Uganda: Technical Report - Public Investment Management Assessment
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International Monetary Fund. Fiscal Affairs Dept.
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Publication Date:
23 Nov 2022
eISBN:
9798400224867
ISBN:
9798400224867
Language:
English
Keywords:
public finance; project preparation; NDP III; regulatory authority; development fund
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Uganda has achieved significant improvements in public investment management over the last few years. The new IMF Public Investment Management Assessment (PIMA) report shows that Uganda is well ahead of its comparators in many aspects of public investment management, in particular in institutional design. A number of important measures have been undertaken, including giving the Development Committee a strong role as a gatekeeper for new investment proposals, the establishment of the Projects Analysis and Public Investment Department, and development of guidelines and manuals to improve the quality of project preparation and appraisal. Many reforms are fairly recent and are not fully institutionalized, so there is a clear need to continue and to further strengthen public investment management in Uganda. The IMF and other development partners are active partners to the government in pursuing these reforms.

Abstract

Uganda has achieved significant improvements in public investment management over the last few years. The new IMF Public Investment Management Assessment (PIMA) report shows that Uganda is well ahead of its comparators in many aspects of public investment management, in particular in institutional design. A number of important measures have been undertaken, including giving the Development Committee a strong role as a gatekeeper for new investment proposals, the establishment of the Projects Analysis and Public Investment Department, and development of guidelines and manuals to improve the quality of project preparation and appraisal. Many reforms are fairly recent and are not fully institutionalized, so there is a clear need to continue and to further strengthen public investment management in Uganda. The IMF and other development partners are active partners to the government in pursuing these reforms.

I. Trends in Public Investment in Uganda

A. Public Investment and Stock of Capital

1. Since the end of the Ugandan Civil War in 1986, total investment has been driven by both the public and private sectors across three phases (Figure 1.1a). In the first phase, post-civil war, investment rose sharply driven by private investment. From 2012, private investment began to decline and was offset by a rise in public investment, reflecting the government policy shift from social spending to infrastructure expansion, which include large projects for major roads corridors and hydropower throughout the country.1 Looking ahead, investments in the oil sector are poised to increase sharply, primarily funded from the private sector.

2. Uganda’s level of public investment has only recently surpassed the sub-Sahara Africa (SSA) and Low-Income Developing Country (LIDC) averages but remains below regional comparators (Figure 1.1b). Investment flows have been increasing from the mid-2000s, but at a slower rate than regional peers and comparators. The sustained flow of investment spending from 2010, as budget priorities shifted from decentralized social spending to project led economic infrastructure, has seen Uganda exceed the SSA and LIDC average, but still lag behind regional comparators with similar infrastructure needs (Kenya, Rwanda, and Tanzania) by approximately 2 percentage points of GDP.

Figure 1.1
Figure 1.1

Uganda: Public Investment

(percent of GDP)

Citation: IMF Staff Country Reports 2022, 350; 10.5089/9798400224867.002.A001

Source: IMF estimate based on official data and World Economic Outlook

3. Uganda’s capital stock is significantly lower than low-income developing countries (LIDC), sub-Saharan Africa (SSA) averages and peer comparators (Figure 1.2). Capital stock declined in the years leading up to 2007, as public investment levels remained flat at approximately 4 percent of GDP and aging infrastructure depreciated, before picking up significantly from 2007 onwards.2 The capital stock subsequently stabilized as investment increased, but there is still significant catch up required to reach comparable levels with the LIDC, SSA and comparator averages. Consistent with the IMF methodology for deriving capital stock, for the ratio of capital stock to GDP to increase, new public investment must first cover depreciation.3

Figure 1.2
Figure 1.2

Public Capital Stock

(percent of GDP)

Citation: IMF Staff Country Reports 2022, 350; 10.5089/9798400224867.002.A001

Source: IMF estimate based on official data and World Economic Outlook

4. Public investment has been a priority in Uganda’s fiscal policy, but fiscal space has tightened in recent years (Figure 1.3). The fiscal policy shift towards infrastructure development became prominent in the mid-2000s following the completion of Highly Indebted Poor Country (HIPC) debt relief, which restored the ability to borrow on non-concessional terms. Compared to its peers in SSA, Uganda devotes a lower share of GDP to current expenditure and sits slightly above the median on capital spending (Figure 1.3a). In the decade since the start of the investment drive in 2007, domestic revenues have remained flat at 11 percent of GDP, which is lower than regional peers since 2007.4 This shift coincided with a sharp reduction in budget support from development partners, which had previously funded over a third of the budget in the early 2000s. As a result, total debt and the fiscal deficit have grown significantly (Figure 1.3b). While debt distress remains moderate, Uganda now has limited fiscal space to absorb future shocks.5

Figure 1.3
Figure 1.3

Current and Capital Spending, Deficit and Debt

(percent of GDP)

Citation: IMF Staff Country Reports 2022, 350; 10.5089/9798400224867.002.A001

Source: WEO, Government Final Accounts and staff Estimates

5. On average, approximately two-thirds of the annual capital budget for the last six years was spent. Externally financed projects were the main contributor to this low absorption (Figure 1.4). At an aggregate level, domestically financed projects have received repeated supplementary budgets and recorded an average execution rate of 107 percent. Conversely, externally financed projects have spent only 44 percent of their allocated budgets over the same period, with delays in procurement, challenges in meeting conditionality and acquiring land rights cited as the main reasons for under execution. These trends are prevalent in the energy, public works and transport sectors which are the main expenditure drivers in the development budget.

Figure 1.4
Figure 1.4

Execution of the Capital Budget

(percent of budget spent)

Citation: IMF Staff Country Reports 2022, 350; 10.5089/9798400224867.002.A001

Source: Budget Performance Reports (various years)

B. Composition and Financing of Public Investments

6. The central government undertakes the majority of public investment, while local government and public corporations (PCs) have a lesser role (Figure 1.5a). Based on the current budget year (FY2022-23) central government accounted for 92 percent of total investment. While local government and PCs accounted for around 5 and 3 percent respectively.

7. Public investments in Uganda are primarily funded through domestic resources, although foreign donors play a significant role (Figure 1.5b). Over the last six years domestic resources have accounted for around 60 percent of total resources, with 40 percent financed through foreign support. Uganda receives a sizeable portion of its public investment through a mixture of grants and concessional loans. From 2015−16 interest payments have increased by a percentage point of GDP to 2.6 percent of GDP, which reflect the more recent shift towards non-concessional loans, in particular heavy borrowing from the China Exim Bank.

Figure 1.5
Figure 1.5

Public Investment by Level of Government and Funding Source

(percent of total public investment)

Citation: IMF Staff Country Reports 2022, 350; 10.5089/9798400224867.002.A001

Source: Budget Performance Reports (various years)

8. The economic infrastructure sector accounts for over two thirds of total public investment, which is significantly higher than the SSA average (Figure 1.6). This underscores the emphasis placed on these areas.

Figure 1.6
Figure 1.6

Public Investment by Function

(percent of total public investment)

Citation: IMF Staff Country Reports 2022, 350; 10.5089/9798400224867.002.A001

Source: Staff estimates based on official data and World Economic Outlook6

9. PPP capital stock was derived from legacy projects prior to the 2015 PPP Act and there have been no new operational PPP projects since then (Figure 1.7). PPPs started to pick up since the mid-2000s, which was largely driven by investments in the energy sector to address blackouts and loadshedding.7 Since the enactment of the 2015 PPP Act and supporting framework, which established a stringent framework for PPPs, no new projects have yet become operational.8 From a pipeline of 44 potential PPP projects, there are 16 PPP projects under different stages of development, in roads, ICT, logistics, rural water, waste management, cultural, sporting venues and university infrastructure with a total project value of 7 percent of GDP.

Figure 1.7
Figure 1.7

Public Private Partnership (PPP) Capital Stock

(Percent of GDP)

Citation: IMF Staff Country Reports 2022, 350; 10.5089/9798400224867.002.A001

Staff estimates based on official data and World Economic Outlook.

II. Efficiency of Public Investment in Uganda

10. Access to services generated by Uganda’s infrastructure lags behind regional peers. Access to infrastructure for education, health, water, and electricity are all below both regional peers and sub-Saharan Africa. The reduction in real per capita allocations for capital investment for health, education and water infrastructure and the delays in energy transmission infrastructure have been cited as two potential reasons for this performance.9 Since 60 percent of Uganda’s population is school age, the lack of access to education infrastructure is a particular concern.

Figure 2.1
Figure 2.1

Measures of Infrastructure Access

(2019 and 2020)

Citation: IMF Staff Country Reports 2022, 350; 10.5089/9798400224867.002.A001

Source: World Bank development indicators database. Units vary to fit scale. Left hand axis: Public education infrastructure is measured as secondary teachers per 1,000 persons; and public health infrastructure as hospital beds per 1,000 persons. Right hand axis: percentage of people using at least basic water services. This indicator encompasses both people using basic water services as well as those using safely managed water services. Basic drinking water services is defined as drinking water from an improved source.

11. To reach higher levels of infrastructure quality and support economic activity, several areas of inefficiency in the energy and transport sectors require addressing. In the roads and energy sectors, there have been improvements in installed energy capacity and the paved stock of the road network (Figure 2.2).10 Persistent energy losses, fluctuation in the quality of road conditions and comparatively high road mortalities within the region, raise questions regarding the value for money of the investments (Figure 2.3). Transmission challenges to transfer power from newly installed mini-hydropower stations and shortfalls in road maintenance budget provision have been cited as two reasons for this.11

Figure 2.2
Figure 2.2

Energy Installed Capacity and Roads Capital Stock

Citation: IMF Staff Country Reports 2022, 350; 10.5089/9798400224867.002.A001

Sources: Energy Regulatory Authority and UNRA
Figure 2.3
Figure 2.3
Figure 2.3

Measures of Infrastructure Quality

Citation: IMF Staff Country Reports 2022, 350; 10.5089/9798400224867.002.A001

Sources: Energy Regulatory Authority, UNRA and World Development Indicators

12. The perception of the quality of Uganda’s infrastructure showed steady improvements in the period to 2011 but has stagnated since then. The improvements in perceptions over the past ten years have been driven by the electricity sub-sector, particularly after blackouts and loadshedding were eliminated between 2007−10. Perceptions of the road subsector has steadily increased since the establishment of UNRA in 2008 and the subsequent upgrade of major roads corridors. Other sub-sectors have brought down the overall perception, particularly ports (with notable delays to the Jinja and Port Bell ports stalling regional trade connections) and air (delayed expansion of Entebbe airport), which are likely to be contributory factors to the scores.

Figure 2.4
Figure 2.4

Perception of Infrastructure Quality

Citation: IMF Staff Country Reports 2022, 350; 10.5089/9798400224867.002.A001

Source: World Economic Forum and staff estimates. The World Economic Forum surveys business leaders’ impressions of the quality of key infrastructure services. 1 indicates the lowest score and 7 the highest. While this indicator provides a measure of the quality of infrastructure assets, it is affected by individual perception biases.

13. Estimates of investment efficiency in Uganda are uncertain and very sensitive to small changes in the underlying data. The IMF has developed a methodology to assess the efficiency of public investment through the development of an efficiency frontier (Box 2.1). Figure 2.5 shows that Uganda is at the very low end of the efficiency frontier. As Uganda’s capital stock grows, it will need to improve both the quality and access to its infrastructure. Given that high rates of investment are anticipated over the next several years including to scale up oil related infrastructure, addressing the weaknesses and gaps in public investment management identified in the next section of this report would help to increase the efficiency of capital spending.

Public Investment Efficiency Frontier and Gap

The public investment efficiency frontier follows the path of the countries that deliver the highest level of infrastructure outputs for the lowest amount of infrastructure investment over time. Where a country sits relative to that frontier provides a measure of its efficiency in converting infrastructure spending into infrastructure outcomes. The vertical distance below the frontier represents the efficiency gap.

Source: Mission
Figure 2.5
Figure 2.5

Efficiency Frontier and Gap – Access and Quality Indicators

Citation: IMF Staff Country Reports 2022, 350; 10.5089/9798400224867.002.A001

III. Public Investment Management Institutions

A. The PIMA Framework

14. The IMF has developed the Public Investment Management Assessment (PIMA) framework to assess the quality of the public investment management of a country. It identifies the strengths and weaknesses of institutions and is accompanied by practical recommendations to strengthen them and increase the efficiency of public investment.

15. The tool evaluates 15 institutions involved in the three major stages of the public investment cycle (Figure 3.1). These are: (i) planning of investment levels for all public-sector entities to ensure sustainable levels of public investment; (ii) allocation of investments to appropriate sectors and projects; and (iii) delivering productive and durable public assets.

Figure 3.1
Figure 3.1

PIMA Framework Diagram

Citation: IMF Staff Country Reports 2022, 350; 10.5089/9798400224867.002.A001

Sources: Public Investment Management Assessment: Review and Update, April 2018, IMF. http://www.imf.org/en/Publications/Policy-Papers/Issues/2018/05/10/pp042518public-investment-management-assessment-review-and-update

16. For each of these 15 institutions, three indicators are analyzed and scored, according to a scale that determines whether the criterion is met in full, in part, or not met (see Annex 2 for the PIMA Questionnaire). Each dimension is scored on three aspects: institutional design, effectiveness, and reform priority:

  • Institutional design refers to the objective facts indicating that appropriate organizations, policies, rules and procedures are in place. The average score of the institutional design of three dimensions provides the score for the institution, which may be high, medium, or low.

  • Effectiveness refers to the degree to which the intended purpose is being achieved or there is a clear useful impact. The average score of the effectiveness of the three dimensions provides the effectiveness score for the institution, which may be high, medium, or low.

  • Reform priority refers to whether the issues contained within the institution are important to be improved in the specific conditions faced by Uganda.

The following sections provide the detailed assessment for Uganda according to this methodology.

B. Overall Assessment

17. Uganda has achieved significant improvements in public investment management since 2016. A number of measures have been undertaken, including giving the Development Committee a strong role as a gatekeeper for new investment proposals, the establishment of the PAP, and development of regulations and guidelines to improve the quality of project preparation and appraisal. The IMF and other development partners have been active partners to the government in pursuing these reforms. Annex 4 provides an overview of the implementation status for the recommendations on public investment management provided during previous IMF technical assistance missions in 2017, 2018, and 2019.

18. Reflecting the many institutional reforms and improvements in recent years, Uganda is particularly strong in institutional design (Figure 3.2). The legal and institutional frameworks for ensuring fiscal sustainability, project appraisal, private sector provision of public infrastructure, budget comprehensiveness, project selection, procurement, and portfolio oversight are well designed and compare favorably to comparators and in most cases to international good practices.

19. The effectiveness of public investment management is markedly lower than the institutional design. The weakest institutions from an effectiveness perspective are multi-year budgeting, maintenance, availability of funding, portfolio oversight and asset monitoring. These weaknesses have significant, negative impacts on public investment access and quality.

Figure 3.2
Figure 3.2

Uganda: Design versus effectiveness

Citation: IMF Staff Country Reports 2022, 350; 10.5089/9798400224867.002.A001

20. The following sections provide a detailed assessment of Uganda’s public investment management institutions. Each institution is given an aggregate score for institutional design and for effectiveness as summarized in Figure 3.2.

C. Planning Sustainable Levels of Public Investment

1. Fiscal principles or rules (Strength— High; Effectiveness—Medium; Reform Priority— Medium)

21. Debt sustainability is guided by general government fiscal rules for debt and deficit and the medium-term fiscal framework (MTFF) is published but does not differentiate between new and ongoing investment projects.12 Under the Charter for Fiscal Responsibility (CFR), Uganda committed to a government deficit rule of no more than 3 percent of GDP, and a 50 percent of GDP ceiling on the present value of debt for both central and local government, which are consistent with the East African Community (EAC) convergence criteria. An MTFF is prepared semiannually to guide fiscal policy through the annual budget process, though it provides only a limited framework for investment management since it does not distinguish between new and ongoing investment projects nor identify fiscal space for new investment projects.

22. While the MTFF provides an anchor to guide budget preparation, other targets and rules are generally not adhered to. The debt-to-GDP rule was maintained before and during the pandemic, but the deficit target has been continually missed (Figure 3.3). Fiscal forecasts from the MTFF are published in the Budget Framework Paper and include a breakdown of current and development expenditure, but this does not sufficiently constrain the approved budget. During the three years pre-pandemic, the approved budget was on average 15 percent higher than the development ceiling in the MTFF (Table 3.1). The urgent need to “address and bridge the infrastructure gap” and “the need for infrastructure required for extracting Uganda’s first oil” were cited as reasons for not complying to the deficit target in the CFR.13

Figure 3.3
Figure 3.3

Fiscal Rules Compliance

(percent of GDP)

Citation: IMF Staff Country Reports 2022, 350; 10.5089/9798400224867.002.A001

Source: MoFPED Macroeconomic and fiscal performance and debt sustainability reports (various years)
Table 3.1

Uganda: Variance Between MTFF and the Approved Development Budget

(Ush. Billion)

article image
Source: MoFPED Macroeconomic and fiscal performance and budget performance reports (various years)

23. Uganda’s MTFF provides a relatively credible anchor for the budget, but fiscal space has tightened and further improved institutions to support fiscal sustainability is a medium priority. Uganda is now categorized as being at a medium risk of debt distress, reflecting the realization of macroeconomic fiscal risks during the pandemic. The updated CFR accounts for oil revenue volatility and has annual deficit targets inbuilt. It would be beneficial to build on these reform efforts in order to better bind fiscal outcomes with investment needs. Additionally, improving the comparability of the budget with the MTFF (for instance, through directly comparable tables in both documents, including a breakdown of capital spending into ongoing and new projects) would improve transparency and further strengthen the link between the MTFF and the budget.

2. National and sectoral plans (Strength— High; Effectiveness—Medium; Reform Priority— Medium)

24. A strong and comprehensive planning framework guides public investment decisions in Uganda, with the 18 overarching programs in NDP III costed by year and with output and outcome targets for each year. In line with Uganda Vision 2040, the National Development Plan III (NDP III) aims to build on the progress made and learn lessons from the planning and implementation of the first two national development plans.14 The total cost of the 18 programs in NDP III is estimated at Ush. 202,633 trillion, plus Ush. 74,244 trillion in interest payments due (on average 27.5 percent of GDP annually).15 Nine hundred and seventeen projects are included in these programs.16 Figure 3.4a presents the number of projects included in each of the 18 programs of NDP III by stage of development. Cost estimates are presented in the NDP III PIP17 for 203 ongoing projects, 557 new projects and some of the 159 project ideas. There are 158 measurable targets for outputs and outcomes of the 18 programs, for which yearly values and a baseline are established, but these targets are not linked to specific projects.

25. Alignment between the budget and NDP I and II was lower than expected but has improved in NDP III because if a project is not included in NDP III it is not approved by the DC. Alignment between the budget and NDPII was estimated at only 60 percent in 2020 and increasing it to 85 percent by 2025 is one of the key targets of NDP III. Figure 3.4b presents the total cost of projects in the NDP III PIP by program, compared with the total estimated cost of the program in NDP III, showing significant differences for some of the 18 programs. Attainment of targets was low in NDP II, as indicated in the Medium-Term Review, due in part to poor alignment between the NDP, the national budgets and ministerial annual work-plans. NDP III targets are not linked to specific projects, and for some targets the unit to be used for measuring the value of the indicator is not specified or is ambiguous. Also, the sources of data required for assessing progress of indicators are not identified.

Figure 3.4
Figure 3.4

NDP III Projects and Cost Estimates

Citation: IMF Staff Country Reports 2022, 350; 10.5089/9798400224867.002.A001

Source: Mission based on NDP III Annex 3 and Table 23.2, and NDP III PIP

26. More precise costing of major investment projects and associating the targets of the programs to specific projects at the planning stage can contribute to ensure better alignment with the budget and improved monitoring and evaluation of achievements. Given the large number of projects included in the plan that are at the idea or concept stages, cost estimates are preliminary or not available. Better and more detailed costs estimates should be used to re-estimate the cost of the 18 NDP III programs checking c against estimations of resources available for investment in future years to assess the viability of implementing all projects in the five-year period, and to better prioritize for budget inclusion. Also targets linked to specific investment projects, with clear units of measurement and source of data, would contribute to better project prioritization and monitoring and evaluation of progress in plan implementation.

3. Coordination between entities (Strength— Medium; Effectiveness—Medium; Reform Priority— Medium)

27. Comprehensive coordination mechanisms between levels of government are clearly specified in guidelines and budget call circulars, including fiscal transfers and disclosure of contingent liabilities. The National Planning Authority is tasked with ensuring the national development plan is developed in a coordinated manner with MDAs, SOEs and LG. Fiscal transfer formulae for the discretionary development equalization grants and sector grants have been specified in guidelines issued by the MOFPED since 2017 and are published in the budget documents annually.18 Around three percent of sectoral development transfers are discretionary and allocated to selected local governments outside the formulae. Contingent liabilities are required to be reported to the MOFPED for PPPs, legal claims and guarantees on at least a semiannual basis, as required by the Guidelines for the Management of Contingent Liabilities (June 2020).

Table 3.2

Uganda: Development Transfers to Local Governments

(Ush. million)

article image
Source: Government Budget Documents, MOFPED.

28. There is structured coordination between Central Government, LGs and PCs when planning public investments, LGs are provided with indicative resources in a timely manner but not all significant contingent liabilities are reported to central government. The development of the NDP III involved the local governments, and the National Planning Authority (NPA) receives the plans of both local governments and PCs for review and comment to ensure consistency with NDP III. Local governments are represented in the respective program working groups, as appropriate, and an annual meeting takes place between the MOFPED, MOLG and NPA and LGs regionally to discuss NDP and annual budget priorities. Individual projects at the local government level are, however, not subject to the PIM framework at the concept and appraisal stages. Rules for transfer of development funds to the 176 local governments for Education, Health, Agriculture, Water and Environment and Works and Transport are published in the annual budget documents. These are based on approved guidelines but are not explicitly enshrined in legislation or regulation. Distribution formulae take account of basic variables (for example, population) and the results of a local government performance assessment.19 Local governments are given indicative planning figures in the first budget call circular in September (9 months before the beginning of the fiscal year), with a revised figure in February/March. Annual reports on contingent liabilities are disclosed in the Annual Report on Public Debt, Guarantees, Other Financial Liabilities and Grants. There are still important challenges for public investment at the LG level, as illustrated in Box 3.1.

Uganda: Hoima District - Issues in Public Investment

Hoima District is in the mid-western part of Uganda. In 2006, deposits of around 2.6bn barrels of oil, of which 1.2bn barrels were deemed extractable were discovered in the Albertine Rift basin in Hoima District.

Several large capital investments have been undertaken and are ongoing to enhance infrastructure to enable extraction, processing, and transmission of the oil, involving both central government and Hoima District. These include investments by the Ministry of Energy to develop an international airport, with an oil refinery and industrial park on site and access road rehabilitation. Hoima district has taken an active role in coordinating the provision of services to the local community

Hoima finances its capital spending mostly through central government transfers: district development grants 58.2 percent, and sector conditional grants 37.6 percent with only a planned 2.7 percent from local revenues and the remainder from local development partners.

Hoima District has identified several challenges in implementing investment projects at District level.

  • Inadequate resources for operating and maintaining assets such as schools, district roads, water, and health facilities.

  • Insufficient facilities for community involvement in planning, such as technical capacity, logistical support, and community fatigue, leading to limited understanding by community members of their role in the projects.

  • Limited skill base at the local level through the entire PIM cycle, particularly registered civil engineers.

  • Superficial understanding at the local level of how to align planned outputs of NDP III with the District Development plan and weak capacity in identifying understanding impact and trade-offs among investments, exacerbated by the limited involvement of LG in designing the assessment system.

  • Limited evidence bases for strategic planning and delays in feedback on plans from the NPA

  • Project specific problems, particularly with Uganda Intergovernmental Fiscal Transfer Program (UGIFT) related to procurement delays, coordination with the center, systems issues, and limited roles of the district in project implementation.

Source: IMF staff

29. Some significant known contingent liabilities related to public-private partnerships are not disclosed in the annual report on public debt, other financial liabilities. Reported contingent liabilities largely relate to guaranteed loans (Table 3.4). Contingent liabilities related to PPP contracts entered into before the enactment of the 2015 PPP law, including Bujagali Hydropower Generation project, Eskom Generation Concession, and Umeme Power Distribution Concession are not included in the annual report. Recent experience suggests that there could be material contingent liabilities embedded in the contracts with 13 independent power producers which resulted in deemed energy costs to the government of Ush. 87.7 billion due to inadequate investment in power distribution since the power produced could not reach the national grid. This resulted in significant costs for UETCL and ultimately public finances and consumers through the tariff. Reporting of contingent liabilities of ‘legacy’ PPP contracts is therefore important. Furthermore, contingent liabilities related to delayed implementation of public investment projects, and potential related costs such as the delays related to the Karuma Dam opening, should also be reported,

30. While coordination mechanisms are generally well designed, there is room for improvement of their effectiveness. Since the enactment of the PFMA, reporting of contingent liabilities has improved (Table 3.3) but significant events have materialized in recent years, and further enhancements of reporting are needed. In particular, contingent liabilities related to PPP contracts in the energy sector relating to independent power producers, for example the potential fiscal costs of deemed energy contractual clauses should be analyzed and reported in future reports. Including significant projects at an early stage in the PIM framework, particularly at the concept and appraisal stage would enhance coordination at the project level.

Table 3.3

Uganda: Reported Contingent Liabilities

(USD, millions)

article image

4. Project Appraisal (Strength— High; Effectiveness— Medium; Reform priority— Low)

31. Since 2016 a strong framework for project appraisal has been implemented requiring all major capital projects, regardless of financing source, to be subject to rigorous technical, economic, and financial analysis. MoFPED published in 2016 the “Development Committee Guidelines for the Approval and Review of the Public Investment Plan (PIP) Projects” (DC Guidelines), which apply to all projects within the Public Sector.20 It also developed the “Public Investment Manual for Project Preparation and Appraisal.”21 The manual was disseminated and MoFPED provides support on project appraisal to MDAs.22 Complementing the manual, National Parameters23 for project appraisal and a database with Commodity-Specific Conversion Factors were developed.24 The guidelines established Project Preparation Committees (PPCs) at Vote and Sector Working Group level to facilitate the project preparation and appraisal process. Project pre-investment studies are reviewed and approved by the Development Committee (DC), which acts as independent reviewer and gatekeeper.25 The Manual has sections on all key aspects of project preparation and appraisal, including a good chapter on qualitative and quantitative risk analysis, which is also one of the four analytical modules defined in the DC guidelines.

32. All major projects are systematically subject to technical, economic, and financial analysis following the DC Guidelines, and compliance is enforced by the DC, which reviews all projects to be included in the PIP. But pre-investment studies are not published and the analysis done by the DC is only available at request based on the Transparency Act. Project concepts and profiles are usually prepared in-house by MDAs, while pre-feasibility and feasibility studies are outsourced, with some MDAs claiming they have an insufficient budget to outsource them, and feasibility studies for large projects sometimes done by development partners. No feasibility studies could be reviewed by the mission to assess how well the guidelines and manual are applied, but summaries of DC discussions indicate that ample analytical information is available.

33. Despite all progress done on improving PIM, still some challenges remain to consolidate and expand the current achievements. A key aspect is the need to train more public servants in project preparation and appraisal, given that most institutions mentioned insufficient duly trained staff as a limitation. Developing sector specific methodologies would facilitate project appraisal and selection, especially in social sectors, and would improve the quality and standardization of appraisals. A couple of key national parameters for project appraisal, namely the value of time and the value of life, still need to be determined. Also, climate change issues need to be included in the Manual and Guidelines (see Annex 5). This could be an opportunity to prepare a new version of the manual providing more detailed guidance in many aspects.26 The creation of a Project Development Fund to finance feasibility studies was mentioned to the mission and could contribute to more and better feasibility studies.

5. Alternative infrastructure financing (Strength— High; Effectiveness—Medium; Reform Priority— Medium)

34. Legislation and policies provide strong support to private sector involvement in major infrastructure markets. The NPD III places emphasis on encouraging private sector involvement in the economy. Private companies, including international companies, are generally allowed to enter infrastructure markets, with a few exceptions (Table 3.4). The markets for telecommunications, electricity generation and off-grid electricity distribution are competitive. The state-owned electricity transmission company UETCL purchases all power, however this may change as amendments to the Electricity Act are expected to be enacted to enable private sector participation in electricity transmission in the coming year. Infrastructure for water supply and sanitation is owned by the state-owned NWSC and regional water authorities. The Government published a PPP policy in 2010, followed by the enactment of a PPP law in 2015. Detailed national PPP guidelines were subsequently approved in 2019. Most PC investments are financed from the budget, and these are covered by the regular planning and budgeting processes. MOFPED receives the annual statements of all PCs but there is no legal requirement for a published report assessing their financial position, beyond the analysis in the report of the Auditor General.27

Table 3.4

Uganda: Competition and Regulation in Infrastructure Markets

article image
Source: Government of Uganda and public corporation websites

35. Uganda is open to private investment in most economic infrastructure sectors, but there has been slow progress in finalizing new PPPs and there is no consolidated report on the performance of its PCs. While there are legacy PPPs, approved before the 2015 Act, there have been no PPPs contracts awarded under the current legal regime. Since most PC investments are through the budget, these are overseen by the MOFPED and parent Ministry, however there is no published consolidated report on financial performance of major PCs that includes a consolidated summary of the PCs’ investment plans to inform the government and stakeholders of the overall strategy for enhancement of economic infrastructure.28

36. In the medium term the MOFPED should allocate responsibility for producing a consolidated report on PCs and their investments in the form of an ownership report. The report would enable the assessment of performance of at least the ten largest PCs and provide an overview of their investment plans, enabling an assessment of the consistency and complementarity between government and PC investment projects. The review process covers at least the 10 largest PCs measured by assets or 75 percent of total PC infrastructure investments.

Recommendations for Investment Planning

Issue 1: . There are significant differences between the estimated cost of programs in NDP III and the total cost of projects included in each program.

Recommendation 1: Revise costing of programs based on the cost of projects in NDP III and include only those that can be financed within the medium term fiscal framework.

Issue 2: The current methodological tools for project preparation and appraisal need some improvements to incorporate emerging issues like climate change and provide specific guidance for sectors to facilitate work by MDAs and LGs.

Recommendation 2: Update the Manual for Project Preparation and Appraisal to provide more detailed guidance and incorporate climate change issues, develop sector specific project preparation and appraisal manuals, and strengthen financing of pre-investment studies.

Issue 3: There is no published consolidated report on the financial performance of PCs.

Recommendation 3: Allocate responsibility for review and analysis of PC annual financial statements and ongoing and planned investment projects and publish an annual PC performance report.

Issue 4: Contingent liabilities related to PPP contracts entered into prior to the 2015 law are not reported.

Recommendation 4. Identify and report information related to PPP-related contingent liabilities, particularly in the energy sector emanating from contracts signed before the 2015 law was enacted.

D. Ensuring Public Investment is Allocated to the Right Sectors and Projects

6. Multi-year budgeting (Strength— Medium; Effectiveness— Low; Reform Priority— High)

37. Medium term projections of capital spending are published by MDA, but multiyear capital budget ceilings are highly indicative and project costs are not broken down for each year. Projections of capital spending for the general government are forecast by MDAs and aggregated for local governments as part of the MTEF, which is published twice a year as ceilings to the Budget Call Circulars (BCC).29 The ceilings are indicative and comprise of domestic and externally financed components for the development budget and recurrent spending for MDAs and local governments. Multiyear project level budget allocations are reflected in a rolling public investment plan, which also includes the total project costs, but cost requirements are not broken down on an annual basis, nor are any cost revisions or adjustments explained between years.

38. While the medium-term expenditure framework (MTEF) is well-established and closely aligned to Uganda’s fiscal strategy, it is not a reliable anchor for projecting capital spending over the medium term. Indicative MTEF allocations deviate from the budget to a large extent. In the previous three financial years prior to COVID-19, spending exceeded the MTEF development budget ceiling with an average deviation of 20 percent (Figure 3.5). There was a 15 percent variation between the ceilings in the second Budget Call Circular (BCC) and the approved budget in the three years period prior to the pandemic (see Table 3.1 under institution 1). The lack of publication of multiyear project costs implies that no changes in annual project costs are identified or explained to guide budget decision making.

Figure 3.5
Figure 3.5

MTEF Ceilings, Annual Budgets, and Outturns (Ush. Billion)

Citation: IMF Staff Country Reports 2022, 350; 10.5089/9798400224867.002.A001

Source: MoFPED budget framework papers, approved budgets, and budget execution reports (various years)

39. Capturing and publishing annual project costs and cost revisions is important to ensure these changes are known and can be accounted for. As these costs are not published, there is no visibility on how these have been revised or explanations for their changes. This would benefit better estimations of projects that require increased budget allocations, such as the Hoima airport indicated in Box 3.8 in Section 14, who reported a doubling of prices estimates of major inputs of bitumen, diesel, and steel. This could be easily adopted in the Integrated Bank of Projects (IBP) database as the systems development is being finalized (see Section IV.B). Project costs could be added to the existing PIP or presented as a supplementary document, which could take the form of a medium-term strategic investment plan. Annex 6 offers a potential format that this could take.

7. Budget comprehensiveness and unity (Strength— High; Effectiveness— High; Reform Priority— Low)

40. Most capital spending is channeled through the budget process and recurrent and development budgets are prepared, coordinated, and presented together by program. Extra Budgetary Units (EBUs) have been reduced from 70 to one vote in recent years. EBUs are part of budget appropriation and are therefore required to disclose how they plan to spend their revenues that they retain within their own budget.30 The PIP covers central government projects, which include capital transfers to PCs, whereas the approved budget estimates volumes II (local governments) and III (public corporations) cover development allocations at a more aggregated level.31 Capital and recurrent budgets are prepared and presented in the budget on the basis of a fully integrated program classification by each Ministry, Department and Agency.32

41. Limited capital spending is undertaken by EBUs, which are well covered in central government budget documentation along with the bulk of capital spending by public corporations. Investments undertaken by EBUs account for less than 1 percent of total capital spending.33 Details of projects undertaken by EBUs and capital transfers for public corporations are reflected in the PIP as they are classified the same as other central government projects. PPP projects are not reflected as none of the current portfolio is operational. Different departments are responsible for coordinating the recurrent and development budgets and collective decisions are made as part of the planning and budgeting consultations through combined Program Implementation Action Plans (PIAPs).34

42. To promote full disclosure, all future operational PPP projects should be included for information as part of budget documentation. This information is currently stored in various different documents and websites and could benefit by being presented as one comprehensive investment portfolio as part of the Public Investment Plan (PIP). Undertaking this reform would benefit Parliamentarians and the public have a full appreciation of the investment portfolio at the time the budget is appropriated.

8. Budgeting for Investment (Strength— Medium; Effectiveness— Low; Reform Priority—High)

43. The PFM Act and budget call circular set out a framework for protecting investment projects during budget implementation. Total project costs are included in the PIP and multiyear commitments are legally required to be submitted each financial year to guide the affordability of public investments in the form of a multiyear commitment statement (MYCS), which is submitted to Parliament.35 The transfer of funds between capital and current spending during the fiscal year are legally permitted as long as they are not more than ten percent of an item or activity of a Vote.36 The first BCC states the need to prioritize the completion of on-going projects ahead of new ones to ensure that budget allocations sufficiently match contractual commitments and expenditure needs.37

44. The timely and accurate recording of multiyear commitments have been a challenge and there is evidence of projects not being fully protected from budget cuts. The lack of a verification process for multiyear commitments has undermined the effectiveness of the MYCS and the large infrastructure agencies have reported the repeated accumulation of arrears due to unpaid contracts.38 Net virements from the development budget have been minimal (Figure 3.6a), and efforts to prioritize ongoing projects have helped reduce the PIP portfolio (Figure 3.6b). Aggregate release performance of GOU funded projects has improved over the past ten years (Figure 3.7a), however there is evidence of more than half of the projects in the PIP receiving insufficient funds (Figure 3.7b and Table 3.5).39 This is supported by examples of delays, cost overruns and stalled projects cited in the FY2020-21 Auditor General’s report, which indicated that delays amounted to 5 percent of total capital spending.40

Figure 3.6
Figure 3.6

Net Virements and Total PIP Project Numbers

Citation: IMF Staff Country Reports 2022, 350; 10.5089/9798400224867.002.A001

Source: MoFPED annual budget performance reports and program budgeting system database
Figure 3.7
Figure 3.7

Aggregate and Project Level Budget Release Performance

Citation: IMF Staff Country Reports 2022, 350; 10.5089/9798400224867.002.A001

Source: MoFPED annual budget performance reports and program budgeting system database.Notes: Insufficient means funds released are less than the budget allocation, sufficient indicated full funds are released and excess where funds released are higher than the approved budget.
Table 3.5

Uganda: Funding Sufficiency for PIP Projects

(FY2020-21)

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Source: MoFPED Performance Budgeting System Database.

45. Improving the quality, recording and verification of multiyear commitments remains a high reform priority. Ongoing efforts to interface different IT systems should be expedited along with efforts to integrate the MYCS process into the mainstream budget review process. The benefits of implementing this reform will ensure there are more stringent mechanisms to protect ongoing projects and that they receive the required funding they need to be completed on time.

9. Maintenance funding (Strength—Low; Effectiveness—Low; Reform Priority— High)

46. There are few and limited methodologies for assessing routine and capital maintenance needs and routine maintenance cannot be identified in the budget. The Ministry of Health has a routine maintenance manual for medical equipment, but not for facilities. Routine road maintenance is currently limited to pothole repairs, slushing of roads and desilting of culverts—other periodic road maintenance is not done at all. Only critical maintenance is done on strategic bridges and ferries. In the electricity sector the licensing of generation capacity requires that a maintenance plan be in place as well as an outage plan. The routine maintenance plan for transmission lines is coordinated with the generation maintenance plan. The routine maintenance of hydro electrical plants is planned to be executed in the dry season at low water levels. Capital maintenance can be identified in NDPIII, but not in all program or sector strategies. Annex 7 indicates the South African maintenance guidelines for public infrastructure.

47. Periodic and routine maintenance are neglected, although rehabilitation and upgrades are done but with inadequate funding. The lack of methodologies described above results in poor budgeting for maintenance. Lack of routine maintenance or postponing maintenance to later stages increases rehabilitation and asset replacement costs. Maintenance is sometimes identifiable in the budget.41 The Annual Budget Monitoring Report 2018-19 states that a balance between upgrading and maintenance/ rehabilitation of roads projects should be prioritized to reduce the maintenance backlog. The lack of maintenance funding is demonstrated in Table 3.6, which shows that on average 49 percent of the annual road maintenance needs were funded from 2015 to 2021.

Table 3.6

Uganda: Funding Requirement Versus Provisions for Road Maintenance

(Ush. billion)

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Source: UNRA Annual performance report FY2021-22

48. Compilation of routine and capital maintenance methodologies and manuals as well as the acceleration of routine maintenance is an area of high reform priority. Routine- and periodic maintenance will result in substantial savings in the medium and long term on expensive rehabilitation works. An example of cost savings from systematic road maintenance in Rwanda is contained in Box 3.2 below.

Example of Cost Savings in Road Maintenance in Rwanda

A road rehabilitation demanded an investment of RWF 140,000,000. The yearly routine and preventative maintenance cost is estimated as 3 percent of the construction cost, which equals to RWF 4,200,00 per annum. After 8 years, the total maintenance cost will amount to RWF 33,600,000 Without proper maintenance, after 8 years of utilization the road will require significant rehabilitation work, the cost of which may be at least 50 percent of the replacement cost. This amounts to RWF 70,000,000. In this example, the preventative maintenance cost is roughly 50 percent lower than the rehabilitation cost. The actual savings over the period of 8 years would amount to RWF 36,400,000 or more.

Source: Operations and Maintenance Manual, Introductory Module for Rwanda, 2021

10. Project Selection (Strength— High; Effectiveness— Medium; Reform priority— Low)

49. The DC Guidelines establish four levels of central review and approval, and a standard process before a project in the pipeline can be admitted into the PIP. The four levels (phases) are project concept, project profile, pre-feasibility, and feasibility. All new projects must be registered in the IBP at the concept stage and are approved for further development (next phase) after review by PAP and the DC subcommittee. The final decision is taken by the DC, based on recommendations by the DC Subcommittee. After the feasibility study of a project has been completed and approved by the DC, it can be included in the PIP. Standard selection criteria are established for analysis by the DC (Box 3.3).42, Project readiness for implementation and being included in the NDP III are key approval criteria for assigning budget funding to a project in the PIP.

50. Nearly all new public sector projects comply with the review process before being included in the PIP and becoming candidates for funding from the budget or by donors. Each year only 2 or 3 new projects (less than 5 percent of the total) “jump the line”, but still at least a profile is to be prepared.43 Projects are analyzed first by the DC subcommittee in their monthly meetings based on analysis done by PAP and, if necessary, review of the pre-investment study. The fact that the review and selection process comprises four successive steps results in a lengthy process that was criticized by some MDA’s. Proceedings of the meetings are prepared and are communicated to stakeholders.44 The DC holds quarterly meetings to review recommendations by the subcommittee and make final decisions. On a yearly basis all projects in the PIP are reviewed by the DC to identify which should exit based on the established criteria.45 This review process enhances the realism of the PIP, but indicates that the pre-PIP review process has been less than fully effective.

Project Review and Selection Criteria

The Development Committee Terms of Reference for Review of Ongoing Projects in the PIP For FY 2021/22 established the following criteria for the review process:

  • 1. Percentage physical completion

  • 2. Time progress

  • 3. Funding profile/Adequacy of budgetary allocations

  • 4. Project Budget performance

  • 5. Average Project life Absorption Rate /capacity to utilize project resources

  • 6. Capital recurrent ratio

  • 7. Project delay against schedule

  • 8. Project challenges

Based on the assessment done, a decision is taken by the DC regarding its continuity in the PIP, which could be:

  • i. Exit; (project has reached its end date or concluded its activities)

  • ii. Retain; (Project is on track and requires more time to conclude activities)

  • iii. Transfer to the recurrent Budget (Project activities are largely recurrent in nature and can better be implemented under the recurrent Budget)

  • iv. Downgrade to pipeline (Project has not received sufficient funding / doesn’t fulfil readiness conditions Project is not a priority to the programme); or

  • v. Re-scope (Project originally approved scope can no longer be achieved).

  • vi. Postpone for the projects that have limited financing but do not address Covid related interventions.

For project that have stalled in implementation the following criteria will be used to decide about their continuity in the PIP:

  • 1. Current Policy Relevance

  • 2. Financial Consequences of Suspension

  • 3. Legal Consequences of Suspension

  • 4. Social Consequences of Suspension

  • 5. Environmental Consequences

Criteria for projects to enter the budget after appraisal have been defined by MoFPED and are being piloted (Project Selection Criteria for Projects to Enter the Budget After Appraisal, MoFPED, March 2021). They are:

  • 1. Strategic fit

  • 2. Readiness of the project intervention

  • 3. Budget availability and affordability

  • 4. Economic and financial viability

  • 5. Social and environmental impact

Source: IMF staff

51. The efficiency and effectiveness of the current project review and selection process can be increased by continuing efforts to enforce compliance, by improving the selection process, and by reducing time for approval of projects. Even if the percentage of projects “jumping the line” is low, reducing it, or at least avoiding an increase, should be a constant goal of the MoFPED. Improving project preparation and appraisal would also contribute to project selection and prioritization by providing better data The project selection criteria being piloted could increase the effectiveness of the selection process. And efficiency can be improved by shortening the time required by a project to be included in the PIP.

Recommendations for Allocation of Investment Funds

Issue 5: Information on project costs, their revisions, and multiyear planned expenditures are not published at the time of appropriation.

Recommendation 5: Publish complete project costs and multiyear projections, include, and explain cost revisions, in the budget annexes, and systemize this process through the IBP.

Issue 6: The recording of multiyear commitments is inaccurate and not supporting budget choices.

Recommendation 6: Integrate the multi-year commitment process into the mainstream budget review process and improve the accuracy and recording of multi-year commitments.

Issue 7: Lack of maintenance methodologies for routine and capital maintenance and insufficient budget allocations for maintenance.

Recommendation 7: Strengthen methodologies for assessing routine and capital maintenance needs, give higher priority to require attention to enhance maintenance funding in the budget process and report actual versus planned maintenance in budget documents.

E. Delivering Productive and Durable Public Assets

11. Procurement (Strength— High; Effectiveness— Medium; Reform Priority— Low)

52. The procurement of major capital projects is open and transparent, with systems in place to ensure monitoring, a procurement data base available and a complaints review process in place. All bids are available on public notice boards, websites and on the e-procurement system. All new bidders can register on-line, and all complaints are lodged. The PPDA monitors the total bidding process including time frames and issues an annual report. The report provides a full summary of each type of bidding, average number of bids per method of procurement, performance of contracts and percentages by value of method of bidding. Complaints are investigated by an Independent Complaints Tribunal. A response should be given to the complaining bidder within 15 days. The PPDA report also deals with the number of service providers suspended over the past years. Section 94 of the Procurement Act allows for the suspension of service providers who breaches the Code of Ethics of providers. There is a summary of average bids per method of procurement, which is illustrated in Annex 8.

53. Procurement is functioning to the satisfaction of the users, with all statistics available, and a functional complaints process. E-procurement commenced on 1 July 2021, with 24 entities utilizing the system. Another 50 entities, including many with large projects will commence utilizing the system from June 2022. There is an updated procurement database available. The system used prior to the e-procurement system was also open and transparent. There was an improvement in the submission of procurement plans from 80.5 percent to 91.3 percent since the previous annual report of 2016−17. Open bidding constitutes 60.4 percent. A follow up on the implementation of recommendation indicate that 69 percent of recommendations were implemented. The complaints process is monitored effectively, and timelines are generally met.

54. Reforms to address procurement constraints are a low reform priority. There is currently a capacity constraint as far as competence is concerned for the compilation of procurement documentation of construction bids for oil related facilities, as well as high end road construction. Development of more advanced procurement methodologies to handle high technology and complicated road projects, also require attention. The merging of the previous paper-based procurement system and the E-Procurement system needs to be completed without delay.

12. Availability of Funding (Strength— Medium; Effectiveness—Low; Reform Priority— High)

55. The PFMA and associated regulations lays down a well-designed framework for funding of public investment execution. It places responsibility on the Secretary to the Treasury (ST) for preparation of an annual cash plan.46 Accounting officers in spending units are required to produce annual work and procurement plans detailing their annual requirements through the year. The annual cash plan is subsequently broken down into quarters and authority to spend (warrants or budget releases) are issued on a quarterly basis to Accounting Officers.47 Cash management guidelines specify a cash management committee, chaired by the Deputy Secretary to the Treasury with representation of the budget, economic affairs directorates, the cash policy department and the Accountant General’s Department, Uganda Revenue Authority, and the Bank of Uganda. This operational committee should meet monthly to reconcile and agree data and review the progress against the cash plan and assess amounts available for release in the form of the quarterly warrants. The annual cash plan may be updated during the year to reflect the progress in execution of the budget. There is no legal framework requiring donors to maintain bank accounts in the Central Bank, where accounts are held depends on individual donor agreements.

56. The current arrangements for in-year funding of public investments are not effective. While cash flow forecasts are prepared, only the inflows are updated quarterly in the cash flow plans. There is no systematic updating of the cash flow plans on a monthly basis based on up-to-date information on planned spending provided by spending units. Cash management is based on budget execution data rather than the actual cash needs for spending in the year. There is evidence of significant arrears (Table 3.7), indicating that the cash is not available to honor commitments for budgeted expenditures, an issue also raised by the Auditor General.48 In practice, some projects receive less budget release than projected, others receive the required amount and, in some cases, more budget release than budgeted (see Figure 3.7b under institution 8). Some project accounts are held in commercial banks, while others are housed in the Bank of Uganda, depending on individual agreement with the financiers.

Table 3.7

Uganda: Verified Expenditure Arrears 2019 and 2020

(Ush. billion and percent of stock)

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Source: Strategy to clear and prevent arrears (2019 data) MOFPED June 2021, Copy of domestic arrears report, Internal Auditor General, MOFPED (May 2021)

57. Improved arrangements and practice for funding of investments is a high reform priority. The mismatch between planned expenditure and available funds, evidenced by significant expenditure arrears points to critical failings in the public financial management system supporting PIM. Arrears in payments for public investments have had serious implications for implementation of projects and costs to the government. Project delays can result in delayed or unfinished projects, increased costs due to interest, penalty costs, court judgements, and seriously impedes the efficiency of public investment management.

13. Portfolio Management and Oversight (Strength— High; Effectiveness—Low; Reform Priority— High)

58. Major projects are centrally monitored during project implementation, funds can be re-allocated between projects during implementation, and ex-post reviews are required. The total portfolio of projects is monitored by the BMAU, who issue a semiannual report summarizing its findings as well as recommendations. This report is submitted to Parliament. Funds can be re-allocated between investment projects, but only for GoU funded projects. Treasury Instruction 8.4 and PFMA section 22 regulates the process of re-allocation, with a limit of 10 percent of the original budget. The Public Investment Management Framework, as well as the UNRA Programme Management Framework require ex-post reviews. Ex-post reviews are required after completion of the projects to determine if all objectives were met and to compile a lesson learned document.

59. Portfolio monitoring of all projects is conducted as required by regulations; however certain critical issues are not attended to at the required authority level. Although the portfolio of projects is monitored, serious issues such as land compensation disputes remain a problem, causing critical delays in projects as well as large cost overruns. The compensation matter requires high level, legal intervention. The monitoring reports are lacking summary tables of projects with delays, projects with cost overruns, and the number of projects delayed as a result of compensation disputes. Annex 9 contains an example of a summary table for risk projects. The result of the lack of summary portfolio information can be seen in Box 3.4. The reports are also lacking baselines against which percentage completion are measured, and no base dates against which delays can be measured. Re-allocation of funds is done, however very seldom and there is no evidence that the re-allocation of funds has accelerated any projects. Ex post reviews are sometimes conducted for externally funded projects, but not for GoU funded projects. This may be one reason why the lessons regarding land compensation disputes are not addressed more forcefully. UNRA is in the process of appointing Consultants to compile ex-post project reviews, but to date UNRA has not conducted any such reviews.

60. Improvements in the portfolio monitoring process is a high priority reform. The lack of co-ordination and duplication of data requests between MoFPED, BMAU, NPA and the OP APEX system is also a problem that requires attention. The APEX Platform aims to address functional ambiguities and mandate overlaps that have clogged effective Public Policy Management. It is important for systems such as APEX and IBP to automatically generate reports to upper management when there are substantial deviations detected in projects under implementation. A detailed summary table of critical information is required to enable top management to identify critical major projects effectively and to act urgently to resolve risk issues to prevent delays and additional cost. Annex 9 contains an example of such a summary table.

14. Management of Project Implementation (Strength— Medium; Effectiveness— Medium; Reform Priority— Medium)

61. There are project management arrangements in place, project adjustments are applied during the implementation stage and ex-post audits are conducted yearly. The PIMS Framework of Uganda requires the establishment of project management teams. The UNRA Programme and Management Framework specifies that a project management committee be identified and appointed for each project, with a member of senior management in charge of the team. Project adjustment procedures are guided by the Public Procurement and Disposal of Public Assets (Contracts) Regulations, Clause 55, 2014. A single contract adjustment shall not increase the total contract price by more than 15 percent. Where the contract price is amended more than once, the cumulative value of all contract amendments should not increase the total contract price by more than 25 percent, if so, the balance should be re-tendered. Ex-post audits are conducted on a yearly basis by the OAG, these reports are scrutinized by Parliament and the reports are published.49

62. Project management is generally conducted with diligence, however upstream inefficiencies cause cost and time overruns. Reports of the OAG as well as the PPDA have identified poor project management as one of the causes for delayed progress of work as well as for abandoned projects, the OAG made findings which should be addressed.50 Some projects are not closed off duly. The required guidelines for project adjustment are followed. The report addressed delayed projects and abandoned projects but is not clear on projects with cost overruns. Annex 10 contains a list of upstream underlying factors that caused cost- and time overruns, which the Project Manager has no control over. Specific issues identified are summarized in Box 3.4 below. The Hoima International airport provides an example of effective project management. See Box 3.5 below.

Office of the Auditor General Report

The OAG conducted a performance audit dated 30 June 2021, with specific reference to Project Management Principles. Projects of Health, Education and Roads were audited, and the following issues were identified:

  • Health: Delayed construction of the Laboratory Tower – lack of project management

  • Health: Delayed construction of 150 housing units, halfway into the contract only the foundations of one block was completed – lack of project management

  • Education projects – over payment of quantities certified, contractors did not fully mobilize equipment required, irregular payment for services relocation.

  • Roads Projects: 35 Projects from UNRA with a total value of USD 398,427,063.99 and UGX 149,739,813,845 had been delayed within a range of between 64 and 1,072 days.

Source: Audit reports 2021.

Project Management at Hoima Airport

The Hoima International Airport is a special project to facilitate the construction of the oil refinery and pipeline system following the discovery of oil and gas in Western Uganda. The aim of the Airport is to be used to bring in construction parts and equipment for the Refinery and potentially also for the oil fields.

The construction of the period for the Airport was 48 months, with a contractual completion date of February 2023.The Airport airside is currently 80 percent complete with the final layer works on the main runway in progress. The hardstand for the freight section of 600 m by 130 m concrete is completed as well as underground electrical feed for airport lighting. The earth works for the airport consisted of 7,000,000 cubic meters of material.

The Construction works cost is Euro 264 million. There were issues during the construction of the Airport especially during COVID, but as a result of good planning large quantities of material were imported and on site before COVID commenced. The main reason for the additional time claimed is the fact that the originally planned mobile control tower will be replaced with a permanent structure. Cost escalation of approximately 10 percent originated from the global increase in the cost of steel, diesel and bitumen, this escalation is contractual.

The example of effective management of a strategically important project indicates that it is fully possible to effectively implement future major projects in Uganda, provided this is given the necessary priority.

63. Resolving the upstream factors of cost and time overrun is a medium priority reform. Senior project managers are required for the management of major projects, who have adequate experience in contracts management. It is important that Works Contracts be managed diligently and to make sure that payment certificates are calculated correctly and certified correctly. Upstream delaying factors of projects under implementation require attention in an effort to prevent interest penalties on project level.

15. Monitoring of public assets (Strength— Low; Effectiveness—Low; Reform Priority— High)

64. The PFMA provides a strong framework for asset management, but the current accounting framework does not require that asset values are fully reflected in government registers and accounts. There are accounting policies, treasury instructions and guidelines in place to guide Accounting Officers in maintaining records and accounting policies to guide preparation of financial statements. The PFMA requires each accounting officer to maintain an asset register, and the Accountant General to prepare a balance sheet with all assets and liabilities of the government. Treasury Instructions provide further details for maintaining the asset register.51 Boards of Survey of inventories, stocks, and assets, on at least an annual basis, are required to verify the accuracy of the registers of each public sector entity and these surveys are supported by guidelines issued by the Accountant General.

65. The value of assets is not fully accounted for nor reported in the government’s financial statements and depreciation is not charged. While asset registers are maintained, they are not consolidated, many do not include asset values. Historic cost information is incomplete in most registers. The UNRA does however have detailed asset information on all national road assets (estimated value 6bn USD, according to a recent survey of the condition of roads), but this information is not on the government’s balance sheet. A lack of legal clarity around land ownership prevents registration of land and buildings, particularly at local government levels. While assets are surveyed according to regulation, the focus is on smaller movable assets included in the asset register. Despite the Treasury Instructions, current accounting policies require that assets, with the exception of land assets are expensed in the year of their acquisition, therefore assets are fully depreciated in that year and not expensed over the expected life of the asset. The guidelines for the annual survey are silent on procedures for verification of large infrastructure and land and building assets. PCs are required to apply international financial reporting standards and therefore maintain up-to-date assets registers.

66. There is no data available on the total value of Uganda’s public sector assets and improvements in this area is a high reform priority. The first step to address this will be to begin the compilation of a comprehensive asset register, incorporating all property assets. More accurate and complete data will strengthen accountability for assets as intended in the PFMA and provide a more robust basis for assessing resources needed to adequately maintain asset values and identify potential alternative uses. Information on depreciation could be useful in assessing the adequacy of maintenance spending (Institution 9) and support the prioritization of capital maintenance decisions. Undertaking this step would also be supportive of the Government’s long-term intention to move to accruals accounting. Government has recognized these weaknesses and through the Accountant General, has plans to address them. Box 3.6 shows the MOFPED’s plans to enhance asset management across the general government.

Asset Management Reform Plans

The Accountant General has recognized weaknesses in asset management within the general government sector in Uganda. Specific issues identified include:

  • Legal and Regulatory Framework - laws and associated regulations and instructions are not harmonized; no policy framework to guide asset management throughout Government. Compliance and enforcement are weak.

  • Institutional arrangements - Roles and responsibilities of the GOU institutions are not clear and at times overlapping. Weak capacity - limited skills in managing assets and inadequate staffing

  • Contract Management – Delayed or non-delivery of procured items, payments for incomplete work, poor workmanship, abandoned projects and acceptance of defective works/items.

  • Operation and maintenance of assets – underutilization, lack of adequate funding, entities acquiring new assets with less interest in maintaining existing assets, poor condition and obsolesce, failure of Accounting Officers to fully appreciate the role of assets in public services delivery, legal and administrative ownership ambiguity.

  • Asset Management Systems – Inadequate with limited integration and parallel systems

  • (Disposals – continuing non-disposal of obsolete items leading to high storage costs, due to the difficulty is securing the services of the Chief Government Valuer

  • Asset Records and Reporting - Lack of complete and up-to-date asset registers with correct values impairing the decision-making process

  • Current accounting framework: Cash basis of accounting does not give a complete picture of the performance of government in the provision of public services.

  • Integrated approach to GoU asset: Accounting Officers focus on GoU funded assets and ignoring donor funded assets, there is need for all assets of a vote to be consolidated.

To address these weaknesses, the Accountant General’s Department has initiated a reform program across government which includes:

(1) Updating the Asset Management Policy and Framework;

(2) Follow up action and implementation of Board of Survey and audit recommendations relating to the asset management by each MDA and LG;

(3) Addressing data gaps in financial assets (Government Investments/on-lent funds) register;

(4) Development and implementation of a comprehensive and fully integrated asset management information system;

(5) Capacity Building, training, and change management;

(6) Valuation of government assets; and

(7) Ongoing coordination of asset management reform initiatives through collaboration with all key stakeholders.

Source: GoU Asset Management Strategy & Work Plan (2021 – 2025)., Accountant General’s Department, April 2021

Recommendations for public investment implementation

Issue 8: Budgeted funds for project implementation are not released in a timely and predictable manner.

Recommendation 8: Ensure predictable budget releases for investment projects, by enhancing the realism of the annual Budget and MTEF and instituting active cash management arrangements.

Issue 9: The BMAU report does not summarize the major projects in distress, inclusive of the high levels risks that require immediate attention at the required level.

Recommendation 9: Strengthen investment portfolio monitoring to become more forward-looking and based on explicit baselines for financial and physical execution, clearly identifying projects at risk and which actions will be required to resolve the risk. Focus this monitoring on major projects, based on a clear definition of major projects in regulations.

Issue 10: There is no comprehensive asset register to enable monitoring and effective management of the government’s entire asset stock and to enable compliance with the government’s accounting policies.

Recommendation 10: Develop comprehensive assets register, including all types of assets, particularly infrastructure assets, starting with existing available databases held by line ministries and agencies.

IV. Cross-Cutting Issues

A. Legal Framework

67. The existing legal framework in Uganda related to PIM is quite comprehensive and has been amended and strengthened in the last 20 years. It includes Acts that regulate planning, PFM, PPPs, Auditing, LGs, and SOE. Main legal documents are presented in Table 4.1 and a more detailed list including links and comments can be found in Annex 11.

Table 4.1

Uganda: Legal Framework Related to PIM

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Source: IMF staff

68. The Public Finance Management Act of 2015 is the main law regulating PIM in Uganda. Part II deals with Macroeconomic and Fiscal Policies and sets the framework for Institutions 1 and 6 of the PIMA. Part III deals with Budget Preparation, Approval and Management, regulating aspects analyzed in Institutions 7 and 8. Part V regulates budget execution, relating to institution 12, Part IV, Accounting and Audits, is related to Institutions 14 and 15.

69. However, an important gap in the legal framework is the lack of a clear legal basis act for project preparation, appraisal, review, selection, monitoring and evaluation, portfolio management and ex post evaluation, as well as for maintenance. The DC guidelines provide support to some of those processes, but a higher-level legal framework would be desirable to enable enforcement. MoFPED has prepared (February 2022) a “Draft for a National Public Investment Policy” aimed at strengthening and institutionalizing the public investment management framework, promoting effective appraisal, selection, implementation, and maintenance of capital investment, but it has yet to be approved by the Cabinet, and a policy will not have the same legal standing and authority as a law. Annex 12 present examples of legal regulations for PIM in other countries.

70. Implementation of projects is frequently delayed by land issues, a fact that was mentioned by most MDAs that the mission met. Therefore, in order to increase efficiency of the PIM process and reduced time and cost overruns of projects, the legal framework for acquisition of land must be reviewed in order to implement new legislation aimed at speeding-up the acquisition of land, with due consideration to compensations and support that the displaced population may require.

B. IT Systems and Data Management

71. Uganda has developed a series of information systems to support different aspects of PIM, from project inception to monitoring and evaluation. The overarching IT systems governance framework falls under the responsibility of the National Information Technology Authority (www.nita.go.ug). The following table present a list of IT systems that support different aspects of PIM, the institution in charge of their operation and their purpose.

72. The key systems for supporting PIM are the NDP Monitoring and Evaluation System, the IBP, PBS and IFMS. The NDP-III has an M&E system, and it is integrated with PBS, IFMS, PIMIS, and other data warehouses. It can produce customized dashboards for each user. Impact evaluations are a mandate of NPA for governmental programs and investment projects. The IBP allows tracking of project data from the concept stage to feasibility and implementation. It is web based and registers all data requested in the DC guidelines, templates, and supporting studies can be uploaded. The PBS is used for planning, preparation, and approval of the budget and for quarterly reporting by all MDAs and LGs, SOEs and Public Corporations. The IFMS has focused on key Expenditure Management Systems that include Accounting and Reporting, Budgeting, Purchasing and Commitment Accounting, Payments, Cash Management and Revenue Receipting/Accounts Receivable.

73. There is a need for compatibility, data exchange and integration between PIM related IT systems. M&E is done by the PBS, the IBP, the NDP M&E system and the by the OPM, burdening MDAs and LGs with separate data requests. Lack of integration impedes the potential use of data, for example by combining data in the IBP with targets for programs and projects in the NPA M&E system.

Table 4.2

Uganda: IT Systems Useful for PIM

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C. Staff Capacity

74. The MoFPED has identified a lack of the requisite skills for project preparation and appraisal across government. To address this issue, the MoFPED partnered with the University of Makerere to establish a Public Investment Management Center of Excellence. The purpose of the Center is to support the PIM system and it has so far trained government officials in project preparation (One week course) as well as Financial- and Economic Analysis. (Two weeks course). The training will enable officials to better understand the principles of project preparation as well as the project appraisal process. For the future, the Center is planning a basic level course in appraisal with a duration of 7 days, an intermediate level course with a duration of 4 weeks and a Masters’ program with a duration of 1 year.

75. Most major government entities confirmed that their respective staff components are adequate in numbers. UNRA however reported that it has only 6 persons evaluating pre-feasibility and feasibility studies, which might be a low number of personnel for such an extensive task. The staff component of various entities is listed in Table 4.3 below:

Table 4.3

Uganda: Staff Components for Public Investment Management

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76. There are other important areas where capacity strengthening is required. There is a need for additional training of project managers as well as procurement staff to enable them to manage advanced technical projects such as oil refineries and large roads projects. The Project Managers require capacity strengthening in the compilation of terms of references, specifications, and tender documents for high technical level projects. There is also a need for capacity building in using the new e-Procurement system for officials as well as prospective bidders. Capacity issues in terms of staff numbers may also exist, for instance at the office of the Valuer, where there are inadequate staff to verify the value of Government assets and update the asset register. Capacity issues in relation to staff numbers may also be present at the Ministry of Land who cannot assist the Accountant General with the identification of the ownership of land portions for the inclusion and update of the National asset register. The Accountant General’s Office lacks experts to verify the technical elements of projects and asset registers.

Recommendations for cross-cutting issues

Issue 11: The legal framework supporting project preparation, appraisal, and selection hinges on a resolution of MoFPED, which does not provide a strong legal support, and there is no law that ensures effective resolution of land-use conflicts.

Recommendation 11: Strengthen the legal framework for effective public investment management, including amendment of the PFM Act to include a chapter on PIM (or a separate PIM law) and a legal reform to address land use and right-of-way challenges (expropriation law).

Issue 12: Lack of integration of M&E systems results in burdening MDAs and LGs with similar data requests.

Recommendation 12: Integrate IT systems for monitoring and evaluation to avoid duplication of data requests and make better use of data (NPA M&E systems, the IBP, the IFMS, the PBS, the e-Procurement system, and the system of the OPM).

Annex 1. Proposed Action Plan for the Medium Term

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Annex 2. PIMA Questionnaire

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Annex 3. Detailed PIMA Scores

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Annex 4. Status of Previous IMF Recommendations on Public Investment Management

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Annex 5. Climate Change and Project Appraisal

Climate change creates new challenges for public investment in infrastructure with respect to mitigation and adaptation because:

  • Public infrastructure can contribute to Greenhouse Gas (GHG) emissions and therefore to climate change.

  • Infrastructure is also increasingly exposed to the risk of damage from weather-related disasters.

  • And in case of failure the cost will exceed the cost of rebuilding or repair alone.

The challenge is how to design, select and implement infrastructure prepared to face disasters. This requires changes in infrastructure design and construction standards, but it also requires better processes for project preparation, evaluation, selection, monitoring and maintenance. To address these issues the IMF has developed the C-PIMA framework to help governments identify potential improvements in public investment institutions and processes to build low-carbon and climate-resilient infrastructure.

But more resilient infrastructure is usually costlier and traditional appraisal seeks to select the option with the highest NPV or the lowest Cost/Beneficiary. How then can we justify a more expensive project? The following five step approach can be used.

  • First step: Identify relevant risks for a project for example: Earthquake, Volcanism, Hurricane, Tsunami, Landslide, Flood, Wind, Tornado, Erosion, Drought.

  • Second step: Estimate the recurrence period (number of occurrences in a certain number of years). This is a challenging step because recurrence period of many disasters have changed in the last decades due to climate change and therefore historical series are not reliable.

  • Third step: Assess cost in case of disaster. The cost will depend on the damage that the event causes to the project and the consequences that the failure of the project generates, which may include: cost of repairs, cost due to lost benefits, cost in human lives or injuries and environmental costs.

  • Fourth step: Identify actions to increase resilience and estimate their cost. Cost increase may be due to change of project location, larger project size, use of a different technology and additional works.

  • Fifth step: Appraise the project using one of the following options:

    • Evaluate the project as usual and calculate the NPV. Then reevaluate the project for a more resilient alternative and considering the event and its probability of occurrence. Consider the additional investment cost required for the project to be resilient to the disaster and incorporate to the cash flow each year as a benefit the probable cost savings that would be generated by the project resisting the occurrence of the event. Then calculate the NPV for the most resilient project and see if the extra investment is justified.

    • Stress test. Identify indicators to use and minimum acceptable values (for example NPV>0). Appraise considering different probabilities of occurrence of the disaster and determine the probability that leads to the minimum value of the indicators. Then compare that probability with the historical series and decide if the minimum value will ever be reached.

    • Use Monte-Carlo simulation considering the estimated probability distribution for the occurrence of the disaster.

None of the above-mentioned appraisal alternatives is perfect, but they are better than forgetting about climate related and other disasters.

Source: IMF staff

Annex 6. Format Options to Include Total Project Costs and Multiyear Projections

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Annex 7. South African Budget Guidelines for Maintenance

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Annex 8. Uganda Average Number of Bids Per Method of Procurement

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Annex 9. Underlying Factors for Cost and Time Overruns

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Annex 10. Example of A Summary Table for Projects with High Risk

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Annex 11. Overview of Legal Framework Related to PIMA Institutions

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Source: MoF

Annex 12. Examples of PIM Legal Frameworks

Kenya: Kenya's policy towards public investment was re-purposed in 2020 through a National Treasury Circular. Based on the 2012 PFM Act, it defines acronyms, terms, and phrases and represents a combination of policy matters, regulations, and guidelines. These include, and are compatible with, templates for parts of the PIM cycle that also covered in Kenya's pre-investment PIM toolkit. The Kenyan document also covers the implementation and ex post elements of the PIM cycle.

Ethiopia: As a Proclamation, Ethiopia's PIM policy has full legal status and is written in a legal style. As such, it covers definitions of all main terms and phrases together with a scope of application. It includes the principles under which public investment projects should be undertaken as well as defining financial thresholds for small, medium, and large projects. It describes all the elements of the project cycle which include their main activities. In very clear and simple language, it explains the powers and duties of the relevant administrative institutions in the system.

Rwanda: Rwanda's National Investment Policy was published in 2017 and covers key areas such as definitions of terms, scope and coverage of the policy and a set of common guiding principles. Like other good practice policy documents, it covers the institutional responsibilities of the main actors and outlines the main stages of the PIM cycle. Additionally, it also covers policy on PPPs and capital investments in SOEs. The policy also establishes the means for project data collection and management. Each section is concise and clearly drafted while covering the majority of subject areas that might be expected from a good practice policy.

Jamaica: In March 2014 the Financial Administration and Audit Act was amended to include a new Fourth Schedule to set out the Public Investment Management System (PIMS) and all its components. Within the PIMS (new Fourth Schedule), a Public Investment Management Secretariat (PIMSEC) was enabled to do the initial appraisal of all project ideas/concepts prior to the Public Investment Management Committee taking a decision to recommend projects to the Cabinet for inclusion in the Public Sector Investment Program. PIMSEC would ensure all the basics are covered, including policy and planning alignment, and undertake technical analyses to advise the PIMC. It would also host a Monitoring and Evaluation System (in collaboration with the Ministry of Finance’s Projects Branch and the Development Bank of Jamaica).

Source: IMF staff
1

These include the Entebbe Expressway, the Bujugali and Karuma dams.

2

The mid 2000s were characterized by load shedding and reliance on expense diesel run generators and a deteriorating road network, particularly on routes connecting borders with heavy vehicle traffic.

4

This was 15 percent for Tanzania, 17 percent for Kenya and 23 percent for Rwanda.

5

Based on the most recent Debt Sustainability Analysis (DSA) as part of the Article IV (March 2022). Under the baseline scenario in the DSA, debt indicators would remain below their respective threshold, but this is not the case when different stress tests were applied.

6

Economic infrastructure includes transportation. Social includes education, health, housing, and social protection. Other includes general public service, safety and public order and environment. Based on 2018 data.

7

This includes large hydro infrastructure for the Bujagali and Eskom and heavy fuel oil infrastructure to bridge the energy generation supply shortfall.

8

The most advanced projects are: (i) The Kampala-Jinja Expressway; (ii) Entebbe ICT Park, and (iii) The Gulu logistics hub (warehousing and rail),

9

These have been reported in World Bank project documents, UNICEF sector reports and the most recent Auditor General’s report for FY2020-21.

10

These two sectors have jointly accounted for 50 percent of the development budget from 2010.

11

The Lira-Gulu-Agago 132KV transmission project is an example of where this has been a particular challenge. Institution 9 explores the provision of maintenance funding in more depth.

12

The CFR is anchored in the PFMA (2015), Article 5 (1). The first Charter was approved by Parliament on 21 December 2016 and ran from FY2016-17 to FY2020-21. The 2021/22 -FY2025/26 CFR has just been approved and is not part of the assessment.

13

Annual Macroeconomic and Fiscal Performance Report 2017/18 and 2018/19. The frontloading of investment spending was for the Karuma and Isimba dams.

15

The programs in NDP III replaced the previous structure of sectoral strategic plans stipulated in the Comprehensive National Development Planning Framework (CNDPF). See: http://www.npa.go.ug/planning-frameworks/cndpf/

16

Of the 917 programs and projects included in the NDP III PIP 203 are ongoing, 557 are new (at the concept, profile, pre-feasibility or feasibility stage) and 157 are project ideas.

17

Third National Development Plan Projects Investment Plan (NDPIII PIP) 2020/21 – 2024/25. http://www.npa.go.ug/national-projects/5-year-pip/

18

Volume II of the Approved Estimates of Revenue and Expenditure, Local Government Votes.

19

The Local Government Performance Assessment was introduced a s part of the Intergovernmental Fiscal Transfer Reforms in 2018. IThe main objective of the assessment is to provide incentives to promote good practices in administration, resource management, accountability and service delivery, through rewarding and sanctioning good and bad performance practices respectively. The assessment focuses on three dimensions of accountability and budget requirements, crosscutting and sector functional processes and systems for LGs and service delivery results in sectors of Education, Health and Water processes.

21

Developed with support from the World Bank and published in June 2017. See: https://finance.go.ug/sites/default/files/Budget/PIMS%20Manual%2014022018.pdf

22

Developing sector specific methodologies is planned, but none has been produced.

23

National parameters are the Economic Opportunity Cost of Capital (11%), the Foreign Exchange Premium (7.25%), the Premium on Non-tradable Outlays (1%) and a VAT of 18%. An update of national parameters is currently ongoing and includes additional parameters i.e the Economic Opportunity Cost of Labour (EOCL), Social Value of Time (SVT) and Economic Value of Natural and Environmental Resource (EVNER)

24

It allows estimating economic values for more than 5000 tradable and non-tradable commodities. See: http://national-parameters.ug/

25

The Development Committee includes representatives of Office of the President, Office of the Prime Minister, Office of the Solicitor General, Public Procurement and Disposal of Assets Authority, National Planning Authority, Ministry of Gender, Labour and Social Development, National Environment Management Authority, Ministry of Lands, Housing and Urban Development, Equal Opportunities Commission and MoFPED.

26

The Economic Project Appraisal Manual for Kenya published in July 2021 being a good example. See: https://www.treasury.go.ke/wp-content/uploads/2021/08/Economic-Project-Appraisal-Manual.pdf

27

The Report of The Auditor General to Parliament for the financial year ended 30th June 2021 contains analysis of the profitability of 26 of the 46 PCs. A brief unpublished report is also produced by the MOFPED.

28

The IMF FAD has developed a number of tools to assist analysis of PC performance, these are available at: Fiscal-Risks-Toolkit (imf.org). This material was provided to the Accountant General’s Department during the mission.

29

The first in September and the second in February.

30

These are defined as Appropriation in Aid Votes (AIA) in budget documents. The Uganda National Examinations Board (UNEB) is the only Vote in the budget falling under this category.

31

For local governments, these are recorded by conditional grant (e.g., the school construction grant) and for public corporations and state enterprises, itemized expenditure is recorded for the development budget.

32

Reflected in the detailed budget estimates, Budget Framework Paper and Ministerial Policy Statement respectively.

33

Based on the FY2021-22 budget.

34

These are the Projects Analysis and Public Investment Department for the development budget and the Budget Policy and Evaluation Department for recurrent. The latter is responsible for consolidating and coordinating the entries budget process, receiving inputs from relevant stakeholders.

35

Article 23 of the PFMA (2015)

36

Article 22 of the PFMA (2015)

37

Paragraph 16 under the section on Public Investment Management

38

UNRA report that unpaid interim payment certificates have averaged around 400 billion Ush. per year and this rose to 700 billion in FY2020-21. UEGCL noted that they are $5m USD behind in contractor payments due to the late releases for the Nyagak III Hydro Power Projects, which will result in arrears at the end of the financial year.

39

Sectoral analysis shows that the security sector is the only sector that has avoided this. It has one large project (0023 Defense Equipment Project) that accounts for almost a third of the GoU development budget.

40

The report found delayed progress for 58 works projects worth 649 Bn. and 13 cases of abandoned works of 21.3 Bn.

41

The chart of accounts has specific items for the routine maintenance of civil works (228001), vehicles (228002), Machinery, furniture, and equipment (228003), other (228004) and conditional transfers for feeder roads maintenance workshops at the local government level. The two major transfers from the road fund to UNRA for national and district road maintenance and are transfers and not disaggregated.

42

On-going projects are reviewed once a year to decide if they stay in the PIP or exit it. Project Selection Criteria for Projects to Enter the Budget After Appraisal, MoFPED, May 2021

43

Profile is prepared ex-post at the request of the DC, but the project has already been included in the budget.

44

Proceedings are public documents and can be requested based on the Access to Information Act of 2005.

45

In FY 2017/2018 out of 441 projects 118 exited the PIP and in FY 2018/2019 out of 431 129 exited the PIP, which reflects a strict review by the DC.

46

Section 34 of the PFMA

47

The PFMR (Article 14) specify that the Accountant General must issue the warrants by 10th day of the first month of the quarter.

48

The Report of The Auditor General to Parliament for the financial year ended 30th June 2021

49

Diagnostic study to strengthen PIMS reforms in the Works and Transport and the Energy and Minerals development sector, 2020.

50

Audit report from the Office of the Auditor General 2018/2019, PPDA Annual Report 2017/2018.

51

Section 34 of the PFMA

Other IMF Content

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Cover IMF Staff Country Reports
Uganda: Technical Report - Public Investment Management Assessment
Author:
International Monetary Fund. Fiscal Affairs Dept.
Volume/Issue:
Volume 2022: Issue 350
Publisher:
International Monetary Fund
ISBN:
9798400224867
ISSN:
1934-7685
Pages:
84
DOI:
https://doi.org/10.5089/9798400224867.002
Figure 1.1

Uganda: Public Investment

(percent of GDP)
Figure 1.2

Public Capital Stock

(percent of GDP)
Figure 1.3

Current and Capital Spending, Deficit and Debt

(percent of GDP)
Figure 1.4

Execution of the Capital Budget

(percent of budget spent)
Figure 1.5

Public Investment by Level of Government and Funding Source

(percent of total public investment)
Figure 1.6

Public Investment by Function

(percent of total public investment)
Figure 1.7

Public Private Partnership (PPP) Capital Stock

(Percent of GDP)
Figure 2.1

Measures of Infrastructure Access

(2019 and 2020)
Figure 2.2

Energy Installed Capacity and Roads Capital Stock
Figure 2.3

Measures of Infrastructure Quality
Figure 2.3

Measures of Infrastructure Quality
Figure 2.4

Perception of Infrastructure Quality
Figure 2.5

Efficiency Frontier and Gap – Access and Quality Indicators
Figure 3.1

PIMA Framework Diagram
Figure 3.2

Uganda: Design versus effectiveness
Figure 3.3

Fiscal Rules Compliance

(percent of GDP)
Figure 3.4

NDP III Projects and Cost Estimates
Figure 3.5

MTEF Ceilings, Annual Budgets, and Outturns (Ush. Billion)
Figure 3.6

Net Virements and Total PIP Project Numbers
Figure 3.7

Aggregate and Project Level Budget Release Performance