue to face a number o f challenges including: Insufficient infrastructure- water, roads, power, telecommunications Legal andregulatory constraints Inadequate finance, very highinterest rates, short repayment periods, lack o f proper accounts for credit facilities LimitedBusiness Development Services Limited capacity within districts to promote MSMEs Poor information flow Quality andmarketingproblems Non standardbook keeping practices andthe absence o f audited accounts MSMEs Uganda needs to further develop the Leasing market which can play an important role in financing capital investment for enterprises that lack collelateral. There i s need to develop additional reform policies to support financial service providers and improve their ability to respond to the needs o f the private sector with focus on key areas o f pension andcapital market development. It is imperative that the institutional capacity for MSMEpolicy formulation and dialogue i s strengthened both in Government and the private sector. More competent private sector associations have grown inthe period under focus to engage inpolicy research and formulation as well as developing programmes that support private sector growth. The Private Sector foundation Uganda i s an umbrella private sector body currently made up o f over 66 business associations and corporate bodies and is greatly involved in advocacy 91 work for private sector growth. Other associations include Uganda Manufacturer's association, UgandaNational Chamber o f Commerce and Industryandthe MSE Forum. The M S M E sector needs to be actively promoted to increase their implementation capacity and to encourage them to grow into bigger more productive firms. A data bank on MSMEs needs to be developed andupdated regularly andmore M S M E activities need to be included in national and local government development plans. Support for the development o f technical schools to enhance skills development should also be emphasized to target the M S M E growth in addition to other support services geared to increasing firm productivity inUganda. 3.6.6 Competitivenessinregionalandinternationaltrading For Uganda's products to be competitive inregional and international markets, they must be produced inthe most efficient and effective manner. This necessitates the country to focus critically on and improve the factors that influence the cost o f production and transportation. Some o f these factors have to do with the businesses themselves, while others are o f a public nature. Companies have to work hard to cut costs o f production linked to the structural nature o f their businesses. Supply constraints for businesses have to be addressed in a holistic manner and for the entire private sector rather than for selected companies, which would undermine competition and discourage foreign direct investment. Smart subsidies can be offered to businesses in a way that is accessible to all firms on an equitable basis, such as establishment o f industrial parks with common utility supplies and infrastructure. International cooperation to strengthen regional transport networks could also improve competitiveness as transaction costs are reduced. The NEPAD initiative andthe EAC provide a good framework for this cooperation. On the demand side, while Uganda's exports volume may not influence prices received by exporters, the public sector still has a role to play including negotiating the different trading arrangements to reduce trade barriers, both tariff (such as tariff escalation on finished goods) and non-tariff (such as the stringent sanitary and phytosanitary measures). This calls for capacity building in trade negotiations within the relevant institutions such as Ministry o f Tourism, Trade and Industry (MTTI). Such capacity i s currently limited and needs to be developed. However, the approach to trade negotiation may sometimes bringfaster results when done as a trading block rather than as individual small countries. Therefore government should negotiate for better trade arrangements under the East African customs Union (EAC) or the Common Market for Eastern Africa (COMESA). Recent experience has demonstrated that a further barrier to market entry for the Ugandanprivate sector has been a failure to comply with international quality standards. Examples include the substandard methods o f operation that led to the European Union fish ban and the difficulties faced incomplying with the Sanitary and pytosanitary and European Union Retailer Good Agricultural practices (EUREPGAP) measures 92 implemented by the developed countries. It i s critical that the Uganda National Bureau o f Standards (UNBS) i s m h e r strengthened to be able to enforce standards. For agricultural products that form the bulk o f Uganda's exports, U N B S should work with MAAIF to ensure that standards are developed and maintained to increase competitiveness o f the products. 3.7. Labour and employment There is a close relationship between poverty and inadequacy o f productive employment opportunities. Through employment, people earn income, which enables them and their dependants to purchase goods and services necessary for them to meet their minimum needs. To the poorest people, who are unskilled and lack access to productive resources such as land and credit, the provision o f employment may be the only means o f improving their social and economic welfare. Employment The latest source o f information on Uganda's labour force is contained in the Labour Force Survey47 that was a core module o f the Uganda National Household Survey 2002/2003. Uganda's labour force i s defined as including the population aged 10 years and above. Out o f a total estimatedpopulationo f25.2 millionpersons inUgandain2005, 37% are aged less than 10 years and hence are not counted within the labour force. This implies that 63 percent o f the population, which i s about 15.9 million people, are in the labour force (aged 10years and above). The vast majority o f Ugandans derive their livelihood from agriculture and more specifically from crop production (Table 3.13). About 14% o f the labour total force has never received any formal schooling, with twice as many females (19%) having no formal education compared to males (9%). Table 3.13: Occupationtypes for all men andwomen in 2002/03 Source: U N H S 2002103 47UBOS, 2003. 93 Unemployment and underemployment Based on the Labour Force Survey 2002/03 data, Uganda has an estimated 346,000 people who are unemployed, with females doubling the males. The unemployment rate4* for the country is estimated at 3.2% being higher in urban areas (12%) than rural areas (2%). The gender differential is also higher inurbanareas - female unemployment rate is 16% compared to 8% for males (Table 3.14). This suggests that in urban areas, females are less likely to get jobs than their male counterparts probably due to their lower education and vocational skills. Unemployment rates are highest among the youth within the 20-29 age bracket at 5.5% and children in the 10-19 age bracket at 4.3%, overall youth unemployment stands at 5.3%. Table3.14: Rates of Unemployed Persons aged 10 years and above by Sex and Residence Residence Unemployment Rate (%) Total Male Female Urban 7.5 16.3 12.0 Rural 1.6 1.8 1.7 Total 2.5 3.9 3.2 Underemployment, where currently employed persons work for less than 40 hours each week, is widespread in Uganda affecting 65% o f adults, including 75% o f women and 55% o f men. The extent o f underemployment varies with occupation and age - it is only 43% o f paid employees who work less than 40 hours a week compared to 62% o f unpaid family workers and 86% o f self-employed people. The visible unemployment rate is highest amongst youth within the 20-29 age bracket at 18 percent and steadily declines with increase in age. About three-quarters of the visibly underemployed are engaged in subsistence agriculture and the rest in other occupations such as the service sector. In general, the underemployment rates are higher for men than for women both inthe rural and urbanareas. Whilst it is implicitly assumed that strong economic growth will result in job creation, these statistics demonstrate that there are significant gender and regional imbalances in current employment patterns inUganda. Certain categories o f the population, particularly those engaged in the informal sectors, women and youth are highly vulnerable to unemployment andor underemployment which results in low incomes and poverty. Mechanismsneed to be devised to boost employment opportunities and enhance workers' productivity inthe country. 48The unemployment rate is derived by dividing the total number ofunemployed persons by the total number ofeconomically active persons. The result is multipliedby 100. 94 Ongoing initiatives and major issues A number o finitiatives are at varying stages o fdesign andimplementation to improve the employment situation in the country. The Draft Employment Policy i s still awaiting approval from Cabinet; the Labour laws are being revised; the Government is promoting labour based programmes in local construction; the Elimination o f Child Labour Programme has been under implementation since 1999; a productivity centre i s being planned andthe reform o f the social security is ongoing. Some o f the key challenges that require urgent attention include: Highlevels o funemployment especially inrural areas and among women, youths andpeoplewith disabilities RampantChildLabour Inadequate labour market information HIV/AIDS among the workers andits impact or productivity Grossly inadequate social protection and social security for workers. Unsafe working environment Need to develop appropriate policy guidelines and labour legislation L o w remuneration o f workers especially inplantations and the formal sector Lack o f access to labour services by informal sector workers Creating the demand for jobs alone without having a labour force with the necessary skills to match the available job opportunities cannot solve the unemployment problem. The supply side o f the labour market i s constrained by limited skills: technical, managerial and organizational. A large proportion o f the Ugandan labour force is unskilled. It is important that the skills developed in the country match the labour requirements for the country to follow the path of development that it has chosen. This will necessitate reforming technical, vocational, and entrepreneurship education and training systems; and interfacing the education system with the labour market requirements . Increasing the labour absorptive capacity o f the economy will require: Increasing productivity inagriculture; Re-orientingpublic infrastructure works towards labour-based technologies where technically feasible and economically cost-effective; Promoting community participation in community-based infrastructure development and in maintenance; Support to sustainable jobs creation in formal sector industry and recognising the role o f Micro and Small scale Enterprises (MSEs) and provision o f critical support. 95 Chapter 4: Security, Conflict Resolutionand Disaster Management A UPDF soldier on patrol in Northern Uganda 4.1 Introduction Security i s a precondition for improved human welfare and one of the key factors necessary for achieving all the goals o f the PEAP and aspirations o f the Government4'. The Human Development Report 1994resonates this understanding on the importance o f security arguing that human security has two aspects: safety from chronic threats, like hunger, disease and repression; and protection from sudden disruptions inthe patterns o f daily life - and violent conflict undermines both dimensions (UNDP, HDR, 2005). Eliminating violent conflict i s therefore central to restoring and maintaining human security. While the PEAP as a whole aims at enhancing both dimensions o f human security, interventions under this Pillar are specifically intended to realize the second dimension: protecting the national population from sudden disruptions in the patterns o f their daily lives - hence the inclusion o f conflict resolution and disaster management as core aspects ofthe pillar. 492004 PEAP Page 99 96 Key Achievements and Challenges Key Achievements: 0 Absence of a functional conflict resolutionmechanism 0 Slow progress in the operationalisationof the Emergency Contingency Fund * Continued cross-boarder small arms trafficking andcattle rustling Limited financial resources for the effective implementation ofthe defence reform programme. During the review period, Government has implemented a number of actions to consolidate its achievements and to address outstanding challenges in the fight against insecurity. The following sections examine the outcomes from these government actions inrelationto povertyreduction. 4.2 Outcome Performance Table 4.1 summarizes Government's performance in its strategic objective of protecting persons and their property through elimination of conflicts and cattle rustling, resettlement o f IDPs, and strengthened disaster management. Protection Rebel Reduced No civilian ofpersons insurgency in insurgency casualties fi-om and their the North conflict conflict: property through a) Killed 246 elimination of conflicts b) Wounded 177 and cattle rustling, c) Abducted 54 resettlement of IDPs, and strengthened I 97 Reduced No. of cattle 57 management rustling and proliferation rustling proliferation of illegal incidents o f small arms arms No. of small especially in arms 10,000 1,099 Karamoja decommissioned (from region Karamoja) Over 1.6 Reduced Number of 1.6 million 1.826 million numberof people million people are people internally internally internally displaced displaced displaced (million) I with poor condition of life. I Uganda hosts Enhanced % o f MTEF Ushs Ushs. over 200,000 refugees self budgetary 398,792 787,467 refugees, reliance resources million millions0 which add allocated to pressure on Refugee the use of programs in local targeted districts I resources iources: OPM, MFPED, MOD Armed conflict mainly under the auspices o f the LRA rebels i s considered as one o f the major obstacles to poverty reduction, improved human development and the attainment o f MDGs. Poverty indicators in the armed conflict-affected northern region remain relatively poor compared to the rest o f the country. Some o f the affected development areas include education and health, as noted inchapter six. 4.2.1 RebelInsurgency,Terrorismand OrganisedCrime Rebel insurgency continues to be the leading form o f armed conflict affecting the peace and security o f individuals and families invarious regions o f the country. The number o f active rebels groups has steadily gone down since 1986 when the NRMgovernment came to power. Of the 22 rebel groups5' that are known to have existed at various times since 1986 and that are benefitingfrom the current amnesty provision, only the LRA remains active to date. 50 MFPEDDraft estimates o frevenue andexpenditure for FY 2005106.The MTEFprogramme figures here cited here are inclusive o f all other disaster management expenditures. Also, the budget for FY 2002/03 is only for recurrent spending. InFY 2005l06 budget, Ushs 259,800 million is for capacity building for refugeeddisaster management 5 1Refer to Annex IV 98 Though still very active, the strength o f the LRA i s thought to be diminishing. Many o f the group's fighters either surrendered or were killed by the UPDF during the period 2003-2005 and the preceding years. In 2004, government ably quelled the LRA insurgency that had crossed over into Teso region using a combined force o f UPDF and ` m o w boys' to defeat LRA insurgents in the sub region. According to Uganda Human Rights C o m m i ~ s i o n ~this, success enabled an estimated 400 thousand people who had ~ been displaced by the LRA insurgency to returnto their villages. Within the same year, a total o f 1,838 LRA soldiers are reported to have been killed. This achievement by the UPDF in weakening the strength o f the LRA rebel force obviously needs to be taken with consideration o f fact that a significant number o f LRA fighters are abducted children who are forced into rebellion and battle. It is however, encouraging to note that the UPDF is aware o f this complexity and does what i s possible to rescue these child-soldiers alive as evidenced by the number o f abducted children rescued. Information from UHRC 7thannual report indicates that a total o f 2,697 children were rescued by the UPDF from the LRA captivity during the year 2004. Latest figures from MODindicate that between January 2003 and October 2005, Government rescued over 6,000 children who had been captured and 7,994 adult abductees. It also captured 980 rebels and collected 3,737 different types o f arms within the same period. Within the same period, a total o f 1,182 LRA soldiers surrendered and were trained and reintegrated into UPDF according to MOD. Despite the commendable efforts byUPDFinrescuing abducted children, many abducted children remain unaccounted for. UHRC reports that by the end o f 2004, out o f the 26,000 children abducted by the LRA, 4,000 were still unaccounted for in Northern Uganda. It also reports that 1,028 Teso children abducted by the LRA rebels in 2003 were still underrebel captivity inSouthern Sudan as o f end 2004. Keyoutstanding rebel-related insecurity concerns that continue include the threat of ADF and PRA remnants in Eastern DRC regrouping and the LRA shifting o f their base to neighboring DRC. 4.2.2 CattleRustlingandDisarmament Cattle rustlinghas displaced large numbers o f persons in Karamoja and the neighboring districts o f Teso sub-region and Kapchonva. Katakwi District i s the worst hit by cattle rustlinginTeso, with roughly 88,000 IDPs inover 30 camps. Government's disarmament programme in Karamoja that was started in December 2001 was re-launched in September 2004 following its disruption in 2002 due to the redeployment o f UPDF troops from Karamoja to NorthernUganda to deal with increased rebel incursions by the LRA. The disarmament program seeks to incorporate the concerns o f a number o f stakeholders who believe that there was inadequate consultation and also to take into account the lessons learnt from the previous exercise. The aim is to 52UHRC(2005), 7" Annual Report 99 engage all the stakeholders and the communities affected by the problem in a participatory process inorder to achieve effective and sustainable disarmament. Prior to its disruption, the disarmament exercise had realized the recovery o f more than 10,000 guns through both its voluntary and forceful strategies. Compared with the estimated holdings o f 40,000-50,000 firearmss3inthe possession o f Karimojong warriors, this achievement leaves a lot more to be desired. Besides the abrupt redeployment o f the UPDF troops to Northern Uganda, a number o f other reasons have been advanced to explain the limited success o f the disarmament exercise under its first phase. These include inadequate planning, ineffective coordination, insufficient Government funding, inadequate involvement and mobilisation of the local communities. As a result o f the above factors, many Karimojong have since questioned the ability o f the Government to protect them, andhave continued to re-arm and cause insecurity within Karamoja and the neighbouring districts. Information from the Ministry o f Defences4 indicates encouraging progress has been made since the disarmament exercise was re-launched. Some o f achievements made as of June 2005 included the cessation of carrying guns openly, restoration o f law and order in nearly 70 percent o f previous affected areas with increased arrests and trails o f criminals, the voluntary recovery o f 900 guns, restoration o f respect for elders inthe community, reduction in arms trafficking and closure of open arms markets. Information from UHRC, however, indicates that armed conflict has continued in the region. The Commission's Moroto regional office recorded 36 incidences o f insecurity during the period o f August- December 2004. Furthermore, during the year 2004, 31 cases o f cattle raids, 12 cases o f vehicle ambushes and increased violence that culminatedinto 22 deaths were reported55. 4.2.3 AuxiliaryNigilante Forces Auxiliary Forces as they are known today were recruited to augment military efforts where UPDF was thin on the ground. Given the small size o f the Uganda Police Force and the militarized nature o f some the recent crimes, auxiliary forces also provide the first line o f defence to communities before arrival o fthe UPDF. The auxiliary forces comprise o f the Local Defence Units (LDUs), the Amuka group, the Arrow Brigade, and the Anti Stock Theft Unit (ASTU). The ASTU are operating in Karamoja region and were created to curtail and contain cattle rustling inthe region. The other groups o f auxiliary forces were created to respond to LRA rebel insurgency in Northern Uganda. The insurgency has been contained to a large extent and now there i s an on-going exercise to demobilize the LDUs. Already some LDUs who have basic entry requirements to join the army are training to join the UPDF while others with relevant qualifications willjoin the UPF.The remaining LDUs who are unable to join either force 53Office of the Prime Minister (20055 ), Karamoja Disarmament Programme (2005-2008) 54Ministry o f Defence (2005: 10-1l), Statement for the frnancial year 2005/06 Policy 55UNRC (2005), 7" Annual Report, www.uhrc.org/publications. 100 will be resettled and reintegrated into the community. As o f March 2006, UPF had recruited 45% o fthe 4,000 auxiliary forces it undertook to absorb56. 4.2.4 RegionalSecurity The review period witnessed a number o f security related developments o f a regional dimension. Relations between the governments o f Uganda and Sudan were normalized following the signing o f a Peace Agreement in 2004 in Naivasha, Kenya between the Government o f Sudan and the rebels o f Sudan Peoples Liberation Army (SPLA). The normalized relations have served to enable the UPDF to conduct operations against LRA rebel forces across the Ugandan boarder into Sudan territory. This, coupled with enhanced military collaboration between the UPDF and SPLA forces, has brought unusually high pressure to bear on the LRA rebels. This has forced the LRA rebels to relocate some o f their bases and operation into the Democratic Republic o f Congo, and could imply the need to extend the kind o f collaboration between GoU and the Sudan government to the DRC government. Another key issue o f a regional dimension i s cattle rustling. Cattle rustling i s one o f the trans-border problems within the East African Community (EAC) and beyond that requires a regional approach in tackling it. According to MOD,the problem o f cattle rustling as well as that o f small arms trafficking has been raised to the Defence Cooperation Sectoral meetings o f the E A C and the three countries have agreed to work out a joint plan to address the problem. Other countries affected by the problem include Ethiopia, Sudan and Somalia. Because o f the scale o f the problem, the defence ministries o f Uganda and Kenya have agreed to recommend the problem to their Heads o f State to take it up within the IGAD arrangements. The LRA, ADF and PRA have also now become a regional rather than a local problem, hence there i s need for combined efforts not only from Uganda, but from DRC government and the international community ifthis issue is to be resolved Besides the above cross-border undertakings, the government has been engaging in the following routine activities under the various regional declarations, instruments and mechanisms on defence and security policies that Uganda i s a signatory to. The EAC Memorundumof Understandingon Cooperation in Defence:The East African Community has a Memorandum o f Understanding on cooperation in defence signed inNovember 2001, It builds on the already established tradition o f undertaking joint maneuvers and military exercises among the three countries, by providing for cooperation in military training, joint operations, technical assistance, visits andinformation exchange. The AfricanUnionPeace and SecurityCouncilProtocol:This provides for the establishment o f the Peace and Security Council as the apex structure within the 56National Budget Framework Paper for FYs 2006/07-2008/09 101 African Union for effective implementation o f the decisions taken in the areas o f conflict prevention, peacemaking, peace support operations and intervention, as well as peace-building andpost conflict reconstruction. 0 The African Standby Force (ASF): The Protocol o f the Peace and Security Council provides for the establishment o f an African Standby Force. The African Standby Force shall perform functions in the context o f preventive deployment and peace-building, including post conflict disarmament and demobilization. It shall also provide humanitarianassistance to alleviate the suffering o f the civilian population in conflict areas (as well as support efforts to address major natural disasters). The concept o f the African Standby Force is based on brigades to be provided by the five African regions. ASF will have military, police and civilian components and will operate on the basis of various scenarios under African Union mandates, rangingfrom observer missions to peace-keeping operations and interventions. 4.3 Defence Reform Programme Inline with the sources andpatterns of insecurity discussed above, andthe need to treat security from a broader perspective, Government embarked on a defence review process in2001 to provide guidance onthe militarycapability needed for planningofthe defence forces and to provide a policy basis for the transformation o f Uganda's defence forces. As a result, Government interventions within the security and defence sub-sector are now undertaken within the framework o f the Uganda Defence Reform Programme (UDRP) which Government launched in2001. The first phase o f the reform programme involved undertaking a defence review. The objective o fthe review was to improve the UPDFby clearly defining the force's missions andre-examining its functions, roles andresponsibilities with a view o fmodernizing and professionalizing its structures. This was completed inJune 2004 with the preparation o f a White Paper that among other things proposes a strategy for transforming Uganda's defence. Based on the Defence White Paper, a detailed Corporate Plan to guide the implementation o f the review recommendations was developed. Since July 2004, Government has been implementing the corporate plan. Human and financial resource constraints necessitated that Government prioritises and adopts an approach that ensures value for money without compromising either the long-term defence transformation objectives or the Government's ability to addressthe immediate security threats. The implementationo f the Defence corporate planfocuses on two broad areas: enhancing UPDF's military capability and improving the effectiveness o f non-operation functions within the defence institutional structures. Elements being addressed under enhancing UPDF's military capability include: Fire power; troop protection; mobility; sustainability and Command, Control and Communications. Those under non-operation include: Policy 102 Planning; Financial Management; HumanResource and Welfare; Procurement, Disposal andLogistics Management; andInformation Technology. Recent developments in MOD have seen the implementation o f the new Command structure. This inevitably has financial implications to Government. To enhance the military capability o f UPDF, it had been proposed that a Pilot Brigade Scheme be adopted. Originally, it was envisaged that with effect from FY 2004/05, each year a brigade would be modernized i.e supplied with necessary equipment and trained manpower. However due to budgetary constraints the pilot brigade approach did not take off inthe first two years o f defence review implementation. . Reformimplementation innon-operational areas has so far focused on the following: Policy and Planning: The overall objective here is to institutionalize and sustain the policy and planning function in the ministry. The ministry has developed a . Corporate Plan to guide the implementation o f the defence review recommendations. Financial Management: In line with wider Government Policy o f implementing IFMS, the Ministry o f Defence i s in advanced stages o f adopting IFMS. The decentralization o f the finance management function to service levels and . subsequently to the brigade headquarters i s underway. Human Resource and Welfare: Personnel are the most important resource for defence forces. They must therefore be appropriately equipped, trained and motivated to remain committed to the defence o f their country. Efforts to improve the humanresource management and welfare system for the defence forces from the time o f recruitment to retirement and resettlement into civilian life are underway. Notable among these are career planningand guidance, remuneration, . andpension. Procurement, Disposal and Logistics Management: By virtue o f its business some o f Ministry o f Defence procurements are not obtainable o f f shelf. This calls for need for sound procurement procedures that ensure value for money without compromising state security. As part o f adopting the new Procurement and Disposal Act, the ministry has come up with a detailed implementation plan to achieve the above objectives. Capacity building for procurement and disposal staff at the General Headquarters andDivision levels is on going. User guides and . manuals are being prepared. Information Technology: Plans to have a lasting solution to the problems o f ghost soldiers have been finalized. A Service Provider has been contracted to institute an Integrated Resource Management System (IRMS) that will ensure online updating of occurrences (recruitments, deaths, desertations, promotions, transfers etc) andhence a maintenance o f a robust andreliable database. 103 Prevention and mitigation o f the impact o f HIV/AIDS: MODhas also been pursuing measures to mitigate the impact o f the H N / A I D S on UPDF personnel and other non-military staff under its jurisdiction. It has development a draft HIV/AIDS policy which is due for discussion, adoption and subsequently for implementation. It has also streamlined the coordination o f HIV/AIDS activities inthe ministry. An office of the ACP Coordinator has been set up to coordinate all the HIV/AIDS activities in UPDF. It addition, it has developed a 5-year Strategic Plan (2005-09) that focuses on: prevention o f further transmission o f HIV/AIDS among the military community and their families through Abstinence, Being faithful and Condom use (ABC); increasing access to HIV and other STD testing services; increasing access to treatment and care services; provision o f care for orphans andvulnerable children; establishing a monitoring and evaluation strategy and greater involvement o f people livingwith HIV/AIDS inall activities. To date, the ministry has trained 17 doctors 35 clinical officers and nurses in caring for HIV/AIDS patients, scaled up access to Anti-Retroviral Therapy from 145 to 1120 patients and i s also delivering counseling services and awareness raising usingvarious ways. 4.4 Conflict Resolution 4.4.1 Introduction Conflict Resolution refers to a comprehensive process o f preventing or bringing to an end, in a sustainable manner any conflict that disrupts the socio-economic wellbeing of any people, society or country. As an approach to ending armed conflict, it denotes a multi-dimensional strategy that looks beyond the narrow dichotomy o f a militaryversus a negotiated solution. Government in the recently concluded revision process o f the PEAP recognized the fact that sustainable development cannot be attained, if matters o f conflict management and peace buildinginthe country are not effectively addressed. A PEAP pillar was therefore created to holistically capture andmainstream issues o f Security, Conflict Resolution and Disaster Management. In a bid to operationalize the Security, Conflict Resolution and Disaster Management pillar, three sub-sector working groups were formed under the coordination o f Office o f the Prime Minister: a Security Working Group, a Conflict Resolution Working Group and a Disaster Management Working Group. Unlike the Security and Disaster Management sub-sectors which had in place National Policy and Institutional frameworks to guide their operations, the Conflict Resolution sub-sector had neither a policy nor institutional framework to guide its operationalisation. In recognition of this, the Government in collaboration with actors from the donor community and CSOs embarked on a process o f formulating a National Policy on conflict resolution. The process i s being undertaken under the coordination and guidance o fthe OPM. 104 The policy formulation processes will be informed by an issues paper that will explore aspects relating to the nature and dynamics o f conflict in Uganda; existing Government legislation and institutional mandates for conflict prevention, management and resolution; Ugandannational security and defense perspectives on conflict prevention, management and resolution; and the humanitarian,economic, financial and developmental aspects o f conflict inUganda. 4.4.2 Progress,Challengesand Opportunities A number o f initiatives towards conflict resolution have taken place following the completion o f the PEAP 2004. Many o f them are directly related to efforts towards a peaceful resolution o f the conflict in Northern Uganda started over a decade ago. The main actors have been religious, political and traditional leaders as well as individuals committed to seeing the conflict inthe north come to an end. A range o f conflict resolution and management initiatives were implemented over the review period with varying levels o f success. They include military ceasefires, the Betty Bigombe ledpeace effort, andreligious and CSO lednegotiations. Military Ceasefires - The Government has made a series of ceasefire declarations with the LRA over the review period. The latest o f them was declared for the period November 16to December 31200457. The Betty Bigombe5*Led Peace Effort - In 2004, Ms. Betty Bigombe, a former Minister in Charge o f the Pacification o f the North spearheaded an effort aimed at bringingthe Government and LRA to discuss mechanisms o f how to reach a negotiated settlement to the conflict inNorthern Uganda. Despite the common difficulties associated with dialogue with the LRA, the period between November and December 2004 presented the best opportunity to reach a peace settlement with the LRA for over a decade. With support from the international community and inparticular the Netherlands, Norway and the UK Government, Ms. BettyBigombe succeeded inmakingvital contacts with the LRA and several face-to-face meetings between the LRA delegation and the Government o fUganda. Prospects of reaching an agreement were very good and a draft Ceasefire and Peace document was produced by Government in December 2004, but the LRA response for various reasons was slow. Owing to the fact that strict time lines were proposed and given the delay by the LRA to respond, the negotiations collapsed. Despite the collapse o f the talks, there were positive elements that were ripped. For instance, the aftermath o f the latest major attempt to broker a peace settlement saw several rebel leaders (including top commanders5') surrendering to the UPDF. The progress witnessed from the Betty ~~ ~~ 57MinistryofDefence (2005: 9), Policy Statement for the financial year 2005106 58 Ms. Betty Bigombe who works with the World Bank has been an ardent believer ina negotiated approach and was the force behindthe peace talks heldwith JosephKony (LRA Leader) in 1994. ''Mostnotable ones were Brig. SamKolo the former Spokespersonof the LRA,Brig. OnenKamdulu, a Senior Operativeand one of the mostnotoriousfield commanders. 105 Bigombe initiative i s a positive indicator to the fact that a lot can be achieved if dialogue is better organized, and politically and financially supported. The latest development as far as peace talks are concerned was the media announcement inDecember 2005 by LRA's secondincommand, Vincent Otti, ofLRA's offer to engage the government in peace talks. Whether or not the LRA i s serious about this announcement remains to be known. The Government has however, welcomed the offer andexpressedwillingness to take itup. The key lesson however in all this however, i s that there is need for some institutional mechanismto ensure that opportunities for a peaceful resolution are better structured. Religious, traditional and political leaders - This category o f peace actors have continued their pursuit o f a peaceful approach to resolving the conflict in the north and have collaborated with Government, especially at local level at various times. Religious leaders through the Acholi Religious Leaders Peace Initiative have maintained contacts with rebel leaders and contributed immensely to the progress registered by Ms. Betty Bigombe's effort. Traditional leaders have continued to use existing traditional mechanisms to talk to representatives o f rebels to denounce rebellion and return home. Those who have been able to return have been taken through traditional rituals to initiate them back to normal life and foster reconciliation. A number o f political leaders from the Acholi Sub Region have variously contributed to peace and confidence building initiatives aimed at forging a common strategy for resolving the conflict inthe North. In May 2005, a peace building retreat was organised by Civil Society in Paraa Lodge in Guluto bringtogether religious, traditional, political and government leaders to dialogue on the most appropriate route to resolving the conflict. This meeting was also attended by H.E. the President of Uganda in a show o f solidarity with peace actors in Northern Uganda. While such dialogues are necessary for confidence and consensus building, it i s imperative that they are held within a broader context o f a known conflict resolution set up,which is what Government ought to think about. 4.4.3 Conflict Resolution Forum The PEAP proposes the establishment o f a Conflict Resolution Forum as a mechanismto keep dialogue between various stakeholders alive. However, mechanisms for operationalization haven't been put inplace and as a result this effort hasn't taken off. 4.4.4 Amnesty, Reconciliationand Re-integration Underthe Amnesty Act 2001, government made an amnesty provision for fightingrebels willing to surrender and denounce rebellion. The Amnesty provision covers a total o f 22 rebels groups (Annex B). This amnesty offer appears to have been well received by rebels o f both lower and senior ranks. Despite the known challenges facing the Amnesty Commission such as financial resource gaps, the on-and-off efforts towards dialogue and outreach difficulties, the work o f the Commission i s highly regarded and appreciated by 106 ordinary citizens. Indeed by the end o f 2003, the Amnesty Commission had had a positive response by the rebels to amnesty. Box 4.1: Summaryof the Amnesty Commission'sAchievements a) Sensitisation and Promotion of Dialogue Increased awareness about the Amnesty Law as a result of a variety of interventions including radio programmes, publications, visits to prisons, sensitization tours; workshops and seminarsby the Commission's officials. As of 14' July 2005, the Commission had resettled a total of 7,968 reporters and implementedtheUNRFI1specialproject under which 2,500 were integrated insociety. The Amnesty Act hasbeentranslated into seven local languages, namely: Luganda, Runyoro- Rutoro-Runyankore-Rukiga,Lusoga, Lugbara, Ateso andLuo. Reporters originating from the Sudan, Kenya and Democratic Republic o f Congo have been repatriatedto their countries of origintogether withtheir families. The Commission registered some success it its attempt to initiative collaboration with the governments of Sudan, Kenya and the Democratic Republic of Congo in promotion o f the amnesty process. Contacts with key partners in these countries were also made and are continuing. b) Promotion of reconciliation and dialogue among various rebelgroups 0 Peace talks were held with various LRA commanders and dialogue between some LRA commanders and the Local Council V chairman inGuluin2001. 0 The Chairman Amnesty Commission chaired peace talks between the Government and UNRF I1which led to the signing of the peace agreement between the two parties on 24* Dec. 2002. 0 Peace talks with reporters in areas with high numbers o f returnees who have in turn convinced their colleagues to renounce rebellion. c) Receiving and GrantingAmnesty 0 Establishment o f Renunciation, Demobilisation, Registration (DRT) centres in Arua, Gulu, Kitgum,Kampala, Kaseseandm a l e 0 Receivedand processing of 15,509 reporters from differentregions of the Country (figure x) Response to the Amnesty process by rebels in the Acholi sub-region through the chiefs and religious leaders, Uganda's Embassy inKhartoum, Sudan. Facilitation of the return of reporters from Sudan by the Government o f Sudan and Uganda, the International Organization for Migration (IOM), MDRP and other international and local organizations 0 Release of reporters who were incustody inprisons (Luzira & Kigo). Handing over by the UPDF o f child and adult fighters many o f whom are former abducteesto the Commissionand other implementingpartners, 107 The latest statistics (June 2005) from the Amnesty Commission6' show that since the start o f the Amnesty Law, a total of 15,115 rebels have taken advantage o f the Amnesty Law and denounced rebellion. By August 2003, a total o f 9,718 rebels had returned, 39% o f which were former LRA fighters. And in 2004 alone, 3,948 rebels responded to the Amnesty offer. Amnesty packages have been given to returning rebels, although only 41% o f the rebels who reportedin2003 havebeen successfully resettled61. Judging by the trend in the annual and quarterly numbers o f reporters registered by the Commission over the 5-year period o f its existence as indicated by figure 4.1 below, it is evident that rebels have progressive gained confidence in the amnesty process with both the quarterly and annual number of reporters peaking in2003. The decline in the number o f reporters observed since 2003 can be interpreted as either reflecting the declining number o f active rebels or a weaning o f confidence in the amnesty process. However given that Government has continuously been extending the amnesty process, it i s most likely that the observed trend is a reflection o fthe former interpretation. 'igure 4.1:RegisteredReporters by quarter RegisteredReportersby Quarter P.-ra1000 2000 2001 2002 2003 2004 2005 Year iource: Amnesty Commission Challenges 1. Financing for the Commission has come from both the Government and development partners. While the commission is increasingly expected to resettle 6oUHRC(2005), 7" AnnualReport,http://www.uhrc.org/publications 61MoFPED, PEAP page 103 108 more returning rebels, the level o f resources at its disposal has not changed much. Constraints facing the commission as a result o f limited fundinginclude: A backlog o f about 12,000 reporters who have not beenresettled. Most reception centers currently available are not well equipped to handle returnees. Professional psychosocial mechanisms for handling reporters while still at the receptioncenters andmonitoring their progress i s lacking. Production and dissemination o f guidelines for coordination and implementation o f the amnesty process has been limited. 2. Besides being constrained financial, the Amnesty Commission has also faced a number o f other challenges. This include weaknesses within the Laws governing the amnesty process, information gaps between intended amnesty beneficiaries and its administrators, continued insecurity threatens the lives o f reporters and also hinders the reach o f officials from the Amnesty Commission in their publicity efforts; delays in government procedure in processing applications o f reporters in custody and weaknesses within the Commissions management information systems, Box 4.2: Weaknesses within the Laws governing the Amnesty Process The mandate of the Commissionexpires every six months -makingplanning difficult. Based on the current interpretation of the Act, convicted persons are not eligible for amnesty. This appears to some to be contrary to the spirit of the Act. Reporters abroad are expected to report to any Uganda Embassymigh Commission or other international organizations to receive amnesty. Government has not yet published the list of such other internationalorganizations. The Amnesty Act and the anti-terrorismlegislation have some aspects of conflict. Some rebels may fear to come out for dialogue due to this. Ugandan Laws are subordinate to International Criminal Court (ICC). Some rebels may fear to come out for dialogue due to this. The Law didnot anticipate that there would be child combatants. The Law excludes non-Ugandans. The period of coverage which starts from 26* January 1986 i s a limitation to total - reconciliation. As a way forward with the resettlement o f reporters, the Commission presented a project to the Multi-Country, Demobilization and Resettlement Programme (MDRP) through the Office of the Prime Minister to assist it to reach out to the potential reporters with a view to resettling them. The project was approved and became effective in January 2005. The Under the project, its planned to resettle 15,3 10reporters. 3. The InternationalCriminal Court andWarrants o fArrests 109 Given the nature o f atrocities committed by the LRA and their definition within an international context, the Government o f Uganda decided to pursue the option o fbringing in the International Criminal Court (ICC) into the process of conflict resolution in Northern Uganda. Based on its investigations, the ICC issued International Arrest Warrants for LRA's top leadership on October 8th 2005 opening the way for their possible prosecution62. Government believes the issuing o f the arrest warrants will serve, among other the following important purposes: i. IsolatethetopleadershipandcauseinternaldivisionswithintheLRAranksand force those not yet inditedto take the path o f Amnesty ii. ForcecountriesthatareusedbytheLRAtocausemayheminUgandatotake ... more concrete steps towards expelling the LRA from their territory 111. Get more cooperation from neighbouring countries and the international community insearching for the LRA iv. Trails o f those accused will enable victims o f the crimes prosecuted to obtain justice and apply for reparation. v. Ensure more cooperation from neighbouring countries where the rebels have operated from such as Sudan. There is also a feeling among the optimists that targeting the top LRA commanders would force the lower cadres inthe LRA to surrender as they are still coveredby Amnesty. Incarrying out its duties, the Commission has enjoyed the cooperationof a number of government andnon-government agencies as well as various UNagencies. A list o f these partner agencies including the support they have rendered incontained inAnnex C. 4.5 Disaster Preparednessand Response 4.5.1 InternallyDisplacedPersons(IDPs) Internal di~placement~~a problem that has long existed in Uganda and almost all i s regions o f the Country have been affected by it in one way or another64.Its profile has however risen sharply over the past one and half decades to the point o f being identified as the leading setback to Uganda's progress inpoverty reduction. The highprofile o f the problem is largely explainedbythree factors: i)the majority o f IDP are from one region - northern Uganda - which widens social economic inequalities and risks turning the problem into a political issue, ii)the period o f displacement for those affected has been very prolonged andiii)living conditions inthe IDP camps are pathetic. Amnesty International Media Briefing, News Service No. 274, 14" October 2005 63Internally DisplacedPersons(IDPs) are persons or group o fpersons who have beenforced to flee or leave their homes or places o f habitual residence, inparticular as a result ofor inorder to avoid the effects o f armed conflict, situations o f generalized violence, violation o fhuman rights or natural or human-induced disasters, and who have not crossedan internally recognized Stateborder. 64 MFPED (2004:17-20), Post Conflict Reconstruction: The case o fNorthern Uganda 110 Bythe of end2004, close to 80% of the population ofNorthernU anda continuedto live in Camps indifferent parts of North andNorth EasternUganda6'. As of July 2005, the total number of IDPs inthe Northern and North Eastern region stood at over 1.8 million people distributedacross 250 camps (Table 4.2). Using the PEAP baseline number of 1.6 million IDPs in 2002/03, this translates into a 14% rise in the number of IDPs in the country. This meansthat unless drastic measuresare taken, the PEAP mediumterm target of 0 IDPsby 2007/08 i s likely to be unattainable. Soroti 20 8,048 4,832 12,880 K i t m 22 310.1 11 Lira 40 20,387 331,683 352,070 Pader 30 319,506 Apac 15 98,193 Gulu 53 578,054 Kaberamaido 3 4,956 Katakwi 67 150,317 Total 250 1,826,087 Source: OPM Assessments by various Government and non-government agencies including UHRC reveal that living conditions inIDP camps are very poor. IDP camps inNorthern Uganda are characterised by poor and inadequate shelter, inadequate health services, lack o f drugs, shortage o f personnel, and high incidences of diseases arising out of poor sanitation, inadequateand congestedhousing facilities, andunprotectedwater sources. 4.5.2 IDP Policy Because displacement is a result o f both man-made and natural causes, it means that at any one time a number of Ugandans will be in a state o f internal displacement. In recognition of this as well as the need for standard coordinated multi-sectoral, multi- disciplinary procedures and guidelines for Government institutions, development and humanitarian agencies inplanning and responding to matters of internal displacement o f persons, Government developed a National policy for Internally Displaced Persons in Uganda andlaunched it inAugust 2004. The mission of the IDP policy i s to ensure that Internally Displaced Persons enjoy the same rights and freedoms under the Constitution and all other laws like all other Ugandans. Its policy goal i s to establish institutions for managing IDP situations; specify 65UHRC(2005), 7&AnnualReport 111 roles and responsibilities o f the institutions and humanitarianand development agencies, the displaced community and other stakeholders while managing internal displacement. The policy has five objectives: i)to minimize internal conflict, ii)to minimize the effects o f internal displacement by providing an enabling environment for upholding the rights and entitlements o f IDPs, iii)to promote integrated and coordinated response mechanics to address the causes and effects o f internal displacement, iv) to assist in the safe and voluntary return o f IDPs, and v) to guide the development o f sectoral programmes for recovery, through rehabilitation and reconstruction o f social and economic infrastructure insupport ofreturnandresettlement ofIDPs. The policy commits Government to the following: Protectingits citizens against arbitrary displacement Promoting the search for durable solutions to causes o f displacement Facilitating the voluntary return, resettlement, integration andre-integration o f the IDPs Ensuring that every person, internally displaced or otherwise, receives information relating to the IDPpolicy. The institutional framework for operationalisingthe policy comprises o f the following: A LeadAgency for the protectionandassistance o finternally displaced persons Committees on matters relating to internally displacedpersons namely: The Inter- Ministerial Policy Committee (IMPC) andthe Inter-Agency Technical Committee (IATC). The HumanRightsPromotion and Protection Sub-committee (HRPP) District Disaster Management Committee (DDMC) District HumanRights Promotion andProtection Sub-committee for IDP The Sub Country Disaster Management Committees The specific roles and responsibilities o f each o f the above offices are laid out within the IDP policy document. 4.5.3 Transition to Recovery Programme (TRP) Transition to Recovery Programme (TRP), i s a programme that started late last year (November 2004), under the Division o f Disaster Preparedness, with funding support from UNDP. It i s intended for supporting the Department in implementation o f the IDP Policyinorder to improve the living conditions o f IDPs. The project is focusing on seven districts that have been hard hit by the LR4 insurgency and its related displacement in the districts o f North and North Eastern Uganda namely: Gulu, Kitgum, Pader, Lira, Katakwi, Soroti andKaberamaido. Activities that have been implemented under the programme include capacity building for the Department and lower structures like the District Disaster Management Coordinators; and improving the living conditions o f IDPs through facilitating the preparation and launch o fthe IDP policy andthe IDP profiling exercise. 112 The IDP profiling exercise was conducted inthe districts o f Gulu, Kitgum and Pader and was intended for getting detailed information regarding IDPs for proper planning for their assistance and for planningtheir return, resettlement andreintegrationwhen peace returns to the region. A sample population o f 3,000 IDPs was covered during the survey for Acholi Sub-region alone. Plans are under way to also cover Lango sub-region. 4.5.4 Refugees Uganda i s a host to roughly 149,000 refugees mainly from Sudan, Rwanda, Congo, Somalia and Ethiopia. The rights and living conditions o f refugees in Uganda is monitored among others by UHRC. In its 7th Annual Report, the UHRC noted that the following through its monitoring and evaluation exercises: Refugees' right to education is highly respected in Uganda. In almost all the refugee camps visited, the refugee children in school enjoy free education from primary levelto tertiary level. There are also anumber o f organizations bothlocal and international that extend scholarships to refugee children in school. Other refugee children are inUPE schools. 0 Refugees had adequate access to health services for the year under review. 0 On average, refugees inthe camps visited have adequate access to food especially that which is provided by the World Food Programme. Also under the Self- Reliance-Strategy, refugees produce their own food. 0 In2004, most refugee settlements generallyhadanadequate supplyofwater. The outstanding challenges that require Government's intervention as observed by UHRC in2004 included the following: There was existence o f discrimination in granting asylum. The asylum seekers from Burundiand the Democratic Republic o f Congo were easily granted asylum, while those from Rwanda faced unnecessary obstacles intheir asylum claims. There is a growing concern about the highrate o f gender based sexual violence in most refugee settlements visited. This has been attributed to a number o f factors, such as, alcoholism, idleness and unequalpower relations at the household. 0 A number o f constraints including poverty and policy hindered refugees' access to justice in2004. The Refugee Bill, 2003 which has progressive provisions regarding refugees has not beenpassed. 4.5.5 Early Warning Services Earlywarning as a systemis the collection and analysis o finformation for the purpose o f identifying and recommending strategic options for preventive measures prior to the outbreak o f a calamity or a national disaster. This cycle o f data collection and analysis helps to monitor people's access to food and other necessitates o f life and to prepare for any impending related crisis. It aims at empowering individuals and communities with 113 information to act appropriately and in sufficient time to reduce loss o f life, damage to property, a threat to livelihoods and erosion o f a fragile environment. It is however recognized that in Uganda different agencies produce a wide range o f data used in the early warning system for food security. Therefore, the success o f the system requires close interagency collaboration and networking to produce an overall comprehensive picture. This concerted effort enables the maximum use o f available expertise, improvement o f available structures, ensuring sustainability as well as appropriate and timely mitigation and response. Disaster monitoring and early warning activities have not kept instep with developments inclimatepredictiontechnology. Thishasbeenhamperedby; a Lack o f necessary equipment both hardware and software for the stakeholders; including Internet access. e Trained staff to make accurate coverage, timely and regular reports for prone areas. This hampers collection o fraw data, processingand analysis. e This has also been hampered by difficulties o f disseminating information to population where they can trigger response, initiate policy actions and mitigation measures. e It also has weak institutional linkages at the nationalhegional levels leading to poor infrastructure and advisory dissemination. e Lack o f resources. 4.6 Post Conflict Reconstruction/Recovery 4.6.1 NorthernUgandaRecovery andDevelopmentProgramme Overwhelming evidence suggests that insecurity inthe North and Northern Eastern parts o f Uganda over the last 15 years i s the most important explanatory factor for the high poverty incidence inthe region. It has resulted in death and humandisplacement grossly undermining the productive sector and leading to poor service delivery. There are also other broader social, political, economic and policy factors that account for the regional inequalities. Ina bid to address this problem, the Government in conjunction with development partners is in the process o f preparing a Comprehensive Recovery and Development Plan for the North which provides the broad framework for short, medium and long-term actions. This plan aims to consolidate on-going programmes so that new initiatives are complimentary to existing ones, for synergy, and focusing on strategic issues identified on the basis o f conflict prevention, management/mitigation and resolution. The Plan makes a deep analysis and mapping o f the conflicts, and socio- economic andpolitical factors affecting development inthe region. The goal o f the RDP i s to achieve, Peace, Recovery and Development in the North and North Eastern Uganda by 2015. This will be achieved by pursuing the following objectives: 114 i. ConsolidationofStateAuthoritytherebyprovidinganenablingenvironmentfor peace, recovery and economic development o f the region through a) cessation o f armed hostilities b) re-establishing and consolidation Law and Order in communities, c) strengthening the Judicial Services finctionality and d) .. strengthening local government capacity. 11. Rebuilding and empowering communities by a) enhancing quality o f life for non-displaced populations, b) return and resettlement o f displaced population - urban, peri-urban & rural, c) Socio-economic reintegrationo f ex-combatants and other returning populations and d) Initiating o f community rehabilitation and development activities 111. Restoration o f the economy through a) re-activating productive sectors ( agric, .I. services, industry), b) rehabilitated critical infrastructure, and c) reinforcing mechanisms for sound management o f environment and natural resources iv. Peace building and reconciliation and ensuring increased access to medidinfomation, b) strengthening social capital incommunities, c) reinforcing mechanisms for local intrdinter communal conflicts and strengthening partnership with the civil society and the private sector. As o f December 2005, an Inter-ministerial Technical Committee had been formed following the directive o f H.E. the President who is spearheading the preparation o f the Plan. Consultations with all Government sectors, local governments, Members o f Parliament, the civil society and development partners have been undertaken. The final draft copy o f the plan had been finalized by the end o f December 2005 and its effective implementation is expected to start inJuly 2006. 4.6.2 KaramojaDisarmamentProgramme The Karamoja Disarmament Programme (KDP) is planned to be implemented over the period 2005 -2008. It i s intendedto contribute to humansecurity andpromote conditions for recovery and development in Karamoja. It spells out a course o f action that will define interventions by government and other stakeholders necessary to achieve effective and sustainable disarmament inKaramoja. The design o f the programme entailed an analysis o frelevant documentationandresearch on disarmament, on the basis o f which a series o fproposals, recommendations and action plans for inclusion in the planned Disarmament Programme was determined. The programme is in line with both the PEAP and the government current approach to the problem o f cattle rustling that combines encouraging the surrender o f weapons with actions to support the development o fKaramoja. The programme has six component objectives: to provide and ensure adequate security for the people o f Karamoja; to establish law and order in Karamoja; to support the development o f alternative means o f livelihood; to undertake stakeholder mobilisation, sensitisation and education; to enhance the coordination, monitoring and evaluation systems andto address cross-cutting issues 115 4.6.3 NationalStrategic Plan for Karamoja The vision o f the draft National Strategic Plan for Karamoja: `A peaceful, developed and prosperous Karamoja',66 is in line with the current government approach to the problem o f cattle rustling, which combines an ongoing effort to encourage the surrender o f weapons with actions to support the development o f Karamoja (Republic of Uganda, 2004a: 117). Government's approach i s informed by international and regional agreements, protocols and declarations intended to promote sustainable and coordinated action to address the pro blem o f illicit Small Arms and Light Weapons (SALWs), to which government o f Uganda is a signatory.67 Their implementation at the national level has been mandated to the Uganda National Focal Point (NFP) on SALW, Ministry o f Internal Affairs, and i s fully operational. The 2004 National Action Plan (NAP) on SALWs provides the institutional framework for the implementation and coordination o f government action against SALWS.~* A Special PresidentialAssistant (SPA) incharge o f Disarmament and Development inKaramoja has also been appointed by the President to re-enforce the coordination o f the disarmament activities. 4.6.4 RestockingProgramme A successful restockingprogramme was initiated and implementedby Government from 2000/01 to 2002/03 to support the reestablishment o f the cattle culture and support communities that had been affected by conflict and lack o f incomes in the Northern and Luwero districts with livelihood opportunities. A total o f Uganda Shillings 14.2 Billion had been disbursed by Government for the purchase and distribution o f cattle and other animals by local authorities. However, just when the achievements o f the programme were being registered in districts, Government decided to halt the project and stop disbursements. A preliminary evaluation o f the Project revealed that the families that benefited from small animals such as goats, pigs, rabids were very successful inmultiplyingtheir stocks o f animals and forming groups for better income opportunities. While the demand for the program remains high, government has been releasing zero funds for the program for the last three years. This i s a good program with a direct impact on poverty reductionwhich needs to be thoroughly evaluated andreintroduced. 66. See Republic o fUganda. `TheDraB National Strategic Planfor Karamoja'. Kampala: Office o fthe Prime Minister, May 2003 67. These include, among others: (1) the UNprogramme o f action on Illicit Trade inSALW inall its aspects; (2) Bamako Declarationon an African CommonPosition on the Illicit Proliferation, Circulation and Trafficking o f SALW; (3) the Nairobi Declaration on the Problemo f the Proliferation o f the Illicit SALWs inthe Great Lake Region and Horno fAfrica o f March 2000; (4) The United Nations Protocol Against the Illicit Manufacturing o f and Trafficking inFirearms, Their Parts and Components and Ammunition, and lastly; (5) The Nairobi Protocol for the Prevention, Control and Reductiono f Small Arms and Light Weapons inthe Great Lakes Region andthe Horno f Africa. 68. See UgandaNationalFocal Point (NFP) on Small Arms and Light Weapons, "Uganda National Action Planon Small Arms and Light Weapons", July 2004. The process o f formulation o f this plan was coordinatedbythe NFP. The planwas approved by the Uganda National Security Committee. 116 4.6.5 Northern Uganda Social Action Fund (NUSAF) The Northern Uganda Social Action Fund is a community-driven 5-year development project funded by the World Bank, the Government o f Uganda and Communities. The project's development objective is to empower communities in the 18 districts in Northern Uganda by enhancing their capacity to systematically identify, prioritize, and plan for their needs within their own value systems through implementation o f sustainable development initiatives that improve socioeconomic services and opportunities, thereby contributing to improved livelihoods by placing money in the hands o f communities. The project covers 18 districts; Gulu, Kitgum, Pader, Lira, Apac, Moyo, Yumbe, Adjumani, h a , Nebbi, Kotido, Moroto, Nakapiripirit, Soroti, Kaberamaido, Katakwi, KumiandPallisa. NUSAF i s implemented through three main components o f Community Development Initiatives (CDI), Vulnerable Group Support (VGS) and Community Reconciliation and Conflict Management (CRCM). Institutional Development is a support component to the core three components. The design o f NUSAF i s hinged on CRCM to rebuild relationships and strengthen social capital within this war raveged area so that the communities can demand development interventions like C D I andVGS sub-projects. Interventions under CRCM component have focused on activities that contribute to community harmony and building o f social capital including, namely: i)training and capacitybuilding o f community peace promoters, ii)traditional reconciliation ceremonies targeting formerly abducted children, iii)community peace meetings especially in Karamoja, iii)structured activities especially music, dance and drama and sports for youth inIDP camps andpsychosocial activities o fpeople inIDP camps. Inthe period August 2004 to September 31, 2005 a total of 2626 sub-projects had been funded under the programme. Of these 615 (23%) have been completed. Of the funded sub-projects, 1,592 are C D I sub-projects reflecting active participation o f the service poor, 891 are VGS sub-projects and 143 are CRCM sub-projects. Overall implementation of the programme i s however being affected by the high attrition rate (68%) inthe transition o f sub-projects from interest forms to proposals. According to draft Mid-Term Review report o f the programme, this indicates either the inadequacy o f existing capacities to carry out Extended Participatory Rural Appraisals (E-PRA) to ensure community involvement or delays at desk and field appraisals at the district 1eveP9. Each o f the implemented sub-projects has a Community Project Management Committee with 30% o f the members being women and at least one o f the three top executives' members being a woman. 69Northern Uganda Social ActionFund(NUSAF) October 17 -28,2005: Draft Aide Memoire 117 4.6.6 Mainstream Sector-level Interventions Many o fthe conflict-affected districts have continuedto benefit from central government conditional grant allocations for a wide range o f sectoral interventions for improving service delivery. There have also been a number o f initiatives by CSO, FBOs and the donor community runningalong side those by the Government. Particular sectors where interventions have occurred include education, water and sanitation, roads, health and agriculture. Details o f these interventions are discussed under the relevant Chapters (pillarandsectors) o freport. 118 Chapter 5: Good Governance Campaigns under Multi-party politics 5.0 Introduction Over the years Government has recognized that, good governance is an imperative to poverty eradication as it i s to development more generally. Achieving good governance calls for improvements that touch virtually all aspects o f the public sector - from institutions that set the rules o f the game for economic and political interaction, to organizations that manage administrative systems and deliver goods and services to citizens, to human resources that staff government bureaucracies, to the interface o f officials and citizens inpolitical and bureaucratic arenas. Introduction of the Multi Party System of Democracy and the re-emergency of political parties A relatively Independent ElectoralCommission Public Expenditure Reforni initiatives to iniprove the eflticiency and effectiveness of 119 .. Improving JLOS presence, especially in Northern Uganda and the Karamoja areas where service delivery has for longbeenhindered by conflict Ensuring that the anti-corruption agencies have the technical capacity to implement the anti-corruption agenda and non-state actors have the ability to hold leaders accountable Dealingwith the consequences o f declining Local Government Revenue 5.1 Outcome Achievements It is still a challenge to set targets o fperformance indicators under governance. However, the outcomes reviewed under this Pillar refer to political governance; human rights; the legal andjustice systems; andpublic sector management and accountability. 5.1.1 Democracy and PoliticalGovernance 1. Democratisation The term democracy indicates a form o f government where all the state's decisions are exercised directly or indirectly by a majority o f its citizenry through a fair elective process. When these factors are met a government can be classified as such. InUganda, democracy and its principles are seen as crucial for the well-being o f all Ugandans because o f the tumultuous history that the country faced for several years. Uganda i s a diverse society with divisions based on ethnicity, region, and religion. Following independence in 1962, Uganda has been has long periods o f violence and political instability. In 1986, the National Resistance Movement took power and brought peace to most o f Uganda. However, armed insurgencies, in particular the Lord's Resistance Army in the North, as well as military incursions, in particular in the Democratic Republic o f the Congo, continued to threaten domestic and regional stability for a considerable period. The Movement system established by the National Resistance Movement i s was an all-inclusive and consensus-based system. For sometime it limited the activities o f political parties, which were associated with Uganda's troubled past. Through the years, the Movement system has promoted the deepening o f democratisation especially through the decentralized system o f governance. Poverty eradication has for long been pursued as both a political and technocratic project. Over the years, the Presidency has given the PEAP political backing and it has been an effective statement o f government priorities. As a technocratic project the PEAP has been instrumental intranslating the political vision into mechanisms and instruments that have been effective andcredible inthe eyes o fkey outside stakeholders. Move to MultiParty Democracy Positive aspects o f the Movement political system include the fact that there i s a relatively high degree o f press freedom and freedom o f opinion, for example to discuss 120 the pros and cons o f the political system. The judiciary operates with independence. In 2005 the parties were allowed to operate freely in preparation for the 2006 general elections. Inorder to prepare for a smooth political transition and ensure that parties can develop political programmes, consult with the grassroots, and develop non-sectarian policies important strides have been taken to enhance the enjoyment o f the freedom o f association, which i s fundamental to political freedom7'. One o f the most significant steps was the enactment o f the Political Parties and Organizations Act. This Act opened the way for citizens with varying political opinions to be able to express themselves in a multiparty system. The Afro Barometer survey released in June 200571 indicated that the shift to a multi- partypolitical system is favored by 51percent o fUgandans, compared to 45 percent who express the desire to keep the Movement system. Compared with earlier surveys, this represents a trend toward greater support for multiparty rule. While a majority o f respondents in the Afro barometer survey support the change, respondents also express concerns about how a multi-party system would perform. A consistent plurality o f Ugandans expects that the Movement system will perform better than a multiparty system at provision o f good governance and securing o f basic rights and freedoms. This apparent contradiction is explained by the fact that while those who want to keep the Movement system tend to strongly believe that the Movement will perform better, supporters o f multi-partyism are much more sceptical in their expectations o f their preferred system. The survey also shows that urban Ugandans (63%) and men (60%) are more likely to favor a multi-party system. A gender analysis o f the Afro barometer produces interestingresults as shown inFigure 5.1. Figure 5.1: The Extent of the Gender Gap, 2005 80. Men 7 1 - Men no I X l l -I women 57 -;I women 44 wumen 43 women zn 0 .__ - .-._ M~ , Supportdemocracy Rejecta one-party Unaffiliated to a Supporttransition to a Know Correct number Supporlremovalof state politicalparty multipartysystem of presidentla1term presidentialterm limits limits Opinion Source: Author 's calculations of Afro barometer study 2005 These results indicate that, in Uganda today, men are more likely than women to prefer democracy to alternative political systems. Rural Ugandans, on the other hand, are nearly 70The Political Parties andOrganizations Act (2002) "AfroBarometerSurveyJune2005(COMPLETEREF?) 121 evenly divided on the issue: 49 percent support the shift, compared to 46 percent who would retain the Movement system.72 Inan effort to respondto these changes inthe political climate, the Political Parties and Organisations Act (PPOA) was passed in October 2005 by Parliament. It stipulates that all Political and Civic Organizations aspiring to manage and direct public affairs do conform to democratic principles in their internal organization and practice.73 As envisaged under PEAP, this will require that all political organizations must in their internal arrangements and practices ensure that their membership interact, discuss the affairs and objects o f their political organisation, regularly elect their leaders, set goals for their organisation andhave opportunity to review these goals from time to time. Under the PPOA, Parties and Organisations have been allowed to meet freely all over Uganda to decide on the leadership, promote party interests, hold meetings at the grassroots, and change leadership. The PPOA also stresses the issue o f accountability to the public by persons placed in positions o f leadership. Thirty Political Parties and Organizations have registered underthe PPOA (2002)74. The 2006 Presidential, Parliamentary and Local Council elections were held under a multiparty system. By December 2005 the major political parties in the country namely; the National Resistance Movement (NRM), the Forum for Democratic Change (FDC), the Democratic Party (DP), the Uganda Peoples' Congress (UPC) had democratically elected their leaders. Key Challenges: 0 Promoting electoral competition and political dialogue among citizens under multipartypolitics 0 Socializing citizens to democratic values andbehaviours under a multiparty system 0 Providing coherent, programmatically-basedpolitical leadership under a multi party system 2. Constitutional Review Process In a bid to respond to the challenges of Constitutionalism, the Government after wide consultations with the citizens o f Uganda put in place a Constitutional Review Process. This process started in 2001 and ended in 2005. As a result o f this process, two Bills (Constitutional Amendment Bill I1 and Constitutional Amendment Bill 111) were developed from the work o f the Constitutional Review Commission. These Bills propose the articles that require amendment. Constitutional Amendment Bill I1 was tabled, debated andpassed byParliament. 72Afiobarometer BriefingPaper No. 16:I s There A PoliticalGender Gap InUganda?July 2005 73 The Politicalparties and Organizations Bill (2005) 74Office o f the Registrar General, Ministry of Justice and Constitutional Affairs 122 The resultant Constitutional (Amendment) Act 2005 amended the Constitution in accordance with Article 261 o f the Constitution o f Uganda. Significant reforms emanating from this Act include; distinguishing Kampala as the capital city o f Uganda, providing for Swahili as the 2ndofficial language o f Uganda, providing for the leader o f opposition in Parliament under Multiparty Political System, removing the limits on the tenure o f office o f the President, creating the office o f the Prime Minister and the Deputy Attorney General, providing for the creation and functions o f the special courts to handle offences relating to corruption and establishing as well as prescribing the functions o f a Leadership Code tribunal. Some o f the clauses inthe Bills were more controversial than others. The most controversial were the awarding o f federal status to Buganda Kingdom; andthe lifting o fterm limits on the office o fthe Presidency .Eventually the presidential term limits were removed but the issues o f Buganda are under review. Notwithstanding the challenges o f the Constitutional Review process including the presentation o f the Omnibus Bill and its rejection, these reforms have all been geared towards efforts to create o f a democratic system built on Constitutionalism andthe rule o f law. 3. Electoral Politics Since 1986, Uganda runs on electoral politics. The Constitution o f Uganda, 1995 provides a sound foundation for the organization o f free and fair elections under the supervision and direction o f the Electoral Commission. This has encouraged more participation o fthe citizenry inthe electoral affairs o fthe country. Government has set the target o f ensuring that the electoral system guarantees regular, free and fair elections. However, there was a delay on the part o f the Executive to present Bills related to the elections in good time. This put strain and pressure on Parliament to discuss andpass the bills as well as the Electoral Commission to organise e the elections in a short time. However, Government does recognize that a sound legal framework i s a cornerstone to organizing and conducting free and fair elections. When there i s a fraudulent legal framework, elections can never be free and fair. Government put in place a program that recruited police constables to manage the 2006 general elections. This was done to ensure peace and security during the whole election process. This also ensured that the m y , which in the past has been cited in election- relatedviolence, was not involved inelection management. TheNational Voters' Register Another key aspect o f a free and fair election was establishing a credible voter's register. Inthis regard, the Electoral Commission compiled an up to date national voters' register with both bio and image data. This was made possible through the use o f the duplicate analysis system, which identifies double, or multiple registrations and assists to remove or eliminate them from the voters' register. There are however complaints from some citizens that the time for the voters update exercise was not enough and as a result some eligible voters never registered and 123 therefore will not vote in the forthcoming general elections. This was a challenge that has logistical implications, which the Electoral Commission found difficult to handle. Further, the voter education exercise picked momentum rather slowly, although it i s an important exercise in creating awareness and knowledge about the electoral system and one's role inthe whole process. Gender and Electoral Politics Owing to constitutionally guaranteed affirmative action, women's presence in political organs, particularly Parliament and Local Government Councils has steadily improved over the past 10 years. The percentage o f Women Members o f Parliament increased from 18% in 1995 to 24% in 2005, and in Local Councils from 6% in 1990 to 44% in 2005. This evidence suggests that there has been remarkable progress in terms o f numbers o f women ascending to leadership positions in Uganda. To a large extent, increased presence o f women in decision-making has shaped policy and practice. As a result o f women participation in decision-making, relatively progressive legislations have been enacted for example the LandAct. Notably, however, the number o f women in leadership structures is an essential but not sufficient condition for ensuring that gender analysis is integral to the design and implementation o f policies, laws and development programmes. Government i s therefore committed to ensuring that the political transition to multi-partyarrangements maintains a unified gender agenda and that the gains attributed to affirmative action are carried through and strengthened. Key Challenges to the Electoral Process Expensive and time-consuming elections, which have led to Voter apathy and fatigue; Some aspects o f the electoral process, such as election mal-practices, have not been adequately covered by the enabling laws; for example; there i s a grey area on the provision covering bribery o f voters and providing entertainmenthefieshment for supporters since the borderline i s not very clearly defined; Rigid constitutional deadlines for the conduct o f the elections and bye-elections which creates logistical problems Late enactment and amendment o f electoral laws without due consideration to ConstitutionaVStatutorydeadlines complicates the planningo f electoral activities; Election related malpractices coupled with election violence continue to dog the Commission; Lack o f birthcertificates to determine persons o f voting age and curb instances o f under-age voters; Registration o f voters has remainedvoluntary and the Commission cannot compel eligible voters to apply for registration as voters. 124 5.1.2 HumanRights The state o f human rights in the country continues to improve. However, illegal detentions and use o f torture in some detention centres is a major challenge to the enjoyment o f humanrights as reportedby the UHRC. As a torch bearer for Humanrights, the UHRC has beenable to; (a) Document a number o f humanrights violations inits Annual Reports. (b) Inspect anddocument conditions inprisons. (c) Monitor government compliance with international obligations under the ratified humanrights instruments/treaties. (d) Coordinate a national human rights education framework with other human rights organisations. 1. HumanRightsComplaintsReceived The Uganda Human Rights Commission received a total o f 1641 complaints in the year 2003. Of the complaints received 1038 o f the complainants were advised while 601 complaints were registered. In 2004, the UHRC received a total o f 2294 corn plaint^.^^ This posted an increase inthe number o fcomplaints receivedinbothyears. However, the increase may not necessarily reflect deterioration in human rights but rather increased awareness andtherefore reporting for redress. 2. State of Prisons The UHRC noted a remarkable improvement in the treatment o f inmates especially regarding the right to freedom from torture, cruel, inhuman and degrading treatment. The reported cases on torture within detention centres continued to steadily decline. The situation inthe local government prisons i s however worse o f f compared to that incentral government prisons. However some challenges have become chronic inprisons76. These include: 0 Lack o funiforms out o f 18,569 prisoners less than 2,000 have uniform. - 0 Over 90% o fprisoners lack beddings (mattresses andblankets). 0 There i s an acute lack o f transport. 0 There is overcrowding inprisons. Some prisons accommodate up to 12times above their capacity. The prisons that were meant to accommodate 9,094 prisoners now accommodate 18,83 1 giving an excess over capacity o f 8,229 prisoners77. 0 Most prisons are characterized by dilapidated buildings 0 There is stillpoor sanitation and insufficient food. 0 As at January 2005 out o fthe 18,831 prisoners, 11,569 were on remand, 7,191 were convicted and 71 were debtors. 75UHRC 7" Annual Report 76UHRC7" Annual Report 77UgandaprisonServices 125 Inthe year 2004, the Commission was able to carryout 396 inspections of detention centres. These were 105 to prisons, 201to policejails and 89 to militarydetentions. This has enabled it to carry out on spot checks to detention facilities and to appraise the conditions there. Box 5.1 Achievements in the Prison services 0 In2004, the Uganda Prison Services purchased 16,800 metres of cloth for its staff. It also managed to cloth all female prisoners inuniform. 0 Construction and renovation activities on Muinaina, Kotido, Namalu and Kanga Local Government Prisons. Two female wings were opened up in Bushenyi and Fort Portal prisons In2004105bought4vehicles 700 warders and wardressesplus 11cadets were recruited andtrained. I 3. CivicEducation The Uganda Human Rights Commission continues to spearhead civic education efforts aimed at empowering citizens with knowledge and information about their rights. Inthe 2004 alone, the Commission was able to hold 29 education and training workshops for security agencies, local council leaders, teachers, youths and students'*. This has helped to create informed citizenry that is aware o ftheir rights and responsibilities. Through its national framework for civic education, the Uganda Human Rights Commission has been able to successfully co-ordinate civic education programs with the donors on one hand and other civic education providers especially CSOs on the other. A total o f 5 CSOs have been approved and sponsored through donor funds to provide civic education. Because o f limited funding, it is not possible for the Uganda HumanRights Commission to offer civic education to the entire populace o f this country. The role to provide civic education, therefore, i s a preserve o f neither the UHRC nor CSOs alone, in fact FM radio stations have done tremendous job in providing civic education. Ugandans have greatly benefited through the diverse media that exists inthe country. The majority o f Ugandans discuss social, political, economic and cultural developments at ease from an informed point o f view., although there are still several challenges. As shown in Figure 5.2 below, more needs to be done for citizens to appreciate different aspects o f democracy. ''UHRC 7" Annual Report 126 Figure: 5.2: Appreciation of aspects of democracyamongthe populace Caution must however be taken that the media which in most cases is profit driven cannot be relied upon at all times to provide non-partisan civic education. There i s still a need to increase the number o f CSOs to provide civic education, although issues o f capacity are still a challenge. This will help to counter some misinformation or biased information in favour o f a particular individual or organization, given the fact that Uganda has now embraced multipartypolitics. 5.1.3 JusticeLaw andOrder (JLOS) Lack o f access to justice is a defining attribute o f poverty and an impediment to poverty eradication. A well functioning justice system therefore is a precondition to spur economic growth. Consequently, the focus o f JLOS i s not only to increase the capacity o f the justice agencies to deal with criminal and commercial matters, but to prevent and overcome poverty, by strengthening disadvantaged people's choices to seek and obtain a remedy for grievances. Within this context, and to address the policy commitment inthe PEAP, the sector Strategic Investment Plan focuses on improving access to justice and effectiveness and quality o fjustice. (a) CriminalJustice 1. Access to Justice There i s increased reporting o f crime (Figure 5.3) although this could illustrate increased public confidence. On the other hand, its reduction and management still poses a challenge to the sector ingeneral andthe Uganda Police Force inparticular. 127 Figure5.3: CrimeTrend inthe past 10years CRtYE TREND IN THE PAST qB YEARS 140,000 120,000 Y 100,000 2 2 00,000 VI 8 P 60,000 LL 9 p 40,000 20,000 0 1995 1996 1997 1998 1999 2000 2004 2002 2003 2004 YEARS However, there i s differentiated access to justice between men andwomen. For example, for gender based violence that remains a big issue today, reporting o f cases differs as shown inTable 5.1. Table 5.1: Action TakenbyVictims of Gender Violence Male Female Both sexes Action taken N % n % n % No action 168 24.8 314 33.3 482 29.8 Reportedto L C 85 12.5 106 11.3 191 11.8 Reportedto clan 87 12.8 125 13.3 212 13.1 Reportedto police 47 6.9 30 3.2 77 4.8 Sought Legal assistance 18 2.7 19 2.0 37 2.3 Left home 6 0.9 22 2.3 28 1.7 Reportedto religious leaders 7 1.0 11 1.2 18 1.1 Reported to probation & welfare 7 1.0 4 0.4 11 0.7 officer Total 425 100 631 100 1056 100 Reasonsfor No action Offenderwas partner 320 47.2 660 70.1 980 59.3 Opted for it as a way to discipline 56 8.3 65 6.8 121 7.2 There was no one to report to 153 22.6 109 11.6 262 18.7 Offenderwas a relative 146 21.4 25 2.7 171 11.9 Other 3 0.5 83 8.8 86 2.9 Total 678 100 942 100 1620 100 Source: POPSECMFPED-2002 Efforts to address gender based violence and the discriminatory socio-cultural practices that undermine gender equality and fairness in access to justice through legislation have 128 not yielded the desired outcomes. Enactment o f the Domestic Relations Bill and Sexual Offences Billinto laws has stalled due to, among other things, resistance from the public, on cultural andreligious grounds. There has been some improvement indelivery ofjustice ina number o f ways79: 0 Reduction in the length o f stay on remand from an average o f 24 months to less than22.2 monthsfor serious offences; and5.4months for petty offences Reduction in the number o f persons staying on remand beyond constitutional period from 39% to 1% in 2003 and 1% in 2005 for serious offences; for petty offences it reduced from 23% to 10% in2003 and 1.4% in2005 Reduction in time spent on remand after committal from 5% o f committals that had stayed beyond 3 years in 1998 to only 2% as at 2003 and 5.7% in2005 Reduction o f time taken to peruse a file by the DPP staff from 3 months to 1 month Reduction in the number o f files lost between Directorate for Public Prosecution (DPP) andPolice arising from improved information management This has been a result o fvarious interventionsnamely: (i) Infrastructure Development The main focus o f the sector has been to ensure geographical coverage through de- concentration of key JLOS institutions and services to ensure that the process of administering justice increases efficiency from entry to exit and also limits the distances people have to travel in order to access services. Some prisons serve more than one district thus creating congestion by sometimes 10-12 times more than the accommodation capacity. This has been largely achieved through renovation o f dilapidated infrastructure and rationalized construction o f courts, offices for the DPP, Prisons and Police Stations andPosts. (ii) Improved Operations The sector has invested substantially in retooling and equipping its institutions to strengthen institutional capacity to operate with increased efficiency and effectiveness. The UgandaPolice Forcehas beenprovided with pick-up patrol vehicles to enhance their responsiveness and visibility as a crime prevention strategy. Focus has also been directed to providing the Uganda Prisons Service vehicles to ease transportation o f prisoners to attend trials in courts. Although 35 central government prisons still do not have vehicles to transport prisoners to court, the sector's initiative to provide transport to deliver prisoners to attend court has resulted in a reduction o f the average distances prisoners have to walk in places with no vehicles from 15km in 2003 to approximately 6 km in 2005. 79 MidTermEvaluationofJLOS reform2004andPrisonersCensus2005 129 Machinery and equipment are central to the functionality o f the justice system. Effective investigations with up to date equipment are central to any criminal justice system and investment in vital machinery e.g. a Gas Chromatography and a DNA machine will facilitate speedy analysis o f exhibits, production o f required evidence in a timelier manner and at less costs, hence leading to increased disposal o f cases and reduction o f case backlog. Similarly, equipment to the Prisons Farms has contributed to building self- sustainability o f Prisons in food production for inmates and cutting down o f the budget by32% to feedthe approximately 19,600 prisoners. (iii) Recruitment and Human ResourceDevelopment Progress to date includes recruitment o f 500 Prison warderdwardresses and 500 Police officers per annum. This has resulted in an improved staff prisoner ratio from 1:9 to 1:6 towards the targeted international standard ratio o f 1:3, while it has also increased the Police strength resulting also in scaling the national Police-Population ratio from 1:1,734 to approximately 1:1,600. Once the 4000 Special Police Constables (SPCs) from among the auxiliary forces in the North are recruited and absorbed into the Police, it will improve the Police rations further to about 1:1,368. Inaddition, the sector has continued to have 5 Judges o f the High Court, 26 Grade 1 Magistrates appointed per mum to address case backlog and to adjudicate cases ina speedy manner. 60 State Attorneys have also beenrecruited to ensure countrywide coverage andregular prosecution o f cases. (iv) Improved Efpciency and Effectiveness of Justice An efficient and effective justice system can be demonstrated through the throughput o f cases at reduced cost. JLOS aims to improve its throughput o f cases at a reduced cost to the sector. In this regard, the sector has developed institutional strategic plans that are aligned to the sectoral planning and policy framework, and supported organizational development; developed codes o f conduct with minimum requirements to guide operations to ensure results oriented management; trained officers in specialized skills and established and operationalised regional offices and HighCourt circuits through de- concentration o f services and deployment o f staff up country. Other specific initiatives include: Functionalityof ECC andFCC The functionality o f the Executive Committee Courts (ECC) and the Family and Children's Court (FCC) is critical to the sector because they improve access to justice for the poor and marginalized groups e.g. children and women. For example, from the time FCC were gazetted in 1998 the functionality o f the courts has increased to over 40% with an increase in the probation and welfare officers from one or no officer per district in 2001 to one officer per district and at least two officers in20 districts in2003. NationalCommunity Service Programme The national community service program has been rolled over to all the districts in Uganda now and a minimum o f 3010 orders have been issued. This has contributed to decongestion o f prisoners by the same magnitude and saved government over 1-35billion 130 shillings in anticipated costs o f maintaining prisoners inprison. These offenders put in a total o f 77,580 man-hours o f community work valued at over 350 million shillings. The community service programme invariably has also prevented turning petty offenders into hardcore criminals while incarcerated, thus curtailing the rate o frecidivism. Quality of criminaljustice services Inabidto improve the quality o fjustice services, the sector hasdone the following. Improved Civic and Legal Education To this effect, JLOS institutions have established help and complaints desks, published training manuals and brochures as useful guides to users, while a number o f workshops, radio andtelevision programmes have beenheld. Reform of Criminal Laws The sector has also recognized the need to decriminalize petty offences. In order to increase the clearance rate o f criminal cases in the High court and the Court o f Appeal, legislation has been reviewed to increase jurisdiction o f lower courts. For example, amendment o f the Magistrates Courts Act and Trial on Indictment Decree to give jurisdiction over defilement cases whose suspects make up the majority o f persons on remand to Chief Magistrates was completed and awaits to be passed by Parliament. This will inpartreduce casebacklog and delays indelivery o fjustice. Key Challenges The main challenges with criminaljustice are: 0 Prison remand population remains high with 63% o f approximately 19,600 inmates on remand 0 Lack o f a strong penal code to address cases o f defilement. 48% o f those on remand are alleged to have committed the offence. (b) CommercialJustice (i) Commercial JusticeReform Programme (CJM) The Justice, Law and Order Sector has continued to focus on the implementation o f the Commercial Justice Reform programme. User satisfaction with the handling o f Commercial cases has improved. According to the CJRP First Follow Up User Survey 2004, 70% o f the lawyers, 59% o f the formal sector and 67 % o f the Informal Sector respondents were satisfied with the way commercial cases are handled.80 (ii) Access to Commercial JusticeInstitutions Physical access to Commercial Justice Institutions remains inadequate because the institutions are concentrated inKampala where over 90% o f the Law firms are located". CJRP FirstFollowUp User Survey 2004, Survey conductedby K2-ResearchUganda Ltd. a t p. 3 CJRP FirstFollowUpUser Survey 2004, SurveyconductedbyK2-ResearchUgandaLtd, at p. 41 131 There i s need to de-concentrate the JLOS services to other parts o f the country where the majority o f the population, especially the rural poor reside. The Uganda Registration Services Bureau (URSB) plans to set up offices in the Ministry o f Justice and Constitutional Affairs Mbale andMbarararegional offices. (iii) Key Reforms under commercialjustice Strengtheningthe CommercialCourt, Inspectorateof Courts, Companyand LandRegistries The Commercial Court has carried out a number o f case backlog reduction initiatives; and implemented its Customer Service Strategy. The Inspectorate o f Court acquired transport equipment and conducted field inspections o f courts in various parts o f the country in fulfillment o f its role. This enabled the Inspectorate to make a number o f important recommendations for improvingthe delivery and administrationo fjustice. UgandaRegistrationServicesBureau(URSB) commonly referredto as the Company Registryis forging aheadwith reforms. Efforts to strengthen the URSB havebeen geared at ensuring that the Bureau becomes fully autonomous as required by the URSB Act. There has been increased computerization and all key staff have been trained incomputer use and basic records management. The Bureau has revised its user fees that until 2005 were inordinately low inmany respects. As a result, there has been an increase inthe Non Tax revenue (NTR) collected bythe Bureau. 0 Reform Commercial laws and Regulations (including strengthening of claims againstinsolventdebtors) andenactingpendingbills The Uganda Law Reform Commission with support o f JLOS Reform Programme has made a number o f studies for enactment o f or reform o f laws that have an impact on businesses. 0 Simplify Court Procedures and Strengthen Alternative Dispute Resolution procedures. Simplification of Court Procedures JLOS commissioned a study for the review o f the rules o f Civil Procedure in as far as they concern the Commercial Court. The aim o f the study i s to make recommendations for simplifying the rules o fprocedure. Strengthening Alternative Dispute Resolution Procedures The Sector seeks to promote alternative dispute resolution mechanisms to ease access for those enterprises and persons that face barriers due to financial and other constraints. Establishment o f the Center for Arbitration and Dispute Resolution (CADER) was a major initiative under the Mediation Pilot Project (MPP), which made mediation compulsory for all cases filed inthe Commercial Court. The backlog o f commercial cases 132 before the Commercial Court was reduced. The successful settlement rate o f the cases for September 2003 to September 2005 i s 45%. Key Sector Challenges e Currently, the budget for the sector is inadequate to support the reform programme e Slow legislative process still leaves several bills at different stages i.e. before Cabinet andParliamentwith no impact e JLOS institutions are still inadequately staffed e Need to improve JLOS presence, especially in Northern Uganda and the Karamoja areas where service delivery has for longbeenhinderedby conflict e Strengthening its linkages and partnerships with civil society organizations, private sector and other institutions/sectors o f government for concerted effort e The livingconditions for prisoners remain poor e Reportedcrime is on the increase, there i s therefore need to develop strategies for crime prevention that would ultimately limit inflow o f cases into the criminal justice system e Condition o f staff notably the Police and Prisons service remains poor and calls for pay reform andimproved work conditions JLOS i s currently finalizing its second strategic investment plan that will run from 2006/2007-2010/2011. The sector will focus on criminal, commercial, land and family justice issues thus giving greater prominence to addressing concerns o f the poor. The sector challenges that have been identified will continue to be addressed by the sector under the second plan. 5.1.4 Accountability andTransparency in PublicLife Corruption has a direct bearingon the persistent levels o fpoverty experienced inUganda. The National Integrity Survey 2003 indicates that the sectors leading in the incidence o f corruption are police, health services and the Judiciary, followed by tax collection and local councils. This implies that access to health services and justice, law and order services which relate to the basic rights o f citizens cannot yet be taken for granted particularly inrural areas. Nevertheless the Survey, (2003), indicates that anti-corruption . efforts have yielded positive results: A marked reduction in the reported incidence o f bribery since the 1998 survey, . down to 46 % from 63% for the Police, 31% from 40% for the URA, and 29% from 50% for Magistrates Courts General satisfaction with improvements in specific services: health, education and agriculture despite dissatisfaction being expressed with tendering procedures and contract management. However, despite evidence o f some progress corruption remains a major problem. Significant progress has been made inbuildingthe institutional and legal framework and should provide the basis for a more effective anti-corruption strategy. However, great 133 determination is required to make a real impact on the current levels o f corruption and to move to a situation to where corruption is a high-riskactivity. Recent work suggests increasing levels o f poverty and a growing inequality inUgandan society8*. Corruption has a direct impact inthis situation because poor people are highly vulnerable to demands for bribes and where corruption impacts on the quality o f social services it is the poor who are most affected. Corruption increases poverty. Box 5.2: CorruptioninEducatiod3 The Value for MoneyAudit onthe UniversalPrimary EducationProgramme indicatedthat: Out of the 140 sites inspected 45 % were unsatisfactory and it i s estimated that UShs15 billionhasbeenwasted on poor structures. Tenders were awarded to incompetent contractors, who at times failed to interpret the technical guidelines. 0 Technical evaluations by the District Tender Boards were at times disregarded without a good basis. Many of the classrooms did not meet technical guidelines that require classrooms to last 30 years. Inextreme cases structures collapsed before they were completed. Insuch situations it is primarily poor peoplewho mustbear the burdenof corruption interms of inadequate or at times dangerous structures and facilities and poor educational provision. As a result the poor are being deprived of educational opportunities and future earning capacity is limitedas a direct result of meed and corruption. The fact that corruption has become an issue o f national discussion and action is initself an achievement in the fight against corruption. Over the period under review, emphasis has beenplaced on understanding the nature o f corruption and its effects on the economy and the country as a whole as well as buildingthe infiastructureto combat corruption. The global anti-corruption movement, represented by Transparency International, disseminates its Corruption Perception Index (CPI)84 and this has assisted in keeping a focus on corruption at the center o f poverty eradication efforts. Uganda has been rated at the lower levels and categorized as a country with "severe corruption problems" and has achieved limited improvements in its CPI rating over recent years. It is therefore important for Uganda to keep making improvement in the perception on corruption however modest these may be. Figure 5.4 shows the trends in CPI for Uganda since ** MFPED (2005) Poverty Eradication Action Plan200415-200718,MFPED, Kampala 83 Value for Money Audit on the Universal Primary EducationProgramme. Office o fthe Auditor General July 2003 84 The TI Corruption Perceptions Index (CPI) ranks countries interms o f the degree to which corruption i s perceived to exist among public officials and politicians. It is a composite index, drawing on cormption- related data in expert surveys carried out by a variety o f reputable institutions. It reflects the views o f business people and analysts from around the world, including experts who are locals in the countries evaluated. 134 1999. Uganda's rating reached a low in2001 with a score o f 1.9 and a highin2004 with a score o f 2.6. The most recent rating for 2005 was 2.5. Figure5.4: Uganda's on TransparencyInternationalCorruptionPerception Index 1999-2005 1999 2000 2001 2002 2003 2004 2005 It should be noted that CPI list is a subjective index, based on perception. However it draws on a range o f different surveys which improves the accuracy level, (the 2005 CPI for Uganda is based on 8 different surveys). Therefore, it is a rough indication o f the perception and extent o fthe problem o f corruption within a country. Other studies in Uganda have also indicated that corruption is an endemic issue that needs serious Government intervention. A study by the Centre for Basic Research for Transparency Uganda found out that when respondents were asked whether they were aware o f political corruption, overall 98% said yes and only 2% were not aware. However, all respondents inKampala (100%) and Rakai (100%) were aware o f political ~ o r r u p t i o n . ~ ~ 85Center for Basic Research (2005) The Impact of Political Corruption on Resource Allocation and Service Delivery inLocal Governments in Uganda, Final Report, Prepared for Transparency Uganda, Kampala 135 Government recognizes that tackling corruption and building accountability across the public sector requires a great deal more than the establishment o f formal structures. The essential elements o freform are closely inter-related and include: e Provision o f adequate resources on an ongoing basis; e Effective institutional reform, legislation, systems andregulations; e Enforcement; e Education and training; e Public standards, ethics and codes o f conduct; e Public attitudes to corruption and to State resources; e Public information and adequate systems o f access; e A free and active media andincreasinglydemocratic institutions; e Public sector reform, including pay reform; e Political will and direction. Building accountability is a long-term issue that requires rigorous, consistent and highly motivated approaches that tackle all these factors intandem. It is clear that the overriding factor in tackling all aspects o f accountability is the political will on the part o f the Government and all Parliamentary and Local Government institutions to take on these issues in a consistent and vigorous manner. With active political support real progress can be achieved in reducing corruption and contributing directly to reducing poverty in Uganda. 1. The Inspectorateof Government(IGG) The Leadership Code o f Conduct Act 2002 aims to ensure that all Leaders are accountable by establishing that the acquisitions o f assets were not through corruption. The Code prohibits conduct that compromises honesty, impartiality and imposes penalties on leaders who breach it. The law requires officers to declare their incomes, assets and liabilities every two years inorder to ensure their integrity and accountability. ByMay 2004 are the following was achieved: w Analysis o f declared assets and information collected from key categories o f leaders; w Initiation o f Assets Verification; w Investigation o f all complaints received from the public by lSt November 2003; Presentation o f a time-bound actionplanfor the implementationo f the Code. Submission o f declarations by the leaders for the year 2005 were received up-to the deadline date o f 31" March 2005. Receipts and examination o f leaders' declarations for 2005 was done at the same time. 90% o f the leaders submitted their declarations for the year 2005. Identification o f leaders who failed to declare their incomes, assets and liabilities is on going. 136 A public leaders' Register with the names of all the leaders under the LeadershipCode Act was created into the Leadership Code of Conduct (LCC) database in 2004. A cleaning process of the leaders register begun in 2004 to correct mistakes in names, institutions andrepetitions where a leader appears intwo different departments. 2. TheNationalAnti CorruptionStrategy2004-200786 The National Anti-Corruption Strategy for the Government of Uganda is in its initial stages o f implementation andthe following priority actions havebeen identified: International Conventions Uganda fully participated in the negotiations and preparations for the United Nations Convention Against Corruption and the African Union Convention Against Corruption. InDecember 2003 Uganda signed the UNConvention andinSeptember2004 Uganda ratifiedit. The UNConvention came into force on gthDecember 2005. SimilarlyUganda signed the African UnionConvention Against Corruption inDecember 2003. Itwas ratified by Uganda inAugust 2004 and the instruments deposited inOctober 2004. To date Uganda i s one o f only ten African countries that have fully met their obligations under the convention and as a result AU Convention has not yet come into force. Development and Updating of Legislation The development and updating of legislation is an important part of building the anti- corruption infrastructure. In the period under review a number of important steps have beentaken. (i) AspartoftheConstitutionalreviewprocessthepositionoftheInspectorateof Government was clarified. The revision of the Constitution made provision for the President or any local authority to report to Parliament at least once every year on reports submitted to them by the Inspectorate of Government. In addition provisions for a Leadership Code Tribunal and for a special court to combat corruption were introduced. (ii) OnfootofthepassingoftheConstitutionalAmendmentBillitwasnecessaryto revise the Leadership Code Act. In 2005 a Legal Working Group began reviewing the legislation. Discussions are proceeding on the detailed provisions of the Revised Leadership Code Act. (iii) ThePreventionofCorruptionAct 1970hasbeenundergoingrevisionandthis process involved extensive consultation. The provisions of the revised Bill bring Ugandan legislation into line with the provisions of the UN Convention Against Corruption. The scope of the legislation and definitions of corruption have beenwidened andpenalties increased. 86National Anti-Corruption Strategy to Fight Corruption and RebuildEthics and IntegrityinPublic Office 2004-2007. Directorate of Ethics and Integrity, Office o fthe President July 2004. 137 (iv) The Freedom o f Access to Information was enacted by Parliament in July 2004 under the guidance o f the Directorate o f Information. It is envisaged that over time, implementation o f the Act will encourage a more open and transparent approach to the sharingo finformation relatingto government decisions andprocesses. (v) Anti-corruption agencies identified the protection o f witnesses as being a key element in fight against corruption. As such work began in 2005 on the preparation o f Whistleblower and Qui Tam legislation. When enacted this will provide for the legal protection and support for witnesses and enable civil actions to be taken by individuals to recover public assets lost to corruption (QuiTam). 3. Strengtheningthe CapacityofAnti-CorruptionAgencies Limited resources, expertise and organisational capabilities place severe limitations on the capacity o f anti-corruption agencies to deliver consistent progress in terms o f prosecutions, convictions and recovery o f assets. It i s recognised that building such capability involves many factors both internal and external and will take considerable time. To assist this process anti-corruption agencies have sought to identify the resources and capacity needed to deliver on their mandates so as to better position themselves to plan for and seek the necessary resources. An organizational assessment o f the Directorate o f Ethics and Integrity (DEI), Inspectorate o f Government (IG), Directorate o f Public Prosecutions (DPP), and Criminal Investigations Department (CID) has been undertaken to assess the capacity o f these organizations to fulfill their mandates and develop realistic financing and staffing plans for a 3-5 year period. 4. AccountabilitySector In a bid to coordinate the action of institutions responsible for accountability, Government established an Accountability Sector. A Working Group to manage the work o f the Sector i s composed o f the Ministry o f Finance, Planning and Economic Development (MoFPED), Office o f the Auditor General (OAG), Directorate o f Ethics and Integrity (DEI), Inspectorate o f Government (IG), the Public Procurement and Disposal o f Assets Authority (PPDA), Ministry o f Local Government Inspectorate Department, Ministry o f Public Service Inspectorate Department, Uganda Bureau o f Statistics (UBOS) andRepresentatives o f International Development Partners. Discussions are beingheldwith MoFPED to clarify the financial arrangements for the fundingo fthe Accountability Sector Secretariat. 5. InformationSharingandMonitoringfor Anti-corruption The Joint Working Group on Information Sharingestablished by the Inter Agency Forum in2005 is to establishing mechanisms for highprofile case monitoring and information sharing. Initial work i s being done to establish a baseline o f the type and consistency o f 138 information sharing and to clear any technical issues that may arise around sharing information on anti-corruption issues. Monitoringprogresson the implementation of the National Anti-Corruption Strategywill be assisted by work that is being undertaken on the development of indicators for each anti-corruption agency and the draft indicators have been submitted to each anti- corruption agency and await final discussion and approval. Efforts have been made to ensure all indicators are consistentwith the PEAP monitoring and evaluation approach. 6. Commissionsof Inquiry Commissions o f Inquiry and the pursuit of recommendations arising from such Commissions andor White Papers remain areas o f major concern. Political, legal and administrative decisions are required to bring about the finalisation of outstanding matters. The DPP completed investigations and made decisions on prosecutions arising from Commissions of Inquiry (Commission o f Inquiry into the Alleged Exploitation o f DRC's Natural Resources and Commission of Inquiry into Helicopter Purchases). The DEI brought forward proposals for Cabinet consideration for the formal review of the extent and scope of implementation o f each Commission o f Inquiry undertaken and to review the use of Commissions o f Inquiryas amechanism for investigation inthe light o f experience to date. Cabinet approved the proposal. Terms o f Referencehave now been agreed and ajoint working group establishedto oversee the exercise. 7. Consultationswith CivilSociety Organisations The National hti-Corruption Strategy recognised the importance of collaboration between government and civil society inthe fight against corruption. Inthe Strategy the Government committed itself to "structured and systematic consultations". Two rounds o f consultative meetings have been held with CSOs and a 3-year action developed in association with CSOs. The Inter Agency F o m approved a formal proposal on the structure o f the consultative relationship and the joint areas of working and consultations begunformally in2006. The DEIhas actively sought to build coalitions in the fight against corruption and holds annual workshops to engage in public discussions on aspects of accountability. A programme was initiated in 2003 to promote high standards and good practice among professional groups in society. Model Codes o f Practice and Client Charters have been developedinassociationwith professional groups. Key Challengesfor the Sector Developing an effective and strategic Accountability Sector; Ensuring that the anti-corruption agenda is actively supportedbythe political establishment; Achieving improved success inenforcement andreducing levels of corruption; Ensuring that the legal andregulatory framework i s up to date and effective; 139 Promoting anti-corruption awareness and engagement with anti-corruption policy inall sectors; 0 Improving the capacity o f anti-corruption agencies to perform; 0 Convincing the public at large to reject corruption and corrupt enrichment within Ugandansociety. 8. NEPAD andthe African Peer Review Mechanism NEPAD is a vision and strategic framework for Africa's renewal. NEPAD aims at accelerating and deepening regional integration and building competitiveness in African countries. NEPAD's long-term goal is to eradicate poverty through the Millennium Development Goals (MDGs), which is in tandem with the PEAP goals. This is another mechanism for enforcing accountability. Progresson theAfrican PeerReviewMechanism(APRM) The Coordination function o f NEPAD/APRM in Uganda was moved from MFPED to NPA in August 2004. Some achievements have been registered to date with support . from UNDP. The following has been accomplished: The NEPAD/APRMUnit was set up and commenced work inAugust 2005. The Uganda National APRM Commission Members who have been constituted from . key stakeholder institutions in an all-inclusive, transparent and democratic manner;havebeeninducted. Technical Partner Institutions (TPIs) to carry out the Technical Assessments were . mobilized andthey have submitted proposals that are being evaluated. NPA hosted two Support Missions inFebruary and September 2005, ledby Prof. Adebayo Adedeji, Member o f the APRM Panel o f EminentPersons. A Communication and Advocacy Strategy for the APRM process has been developed. A 3-year Programme document for the implementation o f the African Peer Review Mechanism (APRM) process and other NEPAD initiatives for Uganda has been developed and submitted to the UNDP Country Office for support. 5.1.5 PublicFinancialManagement The Government has undertaken a number o f Strategic Financial Management reforms aimed at supporting Government's goal o f poverty eradication. The primary objective o f Government's Public Expenditure Reform initiatives i s to improve the efficiency and effectiveness o fpublic expenditure management processes, to promote accountability and transparency, and thereby enhance the quality o f public service delivery. The following are some o f the key reform areas currently being undertaken and their status to date will be discussed the sections that follow: Non Tax Revenue [NTR] Commitment Control System [CCS] Professional accountancy andIT Training programme 140 Fiscal Decentralization Strategy [FDS] . Asset Management inGovernment Accountability Sector Working Group [ASWG] Decentralisation o f Internal Audit h c t i o n inCentral Government Integrated Financial Management System [IFMS] Cleaning the Government Payroll 1. Non-Tax Revenue(NTR) Government introduced the above reform programme inFY 2001/02 with the objective o f increasingthe contribution o fNTR to the national budget. Since its introduction with a budget of UGShs.14bn, NTRcollection has hadprogressiveimprovement currently standingat abudgetofUGShs.ll2bn. A summary o fthe perfonnance for the period of implementation is giveninFigure 5.5 below: Figure 5.5: Performanceof the NTR FY 2001/02-2005/06 1207 5m v) 100 3 80 m c .-E UBudget (Bn. UG Shs) 1 1 60 .-Eo v) 40 C u 20 0 0 0 FinancialYears Source: Accountant General's Ofice A study undertaken in 2003 made several recommendations to improve NTR performance. Among the recommendations being implemented include the revision o f rates that were found uneconomical, the resumption o f the publication o f summary o f all the revenue sources due to Uganda Consolidated Fund. In addition the study helpedin identifying new sources of revenue that could be explored. The introduction o f Uganda Revenue Authority (URA) in the NTR collection greatly improved the management through minimisation o f leakages in the collection and accountability. Radical changes have been introduced such as the transfer o f the collection of court fines and bail fees to URA. The Government also embarked on 141 producing a Revenue Estimates book, which will indicate all items o f revenue collected byeach Government agency. The major constraints faced in NTR management are; unrealistic budgeting, untimely reconciliations, delayed reporting and transfers to the consolidated fund and the delayed implementation o fthe NTR Consultant's recommendations by the stakeholders. 2. CommitmentControlSystem(CCS) Commitment Control System (CCS) was introduced in 1999/2000 Financial year with the main objective o f eliminating the creation o f Domestic Arrears and to control excessive expenditure, so that Accounting Officers spend within the limits o f resources allocated to them on a quarterly basis. Since its introduction, the system has drastically reduced the creation o f new domestic arrears and created discipline in Financial Management, especially incentral votes. Analysis o f the performance o f the CCS since its introduction shows that the system reduced Pre-CCS arrears from 87 billion in FY 1998/99 to 19 billion at end o f FY 1999/2000 following the introduction o f the CCS. The challenges encountered in implementing the CCS include; failure by Accounting Officers to control commitments in accordance with CCS guidelines, non-recording o f some commitments in books o f accounts, poor maintenance and keeping o f invoice registers to keep track o f all LPOs, invoices and payments against those invoices, concealment o f some over commitments resulting into arrears, resistance to implement CCS, delayed cash releases, limited resources o f Government leading to insufficient quarterly limits andunforeseeable events e.g. epidemic outbreaks, significant fluctuations inworld marketprices for keyitems such as fuel. Some solutions to these aspects include; continuous monitoring and supervision by Treasury/Inspectorate, strengthening the Internal Audit function and sensitizing all stakeholders about the system, so that they fully appreciate its benefits andaccept it. 3. CapacityBuildingandTraining Government recognised the need to have inplace capacity building andtraining activities for accounting, auditing and information technology cadre to enable the acquisition o f skills to support the implementation o f these planned reforms. Training and sensitisation activities linked to the proposed changes in financial management arising from the new financial legislation, and the implementation o f the Integrated Financial Management System are underway. These training activities comprise o f orientation training in the Public Expenditure Management, professional training in accountancy and information technology, and specialised training in areas like audit, security and systems maintenance. 142 The number o f Qualified Professional Accountants and Accounting Technicians in Central, Local Governments and Office o f the Auditor General has since increased from 55 to 257. This is an increase o f 367%. Professional training has improved financial management o f Government accounts. Reports are produced on time and are more reliable. Furthermore the systems are now more transparent and accountability for public resources has been enhanced. As evidenced from the LGDPII annual assessment carried out in October 2004, over 90% o f Local Governments produced final accounts on time.87 By 2005, Government was sponsoring 2,871 staff from Central and Local Governments, and from the Office o f the Auditor General to undertake professional and technician accountancy training. 4. Fiscal Decentralisation Strategy Fiscal Decentralisation Policy i s at the heart o f PEAP. The Decentralisation Policy has led to rapid increase in the flow o f resources to Local Governments and corresponding increases inthe associated reporting. Most o f the transfers are PAF related and tied to the achievement o f P E N Goals. There has therefore been growth in the number and diversity o f transfer mechanisms from Central Government and Donors to Local Governments and this has been a matter o f growing concern in both Central and Local Governments. The multiple transfers clouded problems o f financial accountability and costs o f maintaining the associated bank accounts. In order to deal with the problems above, Government implemented the Fiscal Decentralisation Strategy during 2003/04 with the general objective o f strengthening the process o f decentralisation through increasing Local Governments' autonomy, widening local participation in decision making and streamlining the fiscal transfer modalities to Local Governments in order to increase the efficiency and effectiveness o f Local Governments to achieve PEAP goals within a transparent andaccountable framework. The Pilot implementation o f FDS commenced during the Financial Year 2003/04, with the following Local Governments: Tororo, Soroti, Kyenjojo, Bushenyi, Kabale, Rakai, Masindi, Kotido, Lira, Kitgum, Kampala, Kalangala Districts, and Kabale, Gulu, and Jinja Municipal Councils. MoFPED carried out the rollout to the rest o f the Local Governments in close coordination with the Local Government Finance Commission and Ministry o f Local Government during the FY 2004/05. The majority o f the Local Governments are now capable of producing their Budget Framework Papers as well as submitting the relevant reports to the centre. MoLG (2004), LGDPIIAnnualAssessmentReport,MoLG,Kampala 143 One o f the major changes introduced by the FDS in LG Financial Management is the rationalisation o f the previously many bank accounts, which were based on conditional grants, into a single bank account per sector. The ideal situation will be for each district to have only 12 bank accounts. Under this arrangement, Local Govemments are able to track the expenditures o f the various activities under the sector through the vote books andledgers. Similar reportscanbeprintedoffthe IFMS for sites that are connected to the system. 5. DecentralisationofInternalAudit functionin CentralGovernment Inaccordance with Section 7 ofthe Public Finance andAccountability Act 2003, it is necessary that fully-fledged internal audit units are established in Government reporting entities to enhance the function of Internal Audit and to reinforce service delivery in line with internationally accepted best practices. The decentralization o f Internal Audit is being carried out in a phased manner over a period o f three years, due to the highcost o f implementation. The decentralization is being piloted in Ministry o f Finance, Planning and Economic Development and Ministry o f Public Service commencing with the year 2005/06. Lessons from the pilot sites will be used to roll out to the rest o f Central Government ministries. 6. IntegratedFinancialManagementSystem(IFMS) IFMS is one o f the various financial management reforms, which i s focused on computerization o f the budgeting and accounting functions of Government. The IFMS has been implemented in a phased manner. The system was piloted in 6 Ministries (Agriculture, Works, Lands, Education, Health and Finance) and 5 Local Governments (Bushenyi, Lira, Jinja, KCC- City Hall and K C C - Central Division). Along the way several milestones have been attained andseveral achievements andchallenges learnt. 7. IFMSAchievements 0 Public ExpenditureManagement: It is no longer possible to commit Government when there are no sufficient funds 0 Acceutability: One of the biggest challenges at inception was winning acceptability for the IFMS. Users had to be helped to migrate from the manual based budget and accounting systems to the IFMS 0 Integration of Information: Prior to IFMS, systems were disjointed and one hadto assemble bits andpieces o finformation to make a meaningful report for decision-making. 0 Reporting: The IFMS has revolutionalised production of both statutory and management reports. 0 Increased transparency: The IFMS displays transparency in transaction processing and eliminates the `black box' perception pertaininginthe legacy systems. 0 Change management: The paradigm shift from manual to computerized processesnormally entails changing the way we do our business and inother cases outright elimination of certain processes. 0 Harmonisation: Local Governments have different structures from central Government and some processes are totally different yet a system for use both at the Centre and in Local Governments had to be develoned. 144 competent cadre to sustain. 0 Commitment outside the svstem: Several sites still incur excess expenditure by committing outside the system by way of letters or agreements and these constitute excess expenditure to the extent that they are not supportedby accounting warrants. 0 Local Governments transactions outside IFMS Unlike the Central Government, Local Government sites make payments using manually prepared cheques and this gives opportunity for users who are not committed to the IFMS to prepare cheques without completing the processingof the transactions on the system. 0 Insufficient usageofthe IFMS The IFMSis avery versatileanduser-friendly systemcapable of generatingmany reports that we use inday-to-day decision-making, 8. Clean up of the GovernmentPayroll Payroll and pension management has been a problematic area for quite sometime. Government i s reviewing the current systems and controls over the management and processing o f Central Government payrolls and pensions. Currently cleaning up the Government payroll i s on-going and this has been implemented by the setting up o f the Inter - Ministerial Task force that has made recommendations to eliminate opportunities for loss of resources. 5.1.6 Recommendationsfor further strengtheningthe Sector 1. There is a need to proceed cautiously inorder to ensure that Government gets value for money for all investments made in improving the overall accountability inthis country. .. 11. Capacity buildingand knowledge transfer is critical to ensure sustainability o f the reforms currently being implemented. ... 111. Staff must be recognised and rewarded when there i s a realisation o f significant improvements in efficiency and effectiveness in day-to-day operations. iv. A strategy should be worked out to extend IFMS to Agencies, Commissions andother LocalGovernments. V. Enforcement o f the Public Finance and Accountability Act 2003 and the associated regulations should be strengthened in improving public sector financial management. vi. IT capacity and training is increasingly becoming critical and there is a need for Government IT policy and strategy. 5.1.7 TransparentandEfficientPublicExpenditureThroughAuditing 145 The Office o f the Auditor General (OAG) plays a very critical role in effecting transparent and efficient public expenditure. The OAG audits all the public accounts o f Uganda and reports the findings to Parliament, which discusses the reports and recommends appropriate measures to improve the efficiency and effectiveness o f public expenditures. Parliament also recommends appropriate action to correct the wrongs committed inincurringpublic expenditures. Performance of Audits It is expected that the bill will be passed into an Audit Act; and will widen the scope of the power o f the Auditor General (AG) relevant to better discharge o f hisher functions, provide for auditing o f classified expenditure as well as provide that Parliament ensures that adequate resources, facilities and independent budget are made available for the control o f the Auditor General for effective performance o f hisher office. Concurrently, the O A G has beenrestructured andwill be appropriately, staffed and equipped to make it undertake its critical expanded role more effectively inthe existing dynamic Government environment. Key Challenges ....Ensuringtimely completion o fthe Audit Act anddraft the necessaryregulations to operationalise the law inaccordance with the Constitutional amendments Achieving compliance with International Public Sector Auditing Standards through training professionals Equippingofficials with skills for conducting Value for MoneyAudits Dealing with the timely auditing o f all public funds through clearing the backlogs o f lower local governments for the financial year 2003/4 5.1.8 Decentralization Decentralization inUganda is a policy instrument aimed at improving local democracy as well as increasing efficiency and sustainability in the delivery o f essential services countrywide. However, apart from an enormous increase in fhding for investments at the local level as experienced over the past few years, the argument behind the decentralisation process that has received most attention has been the motive o f democratic reform to promote popular participation, while the aspect o f effectiveness and efficiency has received less attention. Over the review period therefore, a number o f important achievements can be recorded, but equally a number o f challenges remain and need to be addressed. The Decentralization sector held its first Joint Annual Review in 2004 after close to 10 years o f implementation. This review was used to take stock o f the various achievements and the outstanding challenges o f decentralization. A critical part o f the review was also to reflect on the connection between decentralization and poverty eradication. 1. Performance of Decentralization The main question i s whether `reality' in the Local Government matches with the presumed relationships. The Joint Annual Reviews o f Decentralisation (JARD) 2004 and 146 2005 were put in place to review the progress made and the challenges met during this process. The key issues that emerged duringthe review for the decentralization sector include but are not limitedto the following: The development of a DecentralizationPolicy Strategic Framework (DPSF). It was recommended that MoLG should develop a coherent policy document on decentralisation, namely: the DPSF, which should cover all issues and aspects o f the decentralization policy. A draR DPSF has been developed and discussed in JARD 2005. A LocalGovernment Sector InvestmentPlanwas also developed anddiscussed. Review the LGset-up to make it more effective and efficient It was observed that the current set-up o f local government councils is not cost effective and efficient. It was therefore, recommended, the local government structures be reviewed prior to the elections of 2006 so that a more efficient and effective machinery is brought into force. In an attempt to address these issues, a Bill amending the Local Governments Act was developed and has been passed by Parliament. One o f the amendments i s that the membership o f the District Executive Committees has been reduced from seven to five: namely the Chairperson, Vice chairperson and three secretaries. The Local Governments Act has also been amended and District Tender Boards have been abolished andwill be replaced by Contracts Committees. The Contracts Committees will be composed o f five technical staff members and these will not draw extra allowances. The amendments will all in all reduce the costs o f administration in local governments. 0 Comprehensivereview of the Local Governments Act and Local Government Regulations It was observed that most o f the laws governing the PEAP in the country predate the Local Governments Act. This has created disharmony on the ground and inthe way line ministries operate under the decentralized setting. The schedules in the Local Governments Act do not cover in sufficient detail all the activities that the LGs are supposed to undertake. Moreover, the capacity for enacting ordinances and bye-laws i s still low in the LGs. It was, therefore, suggested that the LG Act be reviewed comprehensively. Inaddition to the two Local Governments (Amendments) Bills of2005, which have been passed by Parliament, the Local Government Financial and Accounting Regulations, the Procurement Regulations and the Public Accounts Committee Regulations are being revised. Preparing a policy paper on relations and mutual expectations between LGs and other players like Civil Society Organizations (CSOs), and private sector 147 It was observed with appreciationthat CSOs are now more involved inlocal government activities. The Ministry was tasked to develop a Policy Paper on relations and mutual expectations between LGs and other players such as CSOs and the private sector. A National Action Plan on Public-Private Partnerships has been finalised as a precursor to the development o f the Private-Public Partnership Policy. Development of a communication plan to create public awareness on local taxation It was agreed that concerted efforts be made to inform the public on the importance o f local revenue and what taxes are used for. This was to be implemented by building on existing communication strategies and practices in place. By 2005 the Ministry had developed a communications strategy that is to bepopularised and implemented. Enhancing accountability and transparency to reduce corruption in LGs It was agreed that a Strategy on sharing information about local government issues such as contract awards, financial disbursements and implementation reports be developed and adopted. LOGICS and LOGFIAS databases have been designed to monitor local government performance and a generic training module on Ethics, Integrity & Accountability has been developed. 0 Establishment of service delivery standards in local governments The Ministry o f Local Government was to conduct a study on how local governments' leaders and administrative structures can better support the quality o f service delivery in five sectors o f Health, Water, and Sanitation, Roads, Education and Production. A major activity was to develop service delivery standards in the key areas o f health, water and sanitation. The Ministry o f Water, Lands and Environment has developed National Service Delivery standards for the water sector. The other Ministries plan to do the same indue course. Need to devise strategies for mobilizing more Local revenue It was observed that most LGs are faced with the critical problem of identifying and raising sufficient local revenue to meet their financial obligations. The Ministry and the LGFC were tasked to implement this recommendation. By 2005 the Ministry had established a Local Revenue Enhancement Co-ordination Committee (LRECC) and Desk. Funds have also been released as seed capital to enhance local revenue activities in over 35 local governments. The Ministry o f Local Government i s still in a search for a local revenue source to replace Graduated Tax. Service delivery assessment instruments A number o f service delivery monitoring and inspection manuals have been developed for use by and for LGs. There is, however, no instrument to make a comparative analysis o f service delivery performance levels over a period o f time. A framework i s already in place to facilitate the design and implementation o f the assessments. Inthis regard, the 148 first joint annual assessment o f the performance o f Local Governments has been concluded. This will present lessons for the design o f a more comprehensive system. Minimumallocationformulaof grantsto LGs The Ministry in collaboration with the MFPED, LGFC, and MOPS was tasked to establish actual costs and rationally determine LGs financial obligations towards the cost o f service delivery and the wage bill after the restructuring exercise in order to avoid wage shortages in Local Governments. Preliminary activities geared towards accomplishing this task are underway by 2005. However, this activity will be fully undertaken after the restructuring o f local governments, which i s about to be completed. Preparingproposalsto bringoldlawsinlinewith the decentralisationpolicy It was observed that there were many laws that have since been superseded by the decentralization process. It is therefore proposed that these laws be amended to be consistent with the Local Governments Act. The Ministry participated in the harmonisation o f the old laws, such as the Fishing and Crocodile Act; and the Trading License Act. This is a continuous exercise in which the Ministry will vigorously participate. Civiceducationof electedleaderson their roles andresponsibilities Sensitisation o f elected leaders on their roles, responsibilities, rights and obligations is paramount for the success o f decentralization. JARD 2004 recommended that induction and sensitisation o fpolitical leaders be undertaken. JARD 2004 took place one and ahalf years to the general elections. A strategic decision was made to conduct civic education for leaders after the forthcoming general elections in 2006 and the constitutional amendment, which has extended the life o f Councils to five years. Key Challenges e Coordination and Supervision Mechanism for Local Government a Harmonizationo f Guidelines for the Local Governments e LocalRevenue Generation e Citizen participation e Relations between implementers & PolicyMakers e Lack o f Adequate Capacities e Inadequate Accountability a Budgeting& Planning Process e Fiscal Decentralization 5.1.9 PublicSector Management Over the past decade, there have been a number o f reform initiatives to bring about changes in the public sector delivery system with a view o f providing efficient and responsive services to the citizens. These reforms have been concentrated on areas o f creating an efficient Public Service focused on the need for provision o f high quality services to the public. 149 Further, the role o f Government is changing from providers o f services to that o f a facilitator. This means that the public sector institutions must become more innovative if they are to create public value addition. For example; new employment patterns are arising out o f a shift to computerized systems, such as the IFMS and the higher demand on the public sector to adopt results based management systems. The bigger challenge is that Public expectations for quality service are triggering radical changes inperformance. Public sector management i s about management culture o f public sector institutions. If the Public Sector i s to achieve the PEAP goals and objectives, public sector institutions must move beyond public administration to emphasize the centrality o f the citizen or customer, as well as accountability for results. Therefore the principles embedded in market-based public service management or enterprise culture must be adopted. ThePublic Sector Working Group During the 2003 National PEAP Review, it was revealed that the sectors (Health and Education) with the most distinct and astute level o f Public expenditure relied greatly on strong and elaborate sector wide approaches. The PEAP Review thus recommended the adoption o f sector wide approaches to redeem/ revamp the less achieving sectors. Inpursuit of the 2003 PEAP recommendations, the Ministries of Public Service, Local Government, The Public Service Commission, Office o f the Prime Minister, the National Planning Authority/Local Government Finance Cornmission have been constituted into awaited Public Sector Management Working Group. The major aim o f the PSM working group i s to enhance the performance o f the public sector. The model to be adopted for the monitoring and evaluation system will be that o f monitoring and evaluation capacity development inpublic sector institutions. This model monitors and evaluates performance from the perspective of the individual, the institution, and the public service system inrelationto the environment. Unlike the frontline sectors such as Education, Health, Water, Roads, Agriculture, Economic Management and so on, the PSM working group performance relates to the performance o f public sector systems and processes. The challenge will be to identify these processes adequately and to ensure that they are adequately handled for the enhancement o f public sector performance. The basis o f PSM working group Monitoring and Evaluation system will be at the higher level Key results Area performance o f the strategic objectives o fthe PEAP. Public Sector Challenges The challenge o f the public sector management in Uganda will therefore be to ensure that: Direct public sector costs are cut and labour discipline raised so as to improve resource use. The public sector institutions should be optimally formed for better managed andproductivity. 150 0 Private-sector management best practices are applied. Competition among public sector institutions is increased to lower costs and generate quality services; Controls are shifted from inputs to outputs, to stress results rather thanprocedure. Explicit standards and performance measures should be established, as accountability and efficiency requires clearly stated objectives and attainment o f set goals. Therefore, there i s need to reorient the public sector systems to respond to these challenges. This process will call for: A radicalrethinkingas well as a reassessmento fthe way polices are designed; A transformation inthe way the public service delivers services; A change inthe `mindset' o fPublic officers; A comprehensive programme to develop innovative ways for performance management and service delivery; and 0 A greater use o f Information and Communication Technology in the making o f public sector decisions and delivery o fpublic goods and services. 5.1.10 National Integrated Monitoring and Evaluation Strategy The National Integrated M&E Strategy (NIMES) was established in 2003 as a strategy for monitoring and evaluating the performance o f the PEAP. The core need for the establishment o f NIMES was to address a number o f challenges that include limitedflow o f information, weak M&E coordination arrangements, and gaps in information and underutilization o f information. Within the NIMES framework, M&E arrangements are conceived in a results-oriented manner that tracks progress within the PEAP as a whole. Inthis respect, the entry point for PEAP M&E is to capture successes and constraints in implementing the reform intentions and in attaining the development goals that have been expressed in the PEAP Policy and Results Matrix. In line with good practice principles o f management for development results, Government's M&E will thus be pivoted around the output, outcomes and impact levels - rather than tabulation o f inputs and activities. NIMES has achieved the following: (i) Proflling of Indicators in the PEAP NIMES with relevant sectors has already finalized the profiling o f some PEAP Outcome Indicators. This was done to ensure that monitoring and evaluation o f the PEAP Outcome indicators provide easy feedback into key policy decision-making processes o f government. The profile o f outcome indicators i s presented in accordance with each strategic objective and pillar. It looks at the precision in indicator definitions, indicator baseline information and targets, sources o f data on indicators, frequency o f data collection and reporting. The profile shows that while some indicators are precisely 151 defined and are measurable, others are not precisely defined and therefore alternative indicators are proposed as second generation indicators. This work will continue to ensure that all the available indicators (both quantitative and qualitative) are clearly defined. These indicators will be an important part o f the work o f the Public Sector Working Group as well as the PEAPPillar Working Groups. (ii) Developing the Annual PEAP Implementation Review Process Inorderto enhanceunderstandingofthePEAPperformancebypolicymakers, anannual review mechanism to assess progress o f the PEAP Results has been instituted. This annual PEAP review is a channel o f dialogue between Government, Civil Society, and Development Partners. Through this process due attention will be paid to the Government policy and budgeting cycles and the already annualised review mechanisms in health, education, water, JLOS, PMA, and other sectors. The annual PEAP review framework is re-enforcing to the sectoral sector wide approaches. The objective o f the review mechanism i s to ensure that the PEAP M&E system i s used to feed into the key policy decision processes, planning for the following planning cycles, and determine whether any o f the monitoring data, need to be re-examined or any policy direction need an evaluation or assessment. The review mechanism will be a precursor for developing an appropriate evaluation system for Government Policies andPrograms. The first review i s planned for December 2006. (iii) Develop a Multi-sector Local Government Performance Review Mechanism Over the years, reporting andM&E at the district level i s strongly influenced byreporting requests from the national level and from donor-funded projects. Innovations like the Local Government Development Programme have been instituted as both development fund disbursement mechanisms and policy compliance mechanisms with a carrot and stick approach. In addition, the reporting requirements from higher levels pose several administrative challenges at the district and lower levels. Often authorities at national level request information from districts on the basis o f different procedures and formats, district level staff are therefore overloaded and sometimes confused by the reporting requirements. A regionalised multi-sector performance review mechanism that is based on the principles o f adaptive learning will be used to ensure that there is mutual sharing and exchange o f skills and information among all local governments. A study that clearly articulates the different aspects o f M & E at the Local Government level will have to be launched and the results used in the development and further elaboration o f this area of activity. (iv) Donor Alignment and Harmonization Process In line with the spirit and commitments of the Paris Declaration on Financing for Development, NIMES aims at contributing to the improvement o f performance o f aid from development partners. Up till now there have been several instruments used in measuring performance as well as setting conditions which the Government o f Uganda needs to meet to trigger funding. These include instruments like the Poverty Reduction Strategy Credit (PRSC) o f the World Bank,the Poverty Reduction and Growth Facility o f 152 the IMF, the Policy Support Instrument andother monitoring matrices. A priorityissue is to align the PRSC to the Annual PEAP Review Process. An initial task for will entail working on a review o f the instruments used by development partners. The review will focus on aligning the instruments with the PEAP so that there are clearly stated objectives, expected outcomes as well as intermediate and higher-order outcome indicators and targets. This will help to put in place a joint systematic monitoring andreporting mechanism. The demand for results by development partners and citizens alike will result into an effective and continuous dialogue on results. The objective here is not to coordinate aid financing but to ensure that the coordination o f aid andthe achievement o f development results go handinhand. 153 Chapter 6: HumanDevelopment UP pupils during instruction 6.0 Introduction A healthy and well-educated population is both a necessary condition for development and one o f the central objectives o f development. Government is making continued efforts to ensure the sustained improvement of social service delivery and ultimately the quality o f life for all Ugandans. For instance, the combined share o f the health and education sectors, as a percentage of the total budget, has more than doubled over the past fifteen years. Existing C!iullenges: 0 * Inadequate funding for the health sector Inadequate coordination of the project based nature o f the HIVIAIDS response e Poor quality ofUPEresulting inhighdrop-out rates, especially by girl children 154 The remainder o f this chapter addresses progress and challenges in human development, focusing on health, education, water and sanitation, social development, and population growth. 6.1 Health The overall development goal o f the health sector as laid out in the National Health Policy (1999) i s "the attainment o f a good standard o fhealth by all the people o fUganda, in order to promote a healthy and productive life". The programme goal of the Health Sector Strategic Plansgghas been "reduced morbidity andmortality from the major causes o f ill-health andpremature deaths, andreduced disparities therein". The health sector's contribution to achieving these goals is by provision o f a minimum package o f cost-effective interventions targeting the most common causes o f morbidity and mortality, the Uganda National MinimumHealth Care Package (UNMHCP), to the population o f Uganda, with special attention on increasing access for the poor, the difficult to reach andthe otherwise disadvantaged. Over the period under review, a number o f reforms have been implemented in the health sector with the objective o f positioning the national health system to maximally contribute to improvements in the health status o f the population meanwhile protecting the poor, women, children and other vulnerable members o f society. 6.1.1 TrendsinHealthOutcomesandOutputs2002 -2005 Health status i s usually measured using health and health-related outcome indicators including life expectancy, infantand childmortality rates andmaternalmortality ratios. Table6.1:Health-relatedOutcomeindicators Source: Uganda Demographic and Health Survey 1995,2001/02; PovertyMonitoring and Evaluation Strategy 2002,2004; UNMillenniumDevelopment Goals ~~~ _ _ _ _ _ _ _ ~ ~ 88 The first HSSP I ran from2000101-2004105.The current, HSSP I1will run fron 2005106-2009110. 155 Table 6.1 shows that there was no improvement in the health-related outcome indicators between 1995 and 2001. A number o f efforts have been made in the health sector over the period 2001 to 2005 to reverse this trend. Simultaneous efforts in other sectors, including increasing access to primary education and safe water and sanitation, while generally improving livelihoods o f Ugandans are also expected to contribute to better performance o f the health-related outcomes over the period 2001 to 2005 compared to 1995 to 2001. Notably, many o f the health-related outcomes targets previously set by the PEAP for 2005 were not met, and have been extended to 2009. Given the current trend, it seems unlikely that Uganda will achieve the Millennium Development goals for the same indicators. 6.1.2 Health Outputs2001/02 to 2004/05 The PEAP (2004/5-2007/8) results and policy matrix identified eight key indicators to measure health sector performance and determine the contribution o f the health sector to overall national health and broader outcomes. These are: utilisation o f outpatient services at public and PNFP health facilities; immunisation uptake using coverage with the 3rd dose o f DPT3/Pentavalent vaccine; proportion o f expected deliveries taking place in government and PNFP health facilities; proportion o f approved posts filled by appropriately trained health workers; HIV sero-prevalence as noted at Antenatal Care (ANC) sentinel surveillance sites; proportion o f health facilities without stock-out of 6 tracer medicines/supplies89, national latrine coverage as a proxy for sanitation services, and Couple Years o f Protection (CYP) as a proxy for contraceptive uptake. The trend of performance against these indicators over the period 2001/02 to 2004/05 i s shown in Table 6.2." 6 essential medicines and supplies used as tracer items for quality o f service are: first line anti-malarials (currently chloroquine & Fansidar), cotrimoxazole (Septrin), Oral Rehydration Salts, injectable contraceptives and measles vaccine 90The health sector disaggregates national sector performance by means of combining both management and service delivery outputs to compare district performance. District League Tables (DLT) for the 3 years 2002/03 to 2004/05 are shown inAnnex VI. Onregional basis the districts inNorthern Uganda are doing poorly o n the DLT.This canbe attributed to the insecurity that has persisted inthe region, the peculiar cultural and security challenges inKaramoja and challenges inthe management of some o f the districts. The latter i s supportedby the fact that some o f the districts inNorthernUganda have managedto do very well o n the DLT and o n a number o f specific indicators including Gulu, Adjumani, Moyo and Nebbi. 156 Indicator 2001102 2002103 2003104 2004105 2004105 Achieved Target a) OPD Utilisation(new attendance) 0.60 0.72 0.79 0.9 0.7 b) DPT 3/Pentavalentvaccine coverage 63 % 84.1% 83 % 89% 85% c) Percentageof deliveries taking place 19% 20.3 % 24.4 % 25% 35% inHealthFacilities (GovtandP%P ) d) Proportion of Approved Posts filled 42 % 66% 68% 68% 52% byTrained HealthWorkers e) National Average HIV Sero - 6.5 % 6.2% 6.4%'l 5% prevalenceat ANC Surveillance sites f ) Proportion of Health facilities 33% 40% 35% 65% without stock-out of 4 tracer medicineshpplies Latrine coverage 51.3% 55.6% 57% 57% 60% g) Couple Years ofProtection 210,839 212,089 234,259 There has been marked improvement in a number o f health sector input and output indicators as shown in the Table 6.2. Inparticular the indicators highlighted in the table on proportion o f approved posts filled by appropriately trained health workers; OPD utilisation, and immunisation coverage exceeded the targets that had been set for the PEAP and HSSP Ifor 2004/05. National latrine coverage showed improvement over the period being assessed rising form 51% to 57%, but fell short o f the target o f 60%. The indicators on proportion o f expected deliveries taking place inpublic and PNFP facilities; HIV prevalence; and proportion of health facilities without medicines stock-out did not show significant improvement and were below the PEAP and HSSP Itarget. The indicator on Couple Years o f Protection (CYP) has been improving over the last 3 years it has been measured there was no 2004/05 target as this indicator came on board later. - Interventions and policy reforms undertaken to achieve each o f these performance outputs are explored indetail below. (a) Out-PatientsDepartment(OPD) Utilization The National Household Survey o f 1999/00 indicated that o f the people who did not seek care when they were sick, 50% indicated that this was due to inability to meet the cost. Given the high disease burden in our country, the levels o f utilization o f primary level services before the abolition o f user fees were unacceptably low. Since March 2001, the abolition o f user fees in public health units, with the exception of private wings in hospitals, led to a dramatic increase in the utilisation o f public health facilities as illustratedinFigure 6.1. 91 This is figure i s from a national sero-survey; the rest of the data i s from ANC sentinel surveillance sites 157 The health sector reforms in Uganda have been a mixture o f demand and supply side actions, with a resulting increase inutilization o f health services. Clearly, the highlevels o f utilization could not have been sustained without the increased financial resources to the primary level, which have been used to provide more and better quality services by availing appropriate infrastructure, human resources andmedicines. Figure6.1: OPDNew Attendance inPublicandPNFPunitsover the HSSPI 1 0.9 0.8 0.7 0.6 0.5 0.1 0 1999/00 2000/01 2001/02 2002/03 2003104 2004/05 HSSP I Target Source:AnnualHealthSector PerformanceReport2004105 Analysis o f data from the National Household Survey (NHS) 1999/00 and 2002/03, before and after the abolition o f user fees respectively, has shown the proportion o f the population indicating failure to pay as the major deterrent from seeking health care when sick decreasing from 50% to 35%92. This is likely to be a result o f the combination of abolition o f user fees inpublic health units, and reduction and flattening o f fees in PNFP health facilities following increased support form the government budget. Inaddition, accordingto Deininger andMpuga(2004), althoughthe nationalincidence of sickness before and after the abolition o f user fees remained unchanged, the number o f work-days sick on average declined from 8.3 to 7 days. This has been equated to productivity worth U S $ 9 million, 50% o f which was estimated to have accrued to the bottom 2 socio-economic q ~ i n t i l e s ~ ~ . Were the reforms and increase in utilization necessarily pro-poor? It has been shown by various researchers that demand for health services i s determined by various factors including need and the costs that are involved in accessing the services. These costs may be financial including fees at the facility (public, private), transport to the facility and the opportunities lost by seeking the services. Increasingthe supply o f services and/or raising the demand o f the population for health services results inincreased utilization. The poor 92Deininger & Mpuga 2004: Economic and Welfare Effects o f the Abolition o fHealthUser Fees: Evidence fromUganda 93Deininger & Mpuga 2004: Economic and Welfare Effects o fthe Abolition o fHealthUser Fees: Evidence fromUganda 158 and other vulnerable groups are more likely to under-utilise services because o f the various barriers including cost o f service, distance to facility, perceived poor quality services - inadequate/poorly motivated staff and medicines. Tackling these various barriers therefore is pro-poor. The increase in utilization was more among the poor as shown in the longitudinal study to analyze the effect o f the abolition o f user fees carried out by WHO and MoH (see Figure 6.2). Figure 6.2: OPDUtilisation rate by SE category inpublic Lower LevelUnits 2001-2003 ' e 1.40 1 1.00 - -i .I! 0.80 t 0.60 0.20 -^-*-.A 0.00 1 I , I --epoorest - - poor rich richest Source: WHOMOHstudy on abolitionof User Fees Other studies have shown higher increases in utilization o f health services in public facilities among the poorest 20% as compared to the top 20%94. (b) Immunisation The revitalization of the national immunisation programme has led to remarkable decline in the incidence of immunisable diseases. Figure 6.3 shows the pattern of laboratory confirmed measles cases, with particular decline following the measles campaign. A similar decline inmeasles-related deaths has been reported. 94Ssewanyanaet al, Demand for Healthservices, implications for poverty reduction, EPRC2005 ; Sub National Healthsystems performance assesment ;W H O M O H June 2005. 159 Figure 6.3: Number of Laboratory confirmed cases of Measles and Rubella 2003-2005 -- I II I M) 140 M 20 10 0 J F M A M , , A S O N O J F M ~ M J J A S O ~ ~ , F M A M J J A S O ~ D M a m -Lab mnflrmedmeules cue6 - Lab rn"fIrmW rubella c-e. Source: Annual Health Sector Performance Report 2004/05 c) Deliveries in public and PNFPhealth facilities The utilization o f the health facilities for safe deliveries remains low, with the proportion o f expecting mothers who deliver in government and PNFP health units staying stagnant throughout the HSSP Iperiod. Poor performance has been attributed to: perceived poor quality o f services in particular lack o f equipment, supplies, water, light and privacy; poor attitude o f health workers; inadequate access to maternity services and cultural barriers with the preference for TBAs andother alternatives insocietyg5. The best performing districts are Kwni, Kampala, Jinja, Mukono, andNebbi with at least 40% o f expecting women in their respective populations delivering in public and PNFP health facilities. The worst performers are Nakapiripirit, Kotido, Kamwenge, and Kalangala with less than 10% o f expecting mothers in their respective populations delivering inpublic and PNFP health units (see Annex VII). d) Provision of Human Resources for Health A major area o f focus for the sector, aimed at improving the quantity and quality o f health services, has been inavailing appropriately trained health workers especially at the primary health care levels. Between 2001/02 and 2004/05 the proportion o f approved staff positions filled by health workers has risen from 42% to 68%96. This has been largely due to recruitment o f health workers at the lower level units and general hospital. There has also been emphasis on the training o f some cadres o f staff to enable medium term filling o f gaps at the primary levels. Cadres such as Nursing Assistants, Theatre Assistants, Anesthetic Assistants, have been trained to enable appropriate delivery o f services at the H C 11, I11and IV as a mediumto long term strategy is put inplace to train more qualified personnel. If Nursing Assistants are included in the staff norms as indicated inthe HSSP I,the proportion o f positions filled rises to 86%. As of June 2004, 95Uganda Povertyparticipatory assessment 11,MoFPED December 2002 96 The actual improvement is bigger than indicatedby these figures given the construction and utilisationo f new health facilities 160 staff positions filled at all sub-national levels were above 90% except for Health Centre IIIs, which stood at 78%. e) HIV/AIDS Uganda has often been quoted as a success story inthe fight against HIV/AIDS.From the early 1990's to 2002, the prevalence rate dropped significantly with estimates suggesting a decline from 18% to 6%. This decrease has been primarily attributed to the government's early and consolidated response to the epidemic and commitment in promoting prevention around the ABC (Abstain, Be faithful, use Condoms) strategy. Notably, however, during the past five years, the prevalence rate has stagnated between 6% and 7%, and the 2005 sero-survey reported the national prevalence rate at 6.4% (see Fig. 6.4).97In addition, the same survey identified stark regional and gender disparities (see Fig. 6.5) and Annex VIII. Armed conflict is associated with higher HIV infection rates. A regional mapping o f HIV prevalence in Uganda based on the 2004/05 national HIV serological survey98among adults shows that the HIV prevalence rate in armed conflict affected mid-north regions o f the country i s at 9%, the highest inthe country and equaled only by the central region - the most urbanized region o f the country. This compares very poorly with prevalence rates inthe other region o f the county: North West (3%), North East (4%), West and South West (7%), Mid-East (6%) and South East (7%). The year 2003 marked the revision o f the National Strategic Framework (NSF). The revised NSF aims to mitigate all recognised factors o f susceptibility to HIV infection, as well as minimising the burden o f the disease at individual, community, andnational level. As such, government policy shifted towards a more holistic approach to the epidemic: 'ABC Plus'. This new approach integrates a number o f strategies beyond advocacy for behavioural change. Common examples include the VCT policy, which has succeeded in testing over 700,000 people; and the OVC policy, designed to target the most vulnerable groups, thereby aiming to address the needs o f an estimated 1.7 million orphans. Other examples of group specific interventions include the Great Lakes Initiatives for AIDS (GLIA), targeting cross-borders migrant populations such as long distance truck drivers; the FISH strategy,99 mainstreaming HIV/AIDS in the fisheries sector; and the establishment o f a National Committee for AIDS in Emergency Settings (NACAES) in order to develop a strategic planfor HIV/AIDSinthe North."' Acknowledging the impact o f HIV/AIDS on the livelihood o f the population and on the development o f the country at large, the revised NSF puts greater emphasis on treatment and care. To date, with a policy o f universal access to ARV, 67,369 patients out o f 97No ANC prevalence rate assessments were carried out inboth 2003 and 2004. Moreover, the methodologyused to determine the prevalence rate in2005 (i.e. sero-survey) i s different from that o f all grevious years M o H (2005: lo), Annual Health Sector Performance Report 99The prevalence rate within fishing communities is, on average, three times higher among these groups than the national average. looSeveral studies show that populations inconflict affected areas are highly affected by AIDS. These regions have limited access to unevenly distributed services. Inaddition, care treatment and referral services are poorly coordinated. 161 189,000 estimated to be inneed o f ARV treatment countrywide have been provided with these drugs."' The provision o f ARV drugs policy absorbs a substantial proportion o f AIDS funding. Major international initiatives, like President Bush's Emergency Plan For AIDS Relief (PEPFAR) channel approximately half o f their resources to procurement o f ARVs and other treatment commodities. This focus on treatment begs for an increasingly integrated strategy inorder to coordinatethe prevention andtreatment aspects o f the response. Figure 6.4: HIV prevalence rate, 1995-2005 18 16 14 g 12 3Eg10 $ 8 6 4 2 0 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007108 IBHIV Prevalence BPEAP Target Source: Sero-survey 2005 lo' MoH, 2004, studyprior the ART Policy. 162 Figure6.5: Percentageof HIVpositivewomen and menage 15-49,2004-05 .Womeri 10.4 I I .~ 11.7 7.4 6.3 3.7 9.2 2.7 7.7 7.1 -Men I1 6.4 4.5 I1 5.3 11 4.4 1 3.2 11 7.1 11 1.9 II 5.8 1j 4.6 1 Source: Sero-survey 2005 f ) EssentialMedicinesandHealthSupplies (EMHS) Another area o f emphasis has been the provision of basic medicines and health supplies at the various levels o f the health system with particular focus on the primary health care level. This i s shown by the increase in spending in EMHS at the local govemment, hospital levels and some specific procurement undertakenbyM o Hprogrammes, fromU S $ 0.52 per capita in 2001/02 to U S $ 1.08 per capita in 2004/05 as shown in Table 6.3. The EMHS budget at these levels has more than doubled in 4 years. This has been combined with emphasis on improving the efficiency o f EMHS logistics management by increasingly decentralizing the EMHS budget combined with the creation o f EMHS credit lines at National Medical Stores and Joint Medical Stores for the public and PNFP health facilities respectively. BudgetLine 2001102 2002103 2003104 2004105 MoHProgrammes 0.14 0.12 0.13 0.16 Service Provider Budgets 0.38 0.70 0.90 0.92 Total 0.52 0.82 1.03 1.08 102the informationinthe table excludes information about most project spending including the Global Initiatives; this therefore does not includes finds spent on hghcost items like ARVs, and Pentavalent vaccines 163 Manyinterventionsspecific to elements o fthe UNMHCPhavebeeninitiatedor scaledup within the country. A few are mentioned here and include: revitalization o f preventive activities especially in the areas o f immunisation, environmental health (Kampala Declaration on Sanitation), malaria control - Home Based Management o f Fever (HBMF) and scale up o f the Guinea Worm Eradication Programme among others. The activities for the prevention control and management o f patients with HIV/AIDS have continued to be prioritized with particular implementation o f Voluntary Counseling and Testing (VCT), Prevention o f Mother to Child Transmission (PMTCT), and Anti- Retroviral Treatment (ART). g) CoupleYear of Protection The Couple Year o f Protection (CUP) reflects uptake o f contraception from public and PNFP facilities anddoes not include services receivedinthe private-for-profit sub-sector. Moreover, it reflects the importance the sector stakeholders place on maternal and child health. There was no CYP target for the HSSP Iand from the available information there has beenmodest improvement inperformance over the HSSP I. 6.1.3 Other PerformanceIndicators h) Malaria Control Inthe 80s and 90s, malaria epidemics especially in the south west part of the country were a major cause of morbidity and mortality amongst both children and adults. The last major malaria epidemic inthe country was in 1997/98. Since then efforts have been made with improvement in systems for surveillance and epidemic preparedness and response preventing seasonal spikes from growing into epidemics through several preventive activities and early management of illness. i) HealthInfrastructureDevelopmentandMaintenance There was marked effort to improve physical access to health services especially at the primary levels, with particular emphasis on previously under-served areas. The proportion o f the population within 5 kmradius o f a health facility has risen from 49% in 1999 to 72% in 2004/05, through construction and upgrading of facilities as shown in Table 6.4. Most of these improvements are in rural areas where people often have to move very long distances for basic services. Level Work done Number . HCII New construction 400 H C I1 Upgrading to H C I11 180 H C N Theatre construction 144 H C N Medical Officers' House 133 164 j) PublicPrivatePartnershipfor Health A major focus o f the National Health Policy and the strategic plans has been to develop functional integration o f the different providers in the health system building on the different provider's strong points. It is estimated that the private-not-for profit (PNTP) health facilities comprise about 30% o f the combined total o f public and PNTP services, with the majority o f the PNFP health facilities inrural otherwise undeserved areas. The health sector has utilized this capacity to benefit the poor and socially vulnerable by making the private providers and especially the facility-based PNFP providers' major players at all levels in policy formulation, resource mobilisation and allocation and monitoring and evaluation. This has resulted indecreased fees, improvements inquality o f services provided which led to increased utilization. The allocation o f these resources to the PNFP health units takes into consideration the location o f the unit and the presence o f other providers especially public health units. PNFP health units in remote and poor areas (Kalongo in Pader district, Nyapea in Nebbi district) o f the country get much more funding per hospital bed than those in urban well-served areas (Nsambya and Mengo in Kampala district). 6.1.4 Challengesfor policyimplementation The challenges largely evolve around the level o f funding available for the UNMHCP, the efficiency and the equity concerns around the utilisation o f existing resources. The level o f funding required to provide the UNMHCP has been estimated at U S $28 per capita in the Health Financing Strategy (HFS). With the inclusion o f ARVs, ITNs and A C T for malaria treatment this increases to about U S $ 40 per capita as estimated by the WHO Commission for Macroeconomics and Health. These resources are required from public resources given equity and efficiency considerations. The current public funding (government budget and donor projects) for the health sector is estimated at about US $10 per capita indicating that the sector i s funded at about 25% o frequirements. Duringthe first halfo fthe HSSP Iefforts were madeto improve levels o fpublic fimding for the health sector given its central role in the PEN. This led to growth in the health sector government funding by more than 70% in nominal terms between 2000/01 and 2004/05. However closer study o f this shows that the bulk o f the growth, about 50%, was between 2000/01 to 2002/03, with the growth tapering off inthe second halfo f the HSSP Itoanincreaseoflessthan20%between2002/03and2005/06.Thisisinspiteofa population that is estimated to be growing at about 3.3% annually, inflation at about 5%, increased administration costs with the creation o f new districts, and increased costs o f health inputs - salaries, medicines, fuel and others. This means that inreal terms service providers at the various levels and most worrying at the district and HSD levels have to do with less funds today than three years ago. This stagnation o f the health sector public funding and especially government funding poses a serious threat in terms o f the sector's ability to achieve both PEAP targets and MDG commitments. Particular interventions in need o f increased and continued 165 investment are in the area o f Reproductive Health, malaria control and community mobilisation for health. Reproductive health services including provision o f emergency obstetric care (EmOC) requires substantial investment across the country with facilities for basic emergency obstetric care (BEmOC) to be made available at least at sub-county level (health centre 111), and comprehensive emergency obstetric care (CEmOC) at county level (health centre IV or hospital). Recent studies have shown high m e t need for EmOC at 86%. This significantly contributes to the low utilisation o f maternity services by the pregnant women especially inpoorly served areas. Challenges have been observed especially in terms o f infrastructure, equipment, trained human resources for health and the logistic for appropriate referral. If this picture continues, there are very minimal chances o f Uganda achieving the Maternal Mortality Ratio (MMR) PEAP and MDGtargets for 2005/06 or 2009/10. Malaria remains the major cause o f morbidity and mortality in the country. Possible malaria control measures include vector control especially indoor residual spraying (IRS) and use o f insecticide treated materials (ITMs). The application o f either and preferably both methods as deemed appropriate i s expensive. Current policies include the provision o f free insecticide treated nets (ITNs) to expectant mothers and children under five. For coverage of these measures to increase markedly and be sustained over the medium term, which is what i s required to produce a significant impact on malaria incidence, requires significant amounts o f funding. Some resources in the medium term are expected from some o f the global initiatives - the Global Fund for ADS, TB and Malaria and a US initiative on Malaria. However such inititives perpetuate the vertical nature o f the response, cutting it out from the govemmemt's broader development agenda. Fundingfor EssentialMedicines andHealth Supplies (EMHS) is muchless than required. The current level o f EMHS funding i s about one third o f requirement. This translates into frequent stock-outs at the public health facilities and poor people seeking medicines at drug shops which sell the medicines with a bigmark up. This situation is likely to worsen once the new policy for malaria treatment with artemesin based combination therapy (ACT) is implemented which translates into more than 10 times increase in the cost o f first-line anti-malarials. There are challenges with supplies for reproductive health including regular availability o f cotton, gauze and protectives. This often leads to women being asked to provide these supplies in cash or kind which serves as a further deterrent to maternity service uptake. Other challenges regard the inequitable distribution o f health inputs, outputs and outcomes across the country, and for specific vulnerable groups. Specific population groups that still present a challenge are: the poor, children, women and people living in NorthernUganda. (i) The poor,women andchildren Although marked improvements have been made infacilitating the supply and demand o f health services for the poor, there are still a number o f challenges that prevail. These include medicines stock-outs at the health centres, lack o f equipment and appropriately trained staff, and lack o f amenities like water and lighting at in-patient facilities. These 166 challenges are more often a deterrent to the utilisation o f health facilities by women and children more than the men, since the former control very few resources at the household level. (ii) NorthernUganda The combination o f insecurity, poverty, IDPs and cultural peculiarities in this region o f the country present a particularly challenging environment. For instance, the nomadic lifestyle o f people from the North Eastern region, particularly the Karamojong, requires complex interventions to improve the poor performance o f arrned conflict affected districts inhealth care delivery. Findings from the annual district performance assessments by M o H show that districts from North andNorthEastern regions, where the highest incidences o f armed conflict has been recorded, represented 70, 50 and 60 percent o f the 10 worst performing districts in the Country in FYs 2002/03, 2003/04 and 2004/05 re~pectively."~The assessment i s based on agreed district HSSP monitoring indicators that are grouped under 2 relevant categories: management indicators and service delivery output indicators. Armed conflict i s also associated with unacceptablyhighmortality levels. The Health and Mortality Survey Report o f 2005 showed that mortality in the districts o f Gulu, Kitgum andPader mortality is up to 4 times higher thanthe national averagelo4. (iii) DistributionofHumanResourcesfor Health The high overall performance o f the indicator approved staff positions filled by trained health workers over the HSSP I,masks marked inequities. The performance ranges from 40% and 44% in Kamwenge and Pader to well over 100% in Kampala and a few other districts. To further illustrate the range o f performance, as o f June 2004 up to 65 public H C I1did not have any health workers, and 255 or 30% o f all public H C 11s had only NursingAssistants. The pay reform for public health workers inthe recent past though much needed has had a negative effect on the PNFP sub-sector with decline in staff motivation and exodus to pub lic health units. This is inefficient and inequitable as it removes health workers from where they are badly required. (iv) HIV/AIDS - impact studies highlight the devastating impact o f HIV/AIDS. The epidemic poses a real threat to the country's economic growth and human development by decimating the labour force, and undermining investment, while draining household resources and savings. It i s estimated that the agriculture sector in U anda will lose approximately 14% o fits labour force to AIDS between 1985 and2020.1O B I O 3M o H (2005: 13-14), Annual Health Sector Performance Report lo4 MoWWHO/UNICEF/MSF ,.Health and mortality survey report 2005 I O 5Integrated Support to Sustainable Development and Food Security, 2003, The impact o f HIV/AIDSo n the agricultural sector and rural livelihoods inUganda 167 Such concerns have not been fully translated into funding priorities. While the PEAP points to HIV/AIDS as a cross cutting priority to be mainstreamed across all sectors o f the economy, it comes short o f outlining how this process i s to be put inplace, budgeted for, and monitored. By implication, AIDS is peripherally addressed inthe Medium Term Expenditure Framework (MTEF), andrarely features inother sectors' Budget Framework Papers (BFPs). Part explanation for the government's failure to effectively plan and budget for HIV/AIDS stems from the lack o f national oversight over the fbnding mechanisms and allocations o f donor funding. Notably, while a system is in place for national ownership through the Uganda AIDS Commission (UAC), coordination o f donor initiatives remains a problem. On this note, the Ugandan government has been a large beneficiary o f President Bush's Emergency Plan For AIDS Relief (PEPFAR), and the Global Fund for AIDS Tuberculosis andMalaria (GFATM). PEPFAR's critical activities o f prevention, care and treatment o f HIV/AIDS in Uganda disbursed over 150,000,000 USD between 2004 and 2005. While these funds have been successful in initiating affected Ugandans on antiretroviral treatment, PEPFAR's disregard o f Uganda's home grown response to the epidemic raises concern over the sustainability o f this initiative beyond the project's lifetime, andthreatens to undermine government policy.*06 6.1.5 Key Areas requiring Policy Action Given the very low levels o f funding for the health sector versus requirements it is most pertinent that the available resources are used most efficiently. A number o f levels are recognised at which there could be improvements inefficiency. (i) EfficiencyEnhancement It has been shown that the larger proportion o f donor project funds are not targeted against the sector priorities and inputs, but rather are converted into management overheads, including the provision o f expensive technical assistance. In 2004/05 for example, o f the 255 billion expended though donor projects, only 44% was spent on agreed essential sector inputs. Although this i s an improvement from the previous figure o f 32%, it is still unacceptably low. (ii) Targeting available resources for the UNMHCP Giventhe less thanoptimum fundingfor the provision o fthe UNMHCP, there is need for further prioritisation within the UNMHCP and focus on scaling up (functional and geographical coverage) o f existing interventions before taking on new ones. This is particularly challenging with an increasing proportion o f funds for the health sector lo6According to the HumanRights Watch report, "Uganda is redirecting its HIV prevention strategy for young people away from scientifically proven and effective strategies, towards ideologically driven U S programmes that focus onpromoting sexual abstinence untilmamage". Indoing so, Uganda i s alarmingly watering downthe "C" component o f the "ABC". 168 coming from global initiatives which often come with new and costly interventions. For example an additional U S $ 3.00 per capita for medicines and health supplies has been made available to the health sector through global initiatives and donor projects since 2001/02. However this has not contributed to increased availability o f the core essential items since this has gone for additional (useful) costly interventions like the pentavalent vaccine, ARVs, and Artemesin-based combination therapy. Meanwhile stock-outs for essential medicines andhealth supplies continue. (iii) Improving collaboration between all AIDS stakeholders There is need to track AIDS resources in the country and for a coordinating authority to ensure continuity inthe procurement o f key commodities such as V C T kits, condoms and ARVs. This mechanism would be especially usefbl in ensuring the continuity o f the response when major donors fail to honour, or choose to suspend, their commitments (e.g. GFTAM). Such efforts towards improved coordination and efficiency can foster national ownership andmanagement capacity, bychannelling donor support through the budgetprocess. This implies a complete shift in funding mechanisms, with cross-cutting issues being prioritised within sectors' BFPs. Notably, however, if all sectors are not supported and guided to go through this transition, it is likely that the mainstreaming o f HIV/AIDS, and many other cross-cutting issues, will beruledout against competing priorities within each sector. Integrating AIDS fbnding into sector ceilings implies that a number o f sector ceilings ought to be revised to accommodate for adequate fundingto achieve the national targets outlined inthe NSF. 6.1.6 Key Policy Recommendations The health sector has made marked progress in poverty reduction which has been indicated at the input, process, andoutput levels over the period 2002 to 2005. The HSSP I1aims at consolidating the achievements o f the HSSP I,in a bid to achieve the PEAP and MDG targets. However, the current level and structure o f the health sector funding are unlikely to produce the necessary inputs and outputs required to contribute to the necessary improvements in health outcomes in the medium term. In particular efforts should be made by the government to provide more f h d s for: Adequate amounts o f Essential Medicines andHealth Supplies; 0 Affirmative action for Human Resources for Health in hard-to-reach parts o f the country and similar terms for public andPNFPhealthworkers; 0 The PlanofAction for NorthernUganda, particularly the Karamoja sub-region; 0 Scale up functionally and geographically, reproductive health and anti-malarial interventions across the country. 169 6.2 Education Education is not only an important aspect and index for national development, it i s also vital for achieving a good quality o f life for the people. Research has shown that education contributes to several development areas including maternal and child health, lower fertility rates, protection o f the environment, and sustainable development, among others. Educationper se is still highly valued by communities as a means o f rising out o f poverty, but current education in Uganda i s also perceived to be o f limited worth. Over the period under review (2003-2005), Government continued to give priority to the education sector by increasingthe total sectoral budget. 6.2.1 PrimaryEducation UPE is still highly appreciated by communities, especially the poor, mainly because o f increasing access and improving school physical facilities. Notably, however, there remain serious concerns about the quality o f UPE. Government continues to give great importance to basic education. During the FY 2004/05 a total o f 66.1% o f the Education sector Budget allocation o f Ushs 554.52bn (excluding direct donor support) went to primary education. Commendable progress has been made towards the Education Sector Investment Plan (ESP) targets for 2005'07. As aresult ofthe governmentpolicy o fWE, large numbers o f children have enrolled in primary schools. The total numbers o f children accessing primary education in the country continued to rise although at a decreasing rate. In addition, other indicators for the sub-sector that include teachers on payroll, number of classrooms, pupil teacher ratio and pupil classroom ratio also continued to improve. These have gone a long way in improving the quality o f education in the sub sector. Table 6.5 summarizes the cumulative progress o f these aspects in the sub-sector for period under review. I Enrolment Growth rate I - 111% 111% 14% I-2% I-5% Source: EMIS,2005 I O 7Targets for 2005 are: Pupil classroom Ration 95;Pupil Teacher Ratio 53 170 Table 6.6 reports on enrollment to P.l by sex and age. The number of new entrants in primary one in all primary schools inthe country dropped. This was largely because of the new requirement that all children joining P.l must be six years of age. It was also observed that enrollment ofthe girl children still lags behind that o fboys even at P.1. Source: EMIS,Oct 2005. Box 6.1: Enhancingaccess and equity in primary education To enhance access and equity to primary education, government has continued to license, register andgive grants andmaterials such as furniture to community schools. Duringthe FY 2004/05,73 pre-primary and 147primary schools were licensed, 43 pre-primary and 103 primary schools were registered, and 1240 community primary schools were grant aided. Over the same period 110,127 pieces of h i t u r e were distributedto 375 primary schools inthe districts o f Sembabule, Katakwi, Mbale, Nakapiripirit, Yumbe, Nebbi,Mbarara, Hoima and Kasese. Additional activities include: Completion of the construction of a boarding Primary school for traumatized children in conflict areas within GuluDistrict; Implementation of Non Formal Education in the districts o f Kotido, Moroto, Nakapiripirit, Kampala, Nakasongola, Arua, Bushenyi, Kamuli, Kisoro, Masindi, Ssembabule, Mubende, Nebbiand Mbarara; Continuation of programmes for children inpastoral communities, fishing villages, hard to reach areas, the out of school, disadvantaged children: Alternative Basic Education for Karamoja (ABEK); Basic Education in Urban Poverty Areas (BEUPA); The Child Centered Alternative Non-Formal Education Community-Based Education (CHANCE); Completion Opportunities for Primary Education (COPE); Non Formal Education in Mubendeand EmpoweringLife-long Skills Education(ELSE); Payment of fees for 33,193 children basedon the Universal Primary Education guidelines underNon-FormalEducation; Provisionof SFGto ABEK learning centers inall the districts of Karamoja sub-region; Provision of food by WFP to districts affected by insurgency: Nebbi, Arua, Yumbe, Moyo, Adjumani, Gulu, Lira, Kitgum,Pader, Apac, Kaberamaido, Katakwi and Kumi; Construction of temporary structures and semi-permanent structures in Internally DisplacedPeoples' Camps (IDPC) to cater for school going children. 171 On a related note, in spite o f the sector's continued efforts to address the educational needs o f children with special needs, EMIS data indicates that enrolment of pupils with special needs inprimary schools declined from 247,953 (i.e. 133,487 males and 114,466 females) in2004 to 218,380 (i.e. 117,002 males and 101,378 females) in2005. Finally, on HIV/AIDS and school hygiene and sanitation, the sector oversaw the procurement and distribution o f fountain survival HIVIAIDS kits to 2,240 primary schools in seven districts. Kids time magazines were also printed and distributed countrywide to increase awareness in Early Childhood Education, and the PIASY programme in schools has significantly succeeded in raising awareness on HIV/AIDS transmission, prevention and mitigation. Alarmingly, all HIV/AIDS awareness related interventions remain ad-hoc and grossly uncoordinated. Moreover, during the same period, there was inadequate fimding and advocacy for school sanitation and hygiene. These findings were corroborated by a recent school Sanitation Survey, covering 422 schools in 20 districts out o f then 56. The survey revealed that 74% o f primary schools had no special toilet facilities for children with disabilities, despite the fact that 74% o f schools had children with disabilities. Qualityof primaryeducation According to UPPAP (2002), WE quality concerns were linked to frequent absenteism, late-coming and dropping out by pupils, resulting from barriers such as high financial costs o f extra-WE charges, traditional social and cultural attitudes and practices, and hunger and poor nutrition. The phenomenon o f high school drop-out rate continues to pose a big challenge to the successfbl imlpementation o f national policies. National figures indicate a drop-out rate o f approximately 80%, with girls representing the majority o f primary school drop outs. Marriage and early pregnancy are the most frequently cited reasons for girls dropping out. District and regional variations show even higher disparities. A potential explanation for this finding is that rural-urban disparities in enrolment are partly due rural-urban migration. Parents appear to prefer urbanschools inlight ofbetter facilities. On a different note, UPPAPreports suggest a strong linkage between nutritional status o f children at school and their attendance, learning, and performance. While government appreciates the importance o f feeding in schools, school feeding programmes are expensive to maintain and the current resource envelope cannot meet let alone sustain these needs. There i s need to study the modalities o f developing a comprehensive national nutritional policy. In order to address issues regarding quality of learning, Government continued to enhance the quality o f learning through improving access and usage o f scholastic materials. Under cycle 10, the Instructional materials supplied were mainly core textbooks and teachers' guides. As a result the overall Pupil Textbook and Pupil Classroom Ratios improved from 3:l (2004) to 1.1 (2005) for text book and from 97:l (2004) to 79:1 (2005) for classrooms, respectively. The Pupil Teacher Ratio declined 172 from 58:l (in 2004) to 53:l (in 2005). Furthermore the percentage o f pupils reaching desirable levels o f competency innumeracy inP.3 andP.4 increased from 42% to 45% in P.3 and from 20.5% to 22% inP.4. 6.2.2 Post- Primary Education Secondary education Government is committed to increasing access to post-primary education by all children who complete their primary education. Over the period under review, the overall enrolment at the secondary level rose from 683,609 in 2003 to 697,507 in 2004 in all government and private secondary schools. S.l enrolment in 2004 increased by 0.42% from 179,305 (82,317 girls and 96,988 boys) in2003 to 180,067 (82,494 girls and 97,573 boys) in 2004. Table 6.7 shows the enrolment patterns and trends in both government andprivate senior secondary schools. Totals Female 228,755 237,972 296,457 308,950 313,855 220,702 Total 518,931 539,786 655,951 683,609 697,507 502,541 Source: EMIS,2005 The school enrolment trends shown in the table above indicate that whereas total enrolment i s increasing, the enrolment o f girls i s still lagging behind that o f boys in the secondary sub sector. Secondly the actual total enrolment figures o f 2004 and 2005 fell below the projected enrolment figures for both years as indicated in the PEN."' Government is cognizant o f the fact that many primary school graduates are hitherto not makingit into the secondary level. Inorder to address this, plans are inadvanced stages to start Universal Secondary education by January 2007. On the other hand, for the period under review, enrolment for students with special learning needs in secondary schools also increased from 10,699 (i.e. 5,697 males and 5,002 females) in2004 to 10,893 (i.e. 5,737 males and 5,156 females) in2005. More and more efforts are being put in place to ensure that more and more students under this category enrol insecondary schools. Ithadbeenprojectedthat atotal of 710,953 and 739,391would be enrolled insecondary schools in 2004 and 2005 respectively inUganda. 173 Box 6.2: Enhancing access and quality of secondary education To enhance access and quality o f secondary education, duringthe past financial year, government licensed and registered 166 and 54 private secondary schools, respectively. Inan effort to benefit poor childrenwho complete P.7,4 seed secondary schools were builtinthe districts of Kisoro, Mbarara, Masaka and Adjumani. Additional activities include: Increased expenditure (i.e. Ush 3.2bn in FY 2004/05 compared to Ush 1.9bn in FY 2003/04) on a bursary scheme for 42,289 students whose parents live inthe IDP camps in the districts of Katakwi, Gulu, Lira, Pader, Kitgum, Apac, Kumi, Soroti and Kaberamaido see table 2.4 for the number of beneficiaries per di~trict);''~ Constructions of a special needs school inWakiso; Partial recruitment of staff for Wakiso Secondary School for the deaf (i.e. Head teacher and 5 other teachers); Constructionof 54 laboratories and 13 libraries inselectedrural girls secondary schools; Recruitment of 696 teachers for the 58 newly government grant aided schools; Appointment and deployment o f SNE teachers to achieve a Pupi1:Teacher ratio o f 1O:l for traditional disabilities o f visual impairment, hearing impairment as well as mental retardation; Continued implementation o f efficiency measures in the sector, including double-shift teaching, financial management and accountability, records management for schools to maintainreliable data, decentralized procurement and delivery of instructional materials; Continued payment o f allowances to 2,010 qualified teachers inhard to reach areas such as Kotido, Moroto, Nakapiripirit, Mukono-Buvuma Island and Kalangala.' lo I6.8: Region - Number of beneficiaries of the bursary scheme by district (2004) I District I Male I 2,867 1IFemale 1I 1Total 1,655 4,522 IEast I1Katakwi Kumi I485 I291 776 Soroti 516 428 944 Kaberamaido 1,072 534 1,606 North Avac 4.309 2.758 7.067 Gklu 5,519 2,685 8,204 Lira 8,466 3,750 12,196 Pader 2,229 1,147 3,376 Kitgum 1,698 1880 3,578 Total 27.161 15.128 42.289 Source: Secondary Education department, 2004105 logSuch interventions increased the overall enrolment particularly o f poor children from these areas at the secondary school level from 683,609 in2003 to 697,507 students in2004. Gross Enrollment Rate also rose from 18% in2003 to 21% in2004. 'loAs a result of such efficiency measures, the completionrate at S.4 for boys and girls has registered gradual improvement (i.e. from 18% in2003 to 25% in2004). 174 Highereducation In order to increase access to higher education in a bid to meet Uganda's growing demand for skilled manpower, during the period under review the National Council for Higher Education licensed four new private universities (Le. Kabale University, Kumi University, Afi-ican Bible College University in Wakiso District, and Mountains o f the Moon University in Kabarole district)."' In addition, in 2004/05 a total of 80 students were awarded various scholarships to study abroad. Inan effort to improve the quality ofhigher institutions, government also completed a number o f civil works in all the four public Universities, while implementing salary enhancement scheme for academic staff. These measures have augmented enrolment in higher education from 88,330 (i.e 65,212 in universities, and 23,118 in other tertiary institutions) in 2003 to 108,295 (67, 938 in universities, and 40,357 in other tertiary institutions) in 2004. Notably, the gender enrolment gap for universities continues to widen at the expense o fwomen. Business,Technical,VocationalEducationandTraining(BTVET) Important steps were taken to expand access to Business, Technical, Vocational Education andTraining (BTVET) institutions. Box 6.3: AchievementsinBTVET 0 Constructiono f a four-classroom block inKumitechnical school; 0 Completion of a a girls' hostel at Mulago Paramedical School; 0 Finalization o f construction and commissioning of Birembo Technical Institute; 0 Increased availability of funds following a rise inthe budget share of the sub-sector from 3.8% in2003/04 to 4% in2004/05 (see tabe 2.5 for total enrolment to BTVET);"* 0 Recruitment of teaching staff under the BTVET sub-sector during the FY 2004105 (Le. 288 for Community Polytechnics, 193 technical teachers for Technical Institutes, and 49 lectures for UTCs and UCCs). Note, total enrolment inPrimary Teachers' Colleges (PTCs) declined from 17,637 (2002/2003) to 16,682 (2004/2005). Access by female students to PTCs remains low. InNTCs, enrolment of male students also stood higher than that of females. Monitoring Indicator Source Status Status Status Status Status prov area ofdata 2000 2001 2002 2003 2004 2005 Access Enrolment EMIS 14,077 14,314 20,314 26,313 25,514 21,159 a) Males 12,614 12,726 15,499 18,271 17,860 14,812 b) Females I I1,463 1 1,588 I 4,815 I 8,042 I7,654 I6,347 1 Source: EPD,Annual SchoolCensus,2005 11'This increases the total number oflicenseduniversities from 10to 14. 'IzThe decline in enrolment experienced after 2003 is partially associated to the on going rationalization exercise inthe sub sector. 175 6.2.3 Policydevelopments Duringthe period2003 -2005 the followingpolicy actions were initiated: Government recast the sponsorship policy in Public Universities to emphasize science and Technology. Consequently, with effect from FY 2004/05, government sponsored admissions to Public Universities will comprise 53% Science & Technology, and 47% A r t s and Humanities students. The thrust o f this policy i s that enrolment in Science and Technology-based courses needs to move up from thepresent 17% to at least 50% within the medium and longterm plans; The draft school health policy was formulated and is to be presented to Top Management Meeting for approval during the FY 2005/06. It will address all health related issues ineducation institutions, malaria inclusive; A policy framework for the provision o f basic education to educationally disadvantaged children was developed and approved by Top Management Meeting; The Early Childhood Development (ECD) Learning Framework draft was finalized and i s ready to be presented to the Academic Steering Board o f NCDC for vetting before the Council approves it for launching. The Learning Framework i s for the ages 3-6 andwill be used in all nursery schools and Learning Centers; In-service Guidelines for Teachers were produced on how to teach Reading, writing and Numeracy in lower primary classes with special focus on local languages and the use o f Revised Time Allocation on the lower primary school timetable; M o E has developed a sector HIV/AIDS Policy and guidelines in line with national Strategic framework for HIV/AIDS. The main components o f the Policy are prevention education; treatment, care, support and impact mitigation, workplace interventions; and strengthening management o f the sector response; Two position papers on deployment o f Special Needs Education teachers in secondary schools and admission o f disabled (hearing impairment & visual impairment) students into tertiary Institutions were also prepared and discussed by ESCC; A strategic framework for education for all in conflict and post conflict districts was developed and submitted to Top Management Meeting for approval. Challengesfor PolicyImplementation (i) Ceiling on school fees - This was partly attributed to some teachers still being paid from PTA accounts, andcapitation grants from government remaining as low as less thanUshs 75 per student per day; (ii) Absence o f a recruitment policy for diploma holders in primary schools, complicating recruitment and posting to primary schools; (iii) Persistentruralurbandisparities; 176 Managerial incapacity particularly at the district and frontline facility levels; Inadequate funding, most especially for hygiene and sanitation, and for the teachers' wage bill; Lack o f school feedingprogrammes; Poor coordination o f HIV/AIDS awareness related activities; Restrictedplacement o fbooks inthe hands o fpupils/students; Lingering insecurity in certain parts o f the country. As far as education i s concerned, armed conflict in Uganda i s negatively affecting the attainment o f desired levels o f education for a significant and increasing proportion o f the population. In so doing, it is not only causing poverty but also reinforcing it by distorting the accumulation o f and returns from humancapital. National statistics show that 2.9% o f children in 2004 cited insecurity as being the reason for their decision to leave school with the proportion being higher in rural areas (3.9%) compared to urban areas (1.0%). 4.1% and 3.1% o f the children affected in rural areas are boys and girls respectively while in urban areas it is 1.1% and 1.0% o f boys and girls respectively. This shows that the problem is generally greater in rural areas and amongst boy-children. The problem also appears to be prolonged as evidenced by analysis o f findings from the same survey amongst service provides. 2.5% and 3.8% o f female and male service provides identified insecurity as the common reason for having left school in 2002 respectively, and this proportion rose to 3.0% and 4.5% in 2003 representing an increase o f 20.0% and 18.4% respectively (UBOS, 2004). In addition to reducing years of schooling for an increasing share of the population, armed conflict i s also reducing the level o f returns from public investment in education by affecting the performance o f schools. 7.2% o f government primary schools ranked insecurity as the most serious problem affecting their performance (UBOS, 2004: 22); Isolated cases o f financial mismanagement; Key Policy Recommendations The following are some o f the recommendations that can make improvements under the education sector: 0 Invest on qualitative aspects o f Universal Primary Education, with special attention to (i) school feeding programmes; (ii) teachers' wage bill; (iii) book and studymaterialsprovision; and, (iv) school sanitation. Effectively plan for extending universal education beyond primary, paying special attentionto the needs o f girl children. 177 6.3 Water and Sanitation Access to safe water and sanitation facilities, their management and utilization, are necessary conditions for sustainable development. Lack o f safe water and poor sanitation and hygiene practices exact a disproportionately higher toll on the poorest segments o f society inboth rural and urban areas. As such, in line with the PEAP, the sector's targets include "sustainable safe water supply and sanitation facilities within easy reach o f 77% o f the rural population and 100% o f the urbanpopulation by the year 2015 with an 80%- 90% effective use and functionality o f facilities". 6.3.1 RuralWater Supply andSanitation Access to rural water supplies remains ambiguous. According to the Sector Progress Report 2005, assuming a 100% functionality rate o f all new water fa~ilities"~(see table 6.10), access to rural water supplies increased from 54.9% in2002 to 61.3% in2004/05. Notably, however, on the bases that functionality rates nationwide are reported to be significantly below the 100% mark, a more realistic figure for access to rural water supplies has been estimated at 49.7%. `13The new facilities include piped water schemes for eight Rural Growth Centres (RGCs), defined as trading centres whose population is between 500-5000, and for seven Internally Displaced Peoples (IDP) camps inNorthernUganda. 178 Table 6.10: RWSSplannedand actualachievementsinthe last3 F Y s Benchmark 200212003 1200312004 I200412005 I Actual I I I I Plan Actual IPlan Plan Actual Springprotected 1,322 1,25 1 I932 1,023 874 825 Shallow Well 1,358 1,426 I1,038 I11,045 II976 II1,042 protected Borehole 97 258 I346 I248 I304 I214 Rehabilitated Borehole Drilled 507 459 I544 I495 I570 I542 Rain Water Tanks 431 437 435 527 754 1372 Gravity Flow 36 45 36 32 42 21 Scheme (No) Gravity Flow 121 541 588 489 277 572 Scheme (Taps) Piped Water at 9 5 12 8 RGCs Latrines in 170 122 124 77 128 90 RGCs(including Ecosan toilets) Valley tanks 15 12 8 6 7 8 IDPS 10 7 Additional 858,300 703,600 787,000 populationserved Totals No. of 3,308 3,677 3,102 3,052 2,697 2,757 water points constructed Source: DWD-MIS RuralWater Coverage This section analyses access to improved water supplies. The indicator "percentage of people within 1.5 km (rural) and 0.2 km (urban) of an improved water source" is used by the sector for the assessment o f improved water coverage. However, given the difficulties in measuring this indicator, proxy figures are used to estimate the number o f users inboththe rural and urban context. 179 Rural access to safe'14 water is reported at 61.3% and 52% in the wet and dry seasons, respectively. Notably, however, ifthe maximum walking distance to an improved water source i s reduced to lkm or OSkm, the coverage drops to 52.6% and 36%, respectively. Inlightofthese facts, the sector is inurgentneedto increase accessibility to, andimprove hctionality of, water sources. At local level, water user committees continue to rely on centrally driven interventions, which have failed to generate the required support. An effective solution to this problem calls for substantial deepening o f both financial and managerial decentralization. Rural Coverage Trend. The sectors' rich array o f data sources, including the Uganda Demographic and Health Survey (UDHS), the National Service Delivery Survey (NSDS) and the Uganda National Household Surveys (UNHS) show a steady increase in safe water coverage up to 2002 (Figure 6.6). The apparent drop in coverage from 2002 to 2003 was due to the use o f the new population figures from the 2002 census. Coverage figures prior to this were based on population projections from the 1991 census. However actual population growth, as captured in the 2002 census, was higher than previous estimates. Figure 6.6 shows that new investments in rural water "supplies have just kept abreast with population growth (3.3%) since 2002. Figure6.6: Rural Water Supply Coverage(1999 to 2005) -E 100% 90% al ul 80% fB 70% -0 60% h 50% '2d a 40% f 30% pa 20% K 10% "I" , 1991 1992 1993 1994 1995 I996 1997 1998 I999 2000 2001 2002 2003 2004 2005 +DWD-MIS (Revised2005) Functionalityassumed to be 100%for all sources tDWD-MIS(Revised2005)Functionalityassumedtobe:springs100%:handpumps70%;GFStaps90% - - - A UNHS -f-UDHS X DistrictSituationAnalysis When estimating coverage for rural water supply, consideration should be given to households which are currently considered as un-served but draw water from sources that they have developed or improved themselves. Such sources can be upgraded to even safer supplies which offer great security o f supply. Considering such water sources also overcomes the problem o f trying to "develop a sense of ownership" in order to ensure '14Safe water sources are defined as pipedwater, protectedwater andgravity flow schemes. 180 that operational and maintenance (O&M) requirements are met. Sources which have been developed by the users are actually owned by the users themselves. This provides a solution to the ongoing issues o f O&M and limited available public finances. Equity in District Coverage: Figure 6.7 presents the proportion of the population with access to an improved water source in each District in 2004/5 using the DWD-MIS approach. The figure shows that there is considerable inequity in coverage between districts. Five districts (Kabermaido, Luwero, Kabale, Kanungu, Kibaale) have an estimated coverage o f over 80% and nine districts (Kisoro, Sembabule, Bugiri, Mayuge, Apac, Yumbe, Pader, Kotido and Palisa) have an estimated coverage of between 20 and 40%. It is important to improve the equity o f service delivery inthe districts so as to comply with the key sector policy objective o f `somefor all not allfor some'. The new formula for resource allocation between districts should be implemented with effect from 2006/07 with the aim of making allocations more equitable. Furthermore, the sector should provide guidelines to districts on how resources can be more equitably allocated within the lower local government areas. 181 Figure 6.7: RuralWater Supply Coverage byDistrict(DWD-MIS) * A Land Use Lakes District Service Coverage 2040% 40-60% 60-80% 80-100% 0 0.5 1 1.5 2 Kilometers 182 InternallyDisplacedPeople(IDP) Camps. Using the SPHERE standards o f 15 litres o f water per capita per day and a latrine for every 50 people as examples, IDPs accounting for 1.4 million in approximately 200 camps (UN-OCHA, 2004), would require 21million litres o f safe water per day and some 28,000 latrines to dispose o f their household excreta. A mortality study (WHO, 2005) in the Acholi region revealed that the actual mean litres/person/day was 10.3 and the mean waiting time to collect water was 2.7 hours (SPHERE Standard i s 15 minutes). The study, quoting reports by Health Inspectors, also gave the 'person per latrine ratio' inthe camps as being 80 and 37 in the two districts o f Kitgum and Pader respectively. There are obviously great variations between and within districts with poor indicators for the less accessible camps. One o f the key recommendations o f the study was to improve on water and latrine availability inthe camps. Diarrhoeawas found to be the second leading cause o f mortality for children under five and WES interventions have a demonstrated impact on incidence o f diarrhoea andother water related diseases. Table 6.11 indicates a summary status o f water supply to IDPs. Due to concerns about contamination o f deep and shallow wells inthe IDP camps, and the fact that many hand- pumps would need to be installed to supply the huge populations with improved water sources, focus has been placed on piped water supply systems. The total number o f facilities inplace i s grossly inadequate. There i s need to strengthen the district and local government capacities to monitor, plan, implement and manage the provision of emergency water and sanitation services as well as having flexibility in the sector guidelines and the general budgeting rules for the water grant, to take into account such special conflict situations. The central budget allocation for improvement o f water and sanitation services for IDPs also needs to be increased. ITable 6.11: Provisionof PiDedWater inIDPCamDs I IDP I Camp BH"' Piped District ji Camps 1 Population I1 1 water I I ................................................................. ..................................... ............................................... ................. 171,452 1.. i 51 .................................................................... ~ Borehole 183 6.3.2 UrbanWater Supply and Sanitation Targets andAchievements Table 6.12 shows the targets and achievements for the urbanwater and sanitation sub- sector for 2004/5. A total o f 22,218 new connections were made in the 19 large towns under NWSC and Un-Accounted for Water reduced to 33.4% on average. The increase in connections by NWSC marks an average growth o f about 20% per annum. The staffing ratio was '9 staffper 1000' connections. Inthe past, the central and local governments used to runthe small town water supply systems using own staff. In order to improve efficiency and quality o f water supply services, it was later decided to commercialize service delivery (through partnerships with the private sector) and separate asset ownership from system operation & management. A total o f 3,762 new connections were made in the small towns and the staffing ratio was '33 staffper 1000 connections'. rable 6.12: Targets and Achievements for Urban Water Supply and Sanitation ' .............................. j ............................................................................................................................... " ......................................................................................................... ................................................ i AchI -1 I Target Ach. 1 Target Achievements 1 ~ ~ Coverage 168% 168% 36% r-ll* n/a NRW Significant savings in I I i water production. 1 33.4% 137.3% ln/a \n/a ~ n / a I I 1 ......................... i ......................................... ............................................. .................................... ~ I i Water works Total no. Connections Water produced (million m3> " "....... .... Staff per 1000connections Meteringefficiency " ............................................................................................................. .................................................................... Collection efficiency " .................................................................. ........................................................................................................................................... Water meters installed ..................................................... Mains Extensions (km) " Unaccountedfor water 'I6 Small Towns Water and SanitationProject I" Water Authorities inTown councils 'IB The target has notbeenincluded as the method of estimationhasbeenchangedthis year. 184 Box 6.4: Enabling access to water by the urban poor [thas been established that some of Uganda's poorest people live inthe urban areas. They tend to be more marginalized than the rural poor as they are not able to engage in subsistence rigriculture. Water supply services to peri-urban areas and the urban poor continue to be a major shallenge and are hinderedby: 2 Lack o f physical and structural plans for settlements hence making it difficult to extend services to the areas 3 Rate of population increase which tends to outpace the rate o f infrastructuredevelopment. 4 Low income levels which hinder private connections and affordability to pay for water and sanitation services. Despite the above challenges, NWSC tried to serve the urban poor through kiosks and public standposts, preferential tariffs, a simplifiedconnection policy and specific projects targeting the poor: Kiosks and public stand posts for the urban poor. Currently, the NWSC provides cheaper water for the urban poor through the kiosk or public standpipe system. Duringthe period 2000- 2005, a total of 1,079 new water kiosks and public stand posts were erected (83 in 2000/1, 68 in 2001/2, 277 in 2002/3, 382 in 2003/4 and 269 in 2004/5). Notably, however, the (poor) households collecting water from such kiosks are reported to pay more than their (wealthier) counterparts with house or yard taps (shs. 25/= against shs. 11/=). Unsurprisingly, therefore, through the new/simplified connection policy (shs. 50,000 per connection), NWSC i s encouraging yard taps for all households. Tariffs. The current NWSC tariffs have been designed so that the better-off pay more than the poor. However it should be noted that the actual cost to the consumer i s higher than the tariff. The stand pipe price i s a subsidized rate o f UShs 521 per m3.Due to the uniform tariff structure across the NWSC towns, there are cross subsidies. The smaller urban centres with higher unit costs of water production are subsidized by the larger towns with lower unit costs o fproduction. Simplified Connection Policy. At the end of the first quarter of the FY 2004/05 a new connection policy was introduced to address, amongst other issues, the high level of water losses and the need for accelerated service coverage with special emphasis on serving the poor"'. Quarterly monitoring and a review have shown that the number of new connections has nearly doubled, indicatingthat there was a highlevel of suppresseddemand for services. Water coverage for Large (NWSC) Towns The coverage i s estimated by taking the total amount of domestic water billed (daily average), divided by the assumed per capita consumption'20. The overall coverage o f the 11' Under the policy, NWSC is directly responsible for procurement of all materials, carrying out executiodsupervision of new connections installation up to a distance o f 50 meters once the customer has paid fees. Distances above the mandatory 50 meters the customer will be charged but NWSC i s still to handle the connection. 120NWSC assumes per capita daily water consumption o f 60 litres. The problemwith this method i s that some water, which i s considered as domestic by NWSC, is actually usedinconstruction, washing bays, 185 19 large towns served by NWSC now stands at 68%. Coverage increased by 3% per annum between 2001 and 2003 and by 2% over the last two years (Figure 6.8). The reduction in the growth rates i s due to extension of services made to the more difficult sparsely settled areas. Overall, there has been a progressive growth in new connections over FY 2004/05. 22,2 18 new connections were made, averaging 1,800 new connections per month, bringing the total number of connections to 123,046. New connections exceeded the target o f 12,000, and the total number of connections exceeds the target of 110,000. Coverageby town: Nine out o f 19 large (NWSC) towns (Kampala, Jinja/Njeru, Entebbe, Mbale, Masaka, Mbarara, Gulu, Kasese and Fort Portal) have a coverage greater than or equal to the average NWSC coverage. The towns o f Tororo, Lira, Kabale, h a , BushenyUIsaka and Soroti fall below the average. The NSDS (2000) found that access to piped water in urban households was 9%, compound 12.5% and outside the compound was 27.3%. 100% 90%- Fal80% - g -2 70% - A k + 60%- i50% + A 7 v v -- g! 3 40%- V I " I 2001 2002 2003 2004 2005 Water Coverage for Small Towns According to DWDMWLE data, there are 143 small towns in Uganda with a total population of 1.7 million. 66 small towns have been gazetted as water supply areas. 61 o f these towns have operational piped water supplies and schemes of which 57 (or 86%) are managed by private sector water operators on behalf o f the water authorities and DWD -(this includes five which run under the South Western towns' water supply umbrella organization). An additional four are runby the town councils'2'. watering gardens and livestock which ifnot taken into consideration leads to over-estimation o f urban water coverage. 12' Kyotera, Moroto, Apac and Kotido 186 The percentage coverage i s estimated by summing the assumed number o f users served by all water sources122divided by the urbanpopulation. The average coverage for the 61 towns with operational water supplies i s estimated to be 65%. The overall coverage for the 143 towns i s estimated to be about 36%. Small and large (NWSC) towns have different ways o f calculating access. This makes it very difficult to calculate overall urbancoverage. 6.3.3 Sanitation The observance o f a sanitary environment i s essential for good health and thus a fundamental human right. Over 75% o f Uganda's disease burden i s considered to be preventable as it is primarily caused by poor personal and domestic hygiene and inadequate sanitationpractices. Investing in sanitation brings substantial economic returns, while reducing the cost o f curative health, and magnifying the benefits o f education, by increasing attendance to schools with improved hygiene and sanitation facilities. Recent research established that for every US$ 1 invested in sanitation, the resulting economic benefits range between US$ 5 and US$ 23. Between 2002 and 2005, however, latrine coverage changed from 55.7% to 57%. Inthe same period there was no notable improvement in the sewerage coverage as there were no new investments. In the last three years cholera outbreaks related to poor sanitationhave increased notably inthe urbanslums. Areas of Progress Over the last three years progress has beenrealized inkey areas. These include: 1. Improvedcoordinationat national levelthrough the establishment o fthe National Sanitation Working Group; and at local government level the formation o f District Water and sanitationcoordination Committees. 2. The increased profile o f sanitation at the national level resulting in sanitation undertakings inthe annual health and Water & Sanitationjoint sector reviews for the past three years. 3. The completion o f the National Environment HealthPolicy. 4. An assessment o f the sanitation funding mechanism was done which resulted in the development of an integrated sanitation andhygiene strategy. The strategy (to be ready by early 2006) represents a 10-year national strategy for financing improved sanitation andhygiene aimed at achievement ofnational targets and the MDGs.The strategy outlines three pillars: i.Implementationofademandcreationprogramme ii.Implementationofasupplyimprovementprogramme iii.Reinforceanenablingenvironment 122House connection- 8; institutions, industry, yard tap - 32; kiosk-300; shallow well - 300; protected springs - 200 andboreholes -300 187 ExistingChallenges 1. Demandcreation e Sanitationhygiene involve behavior change, which takes time. Programmes/projects are normally short term. There i s no long-term on-going support to ensure sustained changes inbehavior. e Households do not consider sanitation to be a priority. Although the responsibility o f household sanitation lies with the Ministry o f Health, ultimately household sanitation is considered an individual responsibility. This is a fallacy as an individual's irresponsibility or lack o f means can have an adverse effect on an entire community. The situation is further exacerbated by low levels o f community mobilization. 2. SupplyImprovement e Although water, health, and education sectors highlight sanitation as a highpriority in their policy documents, inpractice it is not a fundingpriority for any o fthem. This is partly because sanitation differs from each o f these sectors' core functions and expertise. Sector policy documents (HSSP; PEAP) have emphasized Sanitation but inadequate guidance has beenprovided as to how it should be done. ,e The sector ceilings make it difficult to avail more h d s for sanitation, even if a development partner i s willing to fund sanitation activities. e There i s lack o f clear guidelines to districts on budget expenditure on improved sanitation andhygiene so the issue i s not given the prominence it deserves. e Although the provision o f water i s largely subsidized, there i s very little subsidy for household sanitation, apart from what goes into promotional messages. It is time government reviewed the pro-poor strategy and evaluated the provision o f targeted/'smart' sanitation subsidies to the very poor (terminally ill,child headed households, the elderly, women headed households, and PWDs). 3. Enablingenvironment e There i s inadequate political will and exemplary leadership practices - sanitation enforcement is not a vote winner. Where it exists, political support is not continuous/long term and so advocacy i s not sustained. e There i s also inadequate awareness and effective implementation o f the Public Health Act andineffective by-laws. Way Forward The Integrated Hygiene Promotion and Sanitation strategy will act as a guiding framework for the implementing agencies, as an instrument o f advocacy and as an input to the more detailed Medium Term Operation Plans (MTOP 3 years). It will also be an input to the overall Sector Investment Plans that fall under the sector financial ceilings within the: Ministry o f Health; Water, Lands and Environment and, Ministry o f 188 Education and Sports. In addition it will guide the sanitation related activities o f Local Governments andother related stakeholders. 1. Implementationof a demandcreationprogramme e Plan and launch a National Hand-washing Campaign. e Local Governments should strengthen inspection and enforcement o f by-laws by local authorities andtechnical staff. e Encourage community mobilization, strengthening the role o f community development workers insanitation promotion andbehavioural change. 2. Implementationof a supply improvementprogramme e Ensuring adequate hding for the sanitation sub-sector through the re-allocation of funds within the three ministries (health; water, lands andenvironment; andeducation and sports). Review the PHC; School facilities grant; and Water and sanitation sector group guidelines to encourage expenditure o f up to 10% on improved hygiene and sanitation. e Release o f budgets through prioritized work-plans. Districts should ensure that plans on sanitation are included in the district Development Plan and Budget Framework Papers. e Accelerate pro-poor affordable technologies. Ensure usability by the widest range of user groups including children, elderly and people with disabilities; 3. Reinforcean enablingenvironmentprogramme e Improve integrated, multi-sectoral coordination o f improved hygiene and sanitation. Local Governments should ensure inter-sectoral collaboration through water and sanitation coordination committees; e Enhance government efforts to improve civil service performance. Ensure adequate staffing at all levels. Deploy Health Assistants at H C I1 levels with adequate facilitation. 6.3.4 Key PolicyRecommendations e Substantial deepening o fboth financial and managerial decentralization. e Ring-fence money for sanitation, through institutionalising a sanitation budget line across the ministries o f Health, Education, and Water & Sanitation. 189 6.4 Social Development Social Development addresses issues o f social exclusion, inequity, inequality, vulnerability, unemployment and disenfranchisement for different groups such as women, men, youths, children, the unemployed, internally displaced persons, the elderly, and persons with disability. These groups are often marginalized or excluded from the benefits o f development, and are particularly vulnerable to exploitation and income shocks. The rest o f this section focuses on three key aspects o f social development: gender, community mobilization, and social protection. 6.4.1 Gender The Constitution o f the Republic o f Uganda recognizes equality between women and men inall development fields. It also prescribes temporary affirmative action infavour o f women, among other disadvantaged groups, for purposes o f redressing imbalances created byhistory, tradition andother factors. Over the past two decades, the Government o f Uganda has actively promoted women's empowerment and gender equality in both legal andpolicy arenas. The Government's National Gender Policy, launchedin 1997 and revised in 2005, underscores and addresses the cross-cutting manifestation o f gender inequalities. The current status and policy recommendations for gender equality in relation to the investment climate/regulatory framework, land titlingrights, access to finance, political participation, and access to justice were highlighted inprevious chapters. Notably, government has introduced gender and equity budgeting in the national and local government budgeting process. To this end, specific guidelines have been developed as part o f the Budget Call Circular. While it i s too early to evaluate the impact o f such initiative, it i s envisaged that this effort will help sectors reorient their expenditurepriorities towards addressing key gender and equity issues. 6.4.2 CommunityMobilizationandEmpowerment Enhancing o f community participation and empowering the poor and vulnerable are key strategies for tackling poverty. Community influence and active participation o f the poor themselves in the planning and management o f community-based initiatives i s vital for ensuringownership andsustainabilityo fpublic investments. The community mobilization and empowerment strategy aims to ensure effective community participation in the design and implementation o f development programmes in all sectors, while empowering communities to manage and sustain such programmes over time. 190 Although the strategy i s still at drafting stage, a number o f activities have been supported duringthe periodunder examination. These include: 1. Rivitalization of Community Development Function Community development has been revitalized in Local Governments to improve service delivery, anddeepen decentralisation. Achievements 0 Recruitment of 28 graduate Community Development Officers (CDOs) in the PMA districts, and re-orientation of 280 CDOs and233 CDAs; Establishment of a Community Development Worker's Conditional Grant (CDW- CG) to improve logistical support to 747 Community Development Workers (CDOdCDAs) for the implementation of community development activities in all districts; Rehabilitation o f 74 Community Development Centres at sub county level, and constructionof 13 new ones. The long-term objective i s to have at least two (2) CDW per sub-county and to provide them with operational funds. Subcounty officials have been sensitized about the roles o f CDWs, and CDW operational and district mentoring guidelines have been developed and disseminated. The CDWs will operationalise the Community Mobilization and Empowerment Strategy in all districts to ensure that communities are effectively mobilized to participate in, andbenefit from, government programmes and services. 2. Rehabilitation and Development of Public Libraries Other structures for community empowerment include the National Library, public and community libraries, andtele-centres. These structures collect, preserve and disseminate information to communities for their self-development, economic advancement and improved livelihood. Achievements 0 Renovationo f 5 public libraries inKampala, Jinja, Kabarole, Tororo and Hoima; 0 Establishment of 10 community libraries inMasaka, Kiboga, Bugiri, h a , Mubende; 0 Establishment of 13 new libraries in Moyo, Zigoti, Ibanda, Bwikwe, Kanungu, Kijura, Moroto, Nebbiand Soroti; e Current construction of 3 libraries inSoroti, Nebbiand Moroto; e Introduction of ICT services infour Libraries; 0 Acquisition and distribution o f 800,000 books to public libraries in support o f functional adult literacy and other continuing education programs. I N.B.O f the former 56 districts, only 22 have public librariesmostly located inurban areas. 191 3. Functional Adult Literacy (FAL) The overall goal o f FAL i s to provide the opportunity to the illiterate to acquire literacy and numeric skills that will effectively help them to participate in the economic, socio- cultural and political transformation and modernization o f Uganda. As such, FAL remains a strong tool for poverty eradication. The sector has extended the FAL programme to all districts o f Uganda, covering 830 out o f 969 sub counties. As a direct result, the adult literacy rate for the population aged 18 years and above increased from 63% in 1999 to 69% 2003. Other achievements 0 Increased enrolment of adult learners from 412,698 (323,579 female, 89,119 male) to 477,017 (Female 384,980; Male 92,037) in2004/05; 0 Recruitment of 25,000 FAL instructors; Purchase and distribution of 10,500 bicycles to facilitate instructors; 0 Development o f a FAL five-year strategic plan; 0 Provision of over 200,000 instructional materials (primers), published in all languages except Lusoga, Lumasaba, Kupsabiny, Madi, Alur, Lubwisi, Kakwa, Samia Lugwe and Pokot. Policy Actions The key policy recommends are to: 0 Finalise and operationalize the Community Mobilization and Empowerment Strategy; 0 Fillvacant Community Development Workers' posts; 0 Enhance support to Functional Adult Literacy; 0 Promote access to public information; 0 Integrate Community Development (CD) inall national development efforts; 0 Ensureeffective community participationinthe design and implementationof development programmes inall sectors, while empowering communities to manage and sustain suchprogrammes over time; 0 Promote culture and enhance the contribution o f culture to community development andempowerment 6.4.3 Social Protection Social protection consists o f public and private initiatives to protect vulnerable groups against livelihood risks, provide income and consumption transfers to the poor, while enhancing their social status andrights. In an effort to reduce social exclusion of the Orphans and Other Vulnerable Children (OVC) in accessing services and participating in the development process, the social 192 development sector has developed a National Policy and National Programme Plan o f Interventions (NSPPI) to guide implementation o f OVC activities. Other achievements 1. Development of a strategy for the rehabilitation and reintegration of formally abducted children and youth in communities. The strategy highlights guidelines for provision of psychosocial counselling, tracing and resettlement o f children. To date, over 10,500 children have been rescued and placed in various trauma centres. The majority o f them were reintegrated into the community. 2. Establishment of the National Council on Disability and National Policy on Disability to ensure equalization o f opportunities for PWDs, promote and monitor effective service delivery, and ensure effective collaboration among all stakeholders. To this end, the sector has continued skills training for PWDs (e.g. tailoring, carpentry, leatherwork and handicrafts) inKireka, Lweza, Mpumudde,RutiandOchokoRehabilitationCentres. 3. Design o f skills programmes to specifically promote youth empowerment, including the Programme for Children and Youth (PCY), the Programme for Enhancing Adolescent Reproductive Life (PEARL), and the Youth Empowerment Scheme (YES). The sector has trained over 4,000 youths with entrepreneurial skills. Approximately 45% of them were also given access to Y E S loans totalling Shs. 935,750,000=. PolicyActions The recommendedactions are: 0 Mobilise and strengthen community-based response for better care o f orphans and other vulnerable children; 0 Support empowerment o f adolescents with reproductive health information and life skills; 0 Strengthen informal community-based support for older persons; 0 Support expansion o f community-basedrehabilitation for persons with disabilities 6.4.4 Challengesfor PolicyImplementation Social development is faced with the following challenges: 0 Inadequate community mobilization and weak participation o f communities in planning, implementation, use and management o f public services and development initiatives; High illiteracy rates among adults hindering their effective participation in development process; L o w labour productivity andwidespread unemployment and underemployment; 193 Widespread social exclusion o f the poor and vulnerable groups in service delivery andparticipation indevelopment initiatives; 0 Persistent gender disparities inbenefiting from social and economic opportunities. 6.4.5 Key PoliciesRecommendations 0 Establish a systematic monitoring and evaluation system to track the impact o fjoint social development interventions against the sector's key indicators. The system should facilitate up and down flow andholistic use o f information by stakeholders, as well as capture bothqualitative andquantitative aspects o f social development. Provide o f sustainable incentives for FAL instructors. Implementation o f the Functional Adult Literacy Programme is still relying on voluntary instructors, whose rate o f attritionremains high(50%). 0 Approve and Implement the Community Mobilization and Empowerment Strategy andLaw. 6.5 Population Growth At an average population growth rate o f 3.3% per annum, Uganda continues to experience one o f the fastest rates o f population growth in the world. By implication, the current total fertility rate'23 is the second highest in Sub-Saharan Africa, and the third highest in the world. At the current rate o f fertility, a woman in Uganda will have an average o f 6.9 children by the end o f her childbearing years. According to the MoFPED (2004), high fertility rates and fast population growth are threatening to wipe out the benefits from improved social spending. At the current population growth rate, by the year 2013/14, 10.3 million Ugandans, approximately 28% o f the total population, will live inpoverty. Reducing population growth by 1percentage point, by the year 2013/14, fewer Ugandans(7.1 million), approximately 22% o f the total population, would live inpoverty. In addition, both real private consumption per capita (which determines poverty levels) andreal government expenditure per capita would increase significantly ifUganda slows its rate o f population growth. More specifically, real private consumption per capita would register, on average, a 1.2% higher increase per annum, while real government expenditure per capita would be 14% higher for both health and education by the year 2013/14. Inother words, a slower population growth rate for Uganda can ensure faster poverty reduction and improved quality o f social services. 6.5.1 PolicyRecommendations Among the most important factors affecting fertility levels are, in order o f importance, female education, female employment opportunities, higher incomes, good access to 123number of children expectedto be delivered by a woman inher lifetime 194 reproductive health services, and a family planning effort that tries to establish norms o f smaller families and assists in making reproductive and family planning services available at low cost to everyone insociety. (i) Investinfemaleeducation Datafromthe UgandaBureauofStatistics shows - that women with no educationhave 7.8, those with some primary educationhave 7.3, and those with some secondary education or more 3.9 children. More educated women have better access to family planning information and services, have a much lower likelihood for teenage pregnancies (this is already true for girls with only some primary education) andhave a lower ` m e t need' for family planningservices. Through its WE policy, Uganda is already embarking on a strategy to promote female education. While this is likely to assist with fertility decline, on the basis that reductions infertility as a result of educational attainment become tangible only at secondary level; USE will play a vital role. (ii) Generatefemale employmentopportunities Greater efforts mustbemadeto - ensure better access to female income-earning opportunities beyond subsistence agriculture. Women make up a small share o f formal sector employment, they have poorer access to credit, and have less capital to work with. As a result, their opportunity cost o f time is still quite low, which enables them to have large numbers o f children. Improving female access to formal sector employment and outside earnings would increase their bargaining power. This could be o f importance for fertility reduction as women have smaller desired fertility levels (4.8) compared to men (5.6). (iii) Smoothconsumptionover the life-cycle Measures to assisthouseholds with - alternative ways to smooth consumption over the life-cycle would clearly assist in reducing fertility. Among the measures to be considered are the development o f financial services (esp. to rural areas), and possibly the introduction o f publicly supported old-age programmes. (iv) Improve reproductivehealth services - Reproductive and child health services are still quite inadequate andprevent families from reducing their number o f children and investing more in each o f them. Given that child mortality and fertility are so closely linked, it i s critical to tackle the issue from both ends. Success in one area will then promote success inthe other. (v) Support family planning Family planningremains limitedby cultural factors, - illiteracy and distance from government health units. Men lack involvement in utilizing family planning services, and they have a negative attitude towards allowing their partners to access such services. One o f the reasons given for this was that men often see children as a source o f wealth. However, people with many children are unable to save, and find it prohibitive to provide adequate nutrition andhealth care for every member o f the household. High fertility has a particularly negative impact on maternal health, thus influencing a mother's ability to adequately care for her children during both ante- and post-natal phases. 195 In conclusion, political leadership and action is a key median through which to provide an integrated approach highlightingmain issues, and co-ordinating the key interventions as articulated above. 196 Chapter 7: Public Expenditure 7.0 Introduction The PEAP has guided the sector-wide approaches to policy reform and investment programming. It has also improved the focus o f Government's three-year rolling Medium Term Expenditure Framework (MTEF) inthe fight against poverty. Major achievementsand challenges: Key Achievements Slow but consistent govemment commitments to finance PEAPpriorities. Key Challenges Persistent budget indiscipline within some sectors andtherefore unending domestic arrears Limited andunreliable fundingofnon-PAF expenditures, some o fwhich are critical to the enhancement o f effectiveness ofpublic service delivery Reorientationo f expenditures towards productive sectors as opposed to social sectors Allocations and Actual Expenditure Ten years ago, the majority o fpublic expenditure was determined by availability o f donor funds. Currently most public expenditure, whether Government or donor-financed, reflects the priorities set out in the PEAP. The development o f the MTEF and sector investment programmes in key sectors such as education and health have strengthened the alignment o f donor funding with PEAP priorities. Government will continue to prioritise funding o f PEAP priorities adequately inthe MTEF. To this effect, through the consultative Public Expenditure Review processes the execution o f the Budget is monitored to ensure its consistency with the agreed budgetary provisions. An examination o fthe BudgetFramework Papers over the years shows that the emphasis remains on committing resources towards support o f the PEAP objectives. This chapter examines the progress made in funding PEAP priorities by taking into account changes made in budget policy to re-orient public expenditure patterns in favour o f the priority sectors. 197 7.I Progress in Funding PEAP Priorities 7.1.1 MTEFSector Ceilings The PEAP (2004) identified the Agriculture, Roaw & Works, Education, Health, Water and Economic and Social Service Functions sectors as the priority areas that can make the strongest contributions to the PEAP's core challenges o f accelerating pro-poor growth andhumandevelopment. As such the shares o fthese priority sectors inthe MTEFwere expected to increase over the long term. Onthe other hand, inorder to fund these priority sectors, the share o f the Security, JLOS, Accountability and Public Administration sectors in the MTEF needed to reduce over the long term by improving efficiency in delivery. Table 7.1 below shows the development o f sectoral shares since 2003/04 and the projections in the current MTEF. It illustrates the commitment of government to achieving the LTEF expenditure targets by 2013/14. Using FY 2003/04 as the base, resource allocation i s on track showing positive movement towards the FY 2013/14 PEAP targets. Agriculture is expected to go above target inFY 2006/07 at 4.6% due to government's commitment to accelerate the reduction o f poverty by targeting areas that improve incomes o f the poor. Table 7.1 Sect oral SharesIntegratedExpenditure Sectoral Shares 198 Economic Functions and Social Services has outdone the target o f 10.10% by 1% in 2005/06 and projected to rise to 12.8%, which is 2.7% above target. This is on account o f resource requirements to facilitate the energy fund. The Health sector's share grew between 2003/04 and 2005/06 but is however projected to decline in2006/07. This i s on account o f the additional requirement o f the Global funds whose share increased by 3.5% in 2005/06 over and above the 2004/05 allocations, whereas the current allocations for 2006/07 to the sector were conservative due to the suspensions, lifting o f the ban on the Global Fund for Malaria Tuberculosis and HIV/Aids will lead to a revised ceiling in the subsequent MTEFS. It is true that the share of the sector Donor project finding i s declining by 133.43bn as a result o f reduction indisbursements for a number of projects. The water sector's share is expected to level at 3.0% and is on track to achieve the 2013/14 targets. On the other handwhereas there is a Memorandum o f Understanding between Water, Education and Health to budget and implement the various components o f sanitation that fall under the different sectors, this understanding has not been actualized andhence continues to impact negatively on the health outcomes After a drop o f 0.7 percentage points in2005/06 the education sector's share i s expected to increase in2006/07 and is on track to achieve the 2013/14 targets. JLOS is expected to move down from its 2003/04 level o f 6.4% of the budget to 4.5% by 2013/14. The sector's share has fallen to 4.9% in 2005106 but it i s expected to remain at this level for FY 2006/07. The accountability sector's share also successfully fell to 4.7% in 2005/06 and i s projected to remain at this level for FY 2006/07. It has not been possible to downsize the share o f Public Administration to meet the targets o f 2013/14 due to the need to finance the transition to democracy and the costs o f foreign missions. This has also been worsened by the demand for new districts, which does not necessarily come with new resources but just exacerbates the high administrative costs. However as an initial step Public Administration has beenredefined creating the Public Sector Management Sector and a Public Administration Sector. Also these two sectors are expected to draw Sector Investment Plansthat clearly define outputs and outcomes tojustify existing as well as any additional resource requirements. 7.1.2 Action Fund The PAF created in 1998 to reorient the budget towards poverty reducing priorities has been extended since its inception and includes all o f the major poverty-sensitive expenditures identified within the PEAP. Resource allocations have increased from 36.6% o f the discretionary budget in 2002/03 and 37.5% in 2005/06 as shown in table 7.2. 199 Table 7.2: PAF Expenditures as a percentage o f GOU Discretionary budget1987/88- 2005106 Fiscal Year 199718 199819 1999100 2000101 2001102 2002103 2003104 2004105 2005106 Expenditure 134.44 233.02 337.30 492.05 624.61 692.36 775.59 819.13 902.54 Discretionary Budget'24 748.80 901.57 1191.70 1410.74 1763.61 ~~~~ 1893.00 2552.06 2186.37 2407.20 % Share of Discretionary GoUBudget 18.0 25.8 28.3 34.9 35.4 36.6 30.4 37.5 37.5 PAF designated expenditures continue to be a major tool for targeting public expenditure towards the poor and aids inidentifying special pro-poor programs within the budget and protects such programs from cuts in financing. In addition the PAF has succeeded in attracting and maintaining donor budget support, as donors motivated by the existence o f the PAF are encouraged to earmark their aid to PAF programs. Notably, whereas this hnd has achieved its role o f attracting additional resources from the Development Partners, the undertaking to maintain PAF as a proportion o f the GOU discretionary budget is crowding out other non PAF areas. Inview o f these facts, while protecting PAF there is need to engage the development partners to agree on a ceiling in the medium to long term so that resources are released for investment in the productive areas that are crucial for growth but are not necessarily PAF designated areas in the current arrangement. 7.1.3 Budgeting at Sect oral Level The overall sector shares may understate the extent to which expenditures have shifted in a pro-poor direction, this section looks at the proportion o f sector expenditures, which have been devoted to pro-poor programs and how sector policies and plans are placing emphasis on programmes and projects which best contribute to poverty eradication as shown the graph 7.1125 below: Figure7.1:Fundingo fPEAP priorities within sectors 124GOUDismtionay buket is dqfnedas Total MTEF GoUexpenditures excludingdonorpmjctaid andinterest a ments "'Derived fromthe MTEFPAF sectoral Allocation 1997108-205106 200 ic- PHC 400 - +Agricultural Extensionand 300 - Exports 250 - +Other (LandReform, Adult 100 Literacy, Restocking, LGDP) 50 0 As illustratedPAF resources areas marked for key PAEiP priorities have been increasing with UPE taking a lions share followed by Primary health care and water and sanitation. Recognizing the Importance o f PAF in ring fencing pro poor expenditures, the analysis that follows explores progress under each priority sector. 7.1.3.1 Roads Substantial efforts have been made on both feeder and main roads under the RSDP2 and adequate funding has been made available to districts for the maintenance o f roads as shown Table 7.3 below. Ushsbn 2000/01 2001/02 2002/03 2003/04 2004/05 2005/06 Works, Housingand Communications 296.98 321.99 316.65 180.34 292.88 277.76 Trunk RoadMaintenance 0.00 0.00 0.00 80.41 87.41 74.27 District Road Maintenance 18.00 20.91 18.81 18.01 18.01 18.01 Urban Road Maintenance 0.00 4.00 4.48 4.03 4.03 4.10 Total 314.98 I% 346.89 339.55 260.75 402.33 374.15 growth 10.13 -2.12 -23.21 54.30 -7.01 7.1.3.2 Agriculture 201 A large percentage o f the poor have livelihoods derived directly from agriculture and agricultural research and extension services are expected to yield high returns and aid poverty reduction. Government i s therefore committed to delivering services inthis sector to enhance improved output as shown in table 7.4 below: Agricultural allocations for FY 2005/06 accounted for 4.6% of the national budget exceeding the 20012/13 target. Table 7.4 FundingTrends in Agricultural Sector Ushs in bn 2000/01 20001/02 2002/03 2003/05 2004/05 2005/06 Agriculture, Animal Industryand Fisheries 66.02 94.39 88.20 78.28 67.81 85.18 National Research Organization (NARO) 30.00 32.79 33.27 21.83 25.82 25.27 District Agricultural Extension 4.41 5.47 5.98 4.58 5.98 5.99 NationalAgricultural Advisory Services ('Districts) 2.00 2.57 5.66 17.62 16.02 27.45 NAADSSecretarait 4.95 Sub-Total 102.44 135.21 133.11 122.31 115.64 148.85 7.1.3.3 Education The education sector remains the largest sector inthe MTEF at 17.1%inthe FY 2005/06 approved budget. The district conditional grant system has also been effective in ensuring that resources intendedto reachschools are actually spent there. The 2000tracking study found that 90% of funds intended for expenditure at school level are now reaching their intended schools'26. 7.1.3.4 Health Government has been committed to increasinghealth service delivery to the poor and the health sector has continued to receive funding support for pro-poor service delivery. Increased funding has also been made towards PHC. Moreover, as a direct result o f increased budget support, there has been a dramatic increase in funding for primary health care services with district budgets increasingseven times. Allocation of Sector Resources - the sector has utilized the increased budget in an efficient and equitable manner. This has been by targeting the appropriate level o f the lZ6OverseasDevelopmentInstitute(2002) How, When andWhy does Poverty get Budget Priority Poverty ReductionStrategy andPublic ExpenditureinUganda 202 health system and earmarking for the essential inputs required for the delivery o f a good quality UNMHCP. Figure 7.2 illustrates the affirmative action shown for the district health services, comprising o f lower level health units, general hospitals, and HSD and district management services. This level has benefited from a significant increase, rising from about 30% o f the sector budget in 1999/00 to more than 50% in2004/05. Given a rising public sector budget this translates into an increase o f more than four times inthe primaryhealth care budget over the six year period. Efforts have also been made at the level o f determining individual district budgets to take into consideration population needs including the population size, disease burden, poverty and specific features like insecurity, refugee and IDP populations. For example in 2003104 the Primary Health Care Conditional Grant allocated to Pader district per capita was 25% higher than for Kampala district given the differences in poverty o f the population and the challenge o f health services delivery in Pader district. Guidelines were provided to districts to ensure targeting o f available resources towards key health inputs. Figure7.2: Trends of GoUbudgetfundingfor the differentlevels of the HealthSector 1999100to 2004105 50% 40% 0% I I I I I I Source:AnnualHealthSector PerformanceReport2004105 For FY 2005/06 the health sector plans to set up a social health insurance fimd, which will streamline financing o f health services for employees o f the formal sector and their dependant^'^^. '*'NationalBudgetFrameworkPaper for Financial Years 2005/06-2007/08 203 7.1.3.5 Water & Sanitation The water and sanitation sector i s committed to a sustainable management o f water resources while ensuring safe water i s within easy reach of majority o f the population'28. The water sector's share o f the total budget is expected to level at 4% over the medium term to enable the sector expand coverage. However o f major concern however i s that, the Sector continues to be characterized some wasteful projects (e.g. in the Support to Rural Water), some analysis has shown that over 90% o f resources i s spent on non-core sector activities like workshops and technical assistance. Emphasis on the sanitation component is law with intervention concentrating only at water sources. 7.1.4 IntergovernmentalTransfers Overall Local Government transfers (Conditional, Unconditional and Equalization grants) have increased from 23.1% o f the total Budget in 1999/2000 to 28.5% in 2005/06129. The bulk o f the Conditional grants are PAF andmainly go to primary education, primary healthcare, water and sanitation as well as rural roads, as shown in table 7.5. Of these transfers primary education has averaged 40%, followed by primary health care which has averaged 10% o f the transfers duringthe period under review. Table 7.5: Conditional grants to districts Votes 501-850 2000101 2001102 2004105 2005/06 2006107 District RoadMaintenance 18-00 20.91 18.81 18.01 18-01 18.01 18.01 UrbanRoadMaintenance 0.00 4.00 4.48 4.03 4.03 4.10 4.10 District Agricultural Extension 4.4 1 5.47 5.98 4.58 5.98 5.99 5.95 NationalAgricultural Advisory Service (Districts) 2.00 2.57 5.66 17.62 16.02 27.45 27.21 District Primary Education incl. SFG 230.48 258.19 280.48 309.31 316.90 338.59 401.59 District Secondary Education 40.97 50.19 65.98 68.98 83.86 82.82 112.81 District Tertiary Institutions 7.92 9.81 13.42 15.18 14.95 23.96 23.40 District HealthTraining Schools I.76 1.93 1.89 1.89 5.52 4.23 4.22 District NGOHospitalsPrirnary Health Care 6.72 11.59 16.61 11.58 17.72 17.73 17.74 District Primary HealthCare 28.39 60.89 71.10 67.11 98.16 102.01 102.13 District Hospitals 6.32 8.87 8.71 8.87 10.36 10.61 10.61 District Water Conditional Grant 22.19 25.35 25.78 3 1.OS 31.OS 31.17 42.16 District Grant for Monitoring and Accountability 7.51 10.27 12.24 12.81 12.81 11.11 11.11 District FunctionalAdult Literacy Grant 0.00 0.00 1.42 1.62 1.62 1.60 1.60 District Equalisation Grant 4.00 4.40 4.33 5.71 3.53 3.49 3.49 lZ8 National Budget Framework Paper for Financial Years 2005106-2007108 lZ9These transfer exclude Projects implementedby the Center at district level 204 Local Government Development Programme (LGDP) 26.10 49.60 41.90 65.75 65.25 64.30 64.31 Non-Sectoral Conditional Grant 6.70 6.07 5.76 6.38 6.37 6.18 8.06 Subcounty Development Grandstrategic Interventions 15.6 10.69 8.56 8.56 8.47 8.47 District Women, Youth and Disability Councils Grants 0.00 0.00 0.00 0.00 1.91 1.36 1.36 District Natural Resource Conditional Grant 0.00 0.00 0.00 0.00 0.89 1.05 1.05 Unconditional Grant (Urban Authorities) 4.16 4.66 4.85 5.35 5.85 18.04 18.05 Unconditional Grant (District) 67.49 69.09 72.58 77.68 81.68 104.49 104.76 GrandTotal 485.13 619.45 672.69 742.08 811.06 886.78 992.18 It is important to note that the equalisation grant which is meant to assist local governments that are below national average in service delivery has not increased over the years, but instead declined since 2003/04 ,This is mainly on account o f creation o f new administrative units . 7.2 Emerging Issues and Priorities 7.2.1 Challenges 1. Budgetdiscipline. The lack of budget discipline severely affects the implementation o f previously agreed priorities. This trend i s either due to lack o f commitment to the priorities or a sign of poor planning and budgeting. For instance, the Public Administration sector, in addition to taking the second largest share o f the budget, has over the years on average taken 47.19% of the supplementary expenditure. The resultant effect o f this indiscipline, i s the under performance o f the Development Budget which in FY 2004/05 performed at only 95% an improvement from 83.45% o f the approvedbudget inFY 2003/04 and a failure to implement budget reallocations to the PEAPpriority sectors. This trend o f over spending bypowerful public institutions also results in-year budget cuts for Non-PAF sectors 2. Sustainabilityof Expenditures The Budget deficit i s currently 8.8 % o f GDP and there i s still an increasing call on public expenditure to finance the PEAP priorities as well as the achievement o f the MDGS. 3. HighDonorDependency Government expenditure currently exceeds its revenues and the fiscal deficit shortfall i s financed by donor support. This continued donor support injects high foreign exchange 205 inflows into the economy with macro economic implications as was discussed in Chapter 2 o fthis report 4.Improving Budget Efficiency Improving efficiency and effectiveness o f all o f public expenditure, so that better value for money, in terms o f the quality and quantity o f services, i s realized with the scarce resources available to Government is vital for the medium and long term. This will only be achieved if the sector working groups (SWGs) take the lead in driving pro-poor expenditure reallocations within their sectors and in enhancing the efficiency o f their spending. Whereas Government expenditures have increased in a number o f sectors, this unfortunately, has not resulted into corresponding additional outputs but instead highunit costs o f service delivery. For instance the value for money study under the water sector spelt out the areas o f weakness that included unique anomalies such as financial mismanagement, improper procurement, outright misuse o f facilities by the staff and beneficiaries, among others, for which mitigating strategies should be enhanced and expedited to ensure that any future increased funding to the sector does not suffer the same fate. To this effect MFPED i s instituting a unit cost study that will guide future budgeting. To improve budget efficiency there i s the need for spending ministries and agencies to account for their performance when bidding for budget resources, define work plans and adhere to Output Oriented Budgeting. In addition all sectors have to identify areas o f efficiency gains, cost them in cases where government has to investment for the savings to be realized. All sectors must be encouraged to produce Sector Investment Plans that clearly outline expected outputs and outcomes. Monitoring should also be undertaken at both the central and local government levels. 5. MaintainingService Delivery Whereas the, the revised PEAP emphasizes maintenance o f service delivery, analysis o f the budgetary allocations reveals that funding to critical sectors that are non PAF has declined to about 20 percent o f the 2002/03 levels. For instance considering the non wage recurrent provisions o f selected Votes, one can conclude that operations are being severely constrained as shown inthe Table7.6 below: Table 7.6: NWR ApprovedbudgetAllocation for selected Votes FYNote 00101 01/02 02/03 03/04 04/05 05/06 MPS 2.37 2.58 2.43 1.89 1.22 1.82 MOLG 2.19 2.08 2.17 1.83 1.29 3.6 MEMD 0.76 2.13 2.07 1.96 1.12 2.0 206 As a result some o f the important interventions meant to improve effectiveness o f the public service like the Public Service and procurement reforms have been severely constrained due to lack o f adequate resources at budget formulation as well as execution. Inmanyinstances the declinehasbeencoupledwithbudget cuts duringbudget execution thus exacerbating the problem. This trendhasto bereveredandallocations to the affected institutions restoredto minimum allocation so that service delivery is not hampered. 6. RecurrentExpendituresinDevelopmentPortfolio Despite the efforts to rationalize and realize efficiency gains inthe development budget, close to 30% o f the development portfolio i s consumptive in nature. This is partially attributed to parallel structures (Authorities andProject Implementation Units). 7. Wages andPay reform The wage bill as a proportion o f the total budget continues to increase over the years as shown inthe Table below. I Table7.7: Total Wage Bill as proportion oftotal GOUBudget FY I2000/01 I2001/02 I2002/03 I2003/04 I2004/05 I2005/06 I GOU 1517.84 1918.7 2037.6 2306.5 2445.8 2698.32 Wage bill 474.81 549.5 627.03 677.66 765.6 835.95 Ass% of GOU 31% 29% 31% 29% 31% 30.9% Annual Growth 16% 14% 8% 13% 9.2% This i s attributed to the desire to expand service delivery in key poverty reducing areas and the Pay Reform strategy. Averaging 30% o f total GOU budget expanding numbers for service delivery coupled with the need for selective salary awards in the health and education sectors will further accelerate the wage bill. Much as government has committed itself to implement a pay reform strategy, the recent selective pay awards to primary teachers, health workers and all other categories that are agitating for similar rewards are not only distorting the pay reform strategy, but also have multiplier effects on similar categories across the service under the single spine . Further due to resource constraints government hasn't been able to keep the purchasing power o f the civil servants. To avert crisis at local lower levels, since FY 2003/04 almost 40% o f the resources allocated for pay reform have gone towards keeping the purchasing power o f primaryteachers thus constraining achievement o fthe agreedtargets. Further inthe medium term, operationalisation o f the new local government structures as well as payment o f emoluments for the local government leaders have implications for the wage bill. In addition the commitment to recruit 1000 constables and 100 cadets annually under the police and prisons translates into additional wage bill requirements o f Shs5.O billion annually, excluding promotions and annual increments. To resolve these problems Government should expedite the finalization o f the comprehensive Public Pay Policy as well as strike a balance between increasingnumbers 207 to meet desired service delivery standards and the desire to pay adequate remuneration to its workers. 8. Local Government Financing With the abolition o f Graduated Tax without corresponding tax heads Government recognizes the constraints faced by local governments in their operations and service delivery. The full compensation o f the Ushs 47.7 billion excluding costs o f creating new local governments and payment o f local leaders i s therefore vital for sustained service delivery andoperation at the lower level. 9. Domestic Arrears Despite the introduction o f the Commitment Control system (CCS) in 1998/99 a number of Accounting Officers have continued to over commit government. The current total Stock o f Arrears including Post CCS arrears is estimated at Ushs. 572 billion including pensions. This magnitude is attributable to several reasons including: court awards; pension's obligations; and gratuity mainly for I S 0 and ESO under Statutory payments. It is important to note however that a number o f these Arrears attract costs when not cleared intime. A hrther delay to clear service providers stifles their businesses andhence may inthe longrunexacerbated poverty. Given the magnitude andthe need to expeditiously clear these liabilities, it has implications for the Government resource envelope available for the expenditure in the medium term. Whereas arrears are not part o f the MTEF they constitute overall government expenditure, thus increased allocations will crowd out increased allocations to other key PEAP priorities. 10.Energy Crisis As was noted earlier, the country is faced with an increased power shortage. The development o f thermal energy i s therefore critical to improve energy generation in the short to medium term if growth in the economy i s to be sustained. Further the development o f the hydropower is a key solution to the long term power crisis. Therefore the power crisis does not only have expenditure demands on the MTEF in the medium term, but has implications for growth and consequently the revenue base for government andthe PEAPimplementation. 7.3 The Budget Strategy The Budget Strategy for the medium term requires a sustained orientation o f government's expenditures towards growth and rural development within a context o f increased fiscal consolidation. In light o f Government's objectives o f promoting growth and rural development, there is need for sustaining and increasing resources for agricultural production and productivity; value addition and infrastructure development. 208 This therefore entails that the tax measures pronounced this financial year are sustained inadditionto identifyingandimproving efficiency ofGovernment expenditure. Inview of the needto deliver the services at sub-county level, there is needto agree on the feasibility o f undertaking inter-sectoral budget allocations in favour o f those sectors which can make the strongest contributions to tackling the core challenges o f the PEAP. 7.3.1 Reorientation of the budget towards productive areas Given the competing expenditure demands, a drastic shift o f resources from consumptive to productive sectors as recommended inthe PEAP is not feasible inthe medium term. In the past, focus has been on reducing the cost o f Public Administration. This has not materialised on the basis o f the democratization process. In addition the areas that were identified by the two studies inPublic Administration do not generate sufficient savings. This has also been coupled by the demand for new districts that just exacerbates the high administrative costs. 7.4 Conclusion and recommendations In view of the issues highlighted in this chapter, and the commitment to achieve the PEAP goals, government has to take hardchoices inthe areas of: Enhancing domestic resource mobilization Re-prioritising Government expenditures, set minimum sector allocations and facilitate the development o f Sectors Investment Plans Rationalization o f government expenditures as well as addressing efficiency and effectiveness o f the budget. It is further imperative that Government mainstreams HIV/AIDS, gender & support to equity issues especially support to orphans. Government expenditure will be more efficient if the policy on office accommodation i s agreed upon; as well as ensure value for money in all areas by setting aside resources to invest in operations that will generate efficiency savings. 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Key economic indicators 48thissue: second quarter 2002/03. Entebbe:UBoS. Uganda Bureau of Statistics. 2004. Report on the agricultural module,piggy-backed onto the 215 Population and Household Census, 2002. Entebbe: UBoS. UgandaBureau of Statistics. 2005[a]. 2002 Ugandapopulation and housing cellsus. Uganda Bureauo f Statistics. 2005[b]. Key economic indicators; issue:fourth quarter 2004/05. Entebbe: UBoS. Uganda Coffee Development Authority. 2002. UCDA monthly reportfor December 2002. Kampala. Uganda Coffee DevelopmentAuthority. 2005. UCDA monthly reportfor September 2005. Kampala. UHRC 7thAnnual Report UNDP, 2005. Uganda Human DevelopmentReport 2005. Linking Environment to Development: A Deliberate Choice.UnitedNations Development Programme, Kampala. UN-OCHA. 2004a. Consolidated Appeals Process (CAP): Humanitarian Appeal 2005 for Uganda, 11th November 2004. UnitedNations Organisation for HumanitarianAffairs. Update on the African Growth Opportunity's Act, 2005(mm) WHO. 2004. Sanitation Challenge: Turning Commitment into Realty. World Health Organisation, Geneva, Switzerland WHO. 2005. Health and mortality survey among internally displaced persons in Gulu, Kitgum and Pader districts, northernUganda. World Health Organisation, Geneva, Switzerland WHO and MoH. 2005. Study on Abolition of User Fees. World Health Organisation, Geneva, Switzerland WHO. 2005. Water, Sanitation and Hygiene. World HealthOrganisation, Geneva, Switzerland World Bank, 2004. Competing inthe Global Economy. An Investment Climate Assessmentfor Uganda, World Bank August 2004 World Bank, 2005. Doing Business in2005, Removing Obstacles to Growth. World Bank, 2005. World DevelopmentReport 2005, A Better Investment Climatefor Everyone. 216 ANNEXES Annex 1:Welfare inthe districts(percentageof households) Take sugar Use soap for Each child Have at least Eachhas at District bathing has a blanket a pair of least two sets shoes each o f clothing. National I47.4 I90.3 143.7 I43.4 I77.8 Busia 42.2 94.0 44.8 39.5 76.9 Iganga 60.0 92.1 45.6 32.1 71.4 Jinja 74.9 95.4 53.8 57.7 83.7 Kamuli I49.7 I 91.2 I39.6 I26-4 I69.4 Take sugar Use soap for Each child Have at least Eachhas at bathing has a blanket a pair of least two sets shoes each of clothing 217 Kapchorwa 69.0 94.6 40.6 47.0 79.8 Katakwi 20.5 90.0 9.6 10.4 70.8 Pader 16.6 74.7 21.0 15.6 56.1 Yumbe 39.9 77.7 31.5 29.9 62.8 218 IBundibumo I 46.8 I 78.7 I 47.4 I 36.8 168.0 Kamwenge 25.0 91.7 43.8 34.9 79.7 Kanungu 28.4 91.0 33.7 37.4 85.9 Kyenjojo 39.1 93.3 42.6 38.6 78.0 219 Annex 11: Percentage of householdssatisfiedwith agriculturalextension services by district RegioniDistrict YOvisited by YOsatisfiedwith % satisfiedwith extensionworker crop husbandry Veterinary extension services extension services Central region Kamnala 16.9 100.0 Mpigi 25.0 86.0 93.4 Wakiso 13.8 88.7 79.8 Eastern region Bugiri 7.5 90.8 100.0 I Busia I 11.9 I 80.1 I 92.4 I Jinja I9.7 175.2 90.9 Kapchorwa I 13.4 I 77.5 II77.9 Mayuge 10.5 93.5 83.9 Mbale 10.9 84.1 100.0 Sironko 6.4 73.4 86.5 Iganga 11.1 100.0 93.2 Tororo 19.5 92.9 86.8 Pallisa 13.0 88.0 94.9 Kamuli 14.0 93-2 91.1 Kaberamaido 12.1 88.4 92.7 I Soroti I 9.3 I 100.0 I 91.0 I Kumi 17.6 100.0 88.2 Katakwi 13.9 100.0 100.0 220 Kotido 23.1 81.4 90.8 Moroto 19.9 82.9 95.3 NakaDiriDirit 30.1 99.2 95.2 Kisoro 6.7 93.8 100.0 Kabarole 10.3 91.0 100.0 Kyenjojo 8.3 83.3 100.0 Kamwenge 4.3 61.3 88.2 Kibaale 11.4 100.0 100.0 Bundibugyo 3.4 89.2 100.0 UGANDA 113.6 I88.6 I92.8 Source: NSDS, 2004. 221 Annex 111: Percentage Distribution of Household Members who received a loan in2004 bv Source and District I Masaka 43 9.1 28.5 0 ) 6.4 6.1 Mpigi 0 16.6 1I25.3 II21.6 I1 12.8 I 0 ) 0 1 17.2 II 0 II 6.4 I 100 Mubende 10 1I 30.3 I 2.7 1 43.1 I 0 1 3.9 1 0 1 10.1 1 0 1 0 I 100 Mukono 0 36.5 4.8 3.1 9.3 11 0 27.9 7.4 0 100 Nakasongola 0 0 21.9 33.4 12.7 11.9 0 0 20.1 0 100 Rakai 75.5 9.4 7.9 0 0 0 0 0 7.2 0 100 Sembabule 26.4 19.4 6.9 0 0 6.9 0 7 33.5 0 100 Kayunga 0 1 0 1 0 I 15.8 I 0 1 84.2 I 0 1 0 1 0 1 0 I 100 ICentralRegion Busia 48 I 8 1 0 I 34.4 I 0 1 3.5 I 0 1 0 1 0 I 6.1 I 100 Jinja 7.3 I 20.9 I 9 I 46.6 I 5.6 I 0 1 0 1 8.6 I 0 1 2 I 100 Kamuli 1I 4.2 I 8.1 I 0 I 6.8 I 0 1 0 1 0 1 54.5 I 26.4 I 0 I 100 Tororo 0 ) 0 100 Kaberamaido I 7.8 I 23 I 0 1 481 21.2 I 0 1 0 1 0 1 0 1 0 1I 100 Mayuge 27 I 0 I 4.7 I 0 1 0 1 68.3 I 0 1 0 1 0 1 0I 100 Pader 0 0 100 0 0 0 0 0 0 0 100 Yumbe 0 0 0 0 0 0 0 0 21.8 78.2 100 222 Uganda I 17.3I 20.5I 4.9I23.4I 5.1I 4.6I 0.5I 8.6I 12.1I 2.9I 100I Source: NSDS, 2004 223 Annex IV: RebelGroupsAffectedBy Amnesty I Action Restore Peace 3 CAMP Citizen Army for MultipartyPolitics 4 FOBA Force Obote Back 5 FUNA Former UgandaNational Army 6 HSM Holy SpiritMovement 7 LRA I National Lord's Resistance Army Union for Liberation of Uganda 9 INFA National Federal Army i oINOM NinthOctober Movement 11 / P R A I Peoples'RedemptionArmy 12 U D M Uganda Democratic Army/Alliance 13 UFDF Uganda Federal Democratic Front 14 UFM Uganda FreedomMovement 15 UNDA Uganda National Democratic Army 16 U N F M Uganda NationalFederal ArmyMovement 17 UNLF Uganda National Liberation Front 18 UNRF.11 Uganda NationalRescue Front 19 UPA Uganda Peoples Army 20 UPDA Uganda Peoples Democratic Army 21 USA Uganda SalvationArmy 22 WNBF West Nile BankFront 224 Annex V: Amnesty CommissionPartnerAgencies/Organisations - - also inthe monitoring of the implementation of the amnesty process. UPDF and Other Security Stakeholders:The UPDF and the Police are also involved especially inensuringsecurity for the reporters andhandlingweaponsreceivedfromthe reporters. The army and other security agencies are key partners in the implementation process of the Commission activities in Uganda. Most of the ex-combatants who have either escaped from the rebel ranks and surrendered to UPDF or captured by the army in battle have been handed over to the Commission. Director of PublicProsecution(DPP): The DPP investigates the cases of all those charged with or detained for any criminal offences. If it finds out that any of them qualifies for amnesty, he should make arrangements for the release of such reporters as long as they have renounced insurgency. The DPP collaborates with other officials including the police, judges, magistrates, court officials and advocates. NGOs/International Agencies: The NGOs working with the people in affected Districts, are another significant group inthe implementationof Amnesty Act. Civil Society Organisations: The Amnesty Commission has been working closely with Civil Society Organizations like Participatory Rural Action for Development (PRAFORD), Trans- Cultural Psychosocial Organization (TPO) and Action Against Hunger (ACF). PRAFORD has been providing life skills training for the reporters in the areas of carpentry, counseling and providing follow up on the reporters. TPO on the other hand has been providing psychosocial services to the reporters and ACF has provided safe drinkingwater points. World Food Programme(WFP): This organization has provided food to reception centers for example inWest Nile. DANIDA: DANIDA Human Rights and Democratization Program provided support to the Amnesty Commission for running community sensitization workshops on peace building and provided technical and practical assistance in the peace process. The Embassy o f Denmark has also provided support to pay packagesto backlog o f reporters The UNMissionin Congo (MONUC): MONUC undertook the responsibility to ensure safe and secure access to the ADF combatants inCongo. It further undertook to carry out the disarmament of these combatants based in Congo and general facilitation of operations, including obtaining support from the authorities inDRC and Uganda. International Organization for Migration (IOM): IOM's participation falls within IOM's Constitution where individuals of concern include displaced persons and nationals returning to their home country. Thus IOM i s assisting inthe transportation o f reporters from other countries i.e. Kenya and Sudan wishing to return to Uganda. They have also assistedin documentation and registration activities. Give M e a Chance (GMAC): GMAC i s a local NGO founded in 1997, and has beenresponsible for assisting the Commission inrehabilitation and reintegrating former combatants o f the various 225 World Vision - Uganda: This is a child focused organization which has handled children affected by war since 1995. World Vision has been able to provide psychosocial support, skill training and entrepreneurship skills to over 6,500 children and reporters. The organizationto date had opened the second center for reporters for specifically handling those who are benefiting from the Amnesty process. The Amnesty Commission has supported this organization in its activities. World Vision has partnered with IOM for the return of those benefiting from the Amnesty Process outside the country like the group inKenya and Sudan. They organize community based programs and have provided training to 425 community care providers in Gulu, Kitgum and Pader districts to reinforce community efforts. United Nations Cultural and EducationFund: UnitedNations Cultural and Education Fund (UNICEF) has helpedchild soldiers by offering themresettlement packages. Gulu Save the ChildrenOrganisation (GUSCO): This is a child focused organization working in Gulu district to provide psychosocial support to formerly abducted children returning from Sudan and elsewhere. Save the Children Alliance: Are supporting the education component of the reintegration program o f former child soldiers, supports community reconciliation and the resettlement of ex- combatants. This support i s giventhrough GUSCO Save the Children Denmark:This has assisted the Commission in fiinding the translation of - the Amnesty Act into some local languagesbythe Institute of Languages o fMakerereUniversity. CARITAS: CARITAS has been involved inthe reception, rehabilitation and resettlement of ex- combatants in Pader district with support from Amnesty Commission. Caritas has also been involved in the process of bringingtogether cultural leaders in Acholi sub-region as a means o f promoting peace inthe region. International Rescue Committee (IRC): This has operated in Kitgum and helped in the receDtion and rehabilitation ofrenorters inthis area. 226 ANNEX VI: DistrictLeagueTable Trends2002/0 to2004/05 1 w League Table 2002/03 2003/04 2004/05 2 years- 03/04 3 years Position &04/05 Top 10 JWa, Moyo, Gulu, Jinja, Gulu, Bushenyi, Gulu, II , - Jinja, Kabarole, Adjumani, Moyo, Jinja, Mpigi, Bushenyi, Jinja, RUkungiri Kalangala, Kisoro, Tororo, Kampala, Masaka, Mpigi, Nebbi, Luwero, Rukungiri, Mpigi, Rakai, Ntungamo, Kampala, RUkUngiri, Bushenyi, Kyenjoojo, RUkUngiri, Kaberamaido and Kampala, Busia RUkUngiri Moyo Kanungu Bottom10 Pader, Ktido, Apac, Kotido, Pader, Kotido, Kotido, Kotido, Katakwi, Yumbe, Yumbe, Nakapiripirit, Nakapiripirit, Masindi Bundibugyo, Kamwenge, Masindi, Kibaale, Masindi, and Masindi, Kitgum, Iganga, Wakiso, Kiboga, Moroto, Yumbe, Yumbe Nakapiripirit and Masindi. Lira, Kamuli, Lira, Moroto, Pader, Kampala Moroto and Yumbe and Kitgum and Mubende Kitgum Lira 227 YODeliveries inGovt andNGOhealth District facilities 1 Kumi 60 2 Kampala 59 3 Jinja 51 4 Mukono 42 5 Nebbi 40 6 Kisoro 39 I 71 Soroti I 39 1 8 Kabarole 38 9 Kamuli 37 I 101 Pallisa I 35 1 11 Rukungiri 35 12 Gulu 33 13 Iganga 31 14 Hoima 30 15 Luwero 30 16 Mpigi 29 17 Ntungamo 28 18 Kanungu 27 19 Masaka 26 20 Mbale 26 21 Rakai 26 228 43 Lira 18 44 Apac 17 45 Kibaale 17 46 Kyenjojo 17 47 Mubende 17 48 Ssembabule 17 49 Kabale 16 501 Moroto 14 511 Yumbe 13 Katxhorwa 12 55 Kotido 6 56 Nakapiripiriti 4 229 ANNEX VIII: HIV/AIDS Prevalence byregion2004/05 i Source: Annual Health Sector performance Report 2004105 230 HOUSEHOLD EXPENDITURE AND POVERTY ESTIMATES INTRODUCTION Collection of consumption and non-consumption expenditure data remains a key component in the National Household Surveys. These data have been useful in monitoring the living standards of Ugandans. Section one of this chapter briefly discusses the methods used in the analysis. Changes in household expenditures in general and household consumption expenditure in particular are discussed in section two. In section three, a discussion of the poverty estimates prior to the summary and conclusions is made. In keeping with previous poverty works (Appleton,2001a; and Appleton & Ssewanyana, 2003), poverty estimateswere derived by following the methods applied to earlier surveys presented in Appleton (2001a, b)'. METHODOLOGY In measuring poverty, there are three critical issues: how to measure welfare, how to set the poverty line and how to aggregate over individuals. These issues are addressed in details in Appendix I. Data Transformation The Uganda National Household Survey of 2002/03 (UNHS 2002103) and the Uganda National Household Survey of 2005/06 (UNHS 2005/06) have some similarities and differences that are worth noting for measuring poverty. First, both surveys share the same sampling frame based on the 2002 Uganda Population and Housing Census. But differ in terms of stratification. The UNHS 2002/03 used a district as a stratum divided into urban, other urban and rural areas; whereas UNHS 2005/06 used a region as stratum divided into rural and urban. Second, UNHS 2002/03 visited the sampled EnumerationAreas (EAs) once, whereas UNHS 2005/06 visited EAs twice. Third, both surveys were conducted during the same months2.Fourth,the two surveysshared very similar consumptionsections, with almost the same list of item codes and identical recall periods. Nevertheless, the 2005/06 survey included a few items not listed separately in the survey of 2002/033. In addition, UNHS ' While methodologicalissues have been raised about measuring poverty in Uganda, we must be aware of the large *number of methodologicaldecisions,both theoreticaland practical,that has to be taken. The timing of UNHS 2005/06 coincided with the National elections but we cannot determine the extent to which this might have affected the income poverty estimates presented in this chapter. The reader should be aware that household surveys in Uganda are constantly evolving, a fact that, although welcome, might introduce problem of comparability over time. For instance, new areas of consumption have 1 2005/06 captured health and education expenditures at both individual and household levels unlike UNHS 2002/03 where such informationwas captured only at household level4.Fifth, the UNHS 2005/06 covered 7,426 households whereas UNHS 2002/03 covered 9,711 households,but both surveys were nationallyrepresentative. Different recall periods were used to capture information on different sub-components of household expenditures. While a 7-day recall period was used for expenditure on food, beverages and tobacco, a 30-day recall period was used in the case of household consumption expenditure on non-durable goods and frequently purchased services. For the semi-durable and durable goods and services, and non-consumptionexpenditures, a 365-day recall periodwas used. For details on the consumption module refer to Appendix Ill. In both surveys, all purchases by household members and items received free as gifts were valued and recorded as per the current prices. The items consumed out of home produce were valued at the current farm-gate/producer prices while rent for owner occupied houses was also imputed at current market prices. Food consumption includes food consumed from own production,purchasesand free collection/gifts. Expenditure data are collected on item-by-item basis. The expenditures were aggregated according to the recall period used and by broader sub-components of expenditures to a household level. Given the different recall periods used to collect data on household expenditures, some conversion factors were applied to change the data on a 30-day monthly basis5.After which all the different sub-components of the expenditures were aggregated to derive the total expenditures at household level. There is a distinction between consumption expenditure and total expenditures.The former refers to expenditure excluding non-consumption expenditure, whereas the latter includes the non- consumptionexpenditure sub-component. Further adjustmentswere made in the construction of the consumption aggregate6used later on in the estimation of poverty estimates. These adjustments included accounting for inter- cropped up. To narrow the discussion to UNHS 2002103 and UNHS 2005106, some of these items were areas of new consumption such as generators/lawnmowers fuel, expenses on phones not owned; and others as a result of breaking down the items into their different forms such as combinationof own mobile and fixed phones expenses, imputed rent separated between owned household and free house. Also to be noted is the introduction on new codes not originally reflected in the questionnaire. Health and education expenditures were captured both at individual and householdlevel. But in 2002/03 such informationwas captured at householdlevel. This approach does, to some extent, reduce on the measurement errors in reporting health and education expenses. There were 5 householdsdropped from UNHS 2005/06 due to missing expenses on food, beveragesand tobacco. This led to a reduction in the number of households used in analysis from 7,426 to 7,421. On the other hand, a hedonic regressionwas employed to impute rentfor 76 householdswho had missing information. Householdconsumption expenditure is preferredover income in assessing poverty incidenceas the former can be more accurately reported by the households/individuaIsthan the latter. 2 temporal' and spatial price variations8, revaluation of foods derived from own consumption into market prices and finally accountingfor householdcomposition in terms of sex and age. The UNHS 2005/06 survey was a nationally representative household survey, covering all districts in Uganda. For consistency and comparability over time, the poverty estimates reported in Appleton (2001) and Appleton & Ssewanyana (2003) adjust for geographical coverage of the surveys. They excluded the Acholi sub-region and districts of Bundibugyo and Kasese, as these areas were not covered in the household survey of I999100 (UNHS 1999/00)due to insurgency at the time of the survey. The exclusion of areas that are among the poorest in the Country would to some extent, lead to a downward bias in poverty estimatessince the excluded areas are amongthe poorest in the Country.This reportfocuses on the household surveys of 1992/93,2002/039and 2005106 to provide a complete picture of the level of poverty in Uganda. However, we also report poverty estimates based on the 2005/06 survey excluding those districts not covered in UNHS 1999/00. The detailed discussions that follow provide a full picture of poverty in Uganda unless stated otherwise. Throughout the chapter, we report expenditure at the mean and on a 30-day monthly basis unlessstated otherwise.All estimatesare weightedto give a national picture. CONSUMPTION EXPENDITURES This section presents and discusses changes in expenditures between UNHS 2002/03 and UNHS 2005/06. First, the mean expenditure per household, per capita and per adult equivalent are presented. Second, insights into the changes in budget shares in total householdexpenditures betweenthe two surveys are provided. Consumption Expenditure Per Household Table 1 presents the monthly consumption expenditure per household for the 2002/03 and 2005106 after adjusting for inflation. Uganda's average household monthly expenditure rose from Shs. 136,468 in 2002/03 to Shs. 152,068 in 2005/06, representing a real increase of 11.4 percent within a period of three years. The increase is mainly driven by the observed increases in the rural areas (of 14.4 percent), while the urban areas registered an increase of only 4.2 percent over the same period. All regions experienced a positive change between the two surveys. While the increase in expenditure per household is more pronounced in Western region with nearly 19 percent The national composite Consumer Price Index (CPI)was used. Used the food index as derived from information provided in the respective household survey. This is meant to account for differences in food prices across region (rural/urbandivide). The survey of 2002/03 excluded Pader district and some few EAs in Kitgum and Gulu districts. This represents less than 1 percent of Uganda's population according to the estimates by UBOS. Hence the survey represents full country coverage. 3 increase, Central region excluding Kampala registered the lowest increase of around 10 percent. In addition, markeddifferences are observedwithin regions. Boththe urban and ruralareas of Eastern and Central region without Kampala recorded the same percentage increase of 15 percent and 11 percent respectively. In Western region, the rural areas recorded stronger increase in consumption per household compared to urban areas. The reverse is observed for Northern region. Kampala recorded the lowest change in per household consumption of only 1.5 percent over the two surveys. Table I:Consumption Expenditure Per Household(1997/98=100) Residence 2002/03 2005/06 Rural Urban Total Rural Urban Uganda Region Kampala 328,773 328,773 333,704 333,704 Central* 151,526 248,962 165916 168,688 276,635 183,112 Eastern 103,933 184,014 112,084 120,176 212,255 129,099 Northern 67,044 141,529 72,880 70,173 150,692 80,616 Western 115,240 214,079 124,825 138,201 246,462 148,088 Uganda 111,413 258,068 136,468 127,419 268,781 152,068 Notes: * Estimatesfor CentralregionexcludeKampala ConsumptionExpenditurePer Capita In nominalterms, the estimated mean consumption per capita in the 2005/06 survey was Shs 39,829 per person per monthcomparedto Shs 29,899 in 2002/03 (Table2). Therewas thus a 33.2 percent nominal increase in consumptionper capita between the surveys. This implies a real rise in consumption, since the CPI rose by 24.3 percent during the periodlo. Thus, per capita consumption expenditure rose by 9.6 percent, in real terms. The nominal increase at the nationallevel is driven by the strong increase in rural areas of 38.8 percent. Table 2: Consumption Expenditureper Capita, in Nominal Terms 2002/03 200906 Rural Urban Uganda Rural Urban Uganda Whole sample 23,474 70,167 29,899 32,574 79,824 39,829 Sub-sample* 23,882 73,338 30,579 33,597 84,252 41,338 'Excludes Kasese, Kitgum, GuluandBundibugyo lo.surveyof2005/06coveredtheperiodfromMay2005toApril2006,duringwhichtimethecompositeCPI averaged 137.1 (1997/98=100). The survey of 2002/03 covered the period May 2002 to April 2003, during which The time the CPI averaged 112.9. 4 On deflating the nominal expenditure by CPI, the results reveal that, on average, the per capita consumption expenditure increased from Shs. 26,663 in 2002103 to Shs. 29,280 in 2005/06, representing a real increase of about 9.8 percent (Table 3). The Central region (without Kampala city) had the highest per capita expenditure increase from Shs. 32,455 to Shs. 37,281 (about 15 percent) real increase. The Western region also registered a 15 percent real increase. On the contrary, a real decline of 10 percent is observed for Kampala, from Shs. 88,152 to Shs. 78,798 per month per capita. On average, the urban areas recorded 6 percent decline in real per capita consumption expenditure while the rural areas recorded a 14.3 percent increase. However, significant differences are observed within regions. The picture is quite mixedfor the urban areas across regions. The highest real increase is observed for Western with 20.1 percent, followed by Eastern with 6.1 percent, Central increased marginally at 0.9 percent, while Northern registered a significant decline of 4.1 percent. Consideringthe rural areas, the highest real increase is observed in Central region at 18.4 percent followed by Western at 15.6 percent and Easternat 13.2percent. 5 Table 3: Mean Per Capita ConsumptionExpenditure(1997/98=100) Residence 2002/03 2005/06 Rural Urban Uganda Rural Urban Uganda Region Kampala 88,152 88,152 78,798 78,798 Central* 28,651 60,815 32,455 33,913 61,383 37,281 Eastem 18,490 44,012 20,474 20,927 46,700 22,945 Northern 13,199 27,472 14,332 13,722 26,337 15,525 Western 22,024 46,106 24,119 25,454 55,369 27,732 Uganda 20,929 62,605 26,663 23,930 58,768 29,280 Although simply comparing nominal estimates of consumption with the CPI is useful to obtain a ball-park figure for real consumption, two further adjustments are made for price effects when estimating poverty as discussed in section 6.1. Specifically, home consumption of food is re-valued into market prices and regional differences in food prices are adjusted. The results are as presented in Table 4. Inthe case of comparison of 2002/03 and 2005/06 survey results, both adjustments have the effect of lowering the estimated rate of real growth. After making these adjustments as well as those for inflation, real mean consumption per capita estimatedfrom 2005/06 survey is 11.4 percenthigher than the correspondingfigure estimated from 2002/03 survey. This rise implies an annualized growth rate of 3.6 percent. However, this growth rate is lower than that observed between 1997 and 1999/00 of 5 percent (see Appleton, 2001). The rural areas, where the bulk of the population resides, reported stronger growth of 5 percent, while the urban areas registered a decline of 1.9 percent annualized growth rate. Table 4: Adjusted Comparisonof Mean ConsumptionPer Capita 2002/03 2005/06 Rural Urban Uganda Rural Urban Uganda As calculatedinofficial reports 23,475 70,173 29,900 32,574 79,824 39,829 Revaluinghomeconsumedfood 24,643 . 70,606 30,968 34,615 80,685 41,689 at marketprices Adjustingfor regionalprices 25,020 68,743 31,036 35,291 78,583 41,939 prices) Adjustingfor inflation(1997198 22,304 61,332 27,674 25,915 57,861 30,821 6 Uganda National Household Survey (UNHS) estimates of private consumption can be compared with those from the national accounts. Although the national accounts are, in part, based on the findings of the household surveys, the 2005/06 results have not yet been used. Consequently, the national accounts provide an independent estimate of overall growth between 2002103 and 2005/06 household surveys. Table 5 reports the constant price estimates for private consumption from the national accounts. In order to compare Table 5 with the findings of the surveys, the timing of the surveys must be considered. UNHS 2002103 was conducted from May 2002 to April 2003 whereas UNHS 2005/06 was conducted from May 2005 to April 2006. Both surveys fall half-way between a calendar and a fiscal year. In order to get an estimate from the national accounts for growth in the period between both surveys, it is most appropriate to compare real private consumption per capita with the average of figures for calendar year 2002 and FY 2002/03 (Shs. 333,700) and average figures for calendar year 2005 and FY 2005/06 (Shs. 348,600). On this basis, the national accounts imply the figure for the period of 2005/06 survey is 4.5 percent higher than that for 2002/03 survey, equivalent to an annualized growth rate of 1.5 percent. This growth rate recorded in the national accounts is lower than that estimated from the surveys. For example, if we take per capita consumption estimates in Table 6.3 we estimate an annualized growth rate of 3.2 percent. If we take the growth estimates from the surveys with full price adjustments (revaluing home consumption and using regional food price deflators), we obtain the 4 percent annualized growth estimate discussed earlier - a much higher figure than that implied by the NationalAccounts. Table 5: NationalAccounts Estimatesof Real Private Consumption Per Capita Fiscal Calendar Private Population Private Annualized year year consumption (`000s) consumption growth rate (Shs 1997/98 per capita (%) prices) (`000 Sh) 2001/02 7,867,125 23,689 332.1 4.7 2002 8,072,348 24,069 335.4 2.8 2002/03 8,118,998 24,460 331.9 0.0 2003 8,297,243 24,851 333.9 -0.4 2003104 8,365,964 25,255 331.3 -0.2 2004 8,640,974 25,660 336.8 0.9 2004/05 8,959,440 26,077 343.6 3.7 2005 9,215,502 26,495 347.8 3.2 2005/06 9,405,564 26,926 349.3 1.7 Source:ii)Private Consumption and Population figures from Statistical Abstract, 2006 i) Private consumptionper capita and annualizedgrowth rates, Authors' calculations Notes: ii)Population estimates were revised afier the Population and Housing Census, 2002 i) NationalAccounts revised in 2003. The results in Table 5 are based on per capita basis. Instead the household size was adjusted to take into account household composition in terms of sex and age. The results are presented in Table 6. Regardless of geographical location, there was growth in consumption between 1992 and 2006. In other words, growth in consumption was broad based although 7 uneven growth is observed. The Northern region registered the least growth, though not surprising given the insecurity that continues to affect the livelihood of the population. However, the picture changes by focusing on the recent two household surveys. Mixed results do emerge, with urban areas registering a negative growth driven by a drop in mean consumptionin Northernand Central regions. Table 6: Mean Consumption Expenditureper Adult Equivalent Residence Mean (Shs.) Annualized growth rate (YO) 1992193 2002/03 2005/06 1992-2006 2002-2006 Rural/Urban Rural 21,200 29,500 33,900 3.6 4.6 Urban 43,200 74,800 71,800 3.9 -1.4 Region Central 31,200 52,700 57,600 4.7 3.0 Eastern 21,500 28,500 32,300 3.1 4.2 North 18,200 21,600 22,600 1.7 1.5 Western 22,700 33,800 39,900 4.3 5.5 Central rural 24,100 38,400 45,300 4.8 5.5 Central urban 51,200 91,200 87,200 4.1 -1.5 Easternrural 20,600 26,200 30,000 2.9 4.5 Easternurban 30,400 55,100 59,300 5.1 2.4 Northernrural 17,600 20,200 20,500 1.2 0.5 Northernurban 26,900 37,600 35,100 2.0 -2.3 Western rural 21,900 31,500 37,400 4.1 5.7 Western urban 36,300 58,000 69,900 5.0 6.2 National 23,924 35,736 39,746 3.9 3.5 Share of Household Expenditure by Item Group The above analysis is extended further to examine the trends in the share of each item group in the total household expenditure including non-consumption expenditures prior to the presentationand discussion of the poverty estimates. The results are presented in Table 6.7. The share of food, drinks and tobacco in total household expenditure increased by 1 percentagepoint, from 44 percent in 2002/03 to 45 percent in 2005106. Its share remainsthe highest; followed by expenditure on rent, fuel and power at 16 percent. The slight increase in the share of food, drink and tobacco is driven by urban areas. The share remains at 50 percent in rural areas. Worth noting is the observed increase of about 3 percentage points in the share of education; and a 3 percentage point rise for the share of health expenditures in overall total household expendituresll. The increase in education share was more Total privateexpenditureon education increasedfrom Shs. 51.9bn in 2002/03to Shs. 81.7bn in 2005/06; whereas private expenditures of health increased from Shs. 29.3bn in 2002103 to Shs. 53.8bn in 2 005/06, in real terms (1997/98=100). 8 pronounced in urban areas whereas rural areas registered a higher increase in the share of health. Table 7: Share of Household Expenditureby Item Groups (%) 2002/03 2005/06 ItemGroup Rural Urban Uganda Rural Urban Uganda Food, drink & tobacco 50 33 44 50 34 45 Clothing & footwear 4 5 4 4 4 4 Rent,fuel & energy 17 23 19 15 20 16 Household&personal goods 7 7 7 5 6 5 Transport & communication 6 12 8 6 10 7 Education 6 10 7 8 13 10 Health 5 3 4 8 4 7 Other consumptionexpenditure 2 3 2 2 4 3 Nontonsumption expenditure 3 5 3 3 5 4 Total 100 100 100 100 100 100 At regional level, the results in Table 8 suggest that the share of food, beverages and tobacco remained unchanged. The only exception is the Northern region where it declined by 2 percentage points and Kampala where it increased by 2 percentage points. The changes in the share of education and health mirror the changes observed at the national level. The observed increase in the share of health in rural areas (Table 7) is driven by rural areas in Eastern and Western regions. In the former, it increased by 2 percentage points and in the latter by 5 percentage points. On the other hand, the observed increase in the share of education (Table 7) is driven by increases in urban areas in Western and Northern regions of 4 percentage points. 9 O v ) l n W ~ Q \ N d \ D m N POVERTY TREND ESTIMATES The absolute poverty line defined in Appleton (2001), obtained after applying the method of Ravallion and Bidani (1994) to data from the first Monitoring Survey of 1993 has been used. This method focused on the cost of meeting calorie needs, given the food basket of the poorest half of the population and some allowance for non-food needs. It should be noted that there is a strong element of judgment and discretion when setting a poverty line. Consequently, too much attention should not be given to the numerical value of any single poverty statistic. Instead the interest is in comparisons of poverty estimates, whether overtime or across different groups. The poverty line was revalued into 1997/98 prices using the Consumer Price Index (CPI) and compared with the adjusted household consumptiondata discussed earlier. Table 9 (a) and Table 10 (b) respectively report poverty statistics for the 2005/06 survey, 2002/03 survey, and the earlier estimates for the 1992/93 (IHS) survey. Three poverty indicators: namely PO, P I and P2 (see Foster, Greer and Thorbecke, 1984) are reported. The PO indicator is "headcount": the percentage of individuals estimated to be living in households with real private consumption per adult equivalent below the poverty line for their rural or urban sub-region. Thus the PO value implies the percentage of Ugandans estimated to live in households which spend less than what is necessary to meet their calorie requirements and to afford them a mark-up for non-food needs. The headcount shows how broad poverty is, although not necessarily how deep. That is to say, we do not know how far below the poverty line, the poor are. For this information we use the PI or P2 indicators. The P I indicator is the "poverty gap". This is the sum over all individuals of the shortfall of their real private consumption per adult equivalent from the poverty line, divided by the poverty line. One way to interpret the PI is that it gives the per capita cost of eradicating poverty, as a percentage of the poverty line, if money could be targeted perfectly. Thus if PI is 9, then in an ideal world, it would cost 9 percent of the poverty line per Ugandan in order to eradicate poverty through selective transfers. In practice, it is impossible to target the poor perfectly and issues such as administrative costs and incentive effects have to be considered. The P I measure gives an idea of the depth of poverty. However, it is limited because it is insensitiveto how consumption is distributed among the poor. For example, if a policy resulted in money transfer from someone just below the poverty line to the poorest person, the PI will not reflect this. To satisfy this condition,we need the P2 measure. The P2 indicator is the "squared poverty gap". This is the sum over all individuals of the square of the shortfall of their real private consumption per adult equivalent and the poverty line divided by the poverty line. The reason to square the shortfall is to give greater weight to those who are 11 living far below the line. In brief, whereas PO measures how widespread poverty is, P1 measures how poor the poor are and, by giving more weight to the poorest of the, P2 gives an indication of how severe poverty is. Data are disaggregated by location, residence and regions. Along with the poverty statistics, the percentage of people in each location, their mean household consumption per adult equivalent and the contribution each location makes to each poverty statistic (i.e. what percentage of national poverty is attributable to each location) are reported. Given that poverty statistics are estimates, it is useful to test whether changes in their values are statistically significant (Kakwani, 1990). We report t-tests of the significance of the changes in the poverty statistics between 2002/03 and the 2005406 in Table 11. In addition, Table A 2 presents detailed information on sampling error and confidence intervals for the headcount index estimates; and effect of measurementerror on our poverty estimates in Table A 3. Using the full sample of 2005106, 31.1 percent of Ugandans are estimated to be poor, corresponding to nearly 8.4 million persons. Table 9 provides more detailed statistics, broken down by region and rural-urban areas. However, excluding districts not covered in UNHS 1999/00,the headcount stands at 29 percent. Table 9: Poverty Statistics in the UNHS 2005106 Residence Pop. Mean Povertyestimates Contributionto: share CPAE PO P1 P2 PO P1 P2 RuraWrban Rural 84.6 33,900 34.2 9.7 3.9 93.2 93.8 94.1 Urban 15.4 71,800 13.7 3.5 1.4 6.8 6.2 5.9 Region Central 29.2 57,600 16.4 3.6 1.3 15.4 12.1 10.7 Eastern 25.2 32,300 35.9 9.1 3.4 29.0 26.1 24.6 Northern 19.7 22,600 60.7 20.7 9.2 38.5 46.8 51.3 Western 25.9 39,900 20.5 5.1 1.8 17.0 15.1 13.4 Central rural 20.6 45,300 20.9 4.7 1.6 13.9 11.0 9.6 Central urban 8.6 87,200 5.5 1.1 0.5 1.5 1.1 1.1 Easternrural 23.2 30,000 37.5 9.5 3.6 28.0 25.1 23.8 Easternurban 2.0 59,300 16.9 4.4 1.5 1.1 1.o 0.9 Northern rural 16.9 20,500 64.2 22.3 9.9 34.9 43.1 47.7 Northern urban 2.8 35,100 39.7 11.5 4.5 3.6 3.7 3.6 Western rural 23.9 37.400 21.4 5.4 1.9 16.5 14.6 13.1 12 Western urban 2.0 69,900 9.3 2.0 0.6 0.6 0.4 0.3 National 100.0 39,746 31.1 8.7 3.5 100.0 100.0 100.0 To evaluate poverty trends, the results of the UNHS 2005406 were compared with those of UNHS 2002/03 and estimates from IHS. The comparisons are for the entire country. As previously mentioned, the UNHS 1999/00 survey data point was omitted from this trend comparison as the surveydid not cover Kitgum, Gulu, Bundibugyoand Kasese due to insurgencesat the time of the survey. However, poverty estimates based on 2005/06 excluding these districts are presented in Table A 1. The results in Table 9 & Table 10 (a) revealedthat the percentageof the people living in absolute poverty declined by 7.8 percentage points, corresponding to a reduction of 1.4 million persons in absolute terms. This decline is statistically significant. The other poverty indicators (P1 and P2 measures) follow a similar trend as the headcount index and the changes are statistically significant (Table 11). Table 10: (a) Poverty in the UNHS 2002103 Residence Pop. Mean Poverty estimates Contribution to: Share CPAE PO P1 P2 PO P I P2 Rural/Urban Rural 86.2 29,500 42.7 13.1 5.7 94.9 95.5 95.7 Urban 13.8 74,800 14.4 3.9 1.6 5.1 4.5 4.3 Region Central 29.6 52,700 22.3 5.5 1.9 17.0 13.7 11.3 Eastern 27.4 28,500 46.0 14.1 6.0 32.5 32.6 32.0 Northern 18.2 21,600 63.0 23.4 11.5 29.6 36.0 40.9 Western 24.7 33,800 32.9 8.5 3.3 21.0 17.7 15.8 Central rural 21.6 38,400 27.6 6.9 2.5 15.4 12.6 10.5 Centralurban 8.0 91,200 7.8 1.6 0.5 1.6 1.1 0.7 Easternrural 25.3 26,200 48.3 14.9 6.3 31.5 31.7 31.1 Easternurban 2.1 55,100 17.9 4.8 2.1 1.o 0.9 0.9 Northern rural 16.8 20,200 65.0 24.3 11.9 28.1 34.3 39.1 Northern urban 1.4 37,600 38.9 13.9 6.6 1.5 1.7 1.9 Western rural 22.6 31,500 34.3 8.9 3.4 19.9 16.9 15.0 Western urban 2.2 58.000 18.6 4.8 1.9 1.o 0.9 0.8 National ' 100.0 35,736 38.8 11.9 5.1 100.0 100.0 100.0 13 Table IO: (b) Poverty in the IHS, 1992193 Residence Pop. Mean Povertyestimates Contributionto: Share CPAE PO P1 P2 PO P1 P2 RuraUUrban Rural 87.6 21,200 60.3 22.6 11.2 93.7 94.8 95.5 Urban 12.4 43,200 28.8 8.7 3.7 6.3 5.2 4.5 Region Central 28.7 31,200 45.6 15.3 7.0 23.2 21.0 19.6 Eastern 26.1 21,500 58.8 22.0 10.9 27.2 27.5 27.5 Northem 20.0 18,200 73.5 30.3 15.8 26.1 29.0 30.8 Western 25.2 22,700 52.7 18.7 9.0 23.5 22.5 22.0 Central rural 21.2 24,100 54.3 18.7 8.8 20.4 18.9 18.1 Central urban 7.5 51,200 20.8 5.7 2.2 2.7 2.0 1.6 Easternrural 23.8 20,600 60.6 23.0 11.4 25.5 26.1 26.3 Easternurban 2.4 30,400 40.4 12.6 5.5 1.7 1.4 1.3 Northernrural 18.8 17,600 75.0 31.0 16.2 25.0 27.9 29.7 Northern urban 1.2 26,900 50.2 19.3 9.8 1.1 1.1 1.2 Western rural 23.8 21,900 53.8 19.2 9.3 22.7 21.9 21.5 Western urban 1.4 36,300 33.2 9.1 3.8 0.8 0.6 0.5 National 100.0 23,924 56.4 20.9 10.3 100.0 100.0 100.0 Table 11:T-test Statistics for Hypothesisof Equalityof Poverty Statistics in 2002103 and 2005106 Residence PO P1 P2 RuraWrban Rural -7.50 -7.90 -7.20 Urban -0.43 -0.78 -0.96 Region Central -3.55 -4.10 -3.09 Eastern -5.06 -6.60 -5.95 Northern -1.05 -2.47 -3.30 Western -6.74 -5.59 -4.70 Central rural -3.16 -3.81 -3.11 Central urban -1.21 -1.07 -0.07 Easternrural -5.07 -6.60 -5.88 Easternurban -0.32 -0.47 -1.08 Northern rural -0.37 -1.67 -2.55 Northern urban 0.16 -1.27 -1.76 14 Westernrural -6.45 -5.31 -4.43 Westernurban -3.18 -4.21 -4.12 National -7.65 -8.12 -7.43 Thus, the main finding is that, the incidence of income poverty declined significantly between UNHS 2002/03 and UNHS 200906 for Uganda as a whole, whichever poverty indicator (PO, P1 or P2) is used. The percentage of the population living below the poverty line declined from 38.8 percent to 31.1 percent betweenthe two surveys. At national level, poverty remained the same in urban areas. However, a significant decline is observed in rural areas between UNHS 2002103 and UNHS 2005/06. The percentage of people in poverty declined from 42.7 percentto 34.2 percent, corresponding to a decline in the number of rural people in poverty from 9.3 million to 7.9 million in rural areas. In urban areas, the corresponding decline was from 14.4 percent to 13.7 percent, recording a slight increase in the absolute number of the poor from 0.5 million to 0.6 million. Other income poverty estimates (Pl, P2) mirror similar trend as observed in PO. For example, the P1 indicator which is related to the cost of eliminating urban poverty using transfers decreased faster in rural areas by nearly 25 percent (from 13.1 to 9.7) comparedto the 10 percent in urban areas (from 3.9 to 3.5). The decrease in poverty between the surveys is most marked in the Western region - where the headcount declined from 32.9 percent to 20.5 percent (that is, from 2.1 million to 1.4 million persons in poverty, respectively). In relative terms, this suggests 12.4 percentage points drop in the poverty headcount well above the nation-wide average of 7.8 percentage points. This reduction is driven by trends in the western rural areas from 34.3 percent to 21.4 percent. The proportion of people in poverty in Easternregion declined from 46 percent to 35.9 percent (that is, from 3.2 million to 2.5 million persons, respectively). The decline in Eastern region is driven by the rural areas, which experienced a 10.8 percentage point drop. In Central region, the decline in the headcount (PO) indicator from 22.3 percent to 16.4 percent is statistically significant at conventional levels. The Northern region registered a slight and insignificantfall in the headcount from 63 percent to 60.7 percent. In absolute numbers, the persons living in poverty increases from 2.9 million in 2002/03 to 3.3 million in 2005/06. While the regional rankings of PI and P2 are identical to the headcount index, there are some differences in the magnitudes. A case in point is the proportionately growing difference in the poverty gap index between Northern region and other regions (especially Eastern and Western regions). Furthermore, while no significant reduction in the headcount index was observed for Northern Uganda, the region experienced a significant drop in the poverty gap (by about 12 percent). This can be explained partly by the various humanitarian interventions and other government 15 interventions such as the Northern Uganda Social Action Fund (NUSAF). Strong growth in consumption in other regions explains the declines in the poverty gap. One noticeable point is how much the poverty gap has reduced vis-&-vis the headcount index over the two year period. Regardless of geographical location, we find that the percentage drop in poverty gap is higher than that of the headcount index, indicativeof rising mean consumption of Uganda's poor. Between UNHS 2002/03 and UNHS 2005106, poverty headcount in Uganda fell by nearly 8 percentage points. There is need to investigate the robustness of this drastic drop over a three year period. This is done by drawing on the theory of stochastic dominance. Each point on a stochastic dominance curve gives the proportion of the population consuming less than the amount given on the horizontal line. Figure 1 shows that for every possiblechoice of poverty line, the poverty rate in 2005/06 is below that of 2002/03. Hence, there is first order stochastic dominance.The precisechoice of the poverty line is unimportantbecause no matter what poverty line is chosen, we still conclude that poverty fell betweenthe two surveys. Similar conclusionsare reachedfor both rural and urban areas (Figure 2 and Figure 3). Figure 1:Poverty Incidence Curve for 2002103 and 2005106, Uganda 1 0.9 0.8 0.7 0.6 0.5 0 4 0 3 - 0 2 - 0 1 - 0 7 0 10000 ZOOM) 30000 4oooO 5MxIO 6ooM) 70000 80000 9WOO 1woOO COmumpUonpsr.d~lllquIYd~11 16 Figure2: Poverty Incidence Curve for 2002103 and 2005106, Rural 0 1OOW 20000 3oOW 40WO 50000 6WW 7WW MOW WWO 1OOW( coruumptlonp*dun.qumhnt Figure3: Poverty Incidence Curve for 2002/03 and 2005/06, Urban ' 1 0.9 0 10000 20000 30000 40000 50000 60000 70000 80000 90000 100000 ConsurnptlonpY Mullq Y h Y n l Ilh.) Changes in the Distribution of Income 17 For Uganda as a whole, the mean of this welfare measure increased from Shs 35,736 per month in 2002/03 survey to Shs 39,746 per month in 2005106 survey; equivalent to an annualized growth rate of 3.5 percent. Table 12 reports real consumption per adult equivalent at the median and other deciles. At the median, the welfare measure increased from Shs. 24,737 to Shs. 28,532, corresponding to an annualized growth rate of 4.8 percent. In other words, welfare increased both at the mean and median, although the increase was stronger at the median than at the mean. Increases in welfare between the surveys are also recorded for all other deciles, except for the more affluent (the gthdecile, the lower bounds of the top 10 percent, most affluent Ugandans) in urban areas. Thus it appears that growth between 2002/03 and 2005/06 surveys benefitedthe masses. These nationaltrends do appear to be driven by rural-urban differences. Table 12: Consumption per Adult Equivalentat Each Decile (1997/98=100) Decile I H S U N H S 2002/03 U N H S 200906 National 8,518 11,696 13,116 11,168 15,024 17,029 13,691 18,143 20,471 16,220 21,303 24,297 18,996 24,737 28,532 22,106 29,037 33,611 26,374 34,448 40,795 32,009 44,059 52,285 42,780 64,322 73,878 Rural Decile I H S U N H S 2002/03 U N H S 2005/06 1 8,194 11,160 12,597 2 10,674 14,311 16,243 3 13,001 17,163 19,503 4 15,319 19,970 22,787 5 17,870 23,011 26,435 6 20,632 26,569 30,645 7 24,353 30,895 36,075 8 29,040 37,499 44,738 9 36,942 52,079 60,492 Urban Decile I H S U N H S 2002103 U N H S 2005/06 1 14,176 19,469 19,609 2 18,661 26,3 16 27,030 3 22,917 32,912 33,784 4 27,852 39,891 42,119 5 32,869 47,728 52,021 6 38,400 57,033 62,148 7 46,601 69,63 1 77,175 8 55,898 90,716 97,744 9 76,974 141,933 141,457 Inequality in HouseholdConsumption 18 Table 13 reports the Gini coefficients as a measure of inequality in household consumption per adult equivalent. Between 2002103 survey and 2005106 survey, the Gini coefficient dropped, and hence inequality declined. The lower deciles registered higher rises in living standards than the more affluent. The observed decrease was driven by a decline in inequality of income in urban areas. Income inequality remained the same in rural areas between UNHS 2002/03 and UNHS 2005/06. Table 13: Gini Coefficientsfor Uganda Residence 1992193 2002103 2005/06 R u r a m r b a n Urban 0.396 0.483 0.432 Rural 0.328 0.363 0.363 Region Central 0.395 0.460 0.417 Eastern 0.327 0.365 0.354 Northern 0.345 0.350 0.331 Western 0.319 0.359 0.342 National 0.365 0.428 0.408 Since the distribution of income became less unequal between 2002/03 and 2005/06 surveys, and growth in consumption was positive and strong, it is not surprising that poverty declined during the period. Consider, for example, the 7.8 point drop in the poverty headcount from 38.8 percent in 2002/03 to 31.1 percent in 2005/06. Applying the decomposition of Datt and Ravallion (1991), it was found that the growth in mean consumption should have reduced the percentage living in poverty by 6.6 percentage points (Le. assuming the distributionof consumption remained as in 2002/03). However, changes in the distribution of welfare were progressive, implying a 1.2 percentage point drop in poverty (the Datt-Ravalliondecomposition is not exact, but in this case, the residual is essentially zero). Table 14 presents the decomposition of income inequality between and within social groups. There is rising income inequality between regions but falling between rural-urban divide and between educational attainment levels. One noticeablepoint is the rising income inequalitywithin regionalsub-groupings. Table 14: Decompositionof Income Inequality (%) Sub-grouping I992193 2002103 2005106 RurallIJrban Between 14.6 20.7 15.6 Within 85.4 79.3 84.4 19 Regions Between 8.7 17.0 19.6 Within 91.3 83.0 80.4 Educationalattainment inlevels Between 14.6 27.3 25.4 Within 85.4 72.7 74.6 Whether households are poor in monetary terms depends on their incomes. Hence, to understandpoverty, an attempt is made to look at what has been happeningto people's incomes. Table 15 and Table 16 provide a disaggregation of poverty indicators for the 2002/03 and 2005/06 surveys respectively, based on the main industry in which the household head works12. Poverty declined markedly amongst crop farming households, with the headcount declining from 48.9 percent to 36.8 percent. But the weighted proportion of the sample in crop farming households increased from 45.2 percent to 53.1 percent during the past 7 days prior to the interview. In other words, more household heads reported their main activity as being crop farming, reflecting movement of labor into farming. Nevertheless, the concentration of poor persons in Uganda remains in crop agriculture. The results further reveal that the percentage of Ugandans living on incomes below the minimum required to meet the basic needs dropped in all the other sectors too. Table 15: Poverty by Sector of Household Head, 2005106 Sector Pop. Mean Poverty estimates Contribution to: share CPAE PO P I P2 PO P1 P2 Crop agriculture 53.1 30,400 36.8 10.2 4.1 62.9 62.0 61.2 Non-crop agriculture 4.9 38,500 28.1 7.7 3.0 4.5 4.3 4.2 Construction& mining 2.0 40,700 27.1 7.1 2.3 1.7 1.6 1.3 Manufacturing 4.7 51,900 21.8 5.2 2.0 3.3 2.8 2.7 Trade 9.1 55,700 14.9 4.0 1.5 4.3 4.1 3.8 Transport & comm. 2.5 52,000 16.7 3.6 1.1 1.3 1.0 0.8 Public services 5.0 75,100 8.5 1.0 0.2 1.4 0.6 0.3 Other services 3.7 62,800 17.9 5.5 2.4 2.1 2.3 2.5 Inactive 5.8 41,600 37.2 12.5 5.7 6.9 8.3 9.3 Off-temp 9.2 39,200 39.0 12.2 5.3 11.6 12.9 13.9 Table 16: Poverty by Sector of Household Head, 2002/03 Sector Pop. Mean Poverty estimates Contributionto: share CPAE PO P1 P2 PO P1 P2 l2Unlikeintheprevioushouseholdsurveys, noinformationwas collectedonthemainactivitystatusduringthepast 12 months prior to the interview. Instead,such information was gathered for the last 7 days prior to the interview. 20 Crop agriculture 45.2 26,000 48.9 14.7 6.2 56.9 55.9 54.5 Non-crop agriculture 5.1 36,700 32.5 9.7 3.9 4.3 4.1 3.9 Construction & mining 2.2 37,100 33.0 10.8 4.8 1.9 2.0 2.1 Manufacturing 7.2 36,100 31.0 8.8 3.3 5.8 5.4 4.7 Trade 14.2 45,800 20.5 5.1 1.9 7.5 6.2 5.2 Transport & comm. 2.6 52,900 19.8 4.3 1.3 1.3 1.0 0.6 Public services 5.4 67,300 13.7 3.5 1.4 1.9 1.6 1.5 Other services 4.6 58,700 26.4 7.4 3.2 3.1 2.9 2.9 Inactive 4.9 37,800 43.1 16.8 8.7 5.4 6.9 8.3 Off-temp 8.6 30,100 53.9 19.3 9.7 12.0 14.0 16.3 An alternative disaggregation of the poverty estimates is by employment status of the household head (Table 17). This revealed improvements in the living standard of all categories, except for those whose head is involved in other unspecified activities. Worth noting is the increased share of private employment accompanied by a reduction in the poverty headcount. This is contrary to what we observed between UNHS 1999/00and UNHS 2002103, where both populationshare and headcount index rose. Table 17: Poverty by EmploymentStatus of Household Head Pop. Mean Poverty estimates Contribution to: share CPAE PO P1 P2 PO P1 P2 2005/06 Self employment 79.7 35,500 33.6 9.5 3.8 86.1 86.5 86.7 Government employment 4.7 76,700 7.2 0.9 0.2 1.1 0.5 0.2 Private employment 11.9 50,200 24.0 6.7 2.7 9.2 9.1 8.9 Others 2.4 38,200 36.2 12.3 5.4 2.9 3.4 3.8 Inactive 1.3 72,800 19.2 3.3 1.2 0.8 0.5 0.4 2002/03 Self employment 79.4 33,100 40.4 12.1 5.1 82.6 80.9 79.2 Government employment 4.9 67,000 16.2 4.0 1.5 2.1 1.7 1.4 Private employment 9.9 41,600 35.3 11.2 5.0 9.0 9.4 9.6 Others 1.1 45,400 31.7 10.4 4.7 0.9 0.9 1.o Inactive 4.7 33,200 44.5 17.9 9.5 5.4 7.1 8.7 Notes: Employment status refers to the past 12 months prior to the interview 21 Both UNHS 2002/03 and UNHS 2005/06 captured information on what the households themselves considered as the most important source of income during the past 12 months prior to interview. The results by poverty status are presented in Table 18. Between the two surveys, the share of households reporting agriculture as the most important source of income increased from 41.8 percent in 2002/03 to 51.5 percent in 2005/06. However, this increase did not translate into worsening living standards. Instead, the incidence of poverty declined from 48.2 percent to 31.5 percent. The share of Ugandans reporting cash transfers (remittances) increased and at the same time they registereda reduction in the headcount index. 22 Table 18: Poverty by Most Important Source of Income to Household Pop. Mean Poverty estimates Contribution to: share CPAF! PO P1 P2 PO P1 P2 200906 Agriculture 51.5 33,000 31.5 8.3 3.2 61.1 59.0 56.9 Wage employment 20.7 65,500 18.0 4.8 1.8 14.0 13.6 13.2 Non-agric. enter 18.8 61,100 16.0 4.1 1.6 11.4 10.6 10.7 Transfers 4.8 68,900 16.0 4.0 1.5 2.9 2.6 2.5 Others 4.2 29.100 66.3 24.6 11.5 10.5 14.2 16.8 2002/03 Agriculture 41.8 25,900 48.2 14.5 6.1 51.9 51.0 49.8 Wage employment 14.2 46,900 34.3 10.9 4.7 12.6 13.1 13.2 Self-employment 37.9 40,700 32.2 9.9 4.3 31.4 31.8 32.3 Transfers 4.4 47,200 29.1 8.8 4.2 3.3 3.3 3.6 Others 1.7 44,300 19.3 6.8 3.4 0.8 0.9 1.1 Notes: i) Self employment in 2002/03 and non-agricultural enterprises in 200Y06need to be interpreted with caution. ii) Analysis done at household level. SUMMARY OF FINDINGS The 2005106 survey showed strong growth in per household, per capita and per adult equivalent expenditure, especially in rural areas. But growth in consumption was marked by uneven progress. In addition, food, beverages and tobacco still dominate the household budget. The results presented in this chapter show a significant increase in the share of education and health in the overall household expenditures. Data on private consumption from the 2002/03 and 200906 surveys imply strong growth between the two periods. Nevertheless, the growth was slightly lower than that observed between 1997 and 1999/00 surveys. It is also worth noting that growth in private consumption based on the national accounts for this period is lower than the growth estimate from the householdsurveys. The growth between the two recent surveys seems to have benefited the majority of Ugandans. For the median Ugandan, the welfare has improved. And this is also true for other deciles. As a result, the proportion of people living in poverty has declined and so has, in absolute terms, the number of poor persons. Thus, the fight against poverty (in percentages and in numbers) realized significant outcomes within the three year period between 2002/03 and 2005/06. And the reduction was statistically significant and robust. The reduction in poverty is particularly marked for some sub-groups of the population - including rural areas as a whole and those residing in 23 Eastern and Western regions.While the proportionof urban poor remained roughly constant, the number of urban poor increased by 0.1 million between the two surveys. Over the entire period, the poverty headcount index changed little in Northern Uganda. However, the slight drop was not enough to prevent a rise in the number of persons living in poverty in the region. One noticeable improvementwas a significant drop in the poverty gap index between UNHS 2002/03 and UNHS 2005/06, indicatingthat the poor in 2005/06 were not as poor as their counterpart in 2002/03. While rural areas experienced very strong growth in mean consumption levels, the urban areas experienced strong reduction in inequality of income. Overall, the findings indicate significant improvements in living standards and in distribution of income, but marked spatial unevenness in the improvements. Finally, the results suggest that the reduction in poverty in rural areas contributed to the overall reduction observed at the national level. In this chapter, we do not attempt to explain the welfare changes that have occurredover time, althoughwe can suggest that one of the factors underlying the improvementscould have been the recoveryof coffee pricesfrom an average of $0.56 per kg in 2002/03 to $1.38 per kg in 2005/06. Accordingly, there is need to conduct a more detailed investigation into what might have happened to sources of income, particularly among the rural population. 24