RESEARCH REPORT No. 3 PUBLIC EXPENDITURE TRACKING ON ROAD INFRASTRUCTURE IN UGANDA: A CASE STUDY OF PALLISA AND SOROTI DISTRICTS NYENDE MAGIDU JEFF GODFREY ALUMAI WINNIE NABIDDO ECONOMIC POLICY RESEARCH CENTRE DECEMBER, 2010 RESEARCH REPORT No. 3 PUBLIC EXPENDITURE TRACKING ON ROAD INFRASTRUCTURE IN UGANDA: A CASE STUDY OF PALLISA AND SOROTI DISTRICTS BY NYENDE MAGIDU JEFF GEOFFREY ALUMAI WINNIE NABIDDO ECONOMIC POLICY RESEARCH CENTRE DECEMBER 2010 Acknowledgements This report synthesizes findings from a study to review the infrastructure public expenditures in two selected districts in Uganda under the central government transfers. The research was conducted by the Economic Policy Research Centre (EPRC). The team gratefully acknowledges the support received during the study particularly the local government staff more especially from the engineering department, finance as well as the assistant secretaries at the lower local governments. The team appreciated especially the strong support and encouragement by the Chief Administrative Officers (CAOs) who made access to information easy. The core study team was supported by interns from Makerere University who included Kisame Keith and Alikwani Abbey whose valuable inputs made the preparation of the report easy. This research report was prepared by Nyende Magidu (team leader), Jeff G. Alumai and Winnie Nabiddo. Dr. Sarah Ssewanyana provided valuable comments throughout the preparation of the report. i List of Acronyms/Abbreviations AfDB African Development Bank BOQs Bill of Quantities CAIIP Community Agriculture Infrastructure Improvement Programme CDO Community Development Officer DANIDA Danish International Development Agency FGD Focus Group Discussions GDP Gross Domestic Product GoU Government of Uganda IFAD International Fund for Agricultural Development LGDP Local Government Development Programme Local Governments Local Governments MoFPED Ministry of Finance Planning and Economic Development MoW Ministry of Works PAF Poverty Action Fund PDU Procurement Department Unit PETS Public Expenditure Tracking Study PPDA Public Procurement and Disposal Act RoU Republic of Uganda RRP Rural Road Programme RSDP Rural Sector Development Programme RSPS Road Sector Programme Support UNRA Uganda National Roads Authority 2 Abstract The main message of this study is that public action by making the choice to invest in infrastructure, has to be taken to alleviate the plight of Uganda’s economy which is endowed with adverse, natural or geographical aspects like tropical climate. Drawing from the existing literature of the various channels or means through which infrastructure affects growth, this study argues for strengthening structures and implementation in the promotion of infrastructure particularly rural roads. In order to identify the sector constraints, the study utilized public expenditure tracking and Focus Group Discussion (FGD) in the two selected districts of Pallisa and Soroti. The findings indicate that not all resources reach the beneficiary levels; capacity challenges exist both among the staff and service providers. This situation is worsened by inadequate funding for rural roads provision. First, apart from increasing public investment, the most important role to be played by the government in this changing scenario will include: strengthening capacity among the local government staff; carrying out performance audit on various firms that execute the works; and maintain road machinery in sound working conditions for provision of better and efficient roads network. Key words: Resource tracking, infrastructure provision, local governments, service provision 3 Table of Contents Acknowledgements .................................................................................................................................. i List of Acronyms/Abbreviations .............................................................................................................. 2 Abstract ................................................................................................................................................... 3 1.0 INTRODUCTION .......................................................................................................................... 6 1.1 Background ............................................................................................................................. 6 1.2 Review of related studies ........................................................................................................ 9 1.3 Rationale of the Study ........................................................................................................... 10 1.4 Objectives of the Study ......................................................................................................... 10 1.5 Scope of the Study ................................................................................................................ 11 1.6 Organization of the Study ..................................................................................................... 11 2.0 METHODS AND DATA ................................................................................................................ 12 2.1 Methods ................................................................................................................................ 12 2.2 Data ....................................................................................................................................... 13 2.3 Economic Potentials of the Sampled Districts ...................................................................... 14 3.0 DEVELOPMENT PROGRAMMES IN THE ROAD SUB-SECTOR ..................................................... 15 3.1 Financing of Roads in Local Governments ............................................................................ 15 4.0 MAIN FINDINGS......................................................................................................................... 17 4.1 Analysis of Resource Flow ..................................................................................................... 17 4.2 Analysis of the Implementation of Activities ........................................................................ 27 4.3 Analysis of policies, regulations and structures used in implementation of Government activities ............................................................................................................................................ 29 4.4 Level of Resource Utilization ................................................................................................. 33 5.0 EMERGING CHALLENGES AND POLICY OUTCOMES .................................................................. 37 5.1 Emerging Challenges ............................................................................................................. 37 5.2 Policy Outcomes.................................................................................................................... 38 References ............................................................................................................................................ 40 4 List of Tables Table 1: District funding sources and share to road maintenance, 2005/06-2008/09 (%) .................. 16 Table 2: Allocation of funds by district and department, 2005/06-2008/09 (%) ................................. 17 Table 3: National Sectoral Allocations Excluding Arrears and Amortisation, 2008/09-2009/10 .......... 18 Table 4: Conditional transfers from Government to districts, 2005/6-2008/9 (Ushs’000) .................. 19 Table 5: Summary of expenditure of funds under Works department ................................................ 22 Table 6: PAF funds transfer from CG an receipted by district, 2005/6-2008/9 .................................... 23 Table 7: LGDP transfers from district to sub-counties, 2005/6-2008/9 (Ushs) .................................... 24 Table 8: Status of key equipment by districts ....................................................................................... 26 Table 9: Allocation of time to Central Government funded programme, 2005/6-2008/9 (%) ............ 26 Table 10: Road sector programme performance.................................................................................. 28 Table 11: Summary of road contractor’s profile ................................................................................... 31 Table 12: Road sub-sector fund balance, 2005/6-2008/9 .................................................................... 34 List of Figures Figure 1: The General Framework of Resource Flow (GFRF) in the Sector ........................................... 13 Figure 2: Labour-Based Activities in Apapai-Ogera Road in Serere County, Soroti District.................. 21 Figure 3: Unspread and Overstayed Murram - Kachocha Road being Under Rehabilitation ............... 32 Figure 4: Broken culverts along Opedura-Akisimu road, Angule Sub-county, Pallisa District .............. 36 Figure 5: Kabiyayi-Ikiki Road-Petete County, Pallisa District being worked on under CAAIP ............... 36 5 1.0 INTRODUCTION 1.1 Background The provision of an efficient road network has been an important focus and a key ingredient in the development efforts for African governments and the donor community in the recent years. Whereas the first and second generations of economic reforms emphasised macroeconomic stability in order for the private sector to play a significant role in the economies,