Chapter 8. Danish Uganda Aid Programme (Main Components)

Introduction

Approach

8.1 This study is not a primary evaluation of the various component activities within the Danish aid programme. However, it draws on available programme documents, reviews and evaluations to make an assessment of Danish-supported activities and their contributions to overall development within each of Danida’s main programme areas. The assessment is based not only on the direct outputs of Danish-funded activities but also on indirect influences on policies, institutions and capacities. This chapter reviews each of these main programme areas. In doing so, it distils findings from more detailed discussions and descriptions of the main interventions in the Thematic Papers which comprise Volume 4 of the report. Stakeholder perceptions (reported in Volume 2) also made an important contribution to the evaluation team’s assessments. Chapter 9 draws on the same sources to consider issues that cut across sectors and programmes, and Chapter 10 then assesses the Danish aid programme as a whole.

Common Patterns

8.2 Figure 8.1 shows the commencement and duration of key “sector” interventions within Denmark’s Uganda aid programme.²⁷

Figure 8.1: Timeline for Sector Interventions

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Source: NCG Pre-Study of Uganda Country Programme Evaluation (NCG, 2006).

Note: Timelines are based on the commencement of formal programmes approved in Copenhagen. In practice, sector work often began earlier through locally approved funding. “Human Rights and Democratisation” is a case in point, and includes a distinct element of support to decentralisation.

Table 8.1: Annual Disbursements by Sector (DKK’000)

1996	1997	1998	1999	2000	2001	2002	2003	2004	1991-04	1987–04
20,593	24,864	45,577	26,367	50,890	63,043	53,444	54,766	56,955	427,055	427,055
1,832	5,182	6,624	12,417	16,095	17,397	12,305	6,375	9,777	130,738	130,738
29,364	35,684	50,044	30,388	18,723	27,573	26,563	15,593	5,741	303,343	303,343
32,606	29,391	13,184	1,592	3,224	-	742	2,109	1,451	120,827	120,827
70,000	49,970	80,002	-	273	-				386,447	386,447
48,274	38,702	44,446	51,609	48,976	56,376	55,507	89,637	82,600	751,104	751,104
27,663	38,498	12,127	59,410	63,605	69,844	55,764	62,428	48,831	509,500	509,500
39,183	18,874	63,666	63,938	91,692	101,069	49,709	37,969	52,349	695,301	695,301
37,151	50,588	55,527	51,308	43,958	49,271	35,978	36,348	72,400	600,396	974,396
64,712	87,454	85,877	87,670	97,164	86,627	57,988	44,099	49,168	989,798	989,798
371,380	379,207	457,073	384,700	434,600	471,200	348,000	349,324	379,273	4,914,510	5,288,510

Source: NCG Pre-study (NCG, 2006). (See notes to Figure 7.7 above.)

8.3 There are certain common patterns. Initial interventions were informed by the strategic stance described in Chapter 6, but were often quite opportunistic. Several activities began with funding from the Local Grant Authority, before obtaining larger-scale funding from Danida HQ. There is strong continuity, both in sectors of focus and in particular activities and partners within those sectors. And, across sectors, there are moves towards sector approaches, first as an organising principle for Danida’s own interventions, then as a joint enterprise with government and other donors.

Disbursement data

8.4 Tables 8.1 and 8.2 show the annual disbursements by sector (in DKK) that lie behind Figure 7.7 (previous chapter). Unfortunately, a sector breakdown for the first four years of the programme is not available. Partly for this reason, our assessment of the relative importance of Danish aid in each sector draws on the OECD DAC commitment data that were presented in Table 7.4 above.

8.5 The NCG Pre-study did not attempt detailed documentation of interventions below a threshold of DKK 3 million. This was understandable, in view of the mass of material that had to be assembled anyway. However, it introduced some constraints and biases. Some sectors (notably Human Rights and Democratisation) were much more based on small interventions than others. And in many sectors, patterns of development were set by small interventions agreed locally before larger programmes were submitted to Danida HQ for approval.

Table 8.2: Sector Shares in the Danida Programme

1997	1998	1999	2000	2001	2002	2003	2004	1991–04
6.6%	10.0%	6.9%	11.7%	13.4%	15.4%	15.7%	15.0%	8.7%
1.4%	1.4%	3.2%	3.7%	3.7%	3.5%	1.8%	2.6%	2.7%
9.4%	10.9%	7.9%	4.3%	5.9%	7.6%	4.5%	1.5%	6.2%
7.8%	2.9%	0.4%	0.7%	0.0%	0.2%	0.6%	0.4%	2.5%
13.2%	17.5%	0.0%	0.1%	0.0%	0.0%	0.0%	0.0%	7.9%
10.2%	9.7%	13.4%	11.3%	12.0%	16.0%	25.7%	21.8%	15.3%
10.2%	2.7%	15.4%	14.6%	14.8%	16.0%	17.9%	12.9%	10.4%
5.0%	13.9%	16.6%	21.1%	21.4%	14.3%	10.9%	13.8%	14.1%
13.3%	12.1%	13.3%	10.1%	10.5%	10.3%	10.4%	19.1%	12.2%
23.1%	18.8%	22.8%	22.4%	18.4%	16.7%	12.6%	13.0%	20.1%
100.0%	100.0%	100.0%	100.0%	100.0%	100.0%	100.0%	100.0%	100.0%

Source: NCG Pre-study (see Table 8.1 above).

Financial Support

Context

8.6 “Financial support” is the category that groups balance of payments aid/import support in earlier years with subsequent debt relief. It corresponds to the more common term “programme aid”. In Chapter 5 we noted the special importance of programme aid in supporting Uganda during the evaluation period, with the emphasis shifting from balance of payments support to debt relief and then to explicit budget support. At times the different labels attached to these forms of programme aid have obscured an underlying similarity: that all can serve as de facto budget support to the government of Uganda (see Box 8.1).

8.7 The programme aid study for Sida (Ddumba-Ssentamu et al., 1999) is an authoritative analysis, which covers the entire period of Danish “financial support” to Uganda. Figure 8.2, based on MFPED records which it cites, shows the Danish contribution to programme aid during the 1990s. This was less than 3.5% of Uganda’s receipts. The Netherlands and Sweden each provided twice as much, the EU and UK nearly four times as much, and the World Bank more than ten times as much as Denmark.

Box 8.1: Programme Aid as Budget Support Sida commissioned an important study of programme aid in 1999. This observed a confusion that has applied equally to Danish aid: The Sida rationale for programme aid has always been that there were financing gaps that had to be filled. However, there seems to have been some confusion on the nature of these gaps. Macroeconomically, it does not make a difference whether programme aid is given as import support, debt relief or budget support, provided that import support and budget support are untied and that debt relief is servicing debts that would have been serviced anyway (which is the case with debt to World Bank or IMF). Under the conditions just mentioned, all three modalities facilitate higher government expenditure and higher imports than would otherwise have been possible. For this reason, the current reluctance to budget support of the Swedish Ministry of Finance is a bit odd: the same arguments could have been raised against import support and debt relief. However, the Ministry has a point in that it is good to discuss whether gaps should be financed continuously. This depends on the effectiveness of aid. Source: Ddumba-Ssentamu et al, 1999 (emphasis added).

Box 8.1: Programme Aid as Budget Support

Sida commissioned an important study of programme aid in 1999. This observed a confusion that has applied equally to Danish aid:

The Sida rationale for programme aid has always been that there were financing gaps that had to be filled. However, there seems to have been some confusion on the nature of these gaps. Macroeconomically, it does not make a difference whether programme aid is given as import support, debt relief or budget support, provided that import support and budget support are untied and that debt relief is servicing debts that would have been serviced anyway (which is the case with debt to World Bank or IMF). Under the conditions just mentioned, all three modalities facilitate higher government expenditure and higher imports than would otherwise have been possible. For this reason, the current reluctance to budget support of the Swedish Ministry of Finance is a bit odd: the same arguments could have been raised against import support and debt relief. However, the Ministry has a point in that it is good to discuss whether gaps should be financed continuously. This depends on the effectiveness of aid.

Source: Ddumba-Ssentamu et al, 1999 (emphasis added).

Figure 8.2: Uganda’s Programme Aid Receipts 1990/91–1997/98

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Source: Ddumba-Ssentamu et al, 1999 (MFPED data cited in Table 4.2).

Danish support

8.8 We have had access to the NCG Pre-study records on financial support, but our analysis builds more directly on a major evaluation of Danida balance-of-payments support which was undertaken in 1994.²⁸ This included a Uganda case study, from which Table 8.3 is drawn.

8.9 Although the NCG Pre-study shows Financial Support commencing in 1990 (Figure 8.1), Table 8.3 (from the T&B study) shows that such support actually began earlier, with some of the interventions approved in 1987 (EADB credit line and cofinancing of World Bank SAP) and 1998 (commodity import support, steel for hoes). The total through 1993 was DKK 300m. Additional financial support allocations amounted to DKK 230m, as follows:²⁹

Table 8.3: Overview of Danish Balance of Payments Support to Uganda 1987–1993

Source: Danida files. (Reproduced from T & B Consult, 1994.)

8.10 Commodity import support (CIS) was variously linked to the import of steel for hoes, raw materials for soap manufacture, vegetable seeds and (from a Danish-aided factory in Tanzania) of cement. Commodity import support was tied to procurement from Denmark or the region, and Denmark also practised the tying of the counterpart funds generated. This rendered such aid very cumbersome and inefficient. The 1994 BOP evaluation (T&B Consult, 1994) noted that, as well as being cumbersome for Uganda, this was not an efficient way of supporting Danish business interests:

The Danida CIS programmes have ... been useful, but the large degree of tying of the programmes to procurement in Denmark, and in some cases of earmarking the use of the generated counterpart funds has slowed down disbursement and created a number of apparently quite unnecessary problems.

By the Ugandan authorities, Danida is considered to have been one of the more “difficult” donors with regard to balance of payments support as its support has been accompanied by a large number of restrictions and earmarking, slowing down disbursements and necessitating a large amount of paper work for the Ugandan administration.

... within Uganda’s present macroeconomic framework, it is most likely that the Danida policy of 50 per cent of the assistance to be spend [sic] in Denmark can be fulfilled more effectively through other aid forms than tied commodity import support.

8.11 Tied credit lines were similarly unsatisfactory, and tying was again an obstacle to efficient disbursement when Denmark co-financed or parallel-financed a World Bank Structural Adjustment Programme (SAP). As Figure 8.2 shows, the World Bank dominated programme aid flows through the 1990s. In addition to the technical problems experienced with disbursement of co-financing, Denmark and other bilaterals found the Bank a difficult and unresponsive partner in programme aid. They felt excluded from the dialogue and setting of conditions incorporated in Policy Framework Papers, even when they acted as SAP co-funders. The later PRSCs represented a significantly different way of doing business (Lister et al., 2006) but by then – as discussed below – Denmark had withdrawn from all forms of general budget support.

8.12 Debt relief was much the most efficient (and effective) form of programme aid. Denmark first contributed to the relief of Uganda’s debts to the East African Development Bank (EADB) and the African Development Bank (AfDB), and then made larger contributions to the Multilateral Debt Fund (MDF). There was no question of tying and payments were made direct to Uganda’s creditors or into the MDF mechanism. A key effect of these payments was to release equivalent resources for other expenditures within the GOU budget (see Box 8.1 above), but this was not taken explicitly into account in the way the aid was described or the way that the use of Danish funds was audited.³²

Box 8.2: Balance of Payments Support – the 1994 and 1996 Assessments Key points from the 1994 BOP study’s critique and recommendations: Making balance of payments support a residual also implies that it is given on a year-to-year basis, making it a short-term type of assistance. This is unfortunate as especially Uganda’s debt crisis calls for long-term solutions; furthermore it complicates the Ugandan budgeting process in so far that the Government of Uganda does not know what will be the size of the support for the coming fiscal year. Seen from the perspective of the Ugandan Government, present conditions of the Ugandan economy are characterised by a shortage of resources for the Ugandan state budget rather than of foreign exchange. In order to implement a number of its priority programmes – like civil service reform, reduction of the army, and elections – the Ugandan Government is therefore in need of budget support for these purposes. The country study has shown that Uganda is very much in need of balance of payments support, not least debt relief. Within Danida this calls for a shift in the use and perception of balance of payments support in Uganda, away from its present day residual character towards status as a more permanent aid form. Balance of payments support can also be seen as an “admission card” for Danida to participate in assessments of the composition of the Ugandan budget – e.g. through the Public Expenditure Reviews – and get influence on donor coordination. Should this type of assistance be cut down or allowed accidentally to disappear, Danida’s position in the policy making process might be weakened. Generally speaking, debt relief and budget support – the two types of balance of payments support which the Evaluation Team recommends for Uganda – are very fungible types of aid. Rather than attempting to prevent such fungibility by setting up restrictions on the use of the funds, Danida should make an effort in avoiding unwarranted effects of this fungibility – e.g. an increase in military expenditures – by trying to influence the framework in which decisions on the use of the development assistance are taken. That could e.g. be by active participation in the Public Expenditure Reviews, or by setting up “negative lists” indicating that future assistance is conditioned on, for instance, the military expenditures not being expanded, the social sectors getting a certain minimum share of the budget, or a certain percentage of Uganda’s export earnings being used for servicing of its debt. (T&B Consult, 1994) The 1996 poverty study offered a similar analysis: In Danish aid to Uganda, where macro-economic policies of the government are by and large conducive to poverty reduction, policy-based assistance may have a general role to play. Denmark may be able to inspire a group of like-minded donors to compose an aid package, to be conditional on the maintenance and further development of policy reforms, which are pro-poor. By “rewarding” the results of macro-economic policies, the effectiveness of programme aid in terms of poverty reduction may increase. Such performance-based support will require enhanced capacity in Danida to analyse macro-economic developments and sustain the policy dialogue with government and other donors. (COWI 1996, Uganda Volume I.) These studies thus anticipated the approach to budget support that many of Uganda’s donors (but not Denmark) adopted in the post-HIPC period.

8.13 In the early years of the evaluation period, there was an understanding that up to 25% of the programme could be allocated to “financial support”,³³ but there are no sig-nificant disbursements in this category recorded after 1998, when the HIPC agreement came into play and the MDF to which Denmark had contributed gave way to sectoral and general budget support modalities, from which, for the most part, Denmark abstained.

Box 8.3: Danida Reactions to the Balance of Payments Study At the workshop in Kampala which reviewed the draft version of this report, there was some discussion as to whether RDE and Danida had been conscious of the budget support role of debt relief, and therefore whether budget support was deliberately stopped or (in the consultants’ words quoted in Box 8.2) “allowed accidentally to disappear”. RDE Kampala subsequently provided the following comments: It is very difficult to arrive at definite conclusions on the Danida understanding of its debt relief in the 1990s, since not all observations and readings of the use of aid modalities will ever be available. It is therefore impossible to be certain of Danida’s unawareness of giving budget support in the form of debt relief. However, communication between the Embassy in Kampala and MFA in Copenhagen spanning the years 1996-1997 shed some light on the awareness in Danida. Regrettably, the communication is confidential and therefore unavailable to the country evaluation team. The Embassy’s reading of the content is as follows: A high awareness of the fundamental implications of budget support is reflected in the communication. Budget support is considered used as an aid modality, but it is at one point discarded because of unacquaintedness with the budget and the difficulties of justifying budget support in the light of the Government’s increasing military expenditures. Debt relief constitutes a significant contribution to Uganda in the same period, but even though the Embassy has not found any direct reference to a linkage made by Danida between debt relief and budget support, we do not believe that this is necessarily a reflection of unawareness. It could indicate a reluctance of drawing the parallel, because of the political implications of budget support. The official Danida management response to the 1994 study (MFA Danida 1994f) declined to take forward the recommendation to treat BOP aid as a permanent aid form: Recommendation It is recommended that Danida considers BoP support as a permanent aid form and further develop the criteria to be applied, when deciding on whether to use BoP support as an aid instrument. Follow-up BoP support can and should take different forms relating to the different circumstances in different recipient countries. Developing universal criteria to govern all BoP support is therefore not seen as a resource effective way of making decisions with regard to BoP support.

8.14 Financial support tended to be used as a residual to which funds were allocated that could not be absorbed by other modalities.³⁴ Its share in the programme dwindled during the 1990s, reflecting the general trend away from tied CIS, and the fact that: As other Danida activities in Uganda have become more established and extended there are less funds “left over” for balance of payments support (T&B Consult, 1994)

8.15 The 1994 evaluation of balance of payments support concluded that such aid, largely because of its utility as a form of budget support to reforming governments, was highly effective, and ought to be treated not as a residual but as a purposeful modality in its own right (see Box 8.2). This recommendation was not taken up (see Box 8.3 on Danida reactions at country and HQ level).

Agriculture³⁵

Context

8.16 Agriculture is crucial to the Ugandan economy, and income growth of poor farmers is key to the poverty reduction that has taken place. But the improvements are primarily explained by restoration of security, rehabilitation of infrastructure and liberalisation of markets. Direct interventions to support agriculture have not been conspicuously successful. The Land Act of 1998 has not lived up to expectations in delivering land reform, principally because of the failure to put in place the decentralised administration needed for its implementation. Thus the tenure of the mass of small-scale cultivators, especially women, has not become more secure and the associated investment has not been forthcoming.

8.17 The bulk of ODA for agriculture in Uganda in the period under review has come from international financial institutions, namely the World Bank, IFAD and the ADB. The major bilateral donors are Danida and USAID. Based on the commitment records shown in Table 7.5, Danida provided about 7% of ODA to agriculture between 1987-1996, and about 10% between 1997-2004.

8.18 In the early years after 1986, a recurring problem was the underutilisation of the refurbished capacity of state-run enterprises and the reluctance to follow through with undertakings to privatise. Danida was not the only agency experiencing difficulties persuading the government to reduce its direct role in production during this period. For the most part there is little positive evidence that ODA to the agriculture sector in Uganda during this period had any positive impact, directly or indirectly, intended or unintended.

8.19 In the period 1991-98, Uganda’s international partners helped government to take a longer-term view of development opportunities in the agricultural sector – mainly through sub-sectoral planning – and to move to the improvement of agricultural support services in rural areas. For many years there was no well-articulated national agricultural strategy. The Ministry of Agriculture was not regarded as a strong agency, and MFPED has taken a leading role in much of the planning and strategy formulation for the sector. With the PEAP in 1997 and then, in 2000, the Plan for the Modernisation of Agriculture (PMA), a more coherent programme became possible for ODA to the sector. Danida contributed actively to the agricultural strategy debate among donors and with government from which the PMA emerged (see Box 8.4).

Box 8.4: Donor Coordination in Agriculture (as of 2001) In terms of agriculture, the Danish play the coordinating role: “We turned down the Bank.” Donor subgroups formed partly because the Bank tended to ignore other donors and “coordination” increasingly became a dialogue between the Bank and Uganda, while the other donors “picked up the scraps off the table.” The donor subgroup creates a much stronger voice to trample the Bank back into line and say, “No, you’re part of the donor group here; you need to talk with us as well. We do not just get the bits of leftovers. We need to act as one unit.” This arrangement has worked relatively successfully, only because, in late 1996, the Bank was “shot down by Parliament on a large project [the Agriculture Sector Management Project, ASMP] and came into line.” That was the starting point for the dialogue between the Bank and other donors (who also had concerns about that particular agricultural project). Donors were accused of torpedoing the project, because we were critical. The Danish Embassy chairs the donor sector specialist meeting on agriculture. The group started just over a year ago. Two factors triggered the group meetings: problems of understanding with the Bank, which was leading initiatives that most donors did not agree with or appreciate, and initiatives of the Ministry of Agriculture, with which donors also disagreed. Donors decided to get together to assist the sector, the Ministry of Agriculture, the Bank, and the Ministry of Finance to move forward. To give the Bank their due, there was also no real coordination among any bilateral donors. Donors did not know what other donors were doing. We had to get together to share information, so that we had a common understanding of where everyone was going. The Ministry of Agriculture developed sector development plans but in virtual isolation from the donors. That resulted in an “incredibly weak” sector development plan, which neither the donors nor the Ministry of Finance could support. The donors and the ministry then became involved, and Danida and DFID are funding a project (the PMA) over 18 months, trying to help the ministry and GOU to transform the initial sector development plan into a better document. Source: World Bank, 2001a.

8.20 In this most recent phase, much closer alignment in support of ODA to the agricultural sector is in evidence. The National Agricultural Advisory Services Project (NAADS) funded by the World Bank and IFAD, and co-financed by the EC, Danida, DFID, Irish Aid and the Netherlands is evidence of the broad consensus in support of the PMA.

Danish support

8.21 Danida’s allocation to Uganda’s agricultural sector climbed rapidly in the period 1992-2000 and since then has levelled off to about 15% of the annual total (see Tables 8.1 and 8.2 above). This contribution has been strongly bolstered by Danida’s support to the improvement of rural roads. Danida’s strategy is in contrast to general ODA to agriculture for sub-Saharan Africa where DAC statistics show there has been a decline in both the share and value of aid to agriculture over the past two decades. In Uganda, this is one sector in which Danida’s share of total ODA has also increased (see 7.15 above). However, Danida has experienced the same difficulties in achieving effective interventions in favour of poor farmers that have discouraged other donors. Its aid divides into three phases: ad hoc interventions between 1988 and 1991; support to policy development and related investments between 1991 and 1998, and sector programme support thereafter (see Table 8.4).

8.22 Phase 1 (1987-1990): Our detailed review (Thematic Paper 1) concludes that, with the exception of the initial support to the dairy industry, Danida’s contribution to the agricultural sector in the period was not effective. The largest ad hoc intervention was for the construction of grain mills and silos. Changes in grain marketing institutions rendered these an inappropriate undertaking from the outset. The resulting structures became a visible symbol of Uganda’s economic recovery, for which Danida gained some kudos, but they were never viable (see Box 8.5). A large investment in a dairy plant was similarly ill-fated (and also linked to an obsolescent parastatal organisation), although more modest support to the dairy sector was useful.

Table 8.4: Danida’s Main Agriculture Sector Projects

Period	Projects/Programmes	File No.	DKKm	Total
Phase 1 – ad hoc interventions
1988–1991	Support to the Dairy Sector	104.Uganda.27	10.19	159.89
1987–1991	Farm Forestry Project	104.Uganda.20	51.70
1989–1990	Credit for Small Farmers	104.Uganda.31	8.00
1987–1991	Grain Drying & Storage	104.0.27.Uganda.1	90.00
Phase 2 – support to policy development and related investments
1991–1993	Dairy Master Plan Study	104.Uganda.42	4.84	84.74
	Dairy Development Project	104.Uganda.42	25.80
1994–1996	Animal Breeding Project	104.Uganda.50	12.10
1991–2003	Uganda National Farmers’ Association	104.Uganda.49	42.00
Phase 3 – sector programme support
1998–2003	Agriculture Sector Programme Support (ASPS) I	104.Uganda.67	294.30	294.30
2004–	ASPS-II (programme ongoing)	104.Uganda.805	292.40 (budget)

Notes: See Volume 4, Thematic Paper 1, Table 1, for a further explanation of these cost data.

Box 8.5: The Grain Silos The undertaking involved the construction of grain silos at three locations in Uganda. It was one of many turn-key, industrial-scale grain storage and drying projects funded by Danida in developing countries between 1969 and 1992. These were coming to an end, primarily because of world-wide trends in market liberalisation, about the time when the Uganda project was being conceived (NCG, 1993). In Uganda, the Jinja and Kyazanga facilities were constructed for the Produce Marketing Board (PMB) and the Kawempe plant for the Uganda Grain Milling Company. The evaluation commissioned by Danida in 1993 included a detailed study of these projects around the time of their completion. It found that the silos were misconceived due to the abolition of the state grain monopoly in 1988 and market liberalisation which resulted in the collapse of the PMB’s market share. The evaluation was critical of the initial 1987 feasibility study, which focused on the investigation of ’projects’ rather than the overall grain sector. With regard to the recently completed construction and cost over-runs, it raised questions about the procedures used by Danida in the selection of the contractor and the lack of construction supervision, particularly relating to soil engineering at Jinja and the choice of bulk handling equipment. The evaluation team in 2006 was informed that the energy costs of grain drying had proved prohibitive as the Jinja complex had been built in a swamp. It received reports of deep-seated corruption associated with the PMB and WFP operations, unmentioned by the feasibility study and the 1993 evaluation. The situation would have rendered Danida’s investment non-viable, even without the bungled planning and construction. To this day, the Jinja and the Kyazanga facilities, by far the largest Danida investment of the period, are uneconomic and underutilised. The silos at Kawempe (pictured on Uganda’s one thousand shilling bank note) are now used by three private firms for maize and beans. Their main customer is the World Food Programme. Nonetheless the project long continued to have political clout. It was the biggest visible investment of the regime. President Museveni brought Nelson Mandela to see the Jinja complex in 1993.

8.23 Phase 2 (1991-1998): Danida’s assistance to the agricultural sector in the period 1991-1998 focused on the development of the livestock sub-sector and farmers’ associations under the UNFA. The Dairy Master Plan was influential, but the other main projects funded by Danida over this period score very poorly in terms of the DAC evaluation criteria. Danida made a significant contribution to planning in the livestock sector, but then poured funds into a dairy industry which should reasonably have been a candidate for privatisation under the Agricultural Sector Adjustment Programme. Along with other donors, Danida recognised the importance of improving advice and assistance to small farmers, but efforts to establish an extension model based on farmers’ associations (following a Danish pattern which had no parallel outside Scandinavia) led to many years of subsidy and a commitment Danida found difficult to withdraw from despite its lack of success (Box 8.6).

Box 8.6: Uganda National Farmers’ Association (UNFA) In 1992, Danida supported an initiative which was expected to lead to the development of an independent, self-financing agricultural extension system as an alternative to the Training and Visit (T&V) extension model being promoted by the World Bank. The explicit purpose, as expressed in the early documents of UNFA, was to contribute to the welfare of members through the mutually supportive activities of an independent association. Emphasis was placed upon the objective of ’increasing the political influence of farmers’ and giving them ’a voice’. Yet, from the beginning, the claimed non-viability of the World Bank’s T&V model was conflated with the justification for funding the UNFA. According to the authorities in the RDE at the time, the idea of supporting the UNFA and district farmers’ associations (FAs) came from the cooperative sector in Denmark. The initial request for support stated that, by the end of the five-year implementation phase, ’a fully staffed and equipped National Secretariat for the UNFA would be established and functioning with District Coordinators operating in each district’. But in 1997, the UNFA came back for more funds for an organisation which had offices and coordinators in 33 districts. The apex organisation and the constituent district FAs continued to rely heavily on Danida. Less than 10% of the budget had come from fees. FAs in a small number of districts with strong leadership, good communications infrastructure and favourable farming conditions were reported to be breaking even, but in most districts in the north and east of the country, there was little prospect of their surviving without core funding. Under ASPS-I (1999–2004) a determined effort was made to down-size the UNFA (now Uganda National Farmers’ Federation – UNFFE) and channel correspondingly more resources to the district-level farmers associations. Down-sizing has continued under ASPS-II since 2005. No appreciable progress was made in seeing UNFFE develop as an organisation that could truly …represent the nation’s farmers in the national agricultural lobby. Instead UNFFE remains to a large extent a mouthpiece for nation’s leadership. Support to the UNFFE in the ASPS-II will be against a programme of agreed upon deliverables ………and not as “core” funding to the institution” (page 8) Source: MFA D anida and Government of Uganda, 2005.

8.24 Phase 3 (1998-2005): The most recent period represents a sea-change in Danish assistance to the agricultural sector. Under two successive phases of Agriculture Sector Programme Support (ASPS) from 1998, Danida attempted to address the needs of poor farmers in a more programmatic way, designed to improve the condition of the rural poor, not by focusing on discrete projects, but by taking account of the role and functions of the agricultural sector as a whole and providing strategic support. ASPS-I was a Danida-specific programme, but its scope and content were in line with the PEAP, first launched in 1997. ASPS-II is more explicitly linked to the PMA, and includes a Danish contribution to the joint funding of the new approach to extension represented by NAADS (National Agricultural Advisory Services). It adheres to the Government’s current guidelines for the sector, as set out in the PMA, and is designed with the overall objective of poverty alleviation. The programme, which may be joined by other bilateral donors, is therefore relevant taking into account the role and functions of the agricultural sector, global priorities and partners’ and donors’ policies. Issues of effectiveness, efficiency and sustainability are still to be resolved.

8.25 Despite the progress made, concerns remain about the impact of ODA on the agricultural sector in Uganda, compared with more well-defined sectors such as health and roads. Chapter 9 includes further discussion of the poverty-focus of aid to agriculture, and Chapter 10 considers some of the implications that arise from the recent (Danida-led) evaluation of the PMA and from collaboration in the Uganda Joint Assistance Strategy (UJAS). A key issue is whether the appropriate lessons from Danida’s extensive sector experience can be fed into future agriculture strategy for Uganda.

Transport/Roads

Context

8.26 At the time when Denmark resumed its bilateral assistance in 1987 the infrastructure in Uganda was in a deplorable state with most of the facilities broken down and in disrepair. Hence, the rehabilitation and reconstruction of infrastructure featured prominently in the NRM’s 10-point programme, and in subsequent GOU development plans. GOU was heavily reliant on aid for the major investments involved, and the rehabilitation of communications infrastructure was a key factor in the economic rebound after years of conflict and economic decline.

8.27 The World Bank has been the lead financier in the sector with the EC, ADB, JICA, Danida and BADEA also making important contributions. The emerging issues in the road sector include the slow pace of institutional reforms and donor coordination as well as inadequate resources from Government for maintenance of the road infrastructure (this issue is highlighted under sustainability in Chapter 10 – see Box 10.1).

Danish Support

8.28 Danish support to transport infrastructure was much more substantial in the first half of the evaluation period than in the second. Table 7.4 shows Danida providing 10% of ODA commitments to Transport and Storage between 1987-1996, but between 1997-2004 the equivalent Danida share was less than 1%. This reflects Danida’s increasing concentration on rural roads, which have been the main focus of Danish support to the transport sector. Other interventions were more ad hoc, but some of them were large individual projects (see Table 8.5). They included, in 1988, support to a ferry terminal to help keep open alternative international transport routes via Tanzania. In 1992-1994 there was a project to make up a backlog of railway wagon maintenance. Most notably, between 1994-1996 Denmark financed the renovation of Uganda’s international airport. This attracted some criticism in Denmark as “not poverty oriented”, but was justified on the grounds that the investment itself was appropriate, and that the credit Danida would gain with the Ugandan elite would assist in its pursuit of the social leg of its strategy.

Table 8.5: Transport Sector Programmes/Projects funded by Danida 1988-2005

Source: Danida Project Appraisal, Project Description and Completion Reports.

Notes: (a) The figures are allocated grants (budgets). (b) This includes the allocation for second phase (DKK 17.5 million) which covered activities other than roads.

Box 8.7: Labour-Based Road Maintenance Danida’s involvement in labour-based road maintenance dates back to the Northern Uganda Reconstruction Programme in the mid-1990s. Under the Programme, the feeder roads component was designed in the traditional way involving use of heavy equipment. However, when Danida was requested to fund the component, the appraisal team modified the scope of work to focus more on complementing ongoing roadwork activities by mechanised units with a labour-based programme coupled with institutional capacity building. At this time the labour-based methods were being piloted in four eastern districts under the IDA/NDF funded Transport Rehabilitation Project. Since knowledge and skills on labour-based approach were limited, GOU availed the National Technical College Mbale to become a centre for training in labour-based methods. Under Component 2 of RSPS (District Roads), Danida stepped up its support for the labour-based approach by financing the training and building the capacity of contractors to undertake road maintenance, the capacity of MWHC and District Engineering Departments to plan, award and supervise labour-based contracts. The component also covered putting in place the operational framework and strengthening the capacity of Mt Elgon Labour-Based Training Centre (MELTC), Mbale. As a result of these investments, the impact of labour-based road works is beginning to make itself felt. The training of contractors and districts’ staff and the use of labour-based periodic maintenance have expanded from the initial four districts to over 56 today. The analysis of the relative cost-effectiveness of labour-based methods in comparison to equipment-based methods shows that while it costs USD 13,000 to rehabilitate 1 km of gravel road using labour-based methods, the corresponding figure for the equipment-based approach is USD 15,000. In terms of employment, 60% of the labour-based expenditure (USD 7,200) is for unskilled labour which is normally sourced from the local community while the corresponding wage component of the equipment-based approach is only 8% and the vast majority are skilled labourers who come from outside the community. Furthermore, because of the emphasis on gender equality in the recruitment of labour, women are major beneficiaries of the labour-based approach. Hence, the labour-based method is not only cost-effective, but also creates more employment in the local community in a gender-responsive manner. Additionally, the profile and voice of the labour-based contractor are beginning to be heard. Recently, the contractors who have been trained at MELTC formed an Association called Labour-based Contractors’ Association of Uganda (LaBCAU). However, not everyone is happy. Respondents pointed out that there is a lot of disquiet among the big equipment-owning contractors. This is not unexpected in the light of loss of opportunities for jobs. MWHC also says that the speed of scaling up the approach is outstepping their capacity for supervision.

8.29 Early roads investment formed part of the Rakai District Development Programme (RDDP), where the rehabilitation of rural roads is credited with a major role in the revival of the district’s near-derelict economy. Subsequently, Danida provided support to secondary and feeder roads under the Northern Uganda Reconstruction Programme (NURP), and in two phases of Road Sector Programme Support, beginning in 1998. These were linked to the government’s emerging Road Sector Development Programme, and Danida pioneered the development of labour-based approaches to road maintenance (see Box 8.7), as well as supporting roads management institutions at district level. Danida has also provided institutional support at national level through the RSDP Coordination Unit in MFPED.

8.30 The extent of Danida’s further involvement in the roads sector is uncertain (in the context of pressure for all donors to focus more narrowly). This is not because of doubt about the value of Danida’s past investments, but because the Danish contribution is not seen as distinctive (apart from the contribution to labour-based techniques). There is a Danida sentiment that other donors could support the roads sector equally well, and that Denmark is not a sufficiently big infrastructure investor to carry much weight in efforts to strengthen institutions for sector management and aid coordination.³⁶

Water and Sanitation³⁷

Context

8.31 Basic water and sanitation have been seen as essential services, both by GOU and by the international community. The 1980s were the International Drinking Water and Sanitation Decade, in the 1990s the slogan was Health for All, and improved access to safe water is now a Millennium Development Goal (MDG) target. The sector is attractive to donors and lends itself to investment projects. Partly for this reason, expenditure on water and sanitation by donors exceeds that directly financed by the government itself. About two thirds of sector expenditures since 2000³⁸ have been donor-funded.

8.32 Donors played a major role in the water and sanitation sector in Uganda during the period of the evaluation. In the emergency recovery period, Unicef was the major player especially in the rural sub-sector. In the 1990s, Danida made a substantial contribution in the rural sector. More recently, Sida has also become an important player in the sector. The World Bank, ADB, France and Germany have contributed significantly to the urban water and sanitation sub-sectors. Persistent issues in the sector are sustainability and the inadequate capacity of institutions responsible for delivery of water and sanitation services.

Danish support

8.33 Danida has been both a major investor and a pioneer in water and sanitation. Initial standards of provision and extent of coverage were very low, and from early on this was a substantial component of the Danish aid programme. Danida accounted for 31% of ODA commitments between 1987-1996, but only 11.3% of commitments between 1997-2004 (see Table 7.4 above). In recent years Danida’s water and sanitation expenditures have declined both absolutely and as a share of the country programme (13% in 2004 vs. an average of around 20% in the late 1990s – see Tables 8.1 and 8.2 above).

8.34 Denmark’s support to this sector occurred in four phases (see Table 8.6 for financial commitments):

• 1987-1989: emergency support to the water sector through Unicef;
• 1989-1998: support through discrete projects;
• 1998-2001: Water Sector Programme Support 1 (WSPS1) under bilateral arrangement;
• 2002 to date: WSPS2 under a SWAp in collaboration with other donors.

8.35 Danish support made a substantial contribution to increased access to clean water and sanitation by the community. After the initial emergency support via Unicef, key projects were RUWASA and the Eastern Centres Water and Sanitation Project (ECWSP). These pioneered the decentralised implementation of water projects as well as the privatisation of construction. Respondents submit that the RUWASA project model has had a huge influence on the current design and implementation arrangements of the rural water and sanitation sector. Key elements were involvement of communities in planning and management, links between water and sanitation, and attention to maintenance arrangements. Danida also played a major role in capacity building for the sector. Many of the technical staff now in the DWD and the private sector received their training through Danida projects.

Table 8.6: Danida Support for Water & Sanitation (Approvals 1989–2003)

Source: Except for RUWASA 1 (which is an expenditure figure obtained from the project completion report), the table shows budget figures extracted from project/component documents.

Note: * This amount covers only Policy and Management Support (PMS) and the unallocated reserve for WSPS 1. It excludes RUWASA 2, ECWSP and Strengthening Water Resource Monitoring and Assessment services which were part of WSPS 1 but had separate grant agreements. The WSPS 1 agreement was actually signed in February 1998.

8.36 As well as this distinctive contribution to capacity development, Danida’s position in the sector enabled it to support a transition to more programmatic support, first with its bilateral WSPS, then with the development of a fully-fledged SWAp for the sector (see Box 8.8).

Box 8.8: Danish Support to Development of a SWAp for Water and Sanitation Towards the end of the 1990s, GOU embarked on comprehensive reforms of the water sector. The reforms, funded by Danida under the Policy and Management Support (PMS) component of the Water Sector Programme Support 1 (WSPS 1), covered all the four sub-sectors, namely rural water and sanitation, urban water, water for production and water resources management. The reforms were triggered by a number of factors including the need to realign investments, service delivery, responsibilities, management etc. with the new legal, policy, institutional and strategic frameworks. In addition, there was a dire need to rethink some strategies that were not working, e.g. relating to the challenges of operating and sustaining water facilities. The reforms culminated in the formulation of the Strategic Investment Plan (SIP) for a 15-year period (2000-2015). The reform document also contained a number of recommendations including the need to adopt a sector wide approach (SWAp) as a framework for bringing together the stakeholders in the sector for a more coordinated and concerted action to realise the goals of the sector. The SWAp framework was adopted in 2002. Within this arrangement a five-year investment framework 2003-2007 was also agreed. The SWAp process gave birth to the Water and Sanitation Sector (WSS) which comprises the four sub-sectors listed above, namely: rural water and sanitation, urban water, water for production, and water resources management. Some of the initial results of this move include: joint financing of some activities, policy dialogue with all key stakeholders under the aegis of the Water and Sanitation Sector Working Group (WSSWG), and common reporting and monitoring arrangements. With regard to reporting and monitoring, the stakeholders have adopted ten indicators – the so called “golden” indicators – which monitor aspects such as access, functionality, investment, hygiene and sanitation, water quality, water for production, equity, community participation and gender. Finally, the preparation of a follow-on five-year (2008–2012) phase of the strategic investment plan is under way. The next phase known as “Joint Water and Sanitation Sector Programme Support” is being formulated with financial support from Danida, Sida and Austria under the new donor cooperation framework. This joint assistance strategy is expected to be funded through budget support. Source: Volume 4, Thematic Paper 2.

Health and HIV/AIDS³⁹

Context

8.37 By 1986 the health system in Uganda was in disarray. Public sector services were near collapse, with dilapidated facilities, few staff in post and inadequate funding and supplies to operate with. The private not-for-profit (PNFP) services, mainly church-run health services, were in a slightly better state and were the only functioning service providers in many areas of the country. They continue to be a substantial source of health care in Uganda.

8.38 In the late 1980s and early 1990s the focus was on rehabilitating facilities and restoring public services while starting to develop health policy and the capacity of the Ministry of Health (MOH) to plan for the sector and coordinate donors and NGOs. A Three Year Health Plan Frame for the period 1993/94 to 1995/96 had two main strategies: to restore health services by increasing their quality through recurrent funding (avoiding building too many new facilities while existing ones were not operational), and to expand coverage of cost-effective services for major diseases such as malaria and AIDS, through a primary health care approach.

8.39 This approach was designed to fit with the increasing decentralisation to districts of more responsibility for service delivery, which was phased in from 1993/94-1995/96. Districts were given responsibility for hospitals and employment of medical staff, in addition to their previous roles in primary health services. This required more finance and greater management capacity at district level. MOH needed to become more supportive, and to deal with quality assurance, rather than direct service delivery.

8.40 By the late 1990s, there was growing recognition of the role of the private sector, especially PNFP services, as part of the health system and of their financial interdependence with GOU services. After various ad hoc arrangements, the Government agreed to provide subsidies, in the form of conditional Poverty Action Fund (PAF) grants to PNFP health services in districts.

8.41 From 1997 the MOH initiated work on developing a health policy and strategy. This was developed with inputs from development partners over a three-year period and culminated in the 2000/01-2004/05 Health Sector Strategic Plan (HSSP), which was introduced as part of a SWAp. The strategic plan prioritised the delivery of a National Minimum Health Care Package. In the first few years to 2003/04, this showed good results in terms of outputs, supported by increased health budgets especially to district level. There were increasing allocations for PAF health budgets. However, the estimated cost of implementing the minimum health package in Health Sector Strategic Plan I (HSSP I) was USD 28 per capita per year, but the funding achieved was less than half of this.

8.42 A second HSSP (HSSP II) started implementation from 1 July 2005. Its policy directions were consistent with those in the first HSSP. However, from 2005-2006 sector progress has slowed. There has been loss of confidence by donors in the top management of the sector, and there have been difficulties in reconciling the SWAp approach with the growing importance of vertical programmes. The government health budget has stagnated. This has negative impacts on service delivery and relationships with partners (see Chapter 9 for more discussion of aid modalities in the sector).

8.43 Development partners have provided substantial support for health and for HIV/ AIDS in Uganda over the period. Per capita spending was estimated for 2000/01 as USD 18.3 per capita; of this, USD 3.3 was from government, USD 5.0 from donors and USD 10.0 from private sources (80% of this from households, the rest from NGOs) (MOH Uganda, 2004b).

8.44 According to OECD DAC commitment data (Table 7.4 above), Danida was the biggest donor, with a 20% share, between 1987-1996. Between 1997-2004 it slipped to fourth, but still accounted for 11% of ODA commitments for health.

Danish support

8.45 Danida made an early strategic decision that health, rather than education, would be the main focus of its social sector support. Health has absorbed just over 15% of Danish aid to Uganda since 1991 (Table 8.2 above), for a total of DKK 750m in that period.

8.46 Support to drug supply and to drug management systems has been the centrepiece of Danish support for health. Table 8.7 shows the resources allocated to Danida’s major programmes in this sector. As in other sectors, there has been a trend first towards a more programmatic organisation of Danida’s own assistance, and then greater harmonisation and alignment through participation in a SWAp (see Box 8.9).

Table 8.7: Danida’s Major Health Programme Commitments

Source: See detailed programme summaries in Thematic Paper 3, Annex 1.

Note: Also see Volume 4, Thematic Paper 3 for description of smaller interventions and support to NGOs.

Box 8.9: Danish Support Linked to the Evolution of the Health Sector

Year Ugandan health policy Danish support 1987/88    Recovery, restore basic services, Essential drugs programme providing 1988/89 rehabilitate facilities drug kits, managed by Danish Red 1989/90   Cross; repair of Medical Stores; 1990/91   support health information 1991/92     1992/93     1993/94 Decentralisation to districts, Three Essential drugs supply; institutional 1994/95 Year Plan to improve service support for National Medical Stores 1995/96 functioning, expand coverage of and National Drug Authority; Mukono   primary care for major diseases district project; further construction at     NMS; training in environmental health;     support to TASO       1996/97   HSPS1 1997/98 Develop Health Strategy, health sub- Support to selected districts and 1998/99 district approach, negotiate SWAp, central functions including NMS 1999/00 introduce subsidies for PNFP providers         2000/01 HSSP1 Continue support for TASO and 2001/02 Removal of user fees Straight Talk 2002/03 Shift of donor funding into budget   2003/04 support to districts HSPS2 2004/05 SWAp mechanisms introduced such as Some funds via PAF to districts,   HPAC and joint annual reviews medicines credit line; extra funds for 17   Meanwhile, global initiatives come in northern districts; fund central activities   (Global Fund, PEPFAR) Continued support for TASO et al

 8.47 Danida support to the health sector can be seen in three main phases:

• Early support (1987-1992) was focused on essential drug supplies and their management. Drug kits were provided to Uganda and delivered to government and faith-based health facilities. Smaller projects started to rehabilitate services in Mukono district and provide training in environmental health linked to water and sanitation programmes.
• Through the 1990s, drug supplies continued and were accompanied by efforts to strengthen the institutional capacity of the National Medical Stores (NMS) and establish a National Drug Authority (NDA). In addition there was further support to projects in Mukono district, in training and in environmental health, as well as support to central Ministry of Health (MOH) departments to develop management information systems (HMIS) and planning capacity. These were brought together in Danida’s Health Sector Programme Support (HSPS1) which ran from 1996-2002, and included also support for three remote northern districts.
• From 2003 the second Danish Health Sector Programme Support (HSPS2) was more closely linked to the sector wide processes and Government’s Health Sector Strategic Plan (HSSP). It included funding for district health services through the PAF; contributing to medicines funding through the medicines credit lines (also PAF); support to central functions of MOH and 17 northern districts; and enhancing nurse training schools in Northern districts. HSPS3 started in July 2005 and covers similar areas, in support of the Government’s second HSSP.

8.48 It is widely acknowledged by Ugandans and development partners that the Danish contribution to the Ugandan health sector over the evaluation period has been substantial. The contribution to the drug sub-sector is most often noted and respected – both the supply of drugs that helped to restore basic health services across the country since the late 1980s, and the long-term commitment to developing institutional capacity of NMS, the MOH policy department and the NDA. People recognise the challenges of the drug sector and appreciate the sustained efforts from Danida, and willingness to try again when there were setbacks. The provision of safe and effective drug supplies, and mechanisms to re-establish capacity to manage, distribute and procure drugs, were a valuable contribution to the recovery of Uganda’s social services in the post-conflict setting of the late 1980s. The continued financial support for medicines and supplies, alongside the move to a more developmental approach with development of the policy and regulatory framework and national institutions, helped to sustain the system and enable its improved performance.

8.49 Danida has also been supportive of the SWAp for health. Although the share of funding that is managed through budget support or pooled funding mechanisms is limited, there has been support in terms of engaging in sector processes, using shared planning and reporting mechanisms and supporting SWAp structures.

8.50 Overall the focus on building the health system, including the capacity for planning, supporting and managing district services, has been appropriate. In recent years there has been a tendency among the aid community working in health to focus on specific programmes or diseases (especially HIV/AIDS) with less focus on health systems strengthening. It is now recognised that there needs to be a better balance in support with more attention to ensuring that the basic health system works, with qualified health workers, logistics and supplies in place etc. In Uganda, Danida deserves credit for maintaining its systems support in the face of these shifts in fashion.

8.51 As a corollary, this has meant limited direct support to AIDS. Danish support for HIV/AIDS has involved funding for NGOs – the largest recipient was The AIDS Support Organisation (TASO) which has been funded by Danida jointly with other donors since 1993. The educational Straight Talk Foundation has been another recipient. However, Danida has not financed vertical AIDS control programmes or national institutions. Given the number of other agencies and the amounts of funding dedicated to AIDS, this was a reasonable decision on the allocation of Danish resources.

Decentralisation⁴⁰

Context

8.52 Decentralisation was a key ingredient of the NRM’s political strategy (see Chapter 2, 2.6), and the provision of basic services through district institutions was a major part of the poverty reduction strategy embodied in successive PEAPs. A number of donors sponsored multi-sectoral district-level programmes, but these have tended to give way to coordinated support that is aligned with the GOU decentralisation strategy and institutions (institutional support via the Local Government Development Programme, and financial support to local service delivery via Poverty Action Fund grants for which all districts are eligible).

Danish support

8.53 Denmark made two distinctive contributions to the process of decentralisation: through the Rakai District Development Programme, and as the government’s main donor partner in the development of the institutions for decentralisation during the 1990s. The expenditures shown in Table 8.8, at about DKK 300m, amount to less than 6% of all Danida expenditures over the period;⁴¹ nevertheless, decentralisation is one of the activities with which Danish aid is most strongly identified.

Table 8.8: Main Danida Funding for Decentralisation

Source: Danida files (see Volume 4, Thematic Paper 5 for more detail).

8.54 The Rakai programme began in the early 1990s and Danish support continued until June 2006. In many ways Rakai served as a test-bed for models of decentralisation which were later rolled out across the country. However, the initial priority was to restore the economy and institutions of a district which had been ravaged by war and HIV/ AIDS. Subsequent phases focused more on the development of sustainable district-level institutions. A major evaluation in 2000⁴² gave a generally positive verdict on the early phases of RDDP, and recommended a further phase to focus on capacity building for sustainability. Subsequent progress has been equivocal, partly because national level changes have undermined the revenue base of all districts.

8.55 Denmark’s initial involvement in supporting the process of decentralisation was fortuitous⁴³ but the initial relationship with Danida became an enduring one. In the early 1990s, Danida is perceived to have been at the forefront of assisting government in crystallising decentralisation policy and rolling it out through regulations and training. Government informants attribute this relationship very definitely to the style of working that was adopted by Danish experts and Danida-funded consultants (see Annex 2B of the Perception Study in Volume 2 for a detailed review of perceptions on decentralisation). The background of Denmark’s own experience with decentralisation was helpful, but it was also important that the Danish-funded personnel were not dogmatic but prepared to listen to GOU and respond to their requirements. The Danida-funded Decentralisation Secretariat in the Ministry of Local Government played a key role in developing and rolling out the decentralisation reforms which were a real advance in devolving services and responsibilities to elected local governments. Denmark also supported the Local Government Finance Commission and the local government associations, with the aim of empowering not only the central government but also the other actors in the sector.

8.56 From the mid-1990s a number of other donors also sponsored district level programmes. After the Local Government Act of 1997 and the introduction of the Poverty Action Fund in 1998 there was an upsurge in the provision of basic services through local governments. The Local Government Development Programme (LGDP) led by the World Bank set a common pattern and a harmonised donor approach to district support.⁴⁴ Denmark became one of a number of co-financiers of LGDP, but also retained a leading role within the donor group concerned with decentralisation.

8.57 Recent events, including the abolition of the districts’ main revenue base and the re-centralisation of the appointment of district CAOs, are seen as threats to the essence of decentralisation. The continued fragmentation and proliferation of districts as a vehicle for political patronage also tends to undermine districts’ viability (compare the two maps at the end of this volume). Although the future of decentralisation is thus subject to some uncertainty, the Danish contribution to the decentralisation process can be seen as very positive.

Gender⁴⁵

8.58 Gender policy was another area where Danida was able to make a distinctive contribution by virtue of being on the ground early and by working closely, and over a substantial period, with the main central government agency involved. It supported an individual project (Masese Women’s Project) in the early years (DKK 1.73m)⁴⁶ and then the development of government policies and programmes (total funding of the Gender and Development Programme from 1996-2000 was DKK 17.4m). The timing and nature of Danida’s involvement meant that it was able to play a significant role in supporting the development of a national gender policy, and in the drafting of a gender-sensitive Constitution. Cessation of direct support to the gender ministry (and hence the absence of a separate gender component within the Danish Uganda programme) did not indicate less attention to gender issues: it reflected the shift to a mainstreaming approach, relevant across all programmes (see the discussion of cross-cutting issues in Chapter 9).

Other Aspects of Governance, Human Rights and Democracy⁴⁷

Context

8.59 Early Danish strategy for Uganda gave prominence to “institutional development” as an element (see Chapter 6 above and Appendix E). More recently “governance” has become the umbrella term for work related to the quality of government itself and, more broadly, the institutions of a democratic society.

8.60 In the first years of the NRM government, donor support was directed almost exclusively to state institutions rather than non-state actors such as NGOs. This was largely because the national context was seen to favour donor engagement in institutional reform. President Museveni demonstrated a high personal commitment to reform and donors were impressed by the fact that this commitment was backed up with government resources in the form of finance and the deployment of relevant competent expertise for reform initiatives. Uganda’s high dependence on external assistance for restoring the economy also made the government more receptive to donor involvement in reform processes. However, between 1987 and 2005, donor attitudes towards governance in Uganda changed from an initial tolerance of the Movement style of politics to a more recent impatience with the evidence that it is essentially a patrimonial system.

8.61 Donor funding for reforms in human rights and democratisation in Uganda fell broadly into three categories: support to democratisation processes; support to programmes and “watchdog” agencies concerned with preventing corruption and promoting human rights and the rule of law; and support to reform programmes and agencies within the justice sector. In the first category, funding was provided for the development and implementation of the Constitution, for Parliament and for the Electoral Commission. Early activities in the second category included funding for the costs of retrenchment from the civil service and demobilisation from the Ugandan army.

And since the early 1990s, donors have also funded a group of semi-autonomous public agencies concerned with ensuring integrity in public life that were either created or reformed by the new government. These included the Inspector General of Government (IGG), the Uganda Human Rights Commission (UHRC), the Office of the Auditor General, and somewhat later the Directorate of Ethics and Integrity.

Danish support

8.62 Danida was one of the first agencies to become involved in human rights and democratisation work, and it has gained a reputation for being passionate, and outspoken, about rights (see the Perception Study in Volume 2). This concern has been allied to very practical support to various bodies. Danida has remained remarkably faithful to its first commitments and partners in the fields of human rights and democratisation: the IGG, the judiciary and public agencies concerned with human rights. (Its long engagements with decentralisation and gender policy have already been described.)

Table 8.9: Danida’s Support to Human Rights, Democratisation, Justice and Civil Society

Source: Volume 4, Thematic Paper 7, Annex 1.

Note: The projects/programmes listed here total DKK 323 million. Table 8.1 above gives a total of HRD expenditures from 1991 of over DKK 500m. The difference is largely explained by decentralisation expenditures (see Table 8.8 above); by DKK 17.1m for civil service reform in 1994 (financing retrenchment), and by large numbers of small grants under the Local Grant Authority.

8.63 Danida’s support can roughly be divided into three periods: the years 1988–1995, characterised by individual projects and short-term funding; the years 1995–2000 when Danida developed programmatic support to a few key institutions alongside continued project funding for NGOs and for conflict initiatives (see 8.66 below); and the period since 2000 when Danida began the process of consolidating all human rights, justice and conflict-related interventions in a single over-arching programme, a process that continues beyond the period under review.

8.64 Danida’s support has been instrumental in making the IGG, the UHRC and the Auditor General more effective agencies than they would have been without such support. Consistent support to the Judiciary has also been valuable. At the same time as working to strengthen accountability agencies of government, Danida has worked with NGOs and civil society to try to strengthen the constituencies within Uganda that hold government to account. This has included a distinctive effort to reach out to district level NGOs. It is, of course, a moot point whether stronger NGOs lead to more empowered citizens, but Danida’s strategies towards NGOs do appear to have strengthened the sector and not just individual organisations.

8.65 Though Danida’s governance programme has been aligned to formal national priorities, government’s own commitment to these priorities has increasingly been seen to falter. The uncertain political transition, unresolved conflict in the north and Uganda’s regional military involvements have eroded donor confidence in government’s intentions. Over the same period, donors have seen the public agencies set up by government to address corruption and abuses of human rights progressively under-resourced and politically constrained. In common with other bilateral donors, Danida has begun to balance funding for these public agencies with funding for NGOs. Danida has reinforced its support to individual NGO activities by working in ways that strengthen the sector as a whole and by supporting NGOs’ efforts to promote a more enabling legal and regulatory NGO framework. In the process it has developed a management arrangement, the Human Rights and Good Governance Liaison Office (HUGGO), which has given it a distinctive capacity to manage and coordinate support in this field (see Box 9.4 in Chapter 9).

Conflict resolution and peace-building

8.66 Danida’s programme of work in conflict resolution has made a tangible contribution to peace-building. This work has included support for the cease-fire in West Nile, for the Civil Military Operations Centres in Karamoja, for the Amnesty Commission, and for many small-scale community peace initiatives. Danida’s engagement in West Nile is considered by a like-minded donor to have been “pivotal” in bringing the government and the insurgent UNRF II together. The institutional separation between diplomatic representation (in the RDE) and technical expertise (in HUGGO) is considered greatly to have facilitated this. However, knowledge and experience from the work on conflict has not yet been effectively mainstreamed into the programme. Conflict has not been taken into account in sector programming and, as with other donors, the net effect of conflict has been to divert resources to non-conflict areas. There has been limited coordination among donors on conflict resolution. National perspectives have limited donor influence on the course of the conflicts in the north and on capacity to develop common understandings or shared approaches.

Danish Support to Private Sector Development

Background

8.67 From the beginning, Danish strategy for Uganda stressed the importance of the productive pillar of development. This was reflected in the orientation of financial support and in the emphasis given to roads and other infrastructure. The modes of Danish support have been influenced by the attitude to the “Danish resource base” and the desire to give Danish business a stake in the development programme. The tying of aid became less explicit early on in the evaluation period, and subsequently dwindled even further. Nevertheless it was a significant influence on the choice of interventions in agriculture (grain mills, dairy) and for financial support. The perceived importance of supporting Danish business through the aid programme was reflected in the 1996 strategy statement (see Box 8.10). However, trade between Uganda and Denmark is of very minor importance to either country (see Appendix D, Table D6 and Figure D4), and the fact that Denmark does not have special interests in Uganda is cited as a positive factor in its aid and diplomatic relationships with Uganda (see e.g. 3.15 of the Perception Study in Volume 2).⁴⁸

Box 8.10: Involving Danish Business and Industry The 1996 Strategy for Danish Bilateral Development Cooperation with Uganda (MFA Danida, 1996i) included the following rationale: 6.5 The involvement of Danish business and industry Danish business and industry became heavily involved in the development assistance programme following the resumption of Danish bilateral cooperation with Uganda in 1987. Efforts included the construction of a large silo complex and a fodder mill. Among subsequent projects undertaken with participation of Danish industry was the construction of a harbour complex at Port Bell near Kampala. In recent years Danish companies have been engaged in the development of the dairy sector and on various infrastructural projects including, for example, the support to the national railway company. Import support has resulted in a considerable rise in Danish imports. Danish consultancy firms have been involved in the preparatory phases and in the implementation of various projects, including the major water supply project. Prospects for Danish industry will become more favourable with the implementation of major infrastructural projects including the modernisation of Entebbe Airport and the erection of high-voltage electricity supply line. Training and the conveyance of know-how and skills from Danish firms to local organisations and institutions will be an important element of these projects.

8.68 The sector analysis (in Tables 8.1 and 8.2 above) shows that “business” ⁴⁹ accounted for less than 3% of Denmark’s bilateral aid to Uganda from 1991-2004. The expenditure figures prior to 1999 comprise DKK 18.4m from the “personnel” funding category, and DKK 38.8m from within the country frame. Expenditure from 1999 onwards almost all relates to the Private Sector Development Programme,⁵⁰ discussed next.

The Private Sector Development Programme⁵¹

8.69 The Private Sector Development (PSD) Programme was the main explicit intervention to promote business development. A programme piloted in India, Ghana and Zimbabwe was extended to Uganda from late 1996.⁵² This has been funded separately from Copenhagen, and involves financing links for investment and technology transfer between Ugandan and Danish private companies. The focus is not on financing investments as such, but on facilitating a partnership between a Ugandan and a Danish enterprise.

8.70 A Private Sector Secretariat in the Embassy manages the programme. The programme finances study visits and feasibility studies, which have led to about 40 long-term business cooperation agreements between Danish and Ugandan enterprises, in a range of sectors including agriculture, agro-processing, manufacture, and ICT. There have been some notable successes. The Thematic Paper on agriculture notes that the successful emergence of private-sector dairies has also been greatly facilitated by Danida’s support to private business development.⁵³ A twinning arrangement between the Uganda Manufacturers’ Association and the Confederation of Danish Industries has also been supported.

8.71 The PSD programme enjoys a special place in Denmark’s overall aid strategy because it is seen as an important factor in maintaining Danish business support for the programme. One of the results of the strategic review after the 2001 Danish elections was:

Emphasis on greater involvement of the Danish business sector in development cooperation, including the inclusion of private sector programmes in every programme country and the expansion of Mixed Credit schemes. (OECD Development Assistance Committee, 2003a)

8.72 The perceived importance of this strand of Danish development cooperation strategy seems to have made Danida rather impervious to the criticisms from external evaluators (such as those summarised in Box 8.11), which find that such programmes are of limited relevance to the wider issues of private sector development and economic growth in the countries concerned.

Box 8.11: External Evaluation Findings on the PSD Programmes (2001) Extracts from an evaluation of Danish PSD programmes in a number of countries, including Uganda: The evaluation’s assessments Of the five evaluation criteria, the evaluation focuses to a large extent only on the impact of the PS Programme. In this respect, the development impact of the PS Programme is assessed at three levels: The immediate objective of improved local partner businesses, which is assumed to contribute to the intermediate objective: Private sector development. This in turn is assumed to contribute to the development objective of promoting sustainable and socially balanced economic growth. In terms of the immediate objective, the PS Programme is found to have been reasonably successful. The co-operations established, in general, resulted in relevant technologies being transferred from the Danish to the local partner. Technology transfer is defined to include not only specific technical aspects, but also organisational, marketing and management expertise. This is assessed as having contributed to important improvements for the local businesses, though many local beneficiaries also face other constraints limiting the effects and longer-term sustainability of the technology transfer. From the point of view of the local partner, the PS Programme, however, appears rather successful. In contributing to the overall development of the private sectors of the respective countries, the PS Programme is considered less successful. There are clear, direct positive effects on employment and foreign exchange earnings in a number of the individual local companies, and important instances of improvement in environmental and gender aspects in partner companies. However, this was offset by the thin spread, lack of synergy and lack of demonstration effects of the portfolio, as referred to above. The evaluation assessed the PS Programme’s contribution to growth and social development mainly in terms of its performance in respect of job creation and improved international competitiveness. Lack of priority setting implies, however, that the project portfolios do not consistently reflect these concerns. It is also argued that the segments of the private sectors being supported are not necessarily those which have the highest growth potential, or which would contribute most to socially balanced growth processes. The PS Programme does not, for example, consistently prioritise support to small and medium sized enterprises, which might be expected to generate broad-based growth. In sum, the evaluation assesses that the PS Programme has been reasonably successful with respect to attaining its immediate objective, but that it has been much less successful in contributing to the overall development of the private sectors of the respective countries. Further, the PS Programme is seen as, generally, paying very little attention to the issue of economic growth and social development, seriously affecting its impact at this level. Source: Development Associates, 2001.

Other Major Interventions

Energy

8.73 A one-off investment in power lines between Kampala and the Owen Falls hydro electric plant had a similar rationale to the renovation of the international airport – i.e. though not a “characteristic” Danida intervention, it was seen as justified investment in itself and a useful complement to other elements of the portfolio, not least in building good will with the government. It accounts for all but a fraction of the energy sector expenditures (DKK 120.8m) shown in Table 8.1 above.

Special Education

8.74 Apart from some ad hoc support to education infrastructure in the Rakai programme and through NGOs in some other parts of Uganda, Danida deliberately left the education sector to other donors. There was one exception: over several years Danida provided support to the development of special education (to a total value of around DKK 50m). As described in Volume 4, Thematic Paper 13, this was a useful intervention which began with direct support to special education services and then helped to develop national capacity in this field, especially through the Uganda National Institute of Special Education (UNISE).

27) The NCG Pre-study (in its Annex C2) also gives timelines for the main interventions within each of the categories shown in Figure 8.1 (NCG, 2006).

28) Parallel funding for World Bank SAP (see COWI, 1996: Table 9.1).

29) T&B Consult, 1994. A complementary analysis a little later is provided by COWI, 1996. Volume II includes a review of the poverty impact of financial support as one of its case studies.

30) There is a discrepancy between total approvals identified here and in Table 8.3, and the total of Financial Support expenditure shown in Table 8.1 above. The latter does not separate out Financial Support expenditures for 1987-1990, and in several cases actual disbursement was less than the amounts approved.

31) Government of Uganda and Government of Denmark, 1996.

32) The objective of the MDF funding agreed in 1996 was stated as: to enhance the economic growth of Uganda through strengthening the balance of payment of the country. Reporting and audit requirements focused on verifying that Danish funds had reached Uganda’s creditors, not on GOU’s use of the implicit budget support.

33) The Agreed Minutes for 1990 record:
The Ugandan Delegation suggested that at least 25% of the total yearly amounts (IPFs) under the Development Cooperation Programme be reserved for balance of payment support. This was roughly the same as hitherto, where Danida had supplied imported commodities directly such as steel and also financed lines of credit in foreign exchange through various development banks. The Danish delegation agreed to work on this basis, but added that Danida regarded balance of payments as a temporary measure that hopefully could be phased out after some years.

34) Thus, from the 1997 annual consultations:
The Danish delegation informed that the Danish contribution in 1997 to the Multilateral Debt Fund would be determined towards the end of the year and would depend on disbursements to other activities under the country programme. (Uganda-Denmark Development Cooperation Programme, 1997: 20.) See also the explanation of “over-programming” in Chapter 7. It is striking how many of the financial support agreements had December dates. See COWI, 1996: Table 9.1.

35) See Volume 4, Thematic Paper 1 for a fuller treatment.

36) Responses to the draft of this report indicated that this Danida sentiment is not shared by all of those currently involved in the Danida roads programme.

37) For a more detailed treatment, see Thematic Paper 2 in Volume 4.

38) See Appendix 2 of Thematic Paper 2 in Volume 4.

39) For a more extensive treatment, see Volume 4, Thematic Paper 3.

40) See Volume 4, Thematic Paper 5 for a more extended discussion.

41) Decentralisation does not appear as a separate category in Tables 8.1 and 8.2 above; RDDP expenditures are distributed among the various sectors shown, and support to decentralisation institutions appears mainly under HRD.

42) (School of Public Policy University of Birmingham, 2000.)

43) For detailed explanation by participants, see Annex 2B in Volume 2 – the PerceptionStudy.

44) The LGDP evolved from an approach that was piloted by UNCDF.

45) See Volume 4, Thematic Paper 8 for extended treatment.

46) The Masese Women’s Project was very prominent, but there were also small grants to a number of other gender-focused projects, in Rakai and elsewhere.

47) See Volume 4, Thematic Paper 7 for extended treatment.

48) However, Danish agriculture benefits from EU agricultural policies which seriously disadvantage the agriculture sectors of developing countries, including Uganda.

49) “Business” is an aggregate of the DAC categories of Industry, Business & Other Services, and Trade Policy & Regulation.

50) There is a discrepancy between the “business” total of DKK 74,366,561 and the PSD total of DKK 78,868,727 for these years. This arises mainly because the sector classification allocates some PSD expenditures to agriculture, education and energy sectors.

51) See Volume 4, Thematic Paper 9 for more detail.

52) Although it first appears separately in the consolidated expenditure records in 1999. The PSD Secretariat’s records show disbursements of DKK 1.1m in 1997 and DKK 5.9m in 1998.

53) For example, Danish expertise was brought in by Jesa Farm Dairy. Farm production of 7,000 l/day is supplemented by 3000 l/day from outlying contract farmers. The operation has succeeded because it addressed the issue of dairy management.