Uganda’s Development Strategy
The Uganda Vision 2040 aspires to change the country from a low-income to a competitive upper middle-income country within 30 years with a per capita income of US$9,500. In the medium term, Uganda is seeking to become middle-income country in 10 years. The Government’s Vision is to be delivered through a series of five-year National Development Plans (NDPs), the first of which is coming to an end in fiscal year (FY) 2015. The NDPs are designed to be the primary Government national strategic plan and are intended to transform Uganda into a modern and prosperous country as well as guide Uganda’s fiscal strategy. The National Planning Authority is currently preparing the second NDP, which is expected to be in place by the first quarter of FY15 to guide the budget process of the FY16.
More information about Uganda’s development strategy can be found at the National Planning Authority or the Ministry of Finance, Planning and Economic Development.
World Bank Engagement
Uganda joined the World Bank in 1963, one year after obtaining independence. Since then, the Bank has provided over US$8 billion in financing, with more than US$7.30 billion in loans and credits, and more than US$650 million in grants.
The World Bank’s current strategy is outlined in the Country Assistance Strategy (CAS) FY11-15, which is firmly anchored in the government’s five-year National Development Plan (NDP). The CAS hinges on four pillars: support government efforts to promote inclusive and sustainable economic growth; enhance public infrastructure; strengthen human capital development; and improve good governance and value for money. It is estimated that during the CPS period, the International Development Association (IDA) will commit approximately US$2 billion to support development projects and programs in Uganda.
As of April 2014, the Uganda portfolio comprised 14 active projects, including two GEF projects. The total net commitment amounts to US$ 1.43 billion. In addition, there are four regional projects (environment, trade and transport, health and agriculture) with net commitments of US$94.0 million for the Uganda components. In line with government priorities, a rough 60% goes to infrastructure; around one third to education, health and the social sector; and another 7% to private sector development.
Uganda is also benefiting from a large trust fund portfolio (approximately US$80 million in grants) as a result of the Bank’s strategic collaboration with bilateral and multi-lateral development partners. Trust Funds, most of which are linked to lending operations, have focused mainly on agriculture; renewable energy, diaspora, education, private sector, electricity, health (piloting output-based aid in health), transport, governance, tourism, public sector and water supply (Global Partnership on Output-Based Aid).
The United Kingdom’s Department for International Development (DFID) is a key partner in IDA’s Uganda program, providing co-financing to the Northern Uganda Social Action Fund II (US$39 million) and the Transport System Improvement Project (US$8 million); HIV Prevention Effectiveness Evaluation in Uganda (US$1.9 million) and Support to the Implementation of the National Development Plan worth approximately US$12 million.
The established Trust Funds have helped to address donor aid limitations, and for some donors addressed limited presence and management gaps, by providing pooled financing in areas of public goods and national development issues with the Bank leveraging its competitive edge in supporting implementation of these trust fund objectives.
In addition, a multi-donor trust funding from Sweden, DFID, Ireland, Belgian, Norway, Australia, Denmark and Netherlands has been set up to fund various activities related to the Joint Budget Support Framework, including funding of a Technical Assistance and Support Unit. The established Trust Funds have helped to address donor aid limitations, and for some donors addressed limited presence and management gaps, by providing pooled financing in areas of public goods and national development issues with the Bank leveraging its competitive edge in supporting implementation of these trust fund objectives.
The Bank’s analytical and advisory activities underpin investment operations and sector strategies, and inform the government’s reform path. Recent analytical work includes a bi-annual series of the Uganda Economic Updates launched in February 2013. The first issue focused on regional trade and integration and the second and most recent economic update focused on jobs. Other recent studies have focused on Water Coverage in Kampala’s Informal Settlements (2014); Tourism in Uganda (2013); Promoting Inclusive Growth (2012) and a series of Public Expenditure Reviews focused on education (FY08), health (FY09), roads (FY10), and service delivery (FY13). Other reports such as the Public Finance Management in Uganda -- a Platform Approach (2008) with an assessment of fiscal decentralization, and the Public Expenditure and Financial Accountability Report (2009) have been critical in informing the reform agenda in public financial management. The World Bank is currently preparing a Country Economic Memorandum (CEM) that will specifically focus on how Uganda can attain a Middle Income Country Status by leveraging the recently discovered oil resources so as to promote diversified and shared prosperity. The CEM is intended to present policy options to the daunting challenge that policy makers are likely to face including maximizing the linkages between oil and non-oil sector while establishing institutional mechanisms to protect new revenue from rent-seeking and misallocation of resources.
The Bank’s Country Assistance Strategy Progress Review
On August 1, 2013, the World Bank’s Board of Executive Directors discussed and endorsed the progress report of the CAS) for Uganda that will guide the support of the World Bank Group to the country for the remaining two years (2014-2015) of the CAS. An assessment of the progress against CAS outcomes showed mixed performance, but confirmed that CASoutcomes can be achieved provided the Bank adjusts its lending instrument mix; and the Government of Uganda makes progress on two fronts—accelerating implementation and advancing governance reforms.
Over the remaining two years of the CAS, the Bank will focus its interventions on fewer, larger and transformational projects with more emphasis on infrastructure, agricultural productivity and access to market, skills development that leads to more jobs, in addition to continued investments in the social sectors. More specifically, the Bank’s support to Uganda will be focused on: i) transformational operations and related investments; ii) selective development policy; and iii) support Uganda’s governance efforts.
The International Finance Corporation (IFC)
Uganda became a member of the IFC in 1963. As of April 2014, IFC has approved funding for over 50 projects in Uganda amounting to US$1.5 billion, focusing on: i) improving the investment climate; ii) building up the capacity of Small and Medium Enterprises (SMEs) and micro-enterprises as well as institutions that can support them; and iii) proactive support to project development in the financial, agribusiness, and infrastructure sectors. The IFC will continue to support business-enabling environment, public-private partnership (PPP) infrastructure advisory services, and access to finance for SMEs through the Africa small-medium enterprises program for selected commercial banks. Additional operations in the forthcoming years include heightened focus on agribusiness intermediaries, supporting upgrading and expansion of Umeme Ltd.’s power distribution network estimated to cost US$500 million over six years, finance sector development, infrastructure (including railways) and electricity generation companies. Among IFC’s recent commitments includes US$75 million financial support and mobilizing US$200 million for the rehabilitation and upgrading of the railways concession and a US$25 million loan to assist the expansion of Roofings Ltd’s a steel coated zinc project at Namanve Industrial Park.
The IFC is also extending technical and advisory support to the government in addressing barriers to investment growth in the productive sectors, particularly in agriculture, health, tourism, energy, trade and communications. On recent business regulation and business taxation reforms supported by IFC: a) Out of 790 business licenses identified and reviewed; 41 have been eliminated, 378 licenses have been streamlined to strengthen the regulatory function and ensure that they are business friendly, leading to an expected 25% (USD 74 million) reduction in private sector compliance costs to licensing as measured against a baseline (USD 292 million); The establishment of an e-licensing registry, which is used as the definitive repository of all business licenses in Uganda has led to cost savings in excess of USD 12 million; b) GoU rationalized the tax incentive structure leading to reduction in VAT Exempt and Zero Rated Items as well as the removal of discretionary tax incentives. c) In FY15, IFC/WB will roll-out a new program focusing on increasing access to affordable business finance; increasing trading across borders; increasing FDI inflows into the extractives industry and increasing Tax/GDP ratio to minimize the burden on compliant tax payers..
Multilateral Investment Guarantee Agency (MIGA)
Uganda became a member of MIGA in 1992. As of October 2013, MIGA had a portfolio of three guarantees with a combined gross exposure of US$161 million. MIGA is supporting Globeleq Holdings (United Kingdom) with US$41 million in guarantees covering its equity investment in Umeme Ltd, the project company that has leased the electricity distribution grid of Uganda. MIGA is also supporting Sithe Global (USA) with guarantees of US$120 million covering its equity investment in Bujagali Energy Ltd. By supporting private investments in both generation and distribution, MIGA has played a key role in supporting the reform of Uganda’s electricity sector, undertaken with the support of the World Bank in 2002. Umeme Limited was awarded a 20-year electricity distribution concession to manage and operate the assets of Uganda Electricity Distribution Company from March 2005, becoming the first significant private operator of electricity distribution in all of Sub-Saharan Africa. The Bank and MIGA have worked closely together on supporting the Government of Uganda and Umeme Ltd. In providing a more reliable, safe, and affordable supply of electricity, MIGA also has a guarantee in support of an agribusiness investment.
International Monetary Fund (IMF)
There is close interaction with the IMF on the macroeconomic program.
The Bank has a lead role in promoting donor harmonization and aid effectiveness. The Bank is the permanent chair of the Local Development Partners’ Group (LDPG), which is the apex development partner forum in Uganda. The LDPG aims at increasing effectiveness of development assistance in support of the national goals and systems of the Government.
The LDPG oversees and guides the work of sectoral/thematic Development Partners’ Groups (DPGs) to ensure effective coordination and harmonization. DPGs are established to coordinate issues of relevance for the sectors identified by Government. DPGs are typically, but not always, mirroring Government chaired Sector Working Groups (SWG) or Technical Working Groups (TWG), which are comprised of Government Representatives, Development Partners, NGOs, and Representatives from the Private Sector etc.
The Government recently approved a Partnership Policy, which is setting out guiding principles and priorities of government`s management of the relationship with its Development Partners. The intension is to ensure that external assistance and development cooperation is fully aligned to the National Development Plan (NDP) and sector strategies, while maximizing the use of government systems and procedures. The Government has announced their intention to implement the Partnership Policy during the first half of 2014 in close collaboration with Development Partners.
A New Joint Budget Support Framework
Government and Development Partners approved, for the first time, a Joint Budget Support Framework (JBSF) in October 2009. The purpose was to reduce the transaction costs of budget support for the government, increase the predictability of disbursements, and create a stronger and more consistent policy dialogue that fosters mutual accountability in line with the Paris Declaration on Aid Effectiveness. The JBSF includes Austria, Belgium, Denmark, the European Union, Germany, Ireland, Sweden, the United Kingdom, and the World Bank.
The JBSF has been providing budget support on an annual basis against a jointly-agreed Joint Performance Assessment Framework (JAF), which is assessing the Government’s performance in agreed areas. This forms the basis for development partners’ disbursement decisions, and also ensures timely disbursements.
The JBSF governance structure is two tiered:
- A Development Partners Policy Committee meets regularly and engages with the government at an annual high-level forum;
- At the technical level, the JBSF Technical and Policy Dialogue Taskforce coordinate the design and implementation of the JBSF and conduct an annual assessment of performance.
To support the administrative and technical work of the JBSF, a Technical and Administrative Support Unit (TASU) was established, and is financed through a multi-donor trust fund with contributions from participating development partners.
Last Updated: Apr 10, 2014