Uganda Set to Deliver Higher Returns on Public Investments

June 6, 2016

KAMPALA June, 6, 2016 – By 2040, Uganda expects to have realized its vision of a transformed economy to a middle income status. The Government of Uganda is making major public investments to address the binding constraints to growth, particularly the huge deficit in infrastructure in the energy and transport sectors.

To accelerate the benefits and increase the returns from these investments, Uganda needs to improve its public infrastructure management capacity, including the ability to assess, and deliver projects on time and within budget.

The Uganda Economic Update, titled : From smart budgets to smart returns: Unleashing the power of public investment management, calls for sound public investment management systems capable of efficiently and effectively delivering critical infrastructure and tapping new opportunities to finance human capital development.

“By managing public investments better, Government would spur economic growth, improve welfare and give Uganda’s taxpayers more value for money,” said Christina Malmberg-Calvo, World Bank Country Manager for Uganda.  “It is therefore important to invest in the country’s ability to invest by transforming the public investment program into a system that better increases the value derived from public investments”.

Uganda’s share of development expenditure - the bulk of which is allocated to infrastructure development- has increased from an average value of 4.3 percent of GDP during the period FY 2002/03 to FY 2007/08, to 7.6 percent in the period FY 2008/09 to FY 2014/15. Among others, new hydropower dams under development on the River Nile will ensure clean source of electricity to power the country’s economy, while improved transport infrastructure will facilitate faster movement of goods and people. These together, are expected to accelerate economic growth and poverty reduction.

However, the planned investments have not fully materialized; with the consequence that investment is not driving overall economic activity, and the economy is growing slowly, also due to a combination of a weak economic environment, which was further undermined by lower oil and commodity prices on the international markets.  According to the Update, Uganda’s economy, which is growing within the range of 4.5 to 5 percent during the current financial year 2015/16 is much slower than the 5.4 percent anticipated in the previous Update. The country continues also to trail other East African countries, in particular, Rwanda and Tanzania who are growing at 7 percent, while Kenya is at 6 percent.

The Update offers a series of recommendation that would enable Uganda leverage its investments to deliver higher returns. These include a careful scrutiny of public investments to improve public welfare and ensure that these investments are managed effectively and on schedule. The report also suggests the promotion of a learning process to improve future project selection and implementation while addressing associated risks to ensure efficient and effective project implementation.

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