Towards Sustainable Development OCCASIONAL PAPER. 41 COUNTRY REVIEWS OF CAPACITY DEVELOPMENT: THE CASE OF UGANDA March 2017 By Corti Paul Lakuma, Miriam Katunze, Maria Nagawa, Joseph Mawejje, Musa Lwanga, Swaibu Mbowa and Isaac Shinyekwa Occasional Paper No.41 COUNTRY REVIEWS OF CAPACITY DEVELOPMENT: THE CASE OF UGANDA March 2017 Copyright © Economic Policy Research Centre (EPRC) The Economic Policy Research Centre (EPRC) is an autonomous not-for-profit organization established in 1993 with a mission to foster sustainable growth and development in Uganda through advancement of research –based knowledge and policy analysis. Since its inception, the EPRC has made significant contributions to national and regional policy formulation and implementation in the Republic of Uganda and throughout East Africa. The Centre has also contributed to national and international development processes through intellectual policy discourse and capacity strengthening for policy analysis, design and management. The EPRC envisions itself as a Centre of excellence that is capable of maintaining a competitive edge in providing national leadership in intellectual economic policy discourse, through timely research-based contribution to policy processes. Disclaimer: The views expressed in this publication are those of the authors and do not necessarily represent the views of the Economic Policy Research Centre (EPRC) or its management. Any enquiries can be addressed in writing to the Executive Director on the following address: Economic Policy Research Centre Plot 51, Pool Road, Makerere University Campus P.O. Box 7841, Kampala, Uganda Tel: +256-414-541023/4 Fax: +256-414-541022 Email: [email protected] Web: www.eprc.or.ug COUNTRY REVIEWS OF CAPACITY DEVELOPMENT : THE CASE OF UGANDA TABLE OF CONTENTS List of Acronyms / Abbreviations iv Executive Summary 1 1. Introduction 2 2. Conceptual Framework 3 3. Overall Perspective 3 3.1 Major Development Strategies from 1987 to 2015 4 3.1.1 Economic Recovery Programme, 1987 -1996 4 3.1.2 Poverty Eradication Action Plan (PEAP), 1997-2009 5 3.1.3 National Development Plan (NDP 1), 2010-2015 7 4. Capacity-Building Efforts 10 4.1.1 Restructuring 10 4.1.2 Privatisation 11 4.1.3 Macro-Fiscal reform 12 4.1.4 Merger of planning and budgeting 13 4.1.5 Poverty reduction strategy 14 4.1.6 Development of Expenditure Plans 15 4.1.7 Development of institutional capacity to monitor spending: 17 4.1.8 Sector-Wide Approach to Planning 18 4.1.9 Sector Strategic Investment Plans 19 4.1.10 Frontloading infrastructure 19 4.1.11 Change in the Aid architecture 19 4.1.12 Domestic Resource mobilisation 20 4.1.13 Fiscal Decentralisation Strategy 21 4.1.14 Local government grant transfer systems 22 5. Sectoral Efforts and Achievements 23 5.1 Macroeconomic Management 23 5.1.1 Fiscal Reforms 23 5.1.2 Public Debt Management 24 5.1.3 Deregulation and Competition Policy 27 5.1.4 Liberalisation of the Financial Sector 28 5.1.5 Reforms in the Trade sector 30 5.1.6 Regional integration and Trade Agreements 34 5.2 Rural Development 35 5.2.1 Rural Electrification 36 5.2.2 Agriculture 37 5.3 Infrastructure Building 41 5.3.1 The Energy sector 41 5.3.2 Transport Infrastructure 43 5.4 Natural Resources 45 5.4.1 Land Resources 45 5.4.2 Mineral Resources 48 6. Challenges Ahead 51 7. Conclusions and Recommendations 54 References 56 Annexes 59 OCCASIONAL PAPER NO. 41 i COUNTRY REVIEWS OF CAPACITY DEVELOPMENT : THE CASE OF UGANDA LIST OF FIGURES Figure 1: Conceptual Framework for the Analysis of Capacity and Capacity Development in Uganda 3 Figure 2: Public Consumption 10 Figure 3: External debt service and social sector outturn as a % of total expenditure, 1997-2009 15 Figure 4: Grants as percent Budget 20 Figure 5: Distribution of Uganda’s tax revenue, % 21 Figure 6: Intergovernmental transfers as % of annual central government revenue, 2005/6 - 2012/13 22 Figure 7: Uganda’s Real Effective Exchange Rate, Real Interest Rates and Inflation (1983 – 2013) 23 Figure 8 : Trends in annual external public debt (total and disbursed) US$ billions 26 Figure 9: Mutually Exclusive Use of Financial Services by Institutions, percent 29 Figure 10: Gross Domestic Savings, 2005-2013 (un-weighted averages) 30 Figure 11: Trends in proportions of Uganda’s exports to different destinations (%) 35 Figure 12: Trends in electrification levels, % 37 Figure 13: Trends in Agriculture, value added as percentage of GDP (1986-2012), % 37 Figure 14: Trends in Productivity of the major crops in Uganda 39 Figure 15: Renewable Energy Consumption and Private investment on Energy 42 Figure 16: Land tenure types in Uganda, % 47 LIST OF TABLES Table 1: Economic Performance Indicators, Averages 5 Table 2: Performance during the NDP 1 implementation period 9 Table 3: Indicators of Uganda’s Private Sector Performance (Ranked out of 140 Countries) 12 Table 4: Performance of Uganda’s Social Sector 15 Table 5: Stock of domestic debt by type and tenure as of the end of February 2015 26 Table 6: Composition of exports (US$ million) 31 Table 7: Uganda’s Doing Business (DB) Ranking 33 Table 8: Exports by region and country of destination (‘000 US$), 2003-2013 35 Table 9: The growth rate of the agriculture sector, industry sector and services sector between 38 2003 and 2013 38 Table 10: Quality of Infrastructure in Uganda (Ranking out of 140 countries) 43 Table A 1: Capacity Building Efforts, 1987 – 2014 59 Table A 2: Economic Performance Indicators, 1987 – 1996, Year on Year (CY) 69 Table A 3: Economic Performance Indicators, 1997 – 2009, Year on Year (CY) 70 Table A 4: Economic Performance Indicators, 2010 – 2014, Year on Year (CY) 71 Table A 5: National Budgetary Framework Sector Classifications as percentage of total budget 72 Table A 6: Exports by value (‘000 US $), 2005 - 2013 73 Table A 7: Sectoral Composition and Growth of GDP (1990-2014) 74 ii OCCASIONAL PAPER NO. 41 COUNTRY REVIEWS OF CAPACITY DEVELOPMENT : THE CASE OF UGANDA LIST OF BOXES Box 1: The ACBF’s Contribution to Uganda’s CB Efforts 6 Box 2: The Vision 2040 7 Box 3: The revision of the Vision 2025 and Vision 2030 9 Box 4: Restructuring: The Jordanian Experience 11 Box 5: Consolidation of Ministries: The Liberian Experience 14 Box 6: Reforms to support the MTEF in South Africa 16 Box 7: Lessons of Experience from “Success” Stories: UBoS 17 Box 8: Laws that govern debt acquisition, disbursal and servicing as of December 2015 27 Box 9: Trade Facilitation Capacity-Building Efforts in Uganda 31 Box 10: Case Study: UNRA 44 Box 11: The history of land tenure in Uganda 46 Box 12: Key constraints to land use in Uganda 48 OCCASIONAL PAPER NO. 41 iii COUNTRY REVIEWS OF CAPACITY DEVELOPMENT : THE CASE OF UGANDA LIST OF ACRONYMS / ABBREVIATIONS ACBF Africa Capacity Building Foundation AERC Africa Economic Research Consortium AfDB African Development Bank AGOA African Growth and Opportunities Act AGRA Alliance for Green Revolution in Africa BIS Bank of International Settlement BOP Balance of Payments BoU Bank of Uganda CAADP Comprehensive Africa Agriculture Development Program CAIIP Community Agricultural Infrastructure Improvement Project CB Capacity Building CBR Central Bank rate CDS Central Depository System CNDPF Comprehensive National Development Planning Framework CDO Cotton Development Organisation COCTU Coordinating Office for the Control of Trypanosomiasis in Uganda COMESA Common Market for Eastern and Southern Africa CSO Civil Society Organisation CTL Commercial Transaction Levy DAMFAS Debt and Aid Management and Financial Analysis System DDA Diary Development Authority DSIP Development Strategy and Investment Plan DST Development Transfer Systems EPA TAPSS Economic Partnership Agreement Related Trade and Private Sector Support EPRC Economic Policy Research Centre ERA Electricity Regulatory Authority ERP Economic Recovery Program EOC Equal Opportunities Commission EPA Economic Partnership Agreement FDI Foreign Direct Investment FDS Fiscal Decentralisation Strategy FIPS Framework Implementation Plans FTA Free Trade Area GDP Gross Domestic Product GoU Government of Uganda GPI Gender Parity Index HIPC Heavily Indebted Poor Country HIV/AIDS Human Immune Virus/Acquired Immune Deficiency Syndrome iv OCCASIONAL PAPER NO. 41 COUNTRY REVIEWS OF CAPACITY DEVELOPMENT : THE CASE OF UGANDA HNP Health Nutrition and Population HSSIP Health Sector Strategic Investment Plan IDA International Development Agency IFMS Integrated Financial Management System IMF International Monetary Fund IPPS Integrated Personnel and Payroll System IT Information Technology KAPSARC King Abdullah Petroleum Studies and Research Centre LGFC Local Government Finance Commission MAAIF Ministry of Agriculture, Animal Industry and Fisheries MAPS Marketing and Agro-processing Strategy MATIP Markets and Agriculture Trade Improvement Projects MDAs Ministries, Departments And Agencies MDG Millennium Development Goal MDRI Multilateral Debt Relief Initiative MEFMI Macroeconomic and financial Management Institute of Eastern and Southern Africa MoH Ministry of Health MoFPED Ministry of Finance, Planning and Economic Development MoEMD Ministry of Energy and Mineral Development MTDS Medium-Term Debt Management Strategy MTCS Medium Term Competitiveness Strategy MTEF Medium Term Expenditure Framework MTTI Ministry of Tourism, Trade and Industry M1 Base Money NAADS National Agricultural Advisory Services NAGRIC National Genetic Resource Information Centre NFP National Fertilizer Policy NAP National Agricultural Policy NARO National Agricultural Research Organisation NDP National Development