Language: English Original: English AFRICAN DEVELOPMENT FUND

PROJECT: Support to Higher , Science and Technology (HEST) Project

COUNTRY: Republic of

PROJECT APPRAISAL REPORT

September 2012

Team Leader : Mr. Jason Mochache, Chief Education Specialist, OSHD 2/UGFO

Team Members : Mr. David Engwau, Senior Procurement Officer, UGFO Mrs. Juliet Byaruhanga, Senior Private Sector Officer, UGFO Mr. David Mutuku, Principal Financial Management Specialist, EARC Mr. Steven Onen, Principal Legal Counsel, GECL.1/EARC Mr. Ashraf Ayad, Principal Procurement Officer, ORPF.1 Appraisal Team Mr. Stijn Broecke, Young Professional, EDRE Mr. Kwasi Agyeman, Infrastructure and Costing Consultant, OSHD.2 Mr. Stephano Ole-Teveli, ICT Consultant, OSHD.2

Sector Manager: Mr. Boukary Savadogo, Manager, OSHD.2 Sector Director: Mrs. Agnes Soucat, Director, OSHD Regional Director: Mr. Gabriel Negatu, EARC

Mr. E. Porgo, Lead Education Specialist, OSHD Mr. C. M. Guedegbe, Chief Education Analyst, OSHD.2 Mr. S. Jack, Chief ICT Engineer, ICT4D Mr. Baba Imoru Abdulai, Principal Procurment Specialist, OSHD.0 Peer Reviewers Mr. Benedict Kunene, Principal Education Specialist, OSHD.2 Mr. Joseph Muvawala, Chief Education Economist, OSHD.2 Ms. Peninah Kariuki, Chief Country Economist, UGFO

TABLE OF CONTENTS

LIST OF TABLES AND FIGURES, CURRENCY EQUIVALENTS, WEIGHTS AND MEASUREMENTS, ACRONYMS AND ABBREVIATIONS, LOAN INFORMATION, PROJECT SUMMARY, RESULTS-BASED LOGICAL FRAMEWORK, PROJECT IMPLEMENTATION SCHEDULE...... i–vii

1. STRATEGIC THRUST AND RATIONALE ...... 1 1.1 Project links with country strategy and objectives ...... 1 1.2 Rationale for Bank’s involvement ...... 2 1.3 Donor coordination...... 3 2. PROJECT DESCRIPTION ...... 4 2.1 Project components ...... 4 2.2 Technical solution retained and other alternatives explored ...... 6 2.3 Project type ...... 7 2.4 Project cost and financing arrangements ...... 7 2.5 Project’s target area and population ...... 8 2.6 Participatory process for project identification, design and implementation ...... 9 2.7 Bank Group experience and lessons reflected in project design ...... 10 2.8 Key performance indicators ...... 11 3. PROJECT FEASIBILITY ...... 11 3.1 Environmental and social impacts ...... 11 3.2 Economic impact ...... 13 4. PROJECT IMPLEMENTATION ...... 14 4.1 Implementation arrangements ...... 14 4.2 Monitoring and reporting ...... 17 4.3 Governance ...... 17 4.4 Sustainability ...... 177 4.5 Risk management ...... 18 4.6 Knowledge management ...... 18 5. LEGAL INSTRUMENTS AND AUTHORITY ...... 19 5.1 Legal instrument ...... 19 5.2 Loan conditions ...... 19 5.3 Compliance with Bank’s policies ...... 19 6. RECOMMENDATION ...... 20

TABLES Table 1.1: Donor Interventions in Education 4 Table 2.1: Project Components………………………………………………………... 4 Table 2.2: Summary of Reasons for Rejection of the Alternatives Considered………. 6 Table 2.3: Summary of Project Cost by Component………………………………….. 7 Table 2.4: Sources of Finance …………………………………………...... 8 Table 2.5: Sources of Finance and Category of Expenditure ………………………… 8 Table 2.6: Expenditure Schedule by Component …………………………………….. 8 Table 2.7: Summary of Project Costs by Category of Expenditure ………………….. 8 Table 4.1: Risks and Risks and Mitigation Measures ………………………………… 19

FIGURES Figure 1.1: Uganda Public ’ Capital Development Funding, 2007–2011... 2 Figure 1.2: Employment Sectors for Graduates……………...………………………... 3

Currency Equivalents As at Appraisal in May 2012

1 UA = UGX 3901 1 USD = UGX 2516 1 UA = USD 1.55

Fiscal Year 1 July – 30 June

Weights and Measurements 1 metric tonne = 2,204 pounds (lbs) 1 kilogram (kg) = 2.200 lbs 1 meter (m) = 3.28 feet (ft) 1 millimeter (mm) = 0.03937 inch (“) 1 kilometer (km) = 0.62 mile 1 hectare (ha) = 2.471 acres

Acronyms and Abbreviations ADF African Development Fund BTC Belgium Development Corporation BTVET Business, Technical and and Training BU Busitema CIAT Centro Internacional de Agricultura Tropical DHTVET Directorate of Higher, Technical and Vocational Education and Training EDP Education Development Partner EPPAD Education Planning and Policy Analysis Department ESMP Environmental and Social Management Plan ESR Education Sector Review ESSP Education Sector Strategic Plan GCI Universities Global Competitive Indicators GDP Gross domestic product GNI Gross national income GoU Government of Uganda GU HE Higher education HEI Higher education institutions HESP Higher Education Strategic Plan HEST Higher education, science and technology ICT Information and communication technology ISP Internet service provider ITEK Institute of Technical Education Kyambogo KYU M&E Monitoring and evaluation MoES Ministry of Education and Sports MoU Memorandum of Understanding MTR Mid-Term Review MU MUBS Business School MUK Makerere University MUST of Science and Technology NCB National Competitive Bidding NCHE National Council for Higher Education NDP National Development Plan 2010/2011–2014/2015 NEMA National Environment Management Agency PCR Project Completion Reports PCU Project Coordination Unit PSC Project Steering Committee PSFU Private Sector Foundation of Uganda QPR Quarterly Progress Report SIDA/SAREC Swedish International Development Cooperation Agency/Department for Research Corporation STI Science, technology and innovation TIs Target institutions (MUK, KYU, MUST, BU, GU, MU, MUBS and UMI) UBOS Uganda Bureau of Statistics UGFO Uganda Field Office of the African Development Bank UMA Uganda Manufacturer’s Association UMI Uganda Management Institute UNCST Uganda National Council for Science and Technology UPK Uganda Polytechnic Kyambogo UPPET Universal Post and Training USE Universal

ii Loan Information

Client’s information

BORROWER: Republic of Uganda

EXECUTING AGENCY: Ministry of Education and Sports

Financing Plan

Source Amount (UA) Instrument

ADF 66.70 million Loan ADF 0.30 million Loan (Resources coming from cancelled resources)

Government of Uganda 7.44 million Counterpart Funds and Beneficiary Institutions

TOTAL COST 74.44 million

ADF’s Key Financing Information USD Loan Currency Commitment Fee 0.50% (50 basis pts.) Other Fees 0.75% (service charge) Tenor 50 years Grace Period 10 years

Timeframe—Main Milestones (expected)

Concept Note Approval 23 March 2012 Appraisal Mission April-May 2012 Project Approval November 2012 Signing December 2012 Effectiveness March 2013 Completion June 2017 Last Disbursement June 2018

iii PROJECT SUMMARY

Project overview. The Support to Higher Education, Science and Technology (HEST) Project aims to contribute to building Uganda’s human capital skills development capacity—particularly in education, science and technology—to respond to labor market demands and spur productivity nationally. Its objective is to improve equitable access, quality and relevance of skills training and research leading to job creation and self- employment. It involves the active participation of six public universities and two degree- awarding tertiary institutions in skills training, at the various levels of higher learning. The strategic outcomes of the project are access to HEST and information and communication technology (ICT) for delivery of HEST and improved quality and relevance of HEST in target public universities and degree-awarding tertiary institutions, leading to stronger links to the productive sector. The project is aligned to the country’s National Development Plan 2010/2011–2014/2015 that aims at making Uganda an industrialized economy in 2025 through the provision of higher level skills. The total cost of the project is UA 74.44 million, and it will be implemented over a five-year period.

Needs assessment. Uganda’s competitiveness in Science, Technology and Innovation (STI) is among the weakest in the East Africa region. The problem stems from the weaknesses in the training of STI capacity. Higher level skills training is mainly done in public universities that are facing major shortfalls such as poor infrastructure and equipment, insufficient qualified staff and inadequate research capacities. Nationally, enrollment in STI programs is below 30%, against an estimated minimum of 40% to have impact in development. Access to higher education (HE) for STI is inadequate, yet the numbers of those who qualify have been growing as a result of improvements in basic and secondary education. Funding to HE by the Government of Uganda averaged 10%–12% of the education budget over the last five years, against requests of at least 20%. The Bank’s support will enable all the six Ugandan public universities and two strategic tertiary institutions to improve their quantity and quality of STI outputs.

Bank’s added value. The Bank has a unique experience and leverage to assist Uganda in expanding and reorienting its HEST institutions to respond to skills development needs. The previous four education operations financed by the Bank have focused on basic, secondary and business, technical, and vocational education and training. The project is aligned to the Bank’s HEST Strategy (2008), the Medium Term Strategy (2008–2012), the upcoming Human Capital Development Strategy and the Long Term Strategy (2013–2022). Assistance from other Education Development Partners to HEST, targeting scholarships and research, does not fully meet the needs in HE and training. The Bank’s assistance in this sector will assist the government at this critical time in its development path, as the investment in HEST will trigger quality in learning and job creation locally and internationally.

Knowledge management. The project will facilitate the creation of quality and relevant skills and knowledge required by the job market. It will fund the increased use of e- learning in a number of courses in the beneficiary institutions. The key interventions that will generate knowledge will include tracer studies in the job market and evaluation research intended to measure outcomes in the use of ICT through e-learning compared with traditional training approaches alone. The project will also fund the development of libraries, thus enhancing learning and research.

iv Results-based Logical Framework Country and Project Name: UGANDA – Support to Higher Education, Science and Technology (HEST) Project. Purpose of the Project: To contribute to building Uganda’s human capital through HEST and skills development to respond to the labor market demands and spur productivity. Project Objective: To improve equitable access, quality and relevance of skills training and research leading to job creation and self-employment. RESULTS CHAIN PERFORMANCE INDICATORS MEANS OF VERIFICATION RISKS /MITIGATION MEASURES Indicator (including CSI) Baseline (2010) Target (2018)

Improved HE 1. % annual increase in those 34.1% 44.1% across HEST indicators M&E reports

system to provide accessing HEST in the country adequate quality human capital 2. Share of people with high-level 1.8% 3.6% Baseline and impact studies required for skills in the labor force (%)

national UBOS abstracts IMPACT development 3. Increase in GDP per capita USD 606 USD 669 1. Increased access 1a. People accessing equitable STI 36,000 (44%) in 71,000 (at least 50% women) Annual project M&E reports Risks: to HEST and ICT training at the university/tertiary FY2010/11 1. HEIs may not sustainably maintain the expanded training for delivery of levels 12,000 (at least 40% women) NCHE annual database facilities HEST 2. All HEIs may not be able to raise their counterpart contribution 1b STI enrollment in full virtual Zero PCR and impact studies NCHE of 4% on time degrees in HEIs annual reports Mitigation Measures 2. Improved quality, 2a. Ratio of researchers per members 1 researcher per 1000 1.5 researchers per 1000. Annual M&E reports 1a. MoES budget to HE to be increased beyond the current 10% efficiency and of the workforce members of the and at least 0.6% of this will be allocated for maintenance relevance of HEST workforce. NCHE database and annual 1b. HEIs to use business production centers to generate alternative in target public 2b. % of HEST students that reports sources of finance to augment GoU funding on maintenance universities and successfully graduate 9.2% 17% (at least 40% women). 2. GoU capital subventions to the HEIs to be used as the project degree-awarding Project QPRs would provide funds for major capital improvements tertiary institutions 2c. Number of public universities ranked between 10 and 12 in Africa Only MUK is ranked 6 public universities ranked in PCR and impact surveys in GCI ratings 12th in Africa in GCI GCI (at least 1 below 10th rating in 2011 position) GCI ratings Component I: 1. Area of STI faculties expanded, Zero 80,000 m2 rehabilitated/ built Project QPRs, supervisions and Risk Improving and improved and equipped in the 8 TIs and equipped audit reports Limited broadband connectivity in TIs leading to weak and costly

OUTCOMES expanding HEST Internet services for e-learning in six public 2. Campus intake capacity in STI 36,000 71,000 (at least 40%) women MTR report universities and faculties in all the TIs Mitigation Measure two degree- NCHE annual reports GoU to speed up implementation of the national broadband awarding tertiary 3. Number of TIs running a full e- Zero At least 3 TIs running full e- backbone to extend the fiber-optic access to TIs and negotiate institutions learning degree program learning degree programs Annual ESR reports with the ISPs concessionary bandwidth rates for HEST institutions through incentive packages 4. Number of gifted students Zero At least 95–160 students NCHE annual reports and QPRs supported to study STI programs supported (40% being women) of the HEST

5. Number of TIs supported to 1 of 8 7 TIs enhance HIV-AIDS sensitisation initiatives

Component II: 1. Number of STI academic staff 1,800 (maters and 1,880 (64 at PhD and 16 at TIs’ staff compliment Risk

Building capacity in trained at masters and PhD degrees in PhD in all TIs) masters level; 40% women for assessment reports Weak retention of trained staff due to unfavorable remunerations public HEST HEST in the TIs both groups) institutions QPRs and supervision reports Mitigation Measure 2. Number of TI staff and MoES HE 30% in TIs and 0 in 35% for TIs and 10% for GoU and TIs are reprioritizing regular review of engagement management staff trained in strategic MoES HE MoES HE (40% women for PCR conditions for staff, especially in STI

OUTPUTS management areas, maintenance and both groups) governance,

v Component III: 1. Number of new STI research 3 At least 5 (one on QPRs and NCHE annual reports Risk Improving quality programs initiated/enhanced in entrepreneurship). Research/innovation networks established may not be sustained and relevance of strategic sectors funded by NCHE PCR HEST in public Mitigation Measures institutions 2. Number of specialized research One viral research 4 research labs established NCHE annual reports a. Strong links with industry and other world class institutions labs/innovation workshops lab funded by Pfizer (one each at MUK, KYU, required so as to generate research and innovation sponsorships developed/improved to carry out exists in MUK MUST and GU) Ministry of Gender and Labour scientific research. . ongoing labor survey report b. Production centers in institutions to create income generating activities for sustainability 3. Number of major STI programs Zero 5 (one for each major STI Revised HESP to 2020 produced linked to the labor market program) by December 31, 2015 Component IV: 1. Existence of strategic plans with All the 8 TIs have Strategic plans with 8 years’ Work plans in TIs Project proposals for 8 year’s work plans in strategic plans with 5 annual work plans for all the . coordination each of the TIs years’ work plans TI’s QPRs . 2. Existence of STI a specific staff MTR report development plan in each of the 8 TIs Zero One in each TI Audit reports 3. Efficient project management team in place None 1 in MOES and 1 in each TI Staff training reports

Component I: Improving and expanding HEST in six public universities and two degree-awarding tertiary institutions (UA 60.82 million) ADF loan: UA 66.70 million ADF loan from cancelled resources: UA 0.30 million (i) Infrastructure construction (lecture rooms, labs, technology workshops, ICT labs, libraries with virtual capabilities, external civil works and utilities GoU: UA 4.46 million expansion) TIs contribution UA 2.98 million (ii) Equipment procurement, installation and operation and maintenance training including for laboratory technology, agriculture mechanization and learning Total UA 74.44 million equipment (iii) ICT infrastructure, equipment, e-learning programs for the TIs, software and training Component I: UA 60.82 million Component II: UA 6.50 million

Component II: Building capacity in public HEST institutions (UA 6.50 million) Component III: UA 5.15 million Component IV: UA 1.97 million (i) 80 academic staff trained at the masters and PhD level, 24 management staff training and retraining at least 40% being women those with special needs (ii) Scholarships offered for 95–160 gifted poor students to study STI in the TIs Total for the project: UA 74.44 million (iii) NCHE capacity improvement in university enrollment data and quality assurance management and tracer studies preparation

Component III: Improving quality and relevance of HEST in public institutions (UA 5.15 million)

(i) Review of Higher Education Strategic Plan (HESP) and two evaluation research studies (ii) Business incubator centers established in TIs, and networks set up with support of PSFU (iii) Research network established with CIAT and other institutions and 10 research publications completed KEY KEY ACTIVITIES (iv) Practical training of students in industry through (v) Initiatives for linking major STI programs with the labor market

Component IV: Project coordination (UA 1.97 million)

(i) Preparation of 8 years’ strategic plans in TIs (ii) Project management and coordination (iii) Financial management, internal and annual external audit (iv) Procurement or goods, works and services and monitoring of activities

vi Project Implementation Schedule

vii

REPORT AND RECOMMENDATION OF THE MANAGEMENT OF THE AFDB GROUP TO THE BOARD OF DIRECTORS ON A PROPOSED LOAN TO THE REPUBLIC OF UGANDA FOR THE SUPPORT TO HIGHER EDUCATION, SCIENCE AND TECHNOLOGY (HEST) PROJECT

Management submits the following Report and Recommendation on a proposed ADF loan of UA 67 million to finance the Support to Higher Education, Science and Technology (HEST) Project in the Republic of Uganda.

1. STRATEGIC THRUST AND RATIONALE

1.1 Project links with country strategy and objectives

1.1.1 The proposed support to the higher education, science and technology (HEST) project is designed within the context of the human capital development priorities of the country. The project is aligned with the priorities of the country’s development agenda, which emphasizes the enhancement of competitiveness of goods and services produced in the country, and the skilling of Uganda for attainment of a knowledge and industrialized economy by 2025. This is to be achieved through improved production of human capital that is critical for growth and poverty reduction. Uganda’s National Development Plan 2010/2011–2014/2015 (NDP) prioritizes agricultural growth; industrialization and value addition; infrastructure; human resource and skills development; and private sector development. At the sector level, the project objectives resonate with those of the Education Sector Strategic Investment Plan (2007–2015), the Higher Education Strategic Plan (HESP) 2003–2015, and the Business, Technical and Vocational Education and Training (BTVET) Strategy 2010, which, among others things, emphasizes the provision of equitable access and the improvement of the quality of business and technical skills in the country.

1.1.2 The focus of the project is to help produce skills that fit the labor market. The project will create strong links between the training institutions and the employment sectors to encourage the higher education institutions (HEIs) to dovetail their programs to actual labor market needs. This project supports improving and expanding university and tertiary education to make it responsive to the economy’s demand for more focused high-level skills. It supports the Government of Uganda’s (GoU) efforts to resolve a key development challenge of inadequacy and irrelevancy of higher level skills produced by the higher education (HE) sectors, particularly in HEST.

1.1.3 HEST is a priority investment sector for Uganda because the country aims to increase its capacity in high-level human capital, currently the weakest in the East Africa region. The absence of high-level human capital is evident from the employment statistics that show that in all key employment subsectors in the private sector; the ratio of Ugandans to foreigners is low as 1:3. The NDP puts special emphasis on “skilling Uganda” through affirmative action in all sectors of education. This policy intent represents a deliberate attempt by the GoU to increase middle- and high-level skilled workers produced in the country by supporting the BTVET Strategy of 2010 and a review of the HESP to 2020. In addition, the GoU has prioritized HEST as one of the key sectors for which it will borrow funds to address the shortage of training places at the university and tertiary levels.

1.1.4 The project targets improving and expanding six public universities and two strategic tertiary education institutions to make them responsive to the demand for more focused skill production as required by the market. It makes higher education more relevant to skills development and employment creation by developing partnerships with the private sector and enhances networks for research. This will make Uganda well linked to 1

other centers of excellence regionally and internationally. This model will ensure that graduates are also suited to jobs beyond the local market, thus contributing to reducing the current youth unemployment, currently at more than 32% of the 392,000 who leave the education system annually. It also encourages the use of information and communication technology (ICT) in training, improving efficiency in delivery while lowering the demand for massive building infrastructure and also opening job opportunities for graduates beyond the local markets.

1.1.5 The project conforms to the key policies of the Bank and its assistance strategy for Uganda. The Country Strategy Paper 2011–2015, closely aligned to the NDP, is anchored on two pillars of developing infrastructure and improving skills for poverty reduction. It highlights resource challenges and pinpoints activities that will contribute to building an optimal level of the human capital stock required to achieve sustainable growth. It is also in line with the Bank’s priorities as stated in its Medium-Term Strategy 2008–2012, the draft Long Term Strategy and the Higher Education, Science and Technology (HEST) Strategy that emphasize the need for the Bank to invest in vocational training, higher education, science and technology. Further, the project is in line with the Human Capital Development Strategy of the Bank (under development), which focuses on developing relevant human capital through new methods in education, which will contribute to graduates suited to jobs (or create jobs) beyond the local markets.

1.2 Rationale for Bank’s involvement

1.2.1 With the proposed project, the Bank is addressing a pressing need to help build the human capital needed by Uganda for its socioeconomic development and poverty reduction agenda. The project aims at producing more skills in science and technology to respond to increased demand from the labor market and at promoting the development of a knowledge-based economy. According to the NDP, student enrollment in higher and tertiary education rose from 96,826 students (43% women) in 2006 to 136,041 students in 2011 (44% women). Of these, 60% are enrolled in the five public universities targeted by the project, while the rest are in the 27 private universities. The rapid growth in student enrollment in university has not been matched with improvements in infrastructure, equipment or staffing. GoU funding to HE has been averaging 10%–12% of the education budget over the last five years, against requests of at least 20%. In nominal terms, the FY2012/13 sector Medium Term Expenditure Framework increased by 6%. However, in real terms, this is considered a stagnating or declining budget when viewed against the current inflation rates in 2012/13 (18.6% for the 12-month period ending in January 2012), the high population growth (3.2% a year), and the improvements made Figure 1.1: Public Universities' Capital through education policies leading to Development Funding, 2007–11 high enrollment ratios. As shown in Source: MoES Ministerial Policy Statements. figure 1.1, in the same period, capital

12 development funding to the public 10 universities grew only marginally, with 8 allocations being focused to specific 6 1 interventions. Overall, the universities 4 could not match demand for 2

infrastructure with allocations. 0 Amount in UGX billions UGX in Amount MUK KYU MUST GU BU MUBS UMI 1.2.2 Most of the Ugandan HEIs have low access to ICT. Despite the HESP 2003–2015 requirement that universities

1 In 2010 and 2011, MUK and MUBS had higher funding, as they were building university libraries. BU had substantial funding in 2008 to address critical renovations to the facilities, while KYU has not had any major funding at all. 2

maintain an ICT equipment ratio of at least 1 computer to 10 students by 2010, and 1 to 5 by 2015, at this appraisal, only Makerere University (MUK) had attained this requirement with a ratio of computers to students of 1:7. In Mbarara University of Science and Technology (MUST) the ratio was 1:23, and in Gulu University (GU) it was 1:34, while in Kyambogo University (KYU) and (BU) the indicators are far lower, as they have only limited computers. The project would reduce this anomaly by making ICT equipment and networks available to all the target institutions (TIs) to an average ratio of at least 1:10.

1.2.3 Uganda’s economy is mainly dependent on primary production with little value addition due to inadequacy of technologists and scientists in the country’s training programs. Programs in science, technology and innovation (STI) are concentrated in the five operational public HEIs. An additional three private universities host a limited number of science-based courses. According to National Council of Higher Education (NCHE), in 2010 only about 30% of the students in HE were enrolled in STI programs, yet it is estimated that a country needs at least 40% of its training capacity in STI in order to have a significant impact on the economy.2 Enrollment in technology programs is even lower, estimated at only 9% in 2010. As shown in figure 1.2, jobs in Figure 1.2: Employment Sectors for Uganda are concentrated in the primary and Graduates service sectors. Skills to turn the primary Source: National Council for Higher Education 2010. and service sectors into high labor demand 4% sectors are thus critical. Agriculture and 21% manufacturing are poorly developed, and Service yet they should be the take-off sectors for Primary the economy. There is therefore a need for Manufacturing more STI graduates at the tertiary level to 75% improve productivity and create jobs in these sectors.

1.3 Donor coordination

1.3.1 Donor coordination in the education sector is strong and plays a key role in policy formulation, funding and monitoring. All Education Development Partners (EDPs) coordinate their activities with a view to promoting synergies and avoiding duplication and contradictions. The EDPs comprise all the major partners in the country. They jointly signed a Memorandum of Understanding (MoU) in 2010 toward collaboration. In full consultation with the government, they support all subsectors of education as per the Education Sector Strategic Plan (ESSP) 2007–2015. The EDPs’ coordination mechanism is effective with a rotational chair and a co-chair, with the Belgian Embassy as the current chair. They use general various modalities for their support to the government. General budget support has lately declined due to weakening governance in the country. Partners prefer sector budget support or projects. A BTVET Strategy (2011) supported by the World Bank and the Belgian Development Corporation (BTC) has enabled more EDPs to mobilize resources for skills development. The AfDB is taking the lead in HEST through this project. There are also various direct partnerships between some of the chosen universities and other donors like the Netherlands Embassy, Carnegie Corporation, BTC, SIDA/SAREC, Chinese Embassy and World Bank (Millennium Science Initiative), among others. These activities complement this project. None of the EDPs have addressed issues of access and quality at the HEST level, thus AfDB will address a niche not catered to before. The EDPs’ monitoring and evaluation (M&E) is conducted on an annual basis through the Joint Sector Reviews and the annual Education Sector Review. But the capacity of the Ministry of Education and Sports (MoES) to implement all ongoing activities to absorb all funded programs on time needs capacity

2 NCHE. 2010. The State of Higher Education and Training in Uganda Report in 2010. . 3

reinforcing so that programs do not overrun their time. Table 1.1 and Appendix III show interventions by various donors in related areas in education.

Table 1.1: Donor Interventions in Education Total amount Donor (USD contribution Donor 729.44) (%) Funding modality Subsector Region UNICEF 9.50 1.0 Project support Primary education National Irish Aid 3.00 0.0 Budget support Primary education National ILO 0.48 0.1 Project support Primary education National Netherlands 5.10 0.7 Project support Primary education National USAID 50.00 6.9 Project support Skills development and HIV/AIDS National UNFPA 0.50 0.1 Project support Sex in education in primary National UNHCR 0.88 0.1 Project support Primary education National AfDB 85.00 11.7 Project support Secondary and BTVET National JICA 0.70 0.1 Project support Secondary – science and maths National Budget support and Belgian 42.88 5.9 projects Primary, Secondary and BTVET National GIZ- Germany 5.10 0.7 Project support BTVET and PPPs National Budget support and Skills development in primary and EU 246.30 33.8 projects postprimary National World Budget support and Primary, secondary, BTVET and Bank 280.00 38.4 projects tertiary National Source: EDPs Sector Map July 2012.

2. PROJECT DESCRIPTION

2.1 Project components

2.1.1 The sector goal is to contribute to building Uganda’s human capital through HEST and skills development in order to respond to labor market demands and spur productivity. The objective of the project is to improve equitable access, quality and relevance of skills training and research leading to job creation and self-employment. The Project consists of four components and the key activities under each component are outlined in table 2.1. (Technical Annex B2 provides detailed description of project activities.)

4

Table 2.1: Project Components Component Description Component I: (a) This component will expand equitable access to science and technology training and research. It will also Improving and enhance access to HEST through rehabilitation and expansion of STI learning facilities totaling 80,000m2 in six expanding HEST universities (MUK, KYU, MUST, GU, BU and MU) and two degree-awarding institutions (UMI and MUBS). The in six public facilities to be addressed are laboratories, lecture spaces, technology workshops, e-learning centers, virtualized universities and libraries, faculty offices and business incubator/production units. two degree- (b) The rehabilitated/expanded facilities will be equipped to optimum performance in their functions. awarding Improvement of ICT connectivity and equipment leading to increased access and quality of training in these programs institutions will be supported for an additional 35,000 students. The project will support 475 scholarship years of UGX 10.0 (UA 60.82 million each amounting to a total of UA 1.20 million for students to participate in strategic areas of STI at the million) undergraduate or postgraduate level and those with special needs. In both cases, 40% of the beneficiaries will be women. The scholarships will be divided equally to all the eight participating institutions and will be tenable in the project institutions and would benefit 95–160 students studying in the TIs with 20% being at the postgraduate level. (c) ICT broadband backbone and networks together with relevant equipment will also be supported to widen learning methods through e-learning options. STI departments will be equipped with ICT laboratories that enhance learning beyond the campus. Under e-learning, partnerships will be enhanced with various leaders in this line. The project would encourage blended teaching and learning, use of Moodle3 and “cloud computing,” which reduce cost of ICT infrastructure per site. (d) The component will also support the creation of utility networks and their storage, such as power supply and the stabilization/alternatives needed to attain stable learning. Environmental management—which includes fire protection, adequate water and sanitation, waste handling and “greening” of the critical learning system—are also addressed. (e) The design and construction of the facilities will ensure the coverage of gender and HIV/AIDS activities. Those for special needs groups will also be supported to enhance participation of women, as well all the other vulnerable groups to access STI programs in the universities. Component II: The component will support postgraduate training and specialized skills of HEST faculty staff in the TIs. Building capacity (a) Training at the local and regional levels will focus on STI staff and critical areas of institutional management, in public HEST entrepreneurship, governance, public-private partnership development models, maintenance and sustainability. Training institutions will constitute 80 scholarships for STI teaching and research staff and 24 for institutional management staff, at least (UA 6.50 million) 40% will be dedicated to women and persons with special needs. (b) The capacity of the Ministry of Education’s Higher Education Department and the NCHE will be supported to handle tertiary education data and tracer studies of graduates. One staff scholarship for capacity in monitoring, and data management skills will be supported and one technical assistance for ICT/data management for 60 months. ICT equipment to provide a suitable database will also be funded. Component III: The component will strengthen applied research and innovation in STI and improve the relevance of HEST. Improving quality (a) It will finance the initiation of at least five new STI programs with one being entrepreneurship and the review and relevance of of the current HESP 2003–2015 to new HESP 2015–2020. As part of the review, two studies preceding and informing HEST in public the HESP will be undertaken. The studies will include an impact evaluation on various forms of e-learning and how it institutions can be used to harness higher efficiency in HEST. The other study will focus on the use of enrollment and completion (UA 5.15 million) databases in various STI programs to project the impact of HEST in national development. (b) The component will also support the establishment of relevant networks and partnerships with the productive sector, especially in the industry sector, and other worldwide institutions of excellence in their fields. The project will support the establishment of appropriate structures in the TIs for enhancement of production/business incubation centers emerging from research and technology innovations. Eight entrepreneurship incubator centers will be established. Partnership with the Private Sector Foundation of Uganda would be established through a Memorandum of Understanding (MoU) to support the activities and establish links with relevant industries/private sector. (c) Interuniversity links and links with centers of excellence in applied research will be supported. Through a MoU, links between CIAT at Kawanda and MUK and GU will be undertaken. The links will be established and strengthened to enable the institutions to carry out research on tropical agriculture beyond the normal learning process and to multiply research outputs in industry. At least 10 postgraduate scholarships will be supported for relevant research to be undertaken through this link in a five-year period. An estimated 10 STI publications will also be supported in five years. (d) The subcomponent will also support practical training/supervision of students in industry through a well- designed internship program for at least five STI programs. A MoU will be signed between the Uganda Manufacturers’ Association and the MoES to support the placement of students in industry for the internship program. An estimated 2,000 students will benefit from the internship in the five years. Component IV: This component will finance the formulation of strategic plans with proposals for eight years’ work plans and STI-specific staff Project development plan in each of the TIs and project management and coordination. The project management activities will include, management and among other items, coordination needed for implementing the overall project, audit, and M&E. It will support gender, HIV, and coordination special needs person’s activities, and the student scholarships and ICT activities coordination. Technical assistance for project management and the Project Steering Committee activities would also be supported. Capacity development of the MoES staff (UA 1.97 million) responsible for the project implementation and the recruited technical assistants would also be supported.

3 Moodle is a free easy to install, open-source web application for producing modular Internet-based courses that support a modern social constructionist . It is a course management system, also known as a learning management system or a virtual learning environment. While copyrighted, Moodle can be copied and modified to suit the virtual learning environment desired, provided the user also agrees to provide the source to others to use. Virtual universities like the African Virtual University and the Virtual University of Uganda are using the same format. “Cloud computing” refers to ICT technology that uses the Internet and central remote servers to maintain data and applications and convert print-based content to digital media. 5

2.2 Technical solution retained and other alternatives explored

2.2.1 The project considers a combination of improving physical infrastructure and ICT systems use as a means of expanding access and inclusiveness in higher education. This is a departure from the traditional institution-based training that excludes many vulnerable groups in the community (youths, women, retirees and persons with disabilities). It stresses expanding scientific, technology and library facilities and the use of ICT (through e-learning and virtual libraries) as efficient technical solutions to offer training at the university level. The blended model of in-class training and distance learning through e- methods is emphasized because not all high school leavers in Uganda would be proficient in the use of ICT to be able to take on e-learning approaches alone as they join university. Strong focus on ICT-based learning through all the programs will result in STI graduates who are compliant with the future work environment that extends beyond the reachable geographical zones as more and more enterprises migrate to the worldwide web,4 where they are accessible through ICT networks.

2.2.2 The project will support programs that are strategic in areas where the country has a comparative advantage. Agriculture, mining and oil production, entrepreneurship, manufacturing and processing, technical and , applied nutrition, information technology and health care are targeted in this operation. Uganda seeks to become industrialized by 2025, which requires retargeting its development of human capital.

2.2.3 The project also emphasizes the model where universities develop their business incubator/production units. This will spur income generation for the institutions through business creation as well as impart the requisite skills to trainees. In this regard, private partnerships would be encouraged to support the business incubator activities, and also in curricula design to make programs at HEIs responsive to business thinking. The MoES will negotiate Memorandums of Understanding (MoUs) with the Uganda Manufacturer’s Association (UMA) and the Private Sector Foundation of Uganda (PSFU) to support the industrial links and incubator/production units at the Tis, respectively. Another MoU with Centre for Tropical Research in Agriculture (CIAT) will provide research extension in agriculture. (Technical Annexes C8 and C9 provide details of the activities to be supported by UMA, PSFU and CIAT.)

2.2.4 The project introduces evaluation research intended to measure outcomes in the use of e-learning compared with traditional training approaches alone. It will use available statistical data on education enrollment, completion and employability of graduates to assess the impact of higher education in the country’s development. Table 2.2 summarizes the alternatives considered and reasons for their rejection.

4 Often referred to as the “cloud,” as the businesses are not necessarily physically located in the employee’s location but are accessible through the Internet systems. 6

Table 2.2: Summary of Reasons for Rejection of the Alternatives Considered Alternative Brief description Reasons for rejection Providing The approach would provide quality This approach was not preferred because of the poor knowledge through and relevant education through e- physical infrastructure in the HEST institutions and the e-learning options learning thus reducing the need for weak institutional capacities and competencies in ICT in the alone expanding infrastructure for country. E-learning will be developed gradually as the ICT physical space infrastructure and competences needed are being progressively built up Investing the ADF This would involve putting the This approach was found inappropriate as only three funds through a funding into a Sector Pool and leave institutions had capacity in financial management and Sector Budget project management activities into procurement. It was found easier to improve capacity at the Support method the mainstream operations of the MoES for project management than undertaking this in all benefiting institutions the eight TIs Supporting both The approach would mean that the Currently 95% of all STI programs are in public private sector and ADF funding will support both universities. The 27 private universities host about 5% of public universities public and private universities in the STI activities, so there is value for money in investing the with this funding country HEST funds in the public institutions

2.3 Project type

This project is an investment operation designed to increase access and improve the quality and relevance of higher education in Uganda. The ESSP 2007–2015 places a strong emphasis on basic, secondary and postsecondary training, where the AfDB has participated in Education I, II, III and IV projects. This project focuses on HEST where development partners’ interventions have been limited. It will spearhead funding of HEST through the normal ministerial budget arrangement as a project system. The project approach would guarantee that the funds are targeted to the areas identified by the government. As this funding will also support the review of the HESP to 2020, to make STI programs prominent, it will spur further interventions into the HEST sector either through other projects or sector budget support.

2.4 Project cost and financing arrangements

2.4.1 The total cost of the project, net of taxes and customs duties is estimated at UA 74.44 million. An amount of UA 56.56 million is in foreign exchange and the balance of UA 17.88 million is in local currency.5 The project costs are based on MoES estimates, using the latest available tenders in the TIs. A physical contingency of 5% is included in project costs for all categories of expenditure. Price contingencies of 8% are estimated based on an annual 6.5% inflation rate for local and foreign exchange costs. Given that project costs were estimated in USD, these contingencies provision are considered adequate. A summary of cost estimates is presented in tables 2.3–2.7.

Table 2.3: Summary of Project Costs by Component (UA million) COMPONENTS UA million % total % F.E. F.E. L.C. Total costs I. Improving access in HEST in six public universities and two 42.57 11.25 53.82 72.3% 79.1% degree-awarding tertiary colleges II. Building capacity in public HEST institutions 1.50 4.25 5.75 7.7% 26.1% III. Improving quality and relevance of HEST in public 4.56 0.00 4.56 6.1% 100.0% institutions IV. Project management and coordination 1.42 0.32 1.75 2.3% 81.0% Base cost 50.05 15.82 65.87 88.5% 76.0% Physical contingency 2.50 0.79 3.29 4.4% 76.0% Price contingency 4.00 1.27 5.27 7.1% 76.0% TOTAL COST 56.56 17.88 74.44 100.0% 76.0%

5 For the purpose of costing, all items have been priced in U.S. dollars (USD) and converted into Units of Account (UA) at the Bank’s exchange rate for May 2012. 7

2.4.2 The project will be financed jointly by the ADF (UA 66.70 million of loan from ADF-12 and UA 0.30 million of loan resulting from cancelled resources), the GoU (UA 4.46 million) and the TIs (at least UA 2.98 million). Table 2.4 indicates the source of financing for the project. The ADF loan will finance 90% of the total project cost and will comprise UA 56.56 million in foreign exchange representing 76% of total project costs and UA 10.44 million in local currency representing 14% of total project costs. All foreign exchange requirements for the project will be borne by ADF funds. GoU funds would be used to finance activities in component II and IV, which are of a recurrent nature, while beneficiary institutions funding will be used in component I activities, which will start before loan effectiveness declaration.

Table 2.4: Sources of Finance (UA million) SOURCE F.E. L.C. Total % GoU and TIs % of total ADF loan 56.56 10.14 66.70 89.6% ADF loan from cancelled resources 0.30 0.30 0.4% GoU MoES 0.00 4.46 6.0% 7.44 10.0% Beneficiary institutions 0.00 2.98 4.0% Total 56.56 17.88 74.44 100.0% Percentage 76% 24% 100%

Table 2.5: Sources of Finance and Category of Expenditure (UA million) ADF & CATEGORY ADF LOAN GoU GoU % of total % of total % of % F.E. of F.E. L.C. Total cost LC cost Total category Total A. Goods 25.45 0.00 25.45 34.2 0.00 0.00 25.45 34.2 100.0 B. Works 23.71 10.44 34.15 45.9 0.00 0.00 34.15 45.9 69.4 C. Services 6.04 0.00 6.04 8.1 7.08 9.51 13.12 17.6 46.0 D. Operating Costs 0.15 0.00 0.15 0.2 0.36 0.49 0.52 0.7 29.7 E. Miscellaneous 1.21 0.00 1.21 1.6 0.00 0.00 1.21 1.6 100.0 TOTAL 56.56 10.44 67.00 90.0% 7.44 10.0% 74.44 100.0% 76.0%

Table 2.6: Expenditure Schedule by Component (UA million) COMPONENT Year 1 Year 2 Year 3 Year 4 Year 5 TOTAL % TOTAL I. Improving access in HEST in six public universities and two degree-awarding 5.81 12.20 18.47 15.34 9.00 60.82 81.70 tertiary colleges II. Building capacity in public HEST 0.70 1.31 1.92 1.60 0.97 6.50 8.74 institutions III .Improving quality and relevance of 0.52 0.98 1.55 1.26 0.74 5.15 6.92 HEST in public institutions IV. Project management 0.41 0.40 0.40 0.40 0.36 1.97 2.64 TOTAL 7.44 14.89 22.34 18.60 11.07 74.44 100 10.0% 20.0% 30.0% 25.0% 15.0% 100.0%

Table 2.7: Summary of Project Costs by Category of Expenditure (UA million) CATEGORY F.E. L.C. Total % Total % F.E. A. Goods 22.52 0.00 22.52 30.2 100.0 B. Works 21.05 9.15 30.20 42.0 70.4 C. Services 5.27 6.35 11.62 14.9 42.9 D. Operating Costs 0.14 0.32 0.46 0.5 36.2 E. Miscellaneous 1.07 0.00 1.07 0.8 100.0 Base Cost 50.05 15.82 65.87 88.5 76.0 Physical Contingency 2.50 0.79 3.29 4.4 76.0 Price Contingency 4.00 1.27 5.28 7.1 76.0 TOTAL COSTS 56.56 17.88 74.44 100.0% 76.0%

2.5 Project’s target area and population

The proposed project will benefit about 40,000 high school students graduating annually. These will be the students eligible for admission to GoU tertiary institutions countrywide, together with a postgraduate community of 1,800 in the HEIs. The project will 8

expand and improve the quality of delivery at HEST at five operational public universities (MUK with student enrollment of 40,000; KYU 27,000; MUST 3,700; BU 2,500; GU 4,000) and two strategic degree-awarding institutions (UMI with enrollment of 5,000, and MUBS 13,600), and the new Muni University in the West Nile region, which would enroll about 3,000 by 2018 into centers with improved learning environment. An average of 35% of the enrollments listed are female. An estimated 2,000 students will receive internships in industry, while 95–160 needy students will receive scholarships to study STI programs in the public universities, with 10 of them being funded through a link with CIAT. This will lead to more than 71,000 graduates (at least 40% being women) benefitting with training that will make them become high-level manpower in STI to respond to the scarcity of these skills in the labor market. Eighty faculty staff and 24 management staff will also receive scholarships for training at the masters and PhD levels, with at least 40% being women and persons with special needs. The project would also enable the university community in the eight institutions to have access to ICT for education and information management, making them better suited for employment globally. Other beneficiaries of the project include the families of all students, the teaching staff and prospective employers. The families of students who succeed in completing their studies in the TI’s will have enhanced their possibilities of increased lifetime earnings.

2.6 Participatory process for project identification, design and implementation

2.6.1 The project has been developed through an extensive participation of key stakeholders. Throughout the stages of identification, preparation and appraisal of the project, the project team consulted widely with the view to enhancing ownership of the project. A consultative workshop during the preparation mission chaired by the Minister of Education and attended by all major stakeholders also provided a key forum for shaping the project. During identification and appraisal missions, visits were made to all beneficiary institutions and meetings involving the institutional leadership were carried out. Further working meetings were held with technical departments, which provided all the required details for the prioritized sectors of the institutions. All the proposals being funded have been prepared by the beneficiary institutions after thorough consultations processes with their management boards and faculties. Consultations were also made with the EDPs, and a special consultation on the project appraisal was held with the tertiary education working group of the Uganda Communication Commission, Uganda National Council for Science and Technology (UNCST), Ministry of Gender, Labour and Social Development, the Uganda Industrial Research Institute, among others. These consultations helped identify the priorities, constraints and opportunities that informed the design of the project.

2.6.2 Consultations with the private sector were held with the UMA, PSFU and CIAT.6 These addressed the nature of programs at the HEST institutions and the suitability of graduates for the labor market. Consultation with the CIAT focused on the application of research from universities and how this research could be rolled out to industry for multiplication.

2.6.3 The project design includes specific provisions to address the key issues noted from the consultations. The implementation arrangements include the creation of a Project Steering Committee (PSC) to provide strategic guidance during implementation. The project’s monitoring arrangements also provide for beneficiary involvement as well as technical support for ICT use in education, staff development and capacity-building technical

6 UMA and PSFU are member organizations where all major industrialists in the country are members. They will enhance links of universities to these and support placement of interns and organize forums where industry works closely with the universities. CIAT works closely with government research institutions in agriculture. It has state-of-the-art laboratories and networks with worldwide researchers and production companies, thus it would add value to selected university programs to be extended to industry. 9

assistance at the MoES, support to monitoring of enrollment and student data by the NCHE, and monitoring of links with industry by the UMA, PSFU and CIAT in research for agriculture. The EDPs will also be appraised constantly through the annual education sector review data.

2.7 Bank Group experience and lessons reflected in project design

2.7.1 The project would be the fifth Bank Group–financed operation in the education and training sector in Uganda since 1990. The first project, the Strengthening of Scientific and Technical Project, with an ADF amount of UA 12.90 million, rehabilitated the faculties of science, technology and education at MUK, the Uganda Polytechnic Kyambogo (UPK) and the Institute of Technical Education Kyambogo (ITEK). The project was a catalyst in the transformation of UPK and ITEK into what is now KYU. The second project, approved in 2000, was the Education Sector Investment Plan, with an ADF operation of UA 22.38 million. It supported increasing the primary school intake; mainstreaming integrated production skills and agriculture in primary and secondary education; and improving science education teaching in rural girls’ secondary schools. The third project, approved in 2005, was the Support to the Post-Primary Education and Training, financed with a grant of UA 20.00 million. It provided increased and equitable participation in postprimary education and training expansion of 16 institutions and construction of 25 seed secondary schools. The fourth operation, approved in 2008, is the Post-Primary Education and Training Improvement and Expansion, financed with an ADF loan of UA 52.0 million. Its main goal is to provide increased and equitable participation in postprimary education and training through the expansion of 42 existing secondary schools and 2 BTVET institutions and the expansion and construction of 27 seed secondary schools. KYU also benefited from activities of the ADF-supported African Virtual University.

2.7.2 Several lessons have been taken into account in designing this project. The Bank gained valuable experience in the design and implementation of the above projects. All these projects have increased outputs at the secondary level with a large number of secondary graduates. These students require further training, hence the need to intervene in HEST. The project also would also strengthen the previous investments, which were made through Education I project at MUK and KYU. (See statistics on enrollment growth in Technical Annex A.2). The main lessons are the need to address issues of effective and stable project management by putting in place a dedicated project team within MoES; the need for adequate field supervision; effective borrower’s commitment to project implementation and counterpart funding obligations; strong community ownership and participation in project activities; close sector-donor cooperation and coordination; concentration in secondary and BTVET sectors over more than two project cycles enabled the Bank to be a leader in the sector; and funding through a project arrangement has better value for money in Uganda than using a sector or general budget support. This conclusion is reached through assessments made by the EDPs and the GoU through the joint education sector reviews where facilities supported by the ADF have been found to be of higher quality compared with those funded by other EDPs for the same amount of funds spent. The withdrawal of some EDPs from the budget support mechanisms in 2011 attest to the lessons that the AfDB’s concentration on projects is appropriate and has higher returns.

2.7.3 The current AfDB portfolio in Uganda of UA 792.34 million is rated as satisfactory (2.5 of 3.0).7 For the education sector, the recently closed Education III and the ongoing Education IV are rated at 2.94 and 2.72, respectively. The Project Completion

7 AfDB. 2011. “Country Portfolio Implementation Plan Report, September 2011.” Kampala. 10

Reports for Education I, II and III projects have been prepared, and the achievements are detailed in Technical Annex C.13.

2.7.4 Disbursement would be enhanced if design consultants for works are recruited early. This approach is adopted in the HEST project by involving the TIs in the initial activities of master plan development and design of the priority facilities. This will lead to enhanced start-up of the project. The HEST project also ensures that there is effective management having dedicated project staff as opposed to staff already fully engaged in other activities.

2.8 Key performance indicators

2.8.1 The project results-based logical framework contains key impact, outcome and output indicators. The main outcomes indicators are the number of people accessing equitable STI training at the university/tertiary levels; STI enrollment in full virtual degrees in the TIs; an increase in the ratio of researchers per members of the workforce; percentage of HEST students that graduate; and number of public universities ranked between 10 and 12 in Africa on the Global Competitive Indicators rating. The output indicators include area of STI faculties expanded, improved and equipped in the eight TIs; number of STI academic staff trained at the masters and PhD level in HEST in the TIs; number of BI staff and MoES HE management staff trained in strategic management areas, maintenance and governance; number of new STI research programs initiated or enhanced in strategic sectors funded by NCHE; and number of major STI programs linked to the labor market.

2.8.2 Progress on achieving these indicators will be monitored through the MoES’s M&E system. The system is coordinated by the Education Planning and Policy Analysis Department (EPPAD) of the MoES and supported by the NCHE, the institution mandated to monitor quality assurance in HEST provision in Uganda. The NCHE will evaluate access, staff compliment, computer-to-student ratios, learning and laboratory space per student, and research activities initiated as impact indicators. The project is also funding an impact evaluation study that will generate knowledge and indicators to measure performance and achievements in the use of e-learning in delivering HEST. Details of the project monitoring arrangements are described in section 4.6, while the outline of the impact evaluation study is summarized in Technical Annex C.5.

3. PROJECT FEASIBILITY

3.1 Environmental and social impacts

3.1.1 Environment. The project is classified as category II according to the Bank’s environmental guidelines. Activities under the project will expand access through new constructions at the eight institutions, mainly lecture space, labs, libraries, workshops, ICT infrastructure and business incubator centers. Rehabilitating old facilities would also improve the environmental conditions for learning in the institutions. Disposing of outdated equipment will be done in accord with the National Environment Management Authority (NEMA) regulations leading to the use of better equipment, which are more energy-efficient. The project promotes using sustainable technologies, which will reduce the impact on the environment and lower maintenance costs. The information provided in the Environmental and Social Management Plan (ESMP) includes mechanisms for identifying adverse environmental and social impacts associated with the implementation of activities and how they will be mitigated. (Technical Annex B8 provides more details on the implementation activities based on the ESMP.)

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3.1.2 Climate change. The project will have a minimal negative impact on climate change. The universities like all other institutions in the country are required to adhere to the provisions of NEMA. These regulations address pollution concerns and the unchecked use of natural resources that maintain a balanced ecosystem. Through this operation, outdated equipment will be replaced with more efficient ones, improving energy use. Increased use of ICT will also contribute to the reduction of paper use, and circulation of people, which will cut down on fossil fuel requirements. Further, the HEST programs in all the TIs include training on various courses supporting environmental resource management and appropriate technologies adoption. Graduates with this knowledge will be mindful of climate change impacts in their operations.

3.1.3 Social. The project will contribute greatly to the attainment of Uganda’s NDP 2010/2011–2014/2015 and Vision 2025, which aim to make the country a knowledge economy. Investments in higher education and skills development will derive more economic and social benefits by enabling Uganda to raise productivity in key production sectors and to compete in the global market. Currently 75% of employment is in primary sectors, where little value addition is done. The enhanced STI training at the university level will contribute to a knowledge-based economy through skilled manpower, which is expected to add value in the production chain. The strategy adopted will create a platform for greater collaboration between universities and the labor markets, which will have the effect that future graduates are better suited for these markets. The TIs would become skills and entrepreneurship training grounds through the incubator and production centers. This approach could change the apparent notion in the country that graduates leave tertiary institutions without adequate skills, and thus they remain unemployed for long periods or are employed in jobs that their skills do not match.

3.1.4 Special needs persons. Persons with disabilities would also be supported to participate in HEST training through special equipment, appropriate modification of infrastructure and ICT tools. KYU, with 82 persons in special programs for training of teachers for special needs education, would be supported to enhance these programs. Special equipment would be provided for the production unit for the blind. The support would enable production of Braille-embossed documents to be used by the blind countrywide and beyond. Special ICT equipment would also be provided to support the special needs programs. In all the TIs, new multistory learning facilities would be fitted with ramps or lifts so that they are more accessible by all groups. In GU and MU, bridging courses for female participants would be emphasized to connect students from postconflict areas of the country with HEST, as schools in the region may have lost capacity to deliver science education to many in the pre-2006 conflict period. Further, campus master plans should ensure that no persons are displaced from their settlements because of this project.

3.1.5 Gender. The project will help address gender disparities in HEST. Higher education and affiliated institutions in Uganda have an enrollment of about 44% women, but it is less than 30% in STI programs, while in some arts programs women are the majority, at 57%.8 Women are also poorly represented among the academic staff, with representation below 15% in STI programs. This project would emphasize affirmative action for improving the participation of female students in STI and in training of staff. A ratio of at least 40% will be maintained in favor of women candidates in support to staff development and poor students’ scholarships. In the newer TIs, the project encourages private partnerships with the institutions for the construction of hostels for students, with female students and those with special needs being given priority. Under the entrepreneurship incubator centers and internship programs, female students and those with special needs will be given special

8 NCHE. 2010. The State of Higher Education and Training in Uganda Report in 2010. Kampala. 12

consideration. Bridging programs will be set up to enable these vulnerable groups to participate in the skills training. Particular attention will also be taken in the design of learning buildings so that toilet blocks have special consideration for female and persons with special needs. Through e-learning, women who may be constrained from in-class participation would be enabled to study. (Technical Annex C.7 details the gender activities and scholarship arrangements.)

3.1.6 HIV/AIDS. The project would enhance the TIs’ programs for awareness, counseling and management of HIV/AIDS. Four of the TIs are already developing HIV/AIDS strategies for the institutions, while MUK has a strategy in place. Selected activities, which have maximum impact on reducing the incidence of HIV/AIDS, would be supported based on expressed needs. The core activities to be supported include essential supplies, counseling services and awareness creation materials so that all students and staff in the institutions are well aware of the situation, and that no student is denied access to training. (Annex C8 describes the HIV/AIDS interventions to be supported.)

3.1.7 Involuntary resettlement. No people will be displaced by the project. The activities supported by the project will be taking place in the already existing institutions where the land has no third party claims.

3.2 Economic impact

3.2.1 Investments in HEST in Uganda have a positive economic impact because public investment in higher education will improve the productive ability of the country through systematic acquisition of knowledge and skills. Skills are positively related to innovation, productivity and growth. Thus, investment in higher education has the potential to lift productivity and competitiveness by providing the high-level skills demanded by the labor market—and by launching or expanding robust research needed for innovation and higher productivity (and growth). Uganda has been on an increasing growth trajectory since the 1990s but it still faces the challenges of maintaining growth and moving up the income ladder, both of which require improvements in productivity. Increased investment in higher education is critical in this effort because it provides the high-level skills and research to apply current technologies and to assimilate, adapt and develop new technologies, two key drivers of productivity. This HEST project enhances this argument, by ensuring the provision of the actual skills, such as STI and high-level competence in ICT use in all learning. It therefore would lead to high economic and financial outcomes for the country. (Technical Annex B.7 provides the key underlying assumptions of the economic feasibility model used.)

3.2.2 The project is economically sound and beneficial to HEST in Uganda. It will contribute to the GoU’s goal of improving HE to provide adequate quality human resources for development by increasing the number of those enrolled in STI programs at university level from 36,000 in 2011 to 71,000 in 2018 through normal on-campus contact and another 60,000 more through e-learning. These graduates will be available for relevant science and technology work in the country and internationally. The project’s main benefits are drawn from efficiency gains as more results will be achieved through the delivery of up-to-date and relevant education programs in the subsector level. At the institutional level, increased enrollment will lead to an estimated extra revenue of UGX 72 billion by 2018.

3.2.3 The project will also have a direct impact on employment in the short, medium and long run. In the short run, it will generate an estimated 7,000 STI graduates per year, and if 30% join the private sector as self-employed, they could create more than 2,100 jobs a year as single entrepreneurs or more than 6,300 jobs if creating micro businesses of at least three persons each. In the medium term, the project will lead to more than 71,000 employees 13

and job creators when the whole cohort enrolled by 2018 has graduated. An estimated 20% more lecturers would also be employed in the universities if the current establishment performance of 40% improves to 60% per university as expected after this intervention. In addition, due to improved ICT, the TIs would bring out more competent graduates that can create jobs through e-business or join jobs beyond regional boundaries.

3.2.4 The project supports the GoU’s commitment to increasing access to and improving the quality and relevance of HEST as a vehicle for poverty alleviation. Poverty and education are highly correlated, with poverty being both the cause and effect of low levels of education. Currently 90% of students in public universities, and all students in private sector tertiary institutions pay their fees. This heavy commitment to education by the families implies that they are aware of the benefits they would reap from enrolling their students at the HE level. Benefits would be reaped if the programs are better tailored to the labor market or to job creation. An average of UGX 10 million is spent by a student in undertaking a university-level education per year. The project will support 95–160 poor students with three- to five-year scholarships, totaling UA 1.20 million, thus lowering their burden in participating in HEST. (Technical Annex B7.10 provides details for HEST investment economic gains.)

4. PROJECT IMPLEMENTATION

4.1 Implementation arrangements

4.1.1 The Executing Agency will be the MoES. The Permanent Secretary of MoES would be the overall Accounting Officer of the government. The day-to-day activities of the project will be handled by the EPPAD in collaboration with the Directorate of Higher, Technical and Vocational Education and Training (DHTVET), both for the MoES. The MoES will strengthen the existing Project Coordination Unit (PCU) for ADF projects at the EPPAD to implement the project. A project coordinator in the PCU, dedicated to the activities of the HEST project, will be designated by the GoU to manage this project. The DHTVET will be strengthened with a higher education and training technical assistant to support the coordination of the staff and institutional management trainings, student scholarships, institutional links and review of the HESP to 2020. The actual training of staff and student scholarship management will be handled by the TIs.

4.1.2 The implementation capacity of the PCU in the EPPAD was assessed and found to be adequate to implement the project. However, due to heavy load from the Education IV Project, it will be expanded through the recruitment of a financial management specialist and an assistant accountant, who both will work closely with the MoES assistant commissioner of financial management services for managing project finances. A project architect, a quantity surveyor and an ICT expert, who will work closely with the TIs and the Construction Management Unit at the MoES, will be recruited to support implementation of the civil works and ICT systems. The project would also fund a procurement specialist and a M&E specialist who would handle procurement and M&E. A PSC chaired by the Permanent Secretary of the MoES, with representation from key relevant institutions, will be nominated to handle project management oversight. (Details of the implementation arrangements, the PSC and Project Organogram are in Technical Annexes C.3 and C.10.)

4.1.3 The target training institutes will be involved in project management. They have specific capacities for project implementation, and they are already engaged in various capital development activities in their respective centers as per their mandates. To expedite civil works implementation, the TIs are already engaged in developing the institutional master plans using their own resources (BU, MUST, GU, KYU and UMI). They will also carry out 14

staff training, management of scholarships, research and academic program links with the labor market, as well as the incubator and production units. Each of the TIs will appoint a project activities coordinator who will work closely with the MoES project coordinator to implement their institutional activities. A MoU between the MoES and the TIs outlining the roles and responsibilities of the institutions in the implementation of the project would be reached before the first disbursement of the project.

4.1.4 Procurement arrangements. All procurement of goods, works under International Competitive Bidding and acquisition of consulting services financed by the Bank will be in accord with the Bank’s applicable rules and procedures. These include the Rules and Procedures for the Procurement of Goods and Works and the Rules and Procedures for the Use of Consultants, May 2008 edition and as amended from time to time using the relevant Bank Standard Bidding Documents. Procurement of National Competitive Bidding (NCB) contracts would be carried out in accord with the national procurement law as prescribed under the Public Procurement and Disposal of Public Assets Act 2003 or any approved amendments, its accompanying regulations and Standard Bidding Documents. The Bank has assessed the national procurement procedures and bidding documents for procurement of goods and works under the NCB and note that they are generally consistent with Bank’s Rules and Procedures. Deviations and omissions not applicable under Bank financing will be elaborated in the loan agreement. These include the participation of government-owned institutions in the procurement and application of preferential schemes among others. (Appendix VI provides procurement summary table, while the detailed procurement arrangements are explained in Technical Annex B.5.)

4.1.5 The capacities of the MoES’s Procurement and Disposal Unit and the existing PCU in EPPAD need to be strengthened. A procurement specialist will be recruited within EPPAD to strengthen the capacity of the MoES to carry out the procurement activities under the proposed project in order to expedite the procurement process, the GoU will request advance contracting for the selection of the consulting firms for the preparation of the bills of quantities and tender documents and the supervision of civil works and the prequalification of contractors for MUK and KYU.

4.1.6 Financial management. The MoES’s financial management system and that of the TIs were assessed and found to be adequate for the project subject to improvements as explained below. The MoES’s EPPAD, which implements the current Bank’s projects, has structures in place as well as one accountant to carry out the financial management responsibilities of the current Bank finances projects. The financial management assessment concluded that—due to the complexity and size of the new HEST project, and the fact that the Education IV Project, which has disbursed 13.5% of the project funds as of July 10, 2012, will also be under implementation for the next two years, and considering that these are social projects that have numerous activities and contracts—the MoES will need to assign two full- time qualified accountants to manage the new project, separate from the ongoing project. (Other technical assistants to enhance the process are detailed in paragraph 4.1.2.)

4.1.7 The financial management capacities of a sample of the TIs were assessed and found adequate but with areas needing further improvements. The finance departments at MUK, KYU and MUST are fully staffed with accountants. The major weakness noted is that in KYU, MUST, GU and BU accounting transactions are captured manually and there is no existing accounting system. For example, MUK and KYU had their 2010/11 audit reports qualified by the Auditor General while those of MUST were unqualified but with concern that there were many unfilled vacancies in the institution, so the effectiveness of the financial management system could not be ascertained. The implementation of the Auditor General’s

15

recommendations would require major structural changes in accounting systems and information management, thus resulting in the project’s focus on ICT-supported integrated financial management information systems (IFMISs).

4.1.8 The project will substantially make use of the country’s public financial management systems. The MoES uses the government’s budgeting process, which is participatory and adequate for the project. It would embark on a detailed budget preparation and ensure that the counterpart funding is fully budgeted for starting FY2013/14. The contributions from TIs would not be deposited into the project account in the MoES but would be contributions in kind valued by the MoES from the relevant activities to the project supported by the each institution.

4.1.9 The MoES uses IFMIS to capture its accounting transactions. There is an existing finance manual tailored toward the Bank’s projects. All financial transactions will be captured at the institutions level and also at the project management level. The project’s finance team will maintain a separate cash book for each spending institution. Bank reconciliations will be performed on a monthly basis. As part of its internal control system, the MoES has instituted various control measures including budgetary controls, separating expenditures by source of funds and project. The new project ledgers would be kept separate from those of other projects. Timely and proper flow of documentation from the institutions being supported would be instituted by the Executing Agency to ensure justifications for expenditure and financial reports are prepared appropriately.

4.1.10 Reporting and audit. The internal audit function of the MoES will play an important role in conducting regular project internal audits. The departments reports will be shared with the Bank as needed. EPPAD will prepare quarterly financial reports, which will be submitted to the Bank 45 days after the quarter’s end. These reports will include a consolidation of all expenditure incurred by the TIs. For timely consolidation of the information, the TIs will submit their financial reports to the EPPAD project finance team not later than 30 days after the closure of the quarter. The annual financial statements of the project will be audited by the government Auditor General or a firm appointed by the Auditor General based on the Bank’s audit terms of references. The annual Audit Report, complete with a Management Letter, will be submitted to the Bank no later than six months after the end of the financial year. (Technical Annexes B4 and C12 provide financial management details.)

4.1.11 Disbursement arrangements. The project will use all four disbursement methods as prescribed in the Bank’s Disbursement Handbook. It will operate one foreign special account into which the proceeds of the loan will be deposited and further to a local currency special account. Both accounts will be opened at the Central . The opening of foreign and local currency special accounts is a condition precedent to first disbursement of the loan. An initial disbursement will be deposited in the project special account in foreign currency based on a six-month cash flow forecast for the project and based on the agreed work plan approved by the Bank through the initial withdrawal application to the Bank after the effectiveness of the project. Actual expenditures will be replenished through submission of withdrawal applications (at least monthly) supported by statements of expenditures while direct payment method will be used for payments in respect to contracts for equipment, supplies, works and services (including audit and consultancy). The other two methods are reimbursement of approved payments made by the borrower and payment under the reimbursement guarantee. The Bank’s Disbursement Letter will be issued stipulating key disbursement procedures and practices to be used by the project.

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4.2 Monitoring and reporting

The M&E expert in EPPAD, working in collaboration with the entire PCU and M&E unit of the MoES will handle M&E activities of the project. The TIs will designate activity coordinators from their institutions who will prepare the monitoring data on various parameters together with all other relevant statistics and communicate the same to the M&E officer in EPPAD, who will then prepare the monitoring reports. The NCHE, which hosts the national platform for universities and tertiary institutions’ data, will have an overall responsibility for hosting the TIs data on their website. The TIs will also be expected to host key data on their academic and skills progress on their respective interactive websites and conduct a tracer study in the last year of the project to evaluate how beneficiary graduates have performed in job placement or job creation. EPPAD would prepare the Quarterly Progress Reports, according to the format and procedures of the Bank. The Bank will also maintain close monitoring of the project by fielding a minimum of two supervision missions per year, in addition to the regular project support from the Uganda Field Office of the AfDB. (A progress monitoring table is shown in Annex V.)

4.3 Governance

The Bank’s experience in implementing projects in Uganda has shown that the governance practices and control systems in place are satisfactory. However, Uganda had lower rating in the Country Policy and Institutional Assessment rating from 4.1 in 2010 to 4.0 in 2011, which in turn led to a decline in the ADF-12 allocation to the country from UA 308 million to UA 287 million over 2011–13. The decline in the rating was mainly attributed to incipient weaknesses in governance that led to wastage and leakage of public funds in some sectors. However, the Bank’s portfolio, mainly in projects arrangements, was satisfactorily run. The audit and supervision reports of the ongoing education project have not reported any irregularities that would compromise fiduciary assurance. The Bank’s supervision and audit system will be proactive and provide the desired guidance on internal control systems. To ensure that better resource management is maintained at the TIs, the project is funding ICT integrated information management systems, which will enable institutional management to be linked with the rest of the government financial systems.

4.4 Sustainability

4.4.1 The sustainability of the project would be guaranteed by increasing the capacity of the TIs to spend more on recurrent expenditures that affect quality of delivery. Investment of resources by the project in capital improvements of the institutions would have a substituting effect in favor of recurrent expenditures necessary to achieve quality delivery. As result of this investment, about UGX 218 billion of the TIs’ internally generated nontax revenue that was hitherto spent on development-related expenditures will be freed for recurrent expenditures, particularly staff allowances, research, ICT consumables and pedagogical materials whose expenditure ratios have been negligible to have any meaningful impact on the quality of delivery. In addition, the production and incubator centers to be established in each of the TIs will generate more resources for the maintenance of TI facilities. Links with industry will bring in partners who could further sponsor STI programs. The reviewed HESP 2020 would spur interest in HEST investment by other partners. Maintenance of ICT equipment will be sustained through user fees.

4.4.2 The investment in capital through the project would also increase access and efficiency in HE delivery. An increase in access at the institutional level as a result of project intervention will reduce the average cost of delivery of programs due to an increase in 17

economies of scale—and thus a reduction of tuition fees. Reduced tuition fees will encourage enrollment for both male and female students, leading to more revenue collected per institution and better delivery because of improved systems.

4.4.3 The government’s commitment to increase budgetary allocations to HE will ensure the sustainability of the project. It is projected that the wage bill currently at UGX 62.53 billion a year will more than double to UGX 135.95 billion a year by the project’s end of FY2017/18. Sustainability of the increasing wage bill is consistent with the projected economic growth over the medium term.9 The government’s commitment is evidenced by the plan to increase this allocation more than 60% from UGX 129.7 billion in FY2011/12 to UGX 230.19 billion in FY2017/18. The expanded TIs will also increase their enrollment an average of 10% a year, realizing additional UGX 17.78 billion nontax revenues annually, which will further sustain the activities.

4.5 Risk management

4.5.1 A thorough assessment of potential risks has been conducted throughout the project formulation process. The project builds on lessons from the four previous operations financed by the Bank in the education sector from 1991 to present. The risks have been dealt with through improved project management. Table 4.1 details the risk and mitigation measures.

Table 4.1: Risks and Risk Mitigation Measures Risk Rating Mitigation Measure(s) 1. TIs may not sustainably Moderate 1a. Increase the MoES budget to HE beyond the current 10% and allocate at maintain the expanded training least 0.1% for maintenance facilities 1b. TIs to use business production centers to generate alternative sources of finance to augment GoU funding on maintenance 2. All TIs may not be able to raise Moderate 2. GoU capital subventions to the TIs to be used as the project would provide their counterpart contribution of funds for major capital improvements 4% on time 3. Limited broadband connectivity Moderate 3. GoU to speed up implementation of the national broadband backbone to in TIs leading to weak and costly extend the fiber-optic access to TIs and negotiate with the ISPs concessionary Internet services for e-learning bandwidth rates for HEST institutions through incentive packages 4. Weak retention of trained staff Low 4a. Use industrial links and production centers to raise more funds for hiring due to unfavourable remunerations more staff on training grades 4b. GoU and TIs to reprioritize regular review of engagement conditions for staff, especially in STI 5. Research/innovation networks Low 5a. Strong links with industry and other world class institutions required to established may not be sustained generate research and innovation sponsorships 5b. Production centers in institutions would create income-generating activities for sustainability

4.6 Knowledge management

4.6.1 The project would contribute to knowledge generation and management. Through impact evaluation research, it will evaluate how ICT could change the methods of delivery in HEST. Both staff attainment and student attainments through e-learning will be assessed. The outcome of this study will be applied to influence the new direction of Uganda’s HESP to 2020. This study will thus add to knowledge in the country, the Bank and Africa-wide.

4.6.2 The project would support knowledge management through the development of libraries with virtual capabilities, research networks and links with private sector. Staff

9 Technical Annex table A2.13 provides the macroeconomic framework assumptions for budget growth for education. 18

and students would be trained on accessing and using e-books and on virtual libraries to extend their knowledge view. Through links with CIAT, 10 postgraduate scholars would be trained on translating research in tropical agriculture into actual products. The project would also expand the knowledge base in the TIs by training 80 academic and 24 institutional managers to higher degrees, thus adding the stock of high-level personnel. These are all positive indices in knowledge development and management in the country. Increasing the number of graduates from the universities will also add to the knowledge in the economy as a whole.

5. LEGAL INSTRUMENTS AND AUTHORITY

5.1 Legal instrument

The legal instrument for this project shall be an ADF Project Loan Agreement.

5.2 Loan conditions

5.2.1 Subject to approval by the ADF Board of Directors, the loan conditions are the following:

Conditions precedent to loan effectiveness

5.2.2 The loan agreement shall become effective, subject to the borrower’s compliance with the provisions of Section 12.01 of the General Conditions Applicable to ADF Loan Agreements and Guarantee Agreements, as shall be elaborated in the loan agreement to be signed between the GoU and the ADF.

Conditions precedent to first disbursement

5.2.3 In addition to the entry into force of the loan agreement, the first disbursement of the loan shall be conditional upon the fulfillment by the borrower of the following conditions:

(i) Opening of special accounts at the Bank of Uganda on terms and conditions acceptable to the Fund as follows: (a) a foreign currency account for the deposit of loan resources; and (b) a local currency account for the deposit by the borrower of its counterpart funds contribution for the project. (ii) Appointment of the PSC for the implementation of the project, comprising the following members: Permanent Secretary of the MoES, one representative of the TIs, Director of DHVTET at MoES, Commissioner of EPPAD in MoES; Executive Director of NCHE; Executive Director of UNCST; representative of the PSFU or the UMA; representative of the Permanent Secretary of the Ministry of Finance, Planning and Economic Development; and representative from the Ministry of Gender and Labour. (iii) Provision of written confirmation by the GoU that each of the TIs owns all the land on which each relevant component will be implemented, free of any third-party claims.

5.3 Compliance with Bank’s policies

This project complies with all applicable Bank policies. The project is in line with the Bank’s Education Sector Policy as well as with the Bank’s Country Strategy Paper for

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Uganda for 2010–14. The project also complies with the Bank’s procurement and disbursement policies and rules.

6. RECOMMENDATION

Management recommends that the Board of Directors approve the proposed ADF loan of UA 66.70 million to the Republic of Uganda, and UA 0.30 million resulting from cancelled resources, to support improvement and expansion of higher education, science and technology in the country.

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Appendix I: Uganda Comparative Socio Economic Indicators (Source: AfDB Statistics Department, African Economic Outlook, May 2012)

Developing Developed Basic Indicators Year Uganda Africa Countries countries Area ( '000 Km²) 241 80 976 80 976 54 658 GNI per capita US $ Total Population (millions) 2009 32.7 1,008 5,629 1,069 Urban Population (% of Total) 2009 13.1 39.6 44.8 77.7 1500 Population Density (per Km²) 2009 135.7 3.3 66.6 23.1 GNI per Capita (US $) 2008 420 1 428 2 780 39 688 1000 Labor Force Participation - Total (%) 2009 44.0 41.2 45.6 54.6 500 Labor Force Participation - Female (%) 2009 47.8 41.2 39.8 43.3 Gender -Related Development Index Value

2005 0.501 0.525 0.694 0.911 0

2003 2002 2004 2005 2006 2007 2008 Human Develop. Index (among 182 countries) 2007 157 0.514 n.a n.a. Popul. Living Below $1 a Day (% of Population) 2005 51.5 50.8 25.0 … Demographic Indicators Uganda Africa

Population Growth Rate - Total (%) 2009 3.3 2.3 1.3 0.7 Population Growth Rate - Urban (%) 2009 4.5 3.4 2.4 1.0 Population < 15 years (%) 2009 48.9 56.0 29.2 17.7 Population >= 65 years (%) 2009 2.5 4.5 6.0 15.3

Dependency Ratio (%) 2009 105.8 78.0 52.8 49,O Population Growth Rate (%) Sex Ratio (per 100 female) 2009 100.3 100.7 934.9 948.3 4,0 Female Population 15-49 years (% of total pop) 2009 21.6 48.5 53.3 47.2 Life Expectancy at Birth - Total (years) 2009 53.5 55.7 66.9 79.8 3,0

Life Expectancy at Birth - Female (years) 2009 54.1 56.8 68.9 82.7 2,0 Crude Birth Rate (per 1,000) 2009 45.8 35.4 21.5 12.0 1,0 Crude Death Rate (per 1,000) 2009 12.3 12.2 8.2 8.3

Infant Mortality Rate (per 1,000) 2009 71.7 80.0 49.9 5.8 0,0

2003 2004 2005 2006 2007 2008 2009 Child Mortality Rate (per 1,000) 2009 118.0 83.9 51.4 6.3

Total Fertility Rate (per woman) 2009 6.3 4.5 2.7 1.8 Uganda Africa Maternal Mortality Rate (per 100,000) 2006 435.0 683.0 440.0 10.0 Women Using Contraception (%) 2006 23.7 61.0 75.0

Health & Nutrition Indicators

Physicians (per 100,000 people) 2004 7.9 42.9 78.0 287.0 Nurses (per 100,000 people)* 2004 57.9 120.4 98.0 782.0 Life Expectancy at Birth Births attended by Trained Health Personnel (years) (%) 2006 41.9 50.5 63.4 99.3 Access to Safe Water (% of Population) 2006 64.0 64.0 84.0 99.6 71 61 Access to Health Services (% of Population) 2006 … 61.7 80.0 100.0 51 41 Access to Sanitation (% of Population) 2006 33.0 38.5 54.6 99.8 31 21 Percent. of Adults (aged 15-49) Living with 11

HIV/AIDS 2007 5.4 4.5 1.3 0.3 1

2003 2004 2005 2006 2007 2008 2009 Incidence of Tuberculosis (per 100,000) 2007 330.0 313.7 161.9 14.1 Child Immunization Against Tuberculosis (%) 2007 89.0 83.0 89.0 99.0 Child Immunization Against Measles (%) 2007 86.0 74.0 81.7 92.6 Uganda Africa Underweight Children (% of children >5 years) 2006 20.0 25.6 27.0 0.1 Daily Calorie Supply per Capita 2005 2 371 2 324 2 675 3 285 Public Expenditure on Health (as % of GDP) 2006 1.8 5.5 4.0 6.9 Education Indicators

Gross Enrolment Ratio (%)

Primary School - Total 2007 117.2 100.2 106.8 101.5 Infant Mortality Rate ( Per 1000 ) Primary School - Female 2007 117.7 91.7 104.6 101.2 100 Secondary School - Total 2007 22.9 35.1 62.3 100.3 80 Secondary School - Female 2007 20.8 30.5 60.7 100.0 Primary School Female Teaching Staff (% of 60 Total) 2007 39.2 47.5 … … 40 Adult Illiteracy Rate - Total (%) 2007 26.4 59.4 19.0 … 20 Adult Illiteracy Rate - Male (%) 2007 18.2 69.8 13.4 …

0

2004 2005 2006 2007 2008 2009 Adult Illiteracy Rate - Female (%) 2007 34.5 57.4 24.4 … 2003 Percentage of GDP Spent on Education 2008 3.8 4.5 5.4 Environmental Indicators Uganda Africa Land Use (Arable Land as % of Total Land Area) 2007 27.9 6.0 9.9 11.6 Annual Rate of Deforestation (%) 2006 … 0.7 0.4 -0.2

Appendix II: Bank Group Operations in Uganda (as per 31 August 2012) (Source: AfDB SAP system) Net Approved Amount UA million Amount Deadline Status (not Disbursement Commit Serial Approval Signature 1st Date of Disburse Disburse for Last effective & on- Project Description Effectiveness ments No. Date Date Disbursement NTF ADF d (UA d (%) Disbursem going/effective, Date ADB ADF Loan (UA LOAN Grant million) ent etc) million) A. AGRICULTURE Farm Income Enhancement& Forestry Conservation 1 29/09/04 18/01/05 17/05/06 14/07/06 nil 31.57 nil 9.85 41.42 33.70 81.4% 30/12/12 ongoing project Community Agricultural Infrastructure Improvement 2 31/01/07 17/05/2007 21/09/07 19/10/07 nil 30.00 nil nil 30.00 24.90 83.0% 31/12/13 ongoing Programme- Project I Community Agricultural Infrastructure Improvement 3 17/09/08 11.05.2009 02/09/09 23/10/09 nil 45.00 nil nil 45.00 10.89 24.2% 31/12/14 ongoing Programme- Project II Markets and Agricultural Trade Improvement 4 25/03/2009 13.05.2009 05/02/10 17/03/10 nil 38.00 nil nil 38.00 12.27 32.3% 30/09/15 ongoing (MATIIP) Community Agricultural Trade Improvement 5 03/05/2011 10/06/2011 22/02/12 21/03/2012 nil 40.00 nil nil 40.00 0.77 1.9% 31/12/2016 on going Programme III

B. TRANSPORT

Road Sector Support Project 1 (Kabale Kisoro 6 27/04/05 19/05/05 24/07/06 12/04/07 nil 27.01 nil 1.49 28.50 94.5% 29/12/12 ongoing Bunagana Rd) 26.94

7 Road Sector Support Project 1 supplementary Loan 20/12/2006 22/01/2007 18/02/2008 22/06/09 nil 32.99 nil nil 32.99 31.25 94.7% 29/12/12 ongoing

Road Sector Support Project 2 (Fort portal 8 17/12/07 15/05/08 18/11/2009 20/01/2010 nil 56.65 nil 1.35 58.00 64.6% 31./12/13 ongoing Bundibugyo Rd) 37.44 Road Sector Support Project 3 (Nyakahaita Ibanda 9 25/09/09 12/04/2010 13/07/2011 29/07/2011 nil 80.00 nil nil 80.00 44.6% 31./12/14 ongoing Rd) 35.68 C. WATER AND SANITATION

10 Kampala Water Sanitation Project 16/12/2008 11/05/2009 18/02/10 16/07/10 nil 35.00 nil nil 35.00 7.99 22.8% 31/12/14 ongoing

11 Water Supply and sanitation program 5/10/2011 11/01/2012 nil 40.00 nil 3.59 43.59 30/06/2016 not effective

D. SOCIAL

12 Support to the Health Sector Strategic Plan II 08/11/2006 22/01/2007 04/06/07 10/08/07 nil 20.00 nil nil 20.00 18.15 90.8% 31/12/12 ongoing

13 Rehabilitation of Mulago and KCC Clinics 06/07/2011 11/01/2012 02/07/2012 28/08/2012 nil 46.00 10.00 nil 56.00 0.23 0.4% 31/12/2016 on going Support to Post Primary Education and Training 14 25/11/08 11/05/2009 31/08/09 22/12/09 nil 52.00 nil nil 52.00 7.79 15.0% 31/12/14 ongoing Project (Education IV) 15 Rural Income and Employment Enhancement Project 17/11/09 12/04/10 14/02/08 05/06/08 nil 10.20 nil 0.00 10.20 4.87 47.7% 31/07/2015 ongoing

SOCIAL SECTOR Sub-TOTAL 138.20 31.04 22.5% E. ENERGY SECTOR 16 Bujagali Transmission Interconnection Project 28/06/07 26/10/07 23/04/08 14/02/08 nil 19.21 nil nil 19.21 16.18 84.2% 31/12/13 ongoing Mbarara-Nkenda/Tororo-LiraTransmission Lines 17 16/12/08 26/03/2010 18.02..2011 20/04/11 nil 52.50 nil nil 52.50 0.57 1.1% 31/12/13 ongoing Project

F. MULTI NATIONAL PROJECT 19 NELSAP 1 27/11/08 13/05/09 04/07/2011 25/10/2011 nil 7.59 nil 0.00 7.59 0.44 5.8% 31/12/14 on going Lake Victoria Water Supply and Sanitation program 20 17/12/2010 04/04/211 04/04/11 31/01/2012 nil nill nil 11.13 11.13 1.36 12.2% 31/12/2015 ongoing phase II H. PRIVATE SECTOR OPERATION

21 Bujagali Hydro Power Project 02/05/07 21/12/07 20/05/08 29/05/08 72.17 nill nil nil 72.17 72.17 100.0% 31/12/12 ongoing

22 Housing Finance Project 23/11/2011 20/07/2012 15.30 nill nil nil 15.30 not effective 23 Buseruka II Project 04/07/2011 28/11/2011 21/02/2012 29/02/2012 2.58 nill nil nil 2.58 2.58 100.0% 31/12/12 ongoing GRAND TOTAL INCLUDING MULTI NATIONAL AND PRIVATE SECTOR PROJECTS 791.18 343.59 43.43

Appendix III: Main Related Projects Financed by the Bank and other Education Development Partners in Uganda (Source EDP Sector Map July 2012) EDP Modality National/ Amount (USD) Summary of focused activities

UNCEF Programme National, Direct budget support 9,480,261 Enabling provision of pre-primary education Support/ project support/districts Irish Aid Project Support QEI districts and Moroto 8,15,364 Training P1-4 teachers in curriculum Project Support Karamoja districts 407,682 Training teachers in teaching methods and establishing M&E Project Support National 1,358,940 Capacity support to selected training institutions-BTVET Project Support National 1,233,046 Expanding database for teaching and non-teaching staff and monitoring schemes Project Support Karamoja Region 28,538 Construction and rehabilitation of schools ILO Project Support Wakiso and Mbale 475,629 Developing model on access to primary education(Policy and programmes Netherlands Project Support National with focus districts 4,395,932 Strengthening TDMS with International Educators for basic education Embassy Project Support National 705,901 Core funds for Teachers Union USAID Project Support National 50,000,000 Support MOES on skills development at primary level and HIV/AIDS education UNFPA Programme Support/ project National 315,378 Integration of in secondary curriculum and support for EMIS Programme Support National 183,203 Improve quality of midwifery training UNHCR Project Support Isingiro, Kegegwa, Kiryandongo, Moyo, 876, 418 Expanding settlement schools by constructing classrooms and houses for teachers and Adjumani, Arua, Kampala, Hoima providing them with amenities. AfDB Project Support National 85,000,000 Supporting Secondary schools and BTVET Project Support- Grant National 32,000,000 Supporting Secondary schools and BTVET- closing June 2012 JICA Project Support National 400,000 Training teachers in teaching methods and establishing M&E Technical Assistance National 300,000 Improving teaching quality for BTVET Belgian Study and Consultancy National 407,682 Secondary Education Embassy Study and Consultancy National Support Belgian cooperation and finance preparatory studies –Primary schools Sector Budget support National 16,307,280 Focus monitoring on post primary education and quality of teaching and training Project Support Kampala and Arua 26,163,662 Improving linkages (MOES and selected Colleges) GIZ Project Support 8 sub-regions 5,163,972 PPPs with BTVET EU Project Support Abim, Moroto, Nakapiripirit 597,934 Skills empowerment for alternative livelihood Project Support Nakapiripirit 611,523 Improving civil society capacity Project Support Kotido 597,934 Improve basic and secondary education Project Support Moroto, Nakapiripirit 665,881 Improving Vocational skills Project Support Selected Karamoja districts. 529,987 Skills training for poverty reduction Project Support Kampala, jinja, Mukono, Kamuli, Tororo 679,470 Workers PAS-Validation of Informal training Project Support Gulu, Pader, Kitgum, Lamwo, Agago 924,079 Expanding technical education in UG Project Support In selected districts 774,596 Transitional skills training for employment Project Support Lira, Tororo 951,258 PPP for youth empowerment Project Support Oyam, Apac, Amolatar 733,828 Creating income Project Support Pader 475,629 Creating employment Project Support Amuru, Gulu, Kitgum 951,258 Building skills -BTVET General Budget Support National 237,814,500 Various sectors World Bank Adaptable program Loan 1 National 150,000,000 Support government policy of USE reforms Project Support National 30,000,000 Strengthening science teaching & research in the universities and supporting PPPs with academia (research and scholarships) Budget Support National 100,000,000 Multi-sectoral - but HD indicators are aligned with JHF.

Appendix IV: Map of Uganda Showing the location of Target Institutions

Key Target Institution

Disclaimer: This Map was provided by the African Development Bank exclusively for the use of the readers of the report to which it is attached. The names used and the borders shown do not imply on the part of the Bank and its members any judgment concerning the legal status of a territory nor any approval or acceptance of these borders

AppendixV: Monitoring schedule Timeframe Milestone Monitoring agent/feedback September 2012 Loan Negotiation GoU and AfDB October 2012 Board Approval AfDB January 2013 Signing of Loan Agreement GoU and AfDB April 2013 Loan Effectiveness GoU and AfDB May 2013 Project Launching AfDB and MoES October 2013 First Project Supervision Mission AfDB and MoES Annual Joint Sector Review November 2013 MoES and AfDB meeting February 2014 Second Supervision Mission AfDB Every May and November Joint Sector Reviews as well as MoES and AfDB from 2014 to 2017 supervision missions December 31 of 2014, 2015, Submission of Audit Reports MoES 2016, 2017 March 2015 Mid-term Review AfDB and MoES Last Special Account December 2017 MoES and AfDB Replenishment Date June 2018 Completion of all activities MoES December 2017 PCR undertaken AfDB and MoES June 2018 Last Disbursement Date AfDB and MoES December 2018 Final Audit Report MoES

Appendix VI: Procurement Arrangements Summary Summary of Procurement Arrangements vis-à-vis the use of Country Procurement System (UA 74.44 million) in UA millions

UA '000 000

PROJECT CATEGORIES Totals ICB Other Shortlisting Total ADF A. WORKS

1. Makerere University 1.1 Construction, Rehabilitation and External works (9 buildings) 8.50 [8.50] 8.50 [8.50] 1.2 Incubation/production centre 0.16 [0.16] 0.16 [0.16] 2. Kyambogo University 2.1 Construction, Rehabilitation and External works (14 buildings) 9.12 [9.12] 9.12 [9.12] 2.2 Incubation/production centre 0.15 [0.15] 0.15 [0.15] 3. MUST 3.1 Construction, Rehabilitation and External works (10 buildings) 3.39 [3.39] 3.39 [3.39] 3.2 Incubation/production centre 0.14 [0.14] 0.14 [0.14] 4. Gulu University 4.1 Construction, Rehabilitation and External works (9 buildings) 3.99 [3.99] 3.99 [3.99] 4.2 Incubation/production centre 0.16 [0.16] 0.16 [0.16] 5. Busitema University 5.1 Construction, Rehabilitation and External works (7 Buildings) 3.79 [3.79] 3.79 [3.79] 5.2 Incubation/production centre 0.16 [0.16] 0.16 [0.16] 6. Muni University 6.1 Construction and External work (4 buildings) 1.51 [1.51] 1.51 [1.51] 6.2 Incubation/production centre 0.07 [0.07] 0.07 [0.07] 7. MUBS 7.1 Construction and External Works Faculty of Business Computing 1.24 [1.24] 1.24 [1.24] 7.2 Incubation/production centre 0.07 [0.07] 0.07 [0.07] 8. Uganda Management Institute 8.1 Completion of Teaching & office complex and External Works 1.29 [1.29] 1.29 [1.29] 8.2 Incubation/production centre 0.09 [0.09] 0.09 [0.09]

9. Project Management 10.1 Rehabilitation of Offices 0.02 [0.02] 0.02 [0.02] B. GOODS 1. Equipment for Colleges - MUK 6.14 [6.14] 6.14 [6.14] 2. Equipment for Colleges - KYU 3.56 [3.56] 3.56 [3.56] 3. Equipment for Departments - MUST 1.59 [1.59] 1.59 [1.59] 4. Equipment for Colleges - GU 0.97 [0.97] 0.97 [0.97] 5. Equipment for Colleges - BU 0.97 [0.97] 0.97 [0.97] 6. Equipment for Departments - MU 0.16 [0.16] 0.16 [0.16] 7. Equipment for Departments - MUBS 0.22 [0.22] 0.22 [0.22] 8. Equipment for Departments - UMI 0.18 [0.18] 0.18 [0.18] 9. Equipment for Incubation Centres - MUK 0.24 [0.24] 0.24 [0.24] 10. Equipment for Incubation Centres - KYU 0.24 [0.24] 0.24 [0.24] 11. Equipment for Incubation Centres - MUST 0.15 [0.15] 0.15 [0.15] 12. Equipment for Incubation Centres - GU 0.15 [0.15] 0.15 [0.15] 13. Equipment for Incubation Centres - BU 0.15 [0.15] 0.15 [0.15] 14. Equipment for Incubation Centres - MU 0.06 [0.06] 0.06 [0.06] 15. Equipment for Incubation Centres - MUBS 0.07 [0.07] 0.07 [0.07] 16. Equipment for Incubation Centres - UMI 0.07 [0.07] 0.07 [0.07] 17. Supply and Installation of Equipment for ICT Infrastructure 5.90 [5.90] 5.90 [5.90] 18. Furniture for Facilities- All Beneficiary Institutions 4.82 [4.82] 4.82 [4.82] 19. Equipment for Project - Management 0.04 [0.04] 0.04 [0.04] 20. Panel Van 4x4 - Project Management 0.03 [0.03] 0.03 [0.03] 21. Double cabin 4x4 Pick-up – Project Management 0.03 [0.03] 0.03 [0.03] C. SERVICES 1. Master Plans/Design of Buildings (firm) - All Beneficiary institutions 2.05 [0.65] 2.05 [0.65] 2. Preparation of Bidding Docs and Supervision (firm)- All Beneficiary Institutions 1.44 [0.72] 1.44 [0.72] 3. Consultancy for Higher Education Strategic Plan (firm) 0.23 [0.23] 0.23 [0.23] 4. Production from incubator - All Beneficiary Institutions 0.32 [0.32] 0.32 [0.32] Training ( All Beneficiary Institutions)

1. Training of lecturers for Masters and Ph.D., management staff and ICT Staff 5.33 [0.26] 5.33 [0.26] Research and Linkages ( All Beneficiary Institutions) 1. Research, Linkages and Support to Industry through UMA, CIAT, PSFU 1.36 [1.36] 1.36 [1.36] 2. Research, Linkages and directly through the TIs (Distributed Equally) [0.59] [0.59] Social Impact Sensitization (All Beneficiary Institutions) 1. Gender, HIV-AIDS and Special Needs (firm) 0.31 [0.31] 0.31 [0.31] Project Management

1.Individual Consultants/ Management Team (9) and Technical Assistance- 9 specialists (PC, Architect, QS, FMS, AA, PS, MES, ES, ICT Expert, TTA) and 3 1.42 [1.42] 1.42 [1.42] activities

D. Operating Costs

1. Operating Costs Project Management 0.36 [0.00] 0.36 [0.00] 2 Workshops (2) - HESP 0.15 [0.15] 0.15 [0.15] E. Miscellaneous Expenses

1. Project Coordinator 0.08 [0.08] 0.08 [0.08]

2. Students Scholarships 1.20 [1.20] 1.20 [1.20] Totals 53.97 [53.97] 13.42 [8.09] 7.05 [4.94] 74.44 67.00

[ ] Amounts to be financed by ADF ‘Other’ refers to National Competitive Bidding, Shopping, Direct Negotiation, Operating Cost