Document of The World Bank FOR OmCUIL USE ONLY Reqrt No. P-6224-UG MEMORANDUM AND RECONMENDATION OF THE PRESIDENT OF THE INTERNATIONAL DEVELOPMENT ASSOCIATION TO THE EXECUTIVE DIRECTORS ON A PROPOSED CREDIT IN THE AMOUNT EQUIVALENT OF SDR 54.5 MILLIOD TO THE GOVERNMENT OF UGANDA FOR A TRANSPORT REHABILITATION PROJECT MARCH 8, 1994 MICROGRAPHICS Report No: P- 6224 UG Type: MOP This document has a restricted distribution and may be used by recipients only in the performance of their official duties. Its contents may not otherwise be disclosed without World Bankl authorization. CURRENCY EQUIVALENTS Currency Unit = Uganda Shilling (U Sh) US$1.00 = USh 1174 (October 29, 1993, official rate) UShl.00 = US$0.0008517 SDR1.00 8 US$1.3934 (October 31, 1993) US$1.00 = SDR 0.7177 WEIGHTS AND MEASURES Metric System ABBREVIATIONS AND ACRONYMS DA = District Administration ED = Engineering Department GDP = Gross Domestic Product GNP = Gross National Product GOU = Government of the Republic of Uganda ICB = International Competitive Bidding IDA = International Development Association KR = Kenya Railways LCB = Local Competitive Bidding MOLG = Ministry of Local Government MOWTC = Ministry of Works, Transport and Communications MRMP = Main Roads Maintenance Program NPRM = National Prioritized Main Roads Maintenance Program NDF = Nordic Development Fund TRC = Tanzania Railways Corporation URC = Uganda Railways Corporation GOVERNMENT FISCAL YEAR July 1 - June 30 FOR OMCIAL USE ONLY REPUBLIC OF UGANDA TRANSPORT REHABILITATION PROJECT CREDIT AND PROJECT SUMMARY Borrower: Republic of Uganda Implementing Ministry of Works, Transport and Communications (MOWTC); Agency and Ministry of Local Government (MOLG); and Uganda Railways Beneficiary: Corporation (URC) for a portion of the credit Credit Amount: SDR 54.5 million (US$75.0 million equivalent) Terms: Standard IDA Terms with a maturty of 40 years Relending Terms: Out of a total of approximately US$3.1 million to be passed on to URC, 68 percent or approximately US$2.1 million would be a grant, and 32 percent or approximately US$1.0 million would be relent at the rate 7 percent per annum, repayable over 15 years includig 5 years of grace. The foreign exchange risk would be borne by URC. Financing Plan: Nordic Development Fund US$4.6 million IDA US$75.0 million Government US$18.8 million URC US$ 0.1 million Local Authorities (Districts) US$ 0.5 million Total US$99.0 million Economic Rate of Return: The project's weighted average economic rate of return is 17.8 percent. Poverty Category: Program of Targeted Interventions Staff Appraisal Report No.: 12579-UG Map: IBRD 25487 This document has a restricted distribution and may be used by recipients only in the performance of their official duties. Its contents may not otherwise be disclosed without World Bank authorization. MEMORANDUM AND RECOMMENDATION OF THE PRESIDENT OF THE INTERNATIONAL DEVELOPMENT ASSOCIATION TO THE EXECUTIVE DIRECTORS ON A PROPOSED CREDIT TO THE REPUBLIC OF UGANDA FOR A TRANSPORT REHABILITATION PROJECT 1. I submit for your approval the following memorandum and recommendation on a proposed development credit to the Republic of Uganda for SDR 54.5 million (US$75.0 million equivalent) to help finance a Transport Rehabilitation Project. The proposed credit would be on standard IDA terms with a maturity of 40 years. A portion of the credit proceeds (US$3.1 million equivalent) would be passed on to Uganda Railways Corporation (URC), of which US$2.1 million equivalent would be grant and US$1.0 million equivalent would be relent at the rate of 7 percent p.a., repayable over 15 years including 5 years grace and with URC bearing the foreign exchange rsk. The Nordic Development Fund (NDF) would provide parallel financing in the amount of US$4.6 million for capacity building in feeder roads activities. 2. Background: Uganda's population, as enumerated in the 1991 census, is 16.7 million and growving at about 2.7 percent annually. Per capita GNP was estimated to be US$170 in 1992; about 90 percent of the population is rural. At independence in 1962, Uganda had one of the strongest, most promising economies in Sub-Saharan Africa. The countty is not well endowed vith minerals or fossil fuels, but has rich soils and a fivorable climate for agricultural production. The years immediately after independence demonstrated the country's economic potential: real GDP grew by 5.8 percent per annum from 1962 to 1970, with per capita GDP increasing more than 2.8 percent per annum. In the 1970's and early 1980's Uganda suffered a period of severe economic decline and instability, from which it has been emerging again since 1986. The Govemment has been pursuing a wide-ranging package of financial stabilization and restructuring policies and has been successful in bringing inflation down as well as liberalizing the foreign exchange, market. It is also pursuing improvements in revenue collection and the balance of payments situation as preconditions for recovery and economic growth. 3. Uganda's transport system went from relatively well developed to practically inoperative between the early 1970s and the mid-1980s. This was a result of the breakup in 1977 of the East African Cormunity with its customs union and common transport services, and the period of civil strife and devastation, during which Uganda's infiwtructure was severely neglected. Moreover, landlocked Uganda's access by road and rail to the sea through Kenya became unreliable, and an alternative rail/wagon ferry route through Tanznia was started. Since 1986, however, the transport system has irnproved significantly as a result of rehabilitation of trunk roads, and expansion of the vehicle fleet. Road maintenance has now begun to receive much needed attention to prevent loss of these valuable investments. At the same time, a large agricultural potential remains untapped because most of the extensive feeder road network remains in neea of rehabilitation and maintenance. Large Government investments m the locomotive repair facility, wagon ferries and rolling stock in the Uganda Railways Corporation (URC) are yielding a relatively small contribution to traffic expansion due to low operational efficiency and weak financial management and the absence of an effective commercial strategy and marketing efforts. Ministries and agencies operating in the transport sector suffer from budget constraints and related understaffing, as well as weak management. -2- 4. Organization: The Ministry of Works, Transport and Communication (MOWTC) is responsible for transport policy formulation and execution, and planning, construction and maintenance of the main roads network. It also supervises and regulates transport and communication services to ensure their safe and efficient operation. Two arms of MOW`rC, the Transport Licensing Board and the National Transport Safety Council, execute licensing and safety control activities for road transport services. MOWTC oversees the activities of six parastatal bodies namely: (i) the Civil Aviation Authority; (ii) Uganda Posts and Telecommunications Corporation; (iii) Uganda Transport Company; (iv) People's Transport Company; (v) Uganda Railways Corporation and (vi) Uganda Airlines Corporation. MOWTC is divided into two directorates: Engineering, and Transport and Communications. The Engineering Directorate is responsible for road planning, design, construction and maintenance. The responsibility for &-velopment and maintenance of feeder roads lies with the District Administrations (DAs) under the District Adminis on Act of 1967, but the Ministry of Local Government (MOLO); through its Engineering Department (MOLG/ED) is presently undertaking rehabilitation of, and providing technical advice, and flnancial support for the maintenance of feeder roads until district capacity has been improved. MOLG will eventually retain responsibility for the formulation of regulations and the monitoring of their implementation on the district level, once the Districts have assumed the tasks now assigned to them under the Decentralization Policy of October 1992. Monitoring will include regular inspection of services and financial and performance audits at the district level. 5. Sector Policy: The Government's strategic objective is to promote cheaper, more efficient and more reliable transport services so as to facilitate increased agriculture and industrial production, trade and tourism, and the delivery of social and administrative services. The Republic of Uganda has issued "The Way Forward II, Medium-Term Sectoral Strategy", and further elaborated its transport policies in two major documents, namely the Transport Sector Memorandum and the Strategy Paper for Rural Feeder Roads Rehabilitation and Maintenance prepared with World Bank assistance. Uganda's Transport Sector Strategy stresses the need for: (a) a balanced and sustainable roads program through, (i) better planning, and adequate financing of main roads maintenance, and increased maintenance management capability; (ii) pursuit of a rational program of roads reconstruction/rehabilitation, and (iii) in the case of feeder roads, use of cost effective techniques for feeder roads rehabilitation and maintance; (b) commercial orientation for the railways; (c) cost effective policy for air transport development; and (d) improvement of international transport security. 6. The Strat Paper for Rural Feeder Roads Rehabilitation and Maintenance endorses a progressive reduction of the force account mode of operations for periodic maintenance as contracting capacity in Uganda increases. It further proposes to adopt labor-based methods or a combination of equipment and labor-based methods in addition to equipment-based work. The expansion of labor-based techniques would be gradual as it is a technique which, although proven in other neighboring countries, is new to Uganda and requires intensive training of personnel. -3- 7. Project Objectives: The project would support the Government's economic recovery program by helping it to improve the basic road infrastructure to the economy, and ensuring that this and the rail/ferry infrastructure will be well maintained and efficiently managed. The project would assist the Government to: (i) protect the capital investment in selected rehabilitated main roads; (ii) improve maintenance planning and operations of the main road network; (iii) effect institutional strengthening of MOWTC, MOLG and DAs to improve project implementation; (iv) improve feeder road network accessibility in four districts; (v) train local contractors for feeder road rehabilitation and maintenance; and (vi) reorient URC's management towards commercial operation and promote its financial autonomy. Expected key outcomes by project's end include: main roads: (i) 97.4 kms of main roads would have been rehabilitated and included in the maintenance program; feeder roads: (i) 680 kms of feeder roads would have been improved; (ii) about 10 private contractors trained in labor-based method of road improvements; and (iii) district works departments would be strengthened and employment of about 20,000 persons arranged; railways: URC would be a fully commercially oriented autonomous viable parastatal entity, with well- defined business objectives and plan. Government contributions to URC revenues would be confined to compensation for obligatory loss-making services. 8. Project Description: The project would have four components: (a) main roads: (i) IDA- supported share of a four year (FY95-FY98) agreed National Maintenance Program, (ii) strengthening as well as upgrading, regravelling/rehabilitation of selected main roads plus (iii) capacity building in MOWTC (US$76.6 million); (b) feeder roads: rehabilitation and maintenance of feeder roads in Mbale, Kapehorwa, Tororo and Palissa districts and capacity building in MOLG and the participating districts (US$16.5 million); (c) railways: institutional strengthening of URC and procurement of ferry maintenance spare parts (US$3.2 million); and (d) transport planning: institutional strengthening in transport sector planning (US$1.0 million). 9. The total cost of the project is estimated at US$99.0 million equivalent, with a foreign exchange cost of about 75 percent. A breakdown of costs and the financing plan are shown in Schedule A. Amounts and methods of procurement and; of disbursements, and the disbursement schedule, are shown in Schedule B. A timetable of key project processing events and the status of Bank Group operations in Uganda are shown in Schedules C and D, respectively. A map is also attached. 10. Project Implementation: MOWTC would carry out all project activities related to main roads, namely maintenance and rehabilitation as well as its institutional strengthening. MOLG/ED would be responsible for feeder roads rehabilitation activities until the District administrations had been sufficiently strengthened, but the Districts would be responsible from the start of the project for feeder roads maintenance activities. The strengthening of the District Works Departments will be achieved through the training of staff under the project; staff will be obtained through direct recruitment by districts or secondment of engineers by the Engineering Department (ED) at MOLG. The monitoring of project performance in feeder roads activities would be carried out by MOLG/ED. 11. URC would be responsible for the execution of the railways component. The Planning Division in the Transport and Communications Directorate of MOWTC would be responsible for managing the training and technical assistance for strengthening of capacity for formulating transport policy and maintaining the national transport data base. -4- 12. Project Sustainability: The main condition for sustained provision of transportation infrastructure is adequate funding of maintenance. The project contains measures to be undertaken prior to, during and following project completion in order to improve resource mobilization and allocation of funds on a continuous basis. Organizational strengthening is also an important condition for sustainability. Efforts to build organizational, technical and managerial capacityv would rely primarily on using on-the-job training supplemented by some formal institutional training. The project would help URC gradually gain more financial viability by a fundamental reorientation towards commercial operations, and efficient financial management. 13. Lessons Learned from Previous IDA Involvement: IDA has provided five Credits to the Government in the transport sector, namely the First Highway Project (Cr. 108-UG) in 1967, the Second Highway Project (Cr. 1640-UG) in 1969, the Third Highway Project (Cr. 1445-UG) in 1984, the Fourth Highway Project (Cr. 1803-UG) in 1987 and the Railways Project (Cr. 1986-UG) in 1989. Moreover, the South West Agricultural Rehabilitation Project (Cr. 1869-UG) of 1988 and the Northern Uganda Reconstruction Project (Cr. 2362-UG) of 1992, also contain feeder road components and main roads components, respectively. The first three road projects were completed on time and without cost overrun, and the fourth road project is approaching completion. The railways project has been closed in December 1993; it has assisted URC in obtaining its own statute in 1992 and developing a Core Corporate Plan and Performance Contract with the Government as a basis for a major reorientation towards commercial operations and improved financial management. 14. The most important lesson derived from IDA's experience with support to main roads activities in Uganda, in particular with the Third Highway project, is that Government commnitment to provide adequate and reliable local financing for a clearly defined main roads maintenance program is an absolutely indispensable factor for sustainable road maintenance, with improved management as a very important supporting factor. Under the proposed Transport Rehabilitation Projeot, IDA supports a National Prioritized Main Roads Maintenance Program and will agree with Government on scope, composition, and mechanism for release of funds for the financing of road maintenance. 15. Country Assistance Strategy and Rationale for IDA Involvement: The objectives of the project are consistent with the Country Assistance Strategy discussed by the Board on May 20, 1993, of reducing poverty by supporting the Government's efforts to accelerate growth and employment and impr-ve the delivery of public services, including those to vulnerable groups. The project would support v. %nsport infrastructure maintenance and rehabilitation, which has a direct impact on the efficiency of the productive sectors, as well as human capital development and institutional reforms in the sector, which are also key elements in the Bank's assistance strategy. 16. The Government's transport sector strategy fully takes into account the Bank-prepared 1991 Transport Sector Memorandum and the continuous policy dialogue in the transport sector in the course of the project preparation. IDA has also supported the multi-donor Road Maintenance Initiative in Uganda. IDA support will be crucial to achieving major policy reforms, particularly the establishment of a sustainable maintenance program and rehabilitation of the road network, firmly linked to institution building and manpower development. In railways, it would support improvements in financial and market oriented commercial management. It would also support the Government's efforts to transfer to the private sector, road works execution which it has been performing up to now. -5 - 17. Agreed Actions: During negotiations, the following main assurances were obtained: (a) Government would adopt the National Prioritized Main Roads Maintenance Program (NPRM) for FY95- FY98, including the IDA-supported Main Roads Maintenance Pro3rani (MRMP), the size and composition of which would be satisfactory to IDA, and would implement the NPRM in a manner satisfactory to IDA; (b) Government would review and confirm with IDA not later than four months before the start of FY95 and each subsequent year, the proposed annual road maintenance program for main roads, including budgetary requirements and allocations; (c) Government would conduct a Mid-Term Review, not later than March 31, 1996, which will cover the implementation and management aspects of the project, revision of the Strategy Paper on Rural Roads Rehabilitation and Maintenance, evaluation of the financing mechanism for main roads maintenance, evaluation of MOWTC performance with respect to road maintenance mandate, environmental measures taken, reporting, accounting and auditing performance, disbursement procedures and overall sustainability of the Project; and (d) URC will improve its operating ratio continuously reaching a benchmark of 94 in 1999. The Governnent has already provided IDA with the Letter of Sector Policy. 18. The conditions of Credit effectiveness are: (a) submission of a satisfactory Transport Sector Investment and Recurrent Expenditures Plan for FYQ5 through FY97; (b) submission of a satisfactory project implementation manual; and (c) adequate staffing for MOWTC and MOLG. 19. The conditions of disbursement are: (a) for main roads. Government has allocated not less than US$13.5 million equivalent for maintenance related expenditure in its FY95 budget; (b) for railways: (i) execution of a subsidiary loan agreement between the Government and URC; (ii) that URC has appointed three management experts; and (iii) that Government and URC have established URC's capital structure in the context of the Performance Agreement; and (c) for feeder roads: (i) recruitment of key technical assistance personnel to MOLG and DAs; and (ii) fulfillment of conditions for the effectiveness of the Nordic Development Fund Credit Agreement. 20. Program Objective Categories: The project seeks to promote the economic growth, increase ermployment, improve the quality of life and lower the cost of living of the population, both in urban and rural areas, through the provision of cheaper, more efficient and reliable transport services. Tli poorer segments of the population as well as the women will share in the project's benefits in so far as it makes transportation less expensive, increases people's mobility in rural areas, provides access to social centers and increases the supply of agricultural products. The project's capacity building elements are considerable, and will contribute to the sustainability of road networks as well as railway services. 21. Environmental Aspects: The project has been classified as Category B. The risks of environmental degradation in the main and feeder roads component were found to be minimal, because the road activities would be undertaken within the existing rights-of-way, without intruding into any historical sites of national interest or causing illegal incursions on the protected higher forest areas of Mount Elgon. URC's ongoing ferry operations carry fire hazard and water pollution risks which need to be remedied urgently. The project would include actions agreed between the Government and IDA to prevent or nitigate negative impacts from the ferry operations. The project would provide financing where needed for mitigation actions, both in AIDS awareness and in fuel spill containment. 22. Benefits: The main justification of the project is the promotion of economic recovery through reduction of transport costs and improved accessibility to productive agricultural areas. A major benefit of -6- the project will be the establishment of a sustainable main roads maintenance program. The project would contribute to the strengthening of capacity and capability of the ministries and local authorities in road construction and maintenance, which would result in efficiency gains in maintenance management, as well as better resource allocation in the transport sector. The project would help an increasing number of Ugandan contractors to operate efficiently through training, better access to equipment and regular Iiow of financing. An economic analysis of the various components shows an aggregated economic rate of return estimated at 17.8 percent. 23. Risks: There is a risk that the increase in the presently very low ratio of revenues to GDP would not be sufficient to alleviate the severe budgetary constraints, thus resulting in cutbacks on core road expenditures. As the Government is getting an increasingly firm grip on budget availability of resources for maintenance, and has agreed to establish a Special Road Maintenance Account, to help ensure the timely maintenance expenditures, this risk is diminished. Moreover, annual discussions with the Government to agree on a sustainable level of road maintenance and core road rehabilitation have been included in the project to help mitigate this risk. Government and IDA macroeconomic policy discussions, including a continuation of annual Public Expenditure Reviews will also strangthen the Government's commitment to road maintenance. A sector--wide risk is that the Government will not substantially improve its management of public investments, and thus allow deterioration of the country's infrastructure by inappropriate prioritization of, and inefficient execution of investment projects. The Project, as well as our macro-economic dialogue, would address this risk through the rate of return requirements for new projects and through an ongoing review of the transport investment program. There is a risk that URC would make insufficient progress in transforming itself into a commercial enterprise, which would result in further loss of its market share and weakening of its financial position. The project would provide technical assistance to URC's reorientation process as well as the areas of finance and marketing to assist URC in this crucial transformation period. Kenya Railways(KR) and Tanzania Railways Corporation (TRC) must also improve their performances, or URC will be unable to provide efficient services to the seaports. IDA is simultaneously providing assistance to KR and TRC, which, if continued, could help alleviate this risk. 24. Recommendation: I am satisfied that the proposed credit would comply with the Articles of Agreement of the Association and recommend that the Executive Directors approve it. Lewis T. Preston President Attachments Washington, D.C. March 8, 1994 -7- Schedule A UGANDA TRANSPORT REHABILITATION PROJECT Estimated Project Costs (US$ Million) Component Local Foreign Total A. Main Roads 19.0 57.8 76.8 B. Feeder Roads 5.5 11.0 16.5 C. URC 0.2 3.0 3.2 D. Transport Policy 0.1 0.9 1.0 Project Preparation Facility 0.0 1.5 1.S Total Project Costs 24.8 74.2 99.0 Financing Plan (US$ Million) Local Foreign Total 1. IDA 12.8 62.2 75.0 2. Nordic Development Fund 0.8 3.8 4.6 3. GOU 10.7 8.1 18.8 4. Local Authorities (Districts) 0.5 0 0.5 5. URC 0 0.1 0.1 Total 24.8 74.2 99.0 -8- Schedule B Page 1 of 2 UGANDA TRANSPORT REHABILITATION PROJECT Summary of Procurement Arrangements (US$ Million) ICB LCB Other Total Civil Works 39.5 6.2 0.1 45.8 (37.5) (5.9) (0.0) (43.4) Main Roads Maintenance 14.2 15.5 2.5 32.2 (8.0) (7.7) (1.0) (16.7) Vehicles, equipment, office 3.2 0.4 3.6 machines and training tools (3.2) (0.4) (3.6) Consulting Services, 15.3 15.3 and training 3/ (9.6) (9.6) Incremental Operating Costs 0.4 0.4 (0.2) (0.2) Refunding of PPF 1.5 1.5 (1.5) (1.5) Total 56.9 217 20.3 9&9 (48.7) (13.6) (12 7) (75.0) 1/ Amounts in parentheses are IDA financed 2/ Shopping to include both domestic and international with at least 3 quotations 3/ Services would be procured in accordance with World Bank Guidelines: Use of Consultants by World Bank Borrowers and by the World Bank as an Executing Agency August 1981. -9- Schedule B Page 2 of 2 UGANDA TRANSPORT REHABILITATION PROJECT IDA Credit Summary Allocation Amount of Credit Allocated % of Expendiure Category (US$ million) to befinanced Civil Works 35.0 95% Road Maintenance Part A (1) 12.9 annual declining percentages of 60-60-40-40% Part B (1) 0.4 annual percentages of 10-1045-45% Vehicles, Equipment, Tools and 3.0 95% Office Machine Consulting Services and Training 7.2 95% Incremental Operating Costs 0.2 60%. Refunding of PPF Advance 1.5 Anmount due Unallocated 14.8 Total 75.0 Estimated Disbursements from IDA Credit (US$ Million) IDA Fiscal Year 95 96 97 98 99 2000 Annual 14.0 15.3 18.4 15.0 10.4 1.9 Cumnulative 14.0 29.3 47.7 62.7 73.1 75.0 - 10 - Schedule C UGANDA TRANSPORT REHABILITATION PROJECT Timetable of Key Project Processing Events (a) Time taken to prepare March 1990 - December 1993 (b) Prepared by GOU/Consultants (c) First IDA Mission March 1990 (d) Appraisal Mission Departure June 19931 (e) Negotiations January 1994 (f) Planned Date of Effectiveness September 1994 (g) Relevant PCR First Highway Project (Cr. 108-UG), PCR dated June 19, 1977 Second Highway Project (Cr. 1640-UG), PCR dated June 14, 1984 Third Highway Project (Cr. 1445-UG), PCR dated February 25, 1993 Key staff involved were: Ms. Hayley Goris (Mission Leader and Task Manager), Messrs. John Riverson (Highway Engineer), Sujeer Nayak (Sr. Railway Engineer), Satdev Kathuria (Highway Engineer) Mesdames Maria Kiwanuka (Financial Analyst) and Margaret Heraty (Transport Economist). Lead reviewers were Ian Heggie and Melody Mason, Peer reviewers were Thampil Pankaj and Louis Thompson. Mr. Stephen Weissman and Mr. Francis Colago are the Managing Division Chief and Department Director, respectively, for the operation. STATUS OF BANK GROUP OPERATIONS IN UGANDA Schedule D A. STATEMENT OF BANK LOANS AND IDA CREDITS Page 1 of 3 (as of December 30, 1993) Thirty (30) credtit fully disbursed, 761.46 of which SECALs, SALs and Program Loans/Credits aJ Cr.12520 1982 Uganda Reconstructlon Cr. 11 70.00 Cr. 13280 1983 Uganda Agric. Rehab. 66.17 Cr. 14740 1984 Uganda Reconstruction MI 50.00 Cr.A0340 1988 Uganda Economlc Recovcry Credit 24.00 Cr. 18440 1988 Uganda Economic Recovery Credit 6S.00 Cr. 18441 1989 Uganda Economic Recovely Credit I.70 Cr. 18442 1989 Uganda Economic Recovcry Credit 25.00 Cr.A0341 1990 Uganda Economic Recovery Credit 12.80 Cr.18443 1990 Uganda Economic Recovery Credit 1.50 Cr.23871 1991 Uganda Economic Recovery 11 2.00 Cr.20872 1992 Uganda Economic Recovery 1 1.60 Cr.23141 1993 Uganda SAC I 1.40 Cr.20870 1990 Uganda Economic Recovery Ctedit 125.00 Cr. 14340 1984 Uganda TAS U 15.00 Cr. 15390 1985 Uganda Agricultural Development 10.00 1.50 Cr.15600 1985 Uganda Second Power 28.80 0.62 Cr. 15610 1985 Uganda Petroleum Exploration Prom 5.10 1.41 Cr. 18030 1987 Uganda Fourth Highway 18.00 1.84 Cr.18240 1987 Uganda Forestry Rehabiation 13.00 1.16 Cr. 18690 1988 Uganda South West Ag. Rehab. 10.00 6.35 Cr. 18930 1988 Uganda Sugar Rehabilitation 24.90 6.52 Cr.19340 1988 Uganda Health Rec. 42.50 14.03 Cr.19510 1988 Uganda Tech. Asst. Ul 18.00 0.62 Cr. 19620 1989 Uganda Public Enterprises 15.00 5.39 Cr.19650 1989 Uganda Education IV 22.00 6.05 Cr.19910 1989 Uganda Telecom I 52.30 9.39 Cr.20880 1990 Uganda Poverty & Soc. Costs 28.00 9.40 Cr.21240 1990 Uganda Water Supply U 60.00 56.47 Cr.21760 1991 Uganda Livestock 21.00 20.21 Cr.21900 b/ 1991 Uganda Ag. Sector Adj. Credit 100.00 34.76 Cr.22060 1991 Uganda Urban I 28.70 22.29 Cr.22680 1991 Uganda Power m 125.00 110.70 Cr.23140 b/ 1992 Uganda SAC I 125.00 27.10 Cr.23150 1992 Uganda Enterprise Development 65.60 64.55 Cr.23620 1992 Uganda Northern Reconstruct. 71.20 67.05 Cr.24180 1993 Uganda Econ. & Financial Management 29.00 22.60 Cr.24240 1993 Uganda Agric. Extension Prog. 15.79 13.84 Cr.24460 1993 Uganda Agric. Res. & Trg. 25.04 23.58 Cr.24930 1993 Uganda Primary Educ. 52.60 48.24 Cr.24960 b/ 1993 Uganda Financial Sector Adjustment Cr. 100.00 99.00 Total 8.40 1882.99 674.67 of which repaid 8.40 34.84 Total held by Bank & IDA 1848.15 Amount sold 8.32 of which repaid 8.32 TOTAL Undisbursed 674.67 al Approved after FY80. b/ SAL, SECAL or PErogram Loan/Credit. 01-21-9 Schedule D Page 2 of 3 B. STATEMENT OF IFC INVESTMENTS IN UGANDA (as of December 30, 1993) 1993 AEF-Clovergem Canning Preaerv & Process 0.85 0.00 0.85 1993 AEF-NGE-GE Canning Preserv & Process 0.65 0.00 0.65 1994 AEF-SKYBLUE Hotls & Restaurants 0.51 0.00 0.51 1985,1993 DFCU Deveopment Finance Companies 0.00 0.98 0.98 1993 JUBILEE 0.00 0.10 0.10 1965 MULCO Spinning, Weaving & FinIshing 4.32 0.71 5.03 1984 TAMTECO Mfg of Food Producs NEC 1.62 0.00 1.62 1972 TPS Tourism Services 1.11 0.00 1.11 1984 Uganda Sugar Cocoa Chocolates, Sugar 8.00 0.00 8.00 1985 Uganda Tea Food Products NEC 2.81 0.00 2.81 Total gross commitments 19.87 1.79 21.66 Less: Repayments. cancellations, exchange adjustmiets, terminations and sales 9.16 0.71 9.87 Total Commitments now held by IFC: 10.71 1.08 11.79 Total Undisbursed 2.01 0.00 2.01 Total Outstanding IFC 8.70 1.08 9.78 01-224-94 ug2edl.wkl Schedule D Page 3 of 3 DISBURSEMENT ISSUES 1. The active IDA portfolio for Uganda at the end of December 1993, consisted of 27 projects for a total commitment of US$1.09 billion with US$674.6 million undisbursed. This included 24 investment projects for a total of US$796 million committed and US$514 million undisbursed. Over the last five years, the investment portfolio has shown a trend of rapidly increasing undisbursed balance, growing at an average rate of 17 percent per year, whereas disbursements remained at about US$68 million per year on average - with US$78.8 million disbursed in FY93. The corresponding disbursement factor (ratio of disbursements to cumulative net undisbursed balance at the beginning of FY) declined from an average of about 20 percent for FY89-91 to about 15 percent in FY92-93. Meanwhile, problem projects increased from 14 percent in FY92 to 19 percent of the portfolio in FY93. 2. The portfolio's modest disbursement performance is due in part to its relatively young age structure (average of 4.8 years). However, as suggested by the increasing number of problem projects, there are also other issues which have undermined progress. 3. The major issues are: (a) shortage of counterpart funds resulting from poor mobilization of domestic resources and an excessive portfolio of externally funded projects; (b) weakness in project management and initial delays in meeting conditions of effectiveness; and (c) other deficiencies regarding procurement, management of special accounts, and compliance with audit covenants. 4. An in-depth Public Expenditure Review (PER) will be carried out in FY94, following upon a similar exercise in FY93 to reach agreement on a core investment program for which the Government will provide adequate counterpart funding (even if this means postponing or canceling non-core projects). Thereafter, the CPPR (Country Portfolio Performance Review) will finalize restructuring of the Bank's portfolio on the basis of the framework provided by the PER. At the same time, Government and the Bank will review progress in overcoming generic implementation issues identified during previous CPPRs. Other plans for FY94 include: (a) organization of Se tor Implementation Reviews in association with the responsible project managers; (b) provision by the Resident Mission of greater support to project managers on procurement, special accounts, disbursements, and auditing; and (c) continuation of the practice of preparing implementation manuals for new projects. IBRD 25487 UGANDA A. TRANSPORT REHABILITATION PROJECT D A N/ TRANSPORT NETWORK - - - P~rndr R IS*.ynmg Upradmg. / P.M6Cd;zE R-d, l/&blltl tr -.tX / Pfirary bihron Kaboe S- o ordreryb.rovel It '' ,yf / ,_ 5eorxbybUen,a j -' KItIrA -- I ___ Scodorary gram1 fl sow / ~g\ ,,o jl ,5t A,+tA N I A 7 4 - ' ri o s Z // 17z_ea~~~~~~~~ J,O lltoWw < b*llt t I 9 I JANUARY 19J74~~~~~~~~~~~~~ANURY 99