1Performance of the Agricultural Sector in Uganda - Case Study of Donor-Funded ProjectsCaseStudyof Donor-FundedProjectsAgriculture Financing and SectorPerfomance in UgandaCS B A GBudgeting for equity
54ACF Agricultural Credit FacilityAg HH Agricultural HouseholdADF Agricultural Development FundATAAS Agricultural Technology and Agricultural Advisory ServicesCAADP Comprehensive Africa Agricultural Development ProgramCDO Cotton Development OrganizationCSBAG Civil Society Budget Advocacy GroupCSO Civil Society OrganizationDDA Dairy Development AuthorityDSIP Development Strategy and Investment PlanFIEFOC Farm Income Enhancement ProjectFOWODE Forum for Women in DemocracyFSF Food Security FarmerGDP Gross Domestic ProductGOAR Government Outlays Analysis ReportGoU Government of UgandaKCCA Kampala City Council AuthorityKOPGT Kalangala Oil Palm Growers TrustMAAIF Ministry of Agriculture, Animal Industry and FisheriesMDG Millennium Development GoalMFPED Ministry of Finance, Planning and Economic DevelopmentMOF Market Oriented FarmerAcronyms & AbbreviationMTEF Medium Term Expenditure FrameworkNAADS National Agricultural Advisory ServicesNAP National Agricultural PolicyNARI National Agricultural Research InstituteNARO National Agricultural Research OrganizationNARS National Agricultural Research SystemNDP National Development PlanNEPAD New Partnership for Africa’s DevelopmentPEAP Poverty Eradication Action PlanPMA Plan for Modernization of AgricultureSACCO Savings and Credit Cooperative SocietySTATFA Creation of Tsetse & Trypanosomiasis Free AreasUA Unit of AccountUBOS Uganda Bureau of StatisticsUCA Uganda Census of AgricultureUCE Uganda Commodity ExchangeUCDA Uganda Coffee Development AuthorityUNHS Uganda National Household SurveyVODP Vegetable Oil Development ProjectWRS Warehouse Receipt SystemZARDI Zonal Agricultural Research and Development Institute.Budget Support Mode of financing that involves transfer of financial resources of a development partner to theconsolidated fund following the fulfillment of agreed conditions for disbursement. The funds arepart of the national resource and are appropriated by Parliament. They are used in accordancewith the public financial management system of UgandaFood Security Farmer Any farmer who is 18 years and above, a practicing subsistence farmerOff-Budget funds Resource flows that are managed outside the Government systems of planning, appropriation,budgeting and procurement. Government procedures are generally not used in full in managingthese funds. Includes off budget project aid.On-budget funds Resource flows that are managed through the country’s public financial management systemswithin the MTEF and approved by Parliament. Includes on budget project aid.Project Support Aid modality that entails agreement between the development partner or donor andGovernment on a set of inputs, activities and outputs to reach specific outcomes within a definedtime frame, area and budget. This approach allows use of the donor accounting systems.Technical Assistance Involves the transfer of ideas, knowledge, practices, technologies or skills to foster economicdevelopment. Usually for policy development, institutional development, capacity building andproject or programme support.Glossary
76Performance of the Agricultural Sector in Uganda - Case Study of Donor-Funded ProjectsThis report is a joint undertaking of the members of the CivilSociety Budget Advocacy Group (CSBAG) which since 2004has advocated for pro poor and gender sensitive policies andbudgets. Several individuals and organizations have helpedshape the outcome of this report and these include ActionaidUganda, Forum for Women in Democracy (FOWODE), DanielLukwago, Frederick Kawooya, Francis Akorikin, Sophie Kyagulanyi,and Dr. Bbaale Edward who reviewed this report and providedtechnical feedback.This report was produced under supervision of Julius Mukundawhose technical insight guided the research team at differentstages which greatly enriched this report.Special thanks go to Actionaid Uganda whose financial andtechnical support enabled the successful production of thisreport.To effectively engage the Government of Ugandato reverse the trend, and enhance investmentin the sector, the Civil Society Budget AdvocacyGroup [CSBAG] in 2012 deemed it necessary toundertake a study that will facilitate a deepenedunderstanding on how resources are beingused within this sector. Using case studies offour donor funded projects -the Vegetable OilDevelopment Project, Agricultural Improved Rice,Production Creation of Tsetse and TrypanomiasisFree Areas, Farm Income Enhancement Project –Irrigation Component, The study provides an in‐depth assessment of how agricultural loans havebeen applied in Uganda to improve agriculturalperformance. It further analyzes the spendingpatterns and service delivery within agricultureand brings out the salient issues for action.There are significant factors affecting the sector’sperformance that are highlighted in this studythat need redress and, it is our hope thatrecommendations made in this study will resultinto concrete actions in improving agriculturalfinancing and that different actors includingthe Civil Society, Government, Donors and thefamers will work collectively towards promotingthe CAADP agenda of reaching a higher pathof economic growth through agriculture-leddevelopment in Africa .Julius MukundaCoordinator-Civil Society Budget Advocacy GroupAcknowledgements ForewordAlthough agriculture contributes greatly to the economy and asigniﬁcant proportion of the poor depend on it, Public expenditurein this sector has declined significantly over the past financialyears; with the share of the sector ranging from between 3-4%of the national budget causing a decline in Uganda’s agriculturaloutput and productivity. Uganda’s agricultural growth rate is stillbelow the 6 percent annual growth target of the African Union’sComprehensive Africa Agricultural Development Program (CAADP).
98Study ContextExternal assistance flows to Uganda have aver-aged about US$ 760 million annually between2001 and 2010. The agricultural sector attractspart of the donor funding for enhancing variousservices to farmers. Of concern, however is theslow disbursement of donor funds in the sectorwhich has led to slow implementation of donorfunded projects.The overall aim of this study was to assess theperformance status of agricultural services inUganda and utilization of resources to implementprogrammes and policies. The study involvedanalyzing the performance of four loans (donorfunded projects) in terms of planning, budgetingand implementation. The extent to which genderissues were addressed in these projects was as-sessed. The study used secondary data sourcescomplemented by primary information collectedby the Ministry of Finance, Planning and Econom-ic Development.Key conclusions1) The budget allocation to agriculture as ashare of the national budget remains low, at3.2% in FY 2012/2013. Most funds are dis-bursed as small discrete projects whose con-tribution is not impactful and nor sustainable.2) The agricultural sector attracts less than10% of the donor assistance in Uganda thatis channeled to the development budget. Asubstantial part of external support to thesector is in form of Technical Assistancepolicy and institutional development yet theMAAIF continues to lack sufficient implemen-tation capacity.3) A major challenge is the slow disbursementsof donor funds in the sector in turn leadingto slow implementation of donor fundedinterventions. In FY 2011/2012, 74% of thetotal loan portfolio equivalent to US$ 341.55remained undisbursed.4) The four case study loans bring out manyfactors that singularly or in combination slowimplementation of donor funded projects.For example, the poor design of the FIEFOCirrigation project slowed funds disbursementand project implementation. ADB Fundedprojects generally have long bureaucraticprocurement processes that delay disburse-ment of funds. The Government of Japan andFAO took lead in the implementation of theAgriculture improved Rice Production proj-ect which led to distribution of poor qualityinputs, the bulk of funds being used in recur-rent expenditures indicative of poor alloca-tive efficiency and low project sustenance.5) The VODP case study illustrates that they areloans in the agricultural sector that performwell with regard to absorption of allocated re-sources, timely implementation and achieve-ment of the intended outcomes.6) The FIEFOC case study illustrates that someprojects are complete failures because oflow implementation/institutional capacity inthe Ministry of Agriculture, Animal Industryand Fisheries. Although funds absorptionwas high, it was for the wrong reasons, with87% of the resources being spent on generaloperating expenses without any tangible out-come.7) Whereas planning and project design is usu-ally done jointly between MAAIF and donoragencies, there are instances where the do-nor takes lead which leads to low ownershipof interventions by the beneficiaries and lessproject impact.8) Generally, gender mainstreaming is not pri-oritized in agricultural loans.9) Delivery of agricultural services such as exten-sion, credit and research is ongoing althoughreach to majority of farmers remains low. Ac-cess to extension services remains low, with80% of the agricultural households havingnot been visited by an extension worker inthe recent agricultural survey of 2008/2009.10) Whereas the bulk of agricultural service deliv-ery is undertaken at local government level,the district and sub-county officials are notadequately involved in the project design,planning and budgeting stages. Often, theybrought late into the implementation stagewhich lessens ownership, supervision andsustainability of the donor funded projects.Executive Summary Key Recommendations1) The budget allocation to the agriculturalsector needs to be stepped to at least 10% ofthe national budgetary resources to expanddelivery of agricultural services in Uganda.This could include deepening of delivery ofextension and research services to ensurethat farmers access and use improved inputsand technologies to bridge the productionand productivity gap at farm level. Sufficientcounterpart funding should be provided inadequate and a timely manner for marchingwith the donor funds.2) The way donor funded projects in theagricultural sector are packaged shouldbe reviewed to enhance reach, impact andsustainability. Rather than soliciting forsmall discrete projects that have limitedimpact, the Government should focus onencouraging donor funded projects that arelarger and impactful with adequate reachgeographically and in terms of number ofbeneficiaries targeted and quantity of inputsand technologies provided.3) Some level of flexibility in the priorconditions and minimal conditionalitiesimposed by donors for project triggershould be espoused as a means of avoidingunjustifiable low absorption of funds. It iscritical that the prior conditions are wellnegotiated and are easily implementable.Government should improve its procurementand accountability systems so that donorshave a high level of trust in them and can usethem instead of the lengthy donor systems.4) The Government should take lead in theplanning, designing and implementation ofdonor funded projects to enhance ownershipand proper supervision of the projects. TheGovernment should have an active role inbudgeting and utilization of the donor funds.5) Gender planning, budgeting and monitoringshould be core to all donor projects. Genderand equity budgeting should go beyondseeking involvement of women and othermarginalized groups to promoting equitableaccess and use of agricultural servicesand monitoring progress made thereafter.Clear gender mainstreaming strategiesshould form part and parcel of the projectimplementation plan.6) The institutional and implementationcapacity of the agency that is to implementthe donor funded projects should beproperly scrutinized at planning stage andbeefed up before project commencement.Where possible, the implementing agencycan partner with other Government andnon-Government agencies to scale upthe implementation capacity to march theproject requirements.7) Value for money in donor funded projectsshould be encouraged. Expenditures shouldbe on critical areas that address the projectobjectives and give results. Poor allocativeefficiency whereby the bulk of resourcesare spent on consumptive or recurrentunproductive expenditures should bediscouraged.8) There is a need for the Government toencourage and support the development ofpublic private partnerships in the delivery ofagricultural services in Uganda as a means tofill the gap. For example, Government couldpartner or support farmer associations,NGOs and private sector players to scale upgood models of extension that are littered indifferent parts of the country.9) District and Sub-county officials of therespective Local Governments that areto be involved in implementation of adonor funded project should be involvedearly in the project design, planning andexecution of the project. This will enhanceproject ownership by the beneficiariesand sustenance of the interventions andoutcomes.
1110Performance of the Agricultural Sector in Uganda - Case Study of Donor-Funded ProjectsAgriculture loans in this reportrefer to funds1that are receivedby Government of Uganda (GoU)from external donors to financekey interventions within the sector.The report analyzes the spendingpatterns and service delivery withinagriculture and uses selected casestudies of donor financed projects tobring out the salient issues for action.The agricultural sector in Ugandaprimarily encompasses crops,livestock, fisheries and forestry.Donor funds that are channeledin the sector are either under thebudget or project support aidmodality. In recent years, externalfinancing from donors accounts forabout 25% of the budget and 6%of Gross Domestic Product (GDP)2.External assistance flows to Ugandahave averaged about US$ 760 millionannually between 2001 and 20103.1 These may be loans , grants or technical assistance.2 MFPED, 2012b.3 MFPED, 2012d.There are also substantial officialresource flows that are deliveredto projects but managed outsidethe Government systems. The bulkof donor funds in agriculture areon-budget. For example, duringFY 2010/2011, the sector receivedUS$ 58.30 million on budget andUS$ 16.07 million off budget. Theoff budget funds were provided byUSAID, UK, Norway and FAO4. Thestudy focused on donor funds thatare on-budget.The agriculture sector attractsless than 10% of the total donorassistance for the developmentbudget. In FY 2011/2012, the sectorattracted 8% of the donor assistance(Figure 1.1). The donor funding isaimed to complimenting Governmentefforts in number of areas including:improving control and mitigationcapacity of crop pests and livestockdiseases; deepening access tomarkets; capacity for research andgenerating new technologies, value4 MFPED, 2012c.addition and enhancing compliancewith food safety requirements in theexport markets. A substantial partof external support to agriculturecomes in form of technicalassistance for policy and institutionaldevelopment and capacityenhancement. The Governmentstill faces a challenge of capturingall donor and technical assistanceas some of the funds are handleddirectly by the donors.Of concern, however, is the slowdisbursement of donor funds inthe sector which has led to slowimplementation of donor fundedinterventions. Agriculture is one ofthe sectors with large undisbursedloan commitments (Figure 1.2).Note that loan disbursements toagriculture are channeled mainlyto MAAIF and its agencies but alsoa significant fraction is earmarkedto agricultural programmes underMinistry of Local Government (MOLG)and districts.IntroductionChapter 11.1 OverviewThis is a report of aresearch commissionedby the Civil SocietyBudget AdvocacyGroup on agriculturalsector performance inUganda. The motivationfor the study is rootedin the need to get aclearer picture of howagricultural loans havebeen applied in Ugandato improve agriculturalperformance.Figure 1.1: Allocation of Donor Assistance to theDevelopment Budget for FY 2011/2012Figure 1.2: Disbursed and undisbursed loan commitments across sectorsSource: MFPED, 2012b.During FY 2011/2012, the agriculture sector hada total loan portfolio equivalent to US$ 466.80million; of this amount, US$ 119 million (or 26%)had been disbursed and US$ 341.55 millionremained undisbursed. Joint reviews betweenMFPED and Development partners suggest anumber of explanatory factors for this scenario5:• Inadequate and untimely release ofGovernment counterpart funding• Complex procurement procedures that arerequired by donors• Capacity constraints with institutions relatingto personnel, systems and procedures• Poor design of projects5 MFPED, 2012b.Source: MFPED, 2012b.• New loans commitments that are contractedbut take long to become effective.• Some funds not directly controlled byGovernment; expenditure is by thedevelopment partners.This study used the case studies to draw outlessons on the key constraints to utilization ofdonor finances in the agricultural sector.1.2 Study ObjectivesThe main purpose of the study was to assessthe performance status of agricultural services(extension, research, credit, finance, markets,food security) in Uganda and utilization ofresources to implement programmes andpolicies.The study had 7 objectives:1) Provide an overview of the sectorperformance, highlighting key priority issues.2) Identify four Government loans – twothat had ended and another two whoseimplementation was still ongoing under theagricultural sector.3) Review the performance of the completedagricultural loans in terms of budgeting,planning and implementation.4) Identify key pertinent gender issues andhow they were addressed in the completedprojects.
1312Performance of the Agricultural Sector in Uganda - Case Study of Donor-Funded Projects5) Make recommendations on how the projects performed andimprovements for future projects.6) For the ongoing projects, analyze how the projects are performingbased on set benchmarks.7) Make recommendations for the ongoing projects regarding how toaddress gender issues.Table 1.1: Methodological approach to study objectivesObjective Approach1. Provide an overview of the sectorperformance, highlighting key priorityissues.In addition to macro level trend data in the agricultural sector, the areas that were highlighted inthe overall purpose of the study were analyzed, namely: extension, research, credit, finance, marketsand food security. Desk review of secondary data sources at Uganda Bureau of Statistics (UBOS), MAAIF, MFPED,NAADS Secretariat, PMA Secretariat, FOWODE, VEDCO, Action Aid, Oxfam, DRT, World Bank.2. Identify four Government loans –two that had ended and anothertwo whose implementation was stillongoing under the agricultural sectorReviewed secondary data in MFPED loans and grants reports; Approved Estimates; PublicInvestment Plans and MAAIF Output Oriented Budgeting Tool (OBT); Ministerial Policy Statements.Other details are below.3. Review the performance of thecompleted agricultural loans interms of budgeting, planning andimplementationReviewed primary data that was collected by the Budget Monitoring and Accountability Unit (BMAU)and budget monitoring reports. Also reviewed project documents, including evaluation reports.4. Identify key pertinent gender issuesand how they were addressed in thecompleted projects.Authors’ analysis of all available primary and secondary data and information. The gender issueswere identified within the context of the analysis and not as a separate section.5. Make recommendations on how theprojects performed and improvementsfor future projects.Authors’ analysis of all available primary and secondary data.6. For the ongoing projects, analyze howthe projects are performing based onset benchmarks.Reviewed primary data that was collected by the Budget Monitoring and Accountability Unit (BMAU)and budget monitoring reports. Also reviewed project documents, including evaluation reports.7. Make recommendations for theongoing projects regarding how toaddress gender issues.Authors’ analysis of all available primary and secondary data.Identification of case studyprojectsThe first step involved listing all donorfunded projects in Uganda (Annex 1)from which the case study projects couldbe selected. The following criteria guidedproject selection:• Projects must have benefitted fromdonor loans; all projects that aresolely Government funded were notconsidered.• Implemented by MAAIF or itsassociated agencies for policyinfluence.• Easily accessible data andinformation; frequently monitoredprogrammes.• Projects that are reported to beperforming well as well as those thatare seen to be performing poorly.• A mix of donors that funded thechosen projects• Different enterprise focus.• Projects that have public-privatepartnership (PPP) investmentcomponents.On the basis of the above criteria, thefour case study projects that wereselected for analysis were: Vegetable OilDevelopment Project (VODP); Creationof tsetse and trypanosomiasis areas;Agricultural Improved rice productionand Farm Income Enhancement Project(FIEFOC) – Agricultural Component (Table1.2).Table 1.2: Case Study donor funded projectsNo. Project Status of Implementation Key selection criteria1 Vegetable OilDevelopmentProjectFirst phase completed;Second phase recentlystarted.The focus will be on theconcluded phase.• PPP implementation arrangement• Funded by IFAD-GoU• Reported to be performing well.• Implemented in Kalangala district andNorthern Uganda. Focus will be on theKalangala Component• Has both a completed and an ongoingphase.• Implemented directly by MAAIF• Focus is on promoting oil palm plantationagriculture.• Information easily accessible2 Creation oftsetse andtrypanosomiasisareasOngoing • ADB-GoU funded• Countrywide• Directly implemented by MAAIF• Reported to be poorly performing• Focus on control of trypanosomiasis andtsetse fly infestation.• Information may not be easily accessible.3. AgriculturalImproved riceproduction(NERICA project)First phase completedand second phase is nearcompletion• Japan-GoU funded• MAAIF implemented• Focus on promoting growing of improvedrice varieties, the NERICA types.• Both good and poor performancereported.• Information easily accessible4 Farm IncomeEnhancementProject – theAgriculturalComponentOngoing • ADB-GoU funded• Focus on rehabilitating four largeirrigation schemes.• MAAIF implemented and recentlytransferred to MWE due to reported poorperformance• Information fairly accessible1.3 MethodologyThe study relied on secondary data sources, including primary informationthat had been collected by MFPED on the selected donor projects. Table 1.1summarizes the approach used in addressing each of the study objectives.
1514Performance of the Agricultural Sector in Uganda - Case Study of Donor-Funded Projects1.5 Report StructureThe report is structured in five chapters:• Chapter 1: Introduction• Chapter 2: Agricultural Sector Performance• Chapter 3: Performance of Completed Agricultural Loans• Chapter 4: Performance of Ongoing Agricultural Loans• Chapter 5: Conclusions and RecommendationsThe Civil Society Budget AdvocacyGroup (CSBAG) has since 2004brought together CSOs at nationaland local level to advocate forbudgets that address the needs ofpoor women and men.Agriculture is categorized as a primarygrowth sector. At the sector level, two keypolicy documents guide implementation:the National Agricultural Policy (NAP)which is still under development andthe MAAIF Development Strategy andInvestment Plan (DSIP) 2010/11 –2014/15.The overall policy objective of theNAP is to promote food and nutritionsecurity and household incomesAgriculture Sector PerformanceChapter 22.1 IntroductionA key objective of the study was to provide anoverview of agricultural sector performance tocontextualize the study findings. At the macro level,agricultural sector interventions are guided by theNational Development Plan (NDP) that aims to enhanceagricultural production and productivity as a means ofincreasing household incomes and promoting equity.through coordinated interventions thatfocus on enhancing productivity andvalue addition, providing employmentopportunities, and promotingdomestic and international trade. TheDevelopment Strategy and InvestmentPlan (DSIP) is the medium term strategicplan for MAAIF. The DSIP has two highlevel objectives or intended outcomes: (1)Rural incomes and livelihoods increased;(2) Household food and nutrition securityimproved.Figure 2.1: Distribution of working population in Uganda in Uganda by sector (%)The largest proportion of the working population in Uganda(66%) derives its livelihood from agriculture (Figure 2.1).Of policy concern however is why such a large populationengaged in agriculture contributes only 14% to the nationaloutput, indicative of low factor productivity. This issue is furtherexplored in section 2.4 below.Source: UNHS 2009/10
1716Performance of the Agricultural Sector in Uganda - Case Study of Donor-Funded ProjectsThe Uganda Census of Agriculture (UCA)2008/091estimated that the number ofagricultural households in Uganda are 3,945,753.Out of these, the Western Region had thehighest (28.5%), closely followed by the EasternRegion (28.1%), Northern Region (22.9%) andCentral Region (20.5%). Of the 3,575,065agricultural households that responded to thecensus, 2,821,070 or 78.9% were male headedhouseholds and 753,994 or 21.1% were femaleheaded households (Figure 2.2).1 UBOS, 2010.The rest of this chapter discusses sectorperformance from three key dimensions: (1)Growth trends (2) Financing and expendituretrends and (3) Delivery of key services.2.2 Growth trendsUganda’s economy grew at an average GDPgrowth of 7.8 percent between FY 2005/06and FY 2010/11, and slowed down to 3.2percent in FY 2011/2012 as a result of highglobal oil and commodity prices, drought,power shortages, exchange rate volatility andTable 2.1: Sectoral Growth Rates and Shares in GDP 2003/04 – 2011/12Sector 2003/04 2004/05 2005/06 2006/07 2007/08 2008/09 2009/10 2010/11 2011/12Sector Growth RatesAgriculture 1.6 2.0 0.5 0.1 1.3 2.9 2.4 0.7 3.0Industry 8.0 11.6 14.7 9.6 8.8 5.8 6.5 7.9 1.1Services 7.9 6.2 12.2 8.0 9.7 8.8 8.2 8.4 3.1Sector Shares in Total GDP at Current PricesAgriculture 23.8 25.1 18.3 16.9 15.8 15.1 14.7 13.9Industry 22.9 23.5 24.8 25.1 25.1 24.8 25.0 25.3Services 47.4 45.4 49.6 49.6 49.9 50.7 51.6 52.4Source: UBOS Statistical Abstracts for various years; MFPED, 2012; MFPED, 2011; GoU, 2010.2.3 Financing and expenditure trendsThe Ministry of Agriculture, Animal Industry andFisheries (MAAIF) is the lead agency coordinatingagricultural financing both at the Central andLocal Government level. At Central Governmentlevel, financing is handled through 7 Votesnamely: (i) MAAIF (ii) NAADS Secretariat (iii)Cotton Development Organization (CDO) (iv)Uganda Coffee Development Authority (UCDA)(v) National Agricultural Research Organization(NARO) (vi) Dairy Development Authority (DDA)and (vii) Kampala City Council Authority (KCCA)Grant. At the Local Government level, spendingfor agriculture is majorly channeled through3 grants: (i) District Agricultural Extension (ii)NAADS (Districts) (iii) Production and MarketingGrant. Public funds include GoU and donorfinancing.The budget allocation to agriculture as a share tothe national budget remains low (Table 2.2) andstands at 3.2% in FY 2012/2013 which constrainsagricultural spending6.6 At the African Union Assembly in Maputo in July 2003,Heads of State including the Ugandan President, committedto allocating at least 10% of national budgetary resources toagriculture within 5 years of the meeting date.high inflation levels2. Although agricultureremains very critical for spurring nationalgrowth, the share of agriculture in total GDPhas declined over the years from 23.8 percentin FY 2003/04 to 13.9 percent in FY 2010/11.Whereas the industrial and services sectorshave in some years hit a 10% growth rate, thegrowth in the agricultural sector has consistentlyremained dismal at 3% (Table 2.1)3.The growth of the agricultural sector is still belowthe National Development Plan (NDP) annualgrowth target of 5.6 percent and the 6 percentgrowth rate that is required for effective povertyreduction. Research by IFPRI4demonstratedthat if agriculture in Uganda grew at 6 percentper annum, the national poverty headcountlevel would decline from 31.1 percent in 2005to 19.9 percent in 2015, below the 28 percentMillennium Development Goal (MDG) target.Uganda’s agricultural growth rate is also belowthe 6 percent annual growth target of the AfricanUnion’s Comprehensive Africa AgriculturalDevelopment Program (CAADP)5.2 MFPED, 2012.3 MFPED, 2012.4 Benin, 2007.5 The CAADP is an initiative of the New Partnershipfor Africa’s Development (NEPAD) aimed at helping Africancountries reach a higher path of economic growth throughagriculture-led development.Figure 2.2: Percent distribution of Agriculture Household Heads by Sex and RegionSource: UBOS, 2010.
1918Performance of the Agricultural Sector in Uganda - Case Study of Donor-Funded ProjectsTable 2.2: Sectoral Budget Allocations – FY 2009/10 – FY 2011/12Sector 2009/10 Approved 2010/11 Approved 2011/12 ApprovedAllocationUSh bn% Shareof BudgetAllocationUSh bn% Shareof BudgetAllocationUSh bn% Shareof BudgetAgriculture 310.7 4.7% 366 5.0% 434.0 4.5%Lands, Housing & Urban Development 20.3 0.3% 24 0.3% 32.4 0.3%Energy & Mineral Development 698.9 10.5% 391 5.3% 1,320.0 13.7%Works & Transport 1,214.8 18.2% 1,038 14.1% 1,290.8 13.4%Information & Communications Technology 9.5 0.1% 12 0.2% 12.1 0.1%Tourism, Trade & Industry 47.8 0.7% 49 0.7% 53.2 0.6%Education 1,079.6 16.2% 1,243 16.8% 1,416.3 14.7%Health 737.7 11.0% 660 8.9% 799.1 8.3%Water & Environment 172.2 2.6% 250 3.4% 271.3 2.8%Social Development 32.5 0.5% 32 0.4% 50.4 0.5%Security 487.7 7.3% 649 8.8% 974.9 10.1%Justice, Law & Order 359.7 5.4% 532 7.2% 531.6 5.5%Public Sector Management 705.0 10.6% 835 11.3% 986.2 10.2%Accountability 462.9 6.9% 492 6.7% 543.6 5.6%Legislature 121.8 1.8% 163 2.2% 162.7 1.7%Public Administration 217.0 3.2% 302 4.1% 231.8 2.4%Interest payments due - - 340 4.6% 519.6 5.4%Grand Total 6,678.3 100.0% 7,377 100.0% 9,630.0 100.0%Source: MFPED, 2010a; MFPED, 2011a; MFPED, 2012; DRT, 2011.Figure 2.3: Budget allocations within theAgricultural Sector FY 2011/12Table 2.3: On-budget and Off-budget Project Aid to Agriculture (US$ millions)Source: MFPED, 2012a.SectorOn-budget Off-budgetActual Projections Actual Projections2009/10 2010/11 2011/12 2012/2013 2009/10 2010/11 2011/12 2012/2013Agriculture 68.07 58.30 94.47 100.01 9.51 16.07 23.89 37.20Total allSectors641.59 515.62 867.36 687.66 399.55 397.30 451.55 402.06Agric Share%Source: MFPED, 2012c – Informationsubmitted by Development partners byFebruary 2012.2.4 Delivery of keyagricultural services2.4.1 ExtensionThe Government is offering agriculturalextension and advisory services to farmersmainly through the National AgriculturalAdvisory Services (NAADS) programme,complemented by general extension servicesby the District and Sub-county ProductionOffices. Other farmers pay to access privatesector service providers, especially in thelivestock sector. The main objective of theNAADS programme that has been underimplementation since 2001 is to “ensure thatfarmers move from subsistence to marketoriented and eventually commercial farming”.Close to a half of agricultural spending (42.4%)is earmarked to the NAADS programme thatoffers advisory services to farmers, followed bypolicy and institutional development by MAAIFand research and technology development byNARO (Figure 2.3). Most of the donor financingcomes in discrete projects whose contributionto the overall sector outc omes cannot be easilyascertained or measured. A significant amount ofaid also comes off budget and its magnitude anduse is not well captured in Government systems.Table 2.3 provides a snapshot of project aid toagriculture in recent years.The programme is implemented in alldistricts and sub-counties of Uganda,involving provision of advisory services andinputs to various categories of farmersand setting up of technology developmentsites and research trials. The first phase ofthe project ended in 2010 and the secondphase commenced in FY 2010/11 under theAgricultural Technology and Agri-businessAdvisory Services Project (ATAAS). The ATAASaims to strengthen the linkages betweenNAADS and the National AgriculturalResearch Organization (NARO) and increaseagricultural productivity and farmer access totechnology, advice and information.The NAADS program has enabled farmersto access inputs and technologies: in FY2010/11, the programme targeted 100Food Security Farmers (FSF) and 8 MarketOriented Farmers (MOFs) per Parish; thisnumber has gradually come down due toresource constraints to 30 FSF per parish,4 MOF per parish and 2 commercializingfarmers per Sub-county. The FSF are
2120Performance of the Agricultural Sector in Uganda - Case Study of Donor-Funded Projectsprovided with inputs worth UgSh 100,000including seeds for beans, maize, simsim,bananas; hoes, goats and fertilizers, amongother items. The MOF are provided inputs worthUgShs 450,000 mainly to purchase livestock afterthey provide co-funding. The commercializingfarmers are receiving about Ugshs 1,200,000worth of inputs and technologies.According to the recent agricultural census7, outof 3.6 million Agriculture House Holds (Ag HHs)in Uganda, 680,000 (19.0%) reported havingbeen visited by an extension worker during2008/2009. The Western Region had the highestpercentage (29.3%) of Ag HHs that were visitedby an extension worker followed by the EasternRegion (28.7%) and the Central Region with theleast percentage of 16.9% (Table 2.4). Basedon this evidence, although the Government hasrolled out the NAADS to all districts in Uganda,access to extension services remains low, with80% of the agricultural households having notbeen visited by an extension worker.Table 2.4: Distribution of Ag HHs visited byextension workers by region (%)Region Ag HHs Ag HHs visited PercentageCentral 715,486 114,559 16.9%Eastern 1,069,885 194,903 28.7%Northern 755,701 171,200 25.2%Western 1,033,992 199,156 29.3%Uganda 3,575,064 679,818 100%Source; UBOS, Uganda Census of Agriculture2008/97 UBOS, 2010.2.4.2 Research and technologyservicesAgricultural research and technology servicesin Uganda are spearheaded by the NationalAgricultural Research Organization (NARO) thatwas established by GoU in 1992. In 2005, theNARO was restructured from being solely apublic entity to encompassing other stakeholdersincluding non-public service providers. Thus, theNARO now coordinates the National AgriculturalResearch System (NARS). The NARS is offersclient responsive services through the NationalAgricultural Research Institutes (NARIs) and ZonalAgricultural Research and Development Institutes(ZARDIs).Agriculture production has improved over theyears with the dissemination of early yieldingand disease resistant crop varieties and livestockbreeds. Examples of high yielding varietiesthat have been disseminated include, amongothers: Sunflower Sesun 1H & 2H, MM3 Maize,Groundnut Serenut 5R and 6R, Barley SGS 564varieties; matooke hybrids with resistance toBlack Sigatoka, weevils, nematodes and bananabacterial wilt; bean varieties NABE 15 and NABE16; 6 cassava varities with high resistance tobrown streak disease; NERICA Rice varieties; 7coffee varieties that are resistant to the coffeewilt disease; improved varieties for mangoes,oranges, passion fruits, avocado, tomatoes,nectarines, apples and pears; essential oil crops(Centronella Grass and Lemon Grass) and leafvegetables. In additional improved breeds ofpoultry, cattle, piggery and fisheries have beendisseminated8.8 Various NARO reports.Productivity growth in Ugandan agriculture hasresulted primarily from area expansion andnot from intensification of production or use ofimproved varieties that would result in higheryields. According to MAAIF9, estimated averageyields in recent years at farm level have beenbelow those at research stations (Table 2.5).Table 2.5: Yields of selected crops on farmand at research stations in UgandaCrop Yield on farmers’fieldsYield on researchstationYield gap (%)Maize 551 5,000 – 8,000 807 – 1,352Beans 358 2,000 – 4,000 458 – 1,017Groundnuts 636 2,700 – 3,500 324 - 450Bananas 1,872 4,500 140Coffee 369 3,500 849Source: MAAIF, 2010f.The yield gap between average farm yields andresearch yields indicates the immerse potentialin farm productivity. Low and inefficient useof improved inputs is still pervasive amongUganda farmers and poor land management is acontributory factor. The Agricultural Technologyand Agribusiness Advisory Services Project(ATAAS) that was commenced in 2010 aims ataddressing these gaps through closer integrationof research and extension services.9 MAAIF, 2009.2.4.3 Agriculture CreditThe Government of Uganda has implemented anumber of reforms since the 1990s to improveaccess to agricultural financing. These include:the Cooperative Societies programme (1992);the Rural Financial Services Programme (2005),The Poverty Alleviation Fund (1996), EntandikwaScheme (1996), Microfinance programmes(2003), Prosperity for All (2005) and the Savingsand Credit Cooperative Societies (early 2000s).However, the formal sector supply of credit forfarming in Uganda remains limited: since 2000,less than 10 percent of total private sectorcredit is allocated to agriculture production andmarketing10 (Table 2.6).10 Ezra Munyambonera et al, 2012.In the study carried out by FOWODE TRACINGAgriculture Extension grants in Uganda from agender perspective the following was found, thatvery few women benefit directly from NAADs dueto the fact that women never own land. Muchas men benefit most of the work is done by thewomen still as in the figure 2.4 below.There is a need for the Government toencourage and support the development ofpublic private partnerships in the delivery ofextension services in Uganda as a means tofill the gap. For example, Government couldpartner or support farmer associations, NGOsand private sector players to scale up goodmodels of extension that are littered in differentparts of the country.Figure 2.4:NAADsbenefactors bygender in fourdistricts FY2009/10Source:Computation basedon S/C records(FOWODE)
2322Performance of the Agricultural Sector in Uganda - Case Study of Donor-Funded ProjectsTable 2.6: Percentage of Private Credit Distribution through commercial banks by sectorSector 2003 2004 2005 2006 2007 2008 2009 -11Agriculture production 2.00 4.08 6.09 3.70 2.60 2.30 6.00Agriculture marketing 5.00 6.51 3.93 1.60 1.90 2.00 3.00Mining and quarrying 0.01 0.07 0.06 0.00 0.10 0.30 0.33Manufacturing 23.00 20.22 20.08 9.10 10.60 9.30 13.00Electricity and water 5.00 5.89 5.96 4.30 5.40 8.20 0.80Building and construction 3.00 4.01 3.40 4.50 5.00 11.80 17.00Whole and retail trade 50.00 59.23 69.23 47.50 48.82 66.10 40.30Other 0.01 0.00 00.0 29.30 25.58 0.00 19.57Source: Bank of Uganda (BoU) Monetary Statistics, 2011; Ezra Munyambonera et al, 2012.In 2009, the Government introduced theAgricultural Credit Facility (ACF) for provisionof subsidized medium and long termloans to farmers at a 10% interest rate.Over 200 farmers have benefitted fromthe scheme where resources are mainlyinvested in agricultural equipment and valueaddition and agro processing machinery.Funds are channeled to farmers throughcommercial banks. The funds have enabledmedium to large scale farmers to expandtheir businesses and acquire machineryfor commercializing agriculture. The keychallenges of the ACF relate to i) it cannot beused for financing production inputs ii) manyfarmers not aware of its availability iii) Limitedgrace period iv) High interest rate for youngenterprises.The Government is providing financialsupport through the MicrofinanceSupport Centre Limited (MSCL) toSavings and Credit CooperativeOrganisations (SACCOs) to disbursecommercial and agricultural loans.The most recent Uganda Census forAgriculture 2008/09 shows thatonly 36.2% of agricultural householdmembers had ever received a creditwhile 63.8% had never received credit.Table 2.7: Percent Loan Distribution bySector and Region through the MSCL2005 2006 2007 2008 2009 2010Agriculture-Northern 4.1 1.6 3.8 1.4 16.6 6.7Agriculture-Western 1.9 3.6 7.9 21.8 30.6 38.9Agriculture-Central 0.0 12.9 1.3 7.1 16.1 24.2Agriculture-Eastern 0.0 1.2 0.9 0.9 3.0 5.7Commerce and Trade-Northern 16.5 1.3 4.9 6.6 1.5 0.5Commerce and Trade- Western 20.9 8.5 30.6 20.1 3.8 4.7Commerce and Trade-central 50.8 49.8 40.6 23.1 12.8 12.0commerce and Trade- Eastern 5.8 6.5 10.0 4.0 2.7 2.4Business Development-Northern 0.0 1.0 0.0 0.0 0.8 0.0Business Development-Western 0.0 5.0 0.1 0.0 4.1 1.6Business Development- Central 0.0 4.6 0.0 15.0 4.3 1.6Business Development- Eastern 0.0 3.9 0.0 0.0 3.7 1.7Total 100 100 100 100 100 100Source: Microfinance Support Centre, 2010; EzraMunyambonera et al, 2012.Whereas Government has attempted to providecredit for agriculture, access remains low. Themost recent Uganda Census for Agriculture2008/09 shows that only 36.2% of agriculturalhousehold members had ever received a creditwhile 63.8% had never received credit. Of the487,000 agricultural household members thatreceived credit, 309,000 (63.4%) were maleswhile 179,000 (36.6%) were females. Credit ismore easily accessible to males in agriculturalhouseholds in all regions of Uganda thanfemales (Figure 2.5).The main reasons for limited access to creditamong females were high interest rates, lackof collateral, ignorance (poor understandingof procedures for accessing finance due tolow literacy levels) and unavailability of lendinginstitutions. The UCA 2008/09 showedthat the main form of collateral requiredby lending institutions in Uganda was landand salary that are rarely owned by femalefarmers. Many female farmers earn lowincomes and hence are unable to save inSACCOs. This limits the ability of female smallholder farmers from expanding productionto market levels. Government needs toincrease financial literacy, especially amongwomen and provide incentives to enhancetheir borrowing. For example, female farmersshould be supported to accessthe ACF facility which is collateralfree. Efforts to reduce the risksassociated with the agriculturalsector, such as weather,insurance and price stabilization,will help to extend financialaccess but are unlikely to besufficient.The Government is providing financialsupport through the Microfinance SupportCentre Limited (MSCL) to Savings and CreditCooperative Organisations (SACCOs) todisburse commercial and agricultural loans.A recent study by Ezra Munyambonera etal (2012) shows regional disparity in thedistribution of the loans with the Westernand Central regions dominating in receivingsupport. Funds disbursed for agriculturaldevelopment across regions were less than20 percent over the years, apart from thewestern region that received substantiveamounts between 2008 and 2010 (Table 2.7).However, the process of acquiring this creditis difficult /costly for small scale farmers asthey are required to pay 10 – 15 % interestyet they are not sure of the produce as theseasons are not predictable.
2524Performance of the Agricultural Sector in Uganda - Case Study of Donor-Funded ProjectsFigure 2.5: Distribution of AgriculturalHousehold members who received credit bysex and region by 2008/09Source: UBOS, 2011.2.4.4 MarketingThrough the liberalization and privatizationpolicies of the 1990s, the Government divesteditself of providing markets for agriculturalproduce and concentrated since then on playinga facilitative role to private sector to undertakethis responsibility. Government mainly providesmarket information to farmers and has introducedthe Ware House Receipt System (WRS) tofacilitate bulk storage and marketing. The mainobjective is to increase storage capacity, valueaddition and develop a sustainable marketingsystem of agricultural commodities that willcontribute to income enhancement of the smallholder farmers11. The warehouse receipt systemis funded under Uganda Commodity Exchange(UCE) and the commercial banks Housing Finance,Stanbic and DFCU.The six licensed warehouse inUganda include:• Jinja warehouse• Kasese – Elehadai ware house• Kasese – Nyakatozi ware house• Gulu ware house• Masindi ware house• Kapchorwa ware house• Soroti ware house• Tororo ware houseGender mainstreaming is whollyembraced in the WRS program. Theware-houses that are operationalhave employed mostly women tosort the seeds and grains whichhave increased on the householdincome in these families and livelihood. Forevery 30 employees in a warehouse, 25 arewomen who sort the seeds while 5 men carry outadministration work and moving heavy sacks.Although access to markets has improvedtremendously with the opening of roads in thecountryside, farmers still find it a challenge tomarket their produce. The UCA 2008/09 foundthat about 38% of agricultural households have tomove 5Km and above to access local markets, theproblem being more pronounced in the CentralRegion (42% reported being 5Km or more fromnearest local market) followed by Western region(40.7%) – Table 2.8.11 Warehouse receipt system Act 2009considered to food secure, the country facesfood insecurity.The UNHS 2009/10 collected information on theaverage number of meals taken by householdmembers per day in the last 7 days precedingthe survey. A meal was considered to be anysubstantial amount of food eaten at one time.Table 2.9: Distribution of Households that took one meal a day %Residence 2002/03 2005/06 2009/10Rural 6.0 9.0 10.1Urban 8.1 6.3 5.9Kampala 5.3 6.4 6.9Central 3.7 9.6 7.3Eastern 3.0 4.8 7.3Northern 25.1 18.4 20.1Western 4.5 3.8 5.8Uganda 7.7 8.5 9.3Source: UNHS 2009/10.Farmers still lack market informationwhich exposes them to exploitationby middlemen who offer low pricesfor their produce. In remote andmountainous areas, access tomarkets is limited by poor roadinfrastructure and lack of regulartransport means.Table 2.8: Percentage distribution of Households by Distance to nearest local producemarketDistance to Local Market Number of Households Proportion ofHouseholdsLess than 1Km 119,726 3.61 to less than3 Km1,155,526 34.93 to less than5 km765,982 23.25 and above Km 1,267,134 38.3Total 3,308,368 100Source: UCA 2008/2009.Farmers still lack market information whichexposes them to exploitation by middlemen whooffer low prices for their produce. In remote andmountainous areas, access to markets is limitedby poor road infrastructure and lack of regulartransport means.2.4.5 Food securityFood Security exists when all people, at all times,have physical and economic access to sufficient,safe and nutritious food to meet their dietaryneeds and food preferences for an active andhealthy life12. Two proxies are used widely tomeasure the food security and nutrition level of acountry: the number of meals taken in a day (themore the better) and access to salt which is anessential and cheap household item. The UNHS2009/201013showed that, although Uganda is12 Adopted from the World13 UBOS, 2010a.Overall, there was an increase in the proportionof households taking one meal a day as opposedto the traditional three meals a day. The problemof food insufficiency was more pronounced inrural than urban areas and in Northern Uganda(Table 2.9).
2726Performance of the Agricultural Sector in Uganda - Case Study of Donor-Funded Projects3.1.1 Brief project profileThe overall goal of the Vegetable OilDevelopment Project (VODP) is “to increasehousehold cash income of smallholders byrevitalizing and increasing domestic vegetableoil production, in partnership with the privatesector”. The project is structured aroundthree different subprojects: (i) introduction ofcommercial oil palm production on Bugala Islandin Lake Victoria; (ii) development of traditionaloilseeds in northern, eastern and mid-westerndistricts of Uganda; and (iii) research anddevelopment (R&D) of essential oil crops pilotedin a variety of districts. The project is financedby the International Fund for AgriculturalDevelopment (IFAD), Government and theprivate sector player OPUL.The first phase of the project that commencedin 2003 ended on 31st December 2011 andclosure was on 30th June 2012. Implementationof the Oil Palm Component at district levelinvolves a tripartite agreement between threeparties: GoU-MAAIF, the Oil Palm UgandaLimited (OPUL) and Kalangala Oil Palm GrowersTrust (KOPGT). The District Production Officercoordinates the project at district level. OPULis a consortium of private companies (WilmarPerformance of Completed Agricultural LoansChapter 33.1 Vegetable Oil Development ProjectAnalysis of the performance of first andconcluded phase of the Vegetable OilDevelopment Project (VODP) is basedon two key sources of information:the Interim Evaluation report of March2011 and the field findings by theBudget Monitoring and AccountabilityUnit (BMAU) conducted during July-September 2008 and February – March2012. The analysis is limited to theOil Palm Component of the VODPwhich attracted the bulk of the donorresources.1 IFAD, 2011.Plantation Services, BIDCO, Josovina) that arepartners in project. The KOPGT is a trusteebody that was established in 2005 to protect theinterests of and support the smallholder farmerswho are supposed to develop 3500ha of oil palmunder the VODP. The institution, which is GoUfunded, supports the farmers by providing credit,inputs, marketing infrastructure and selling theirfruits.3.1.2 Planning and project designphaseBecause of the complexity of the project in termsof the number of stakeholders involved in thePublic Private Partnership (PPP), the planning anddesigning phase was protracted and took a longperiod. The Government of Uganda conceivedthe idea to establish the VODP in 1986 as ameans of promoting import substitution andexport diversification to recover the economythat had been under war. The Governmentsought the support of IFAD that saw the VODP asan opportunity to increase smallholder incomes.However, it took a total of eight years of planningbefore the VODP was approved in 1997 by theIFAD Executive Board.These findings are collaborated by anothermore recent study carried out by the BMAU in62 districts and 12 Municipalities involving 1,560NAADS beneficiary households14. The studyrevealed that, prior to the NAADS intervention onfood security farmers (FSFs) and market orientedfarmers (MOFs) in FY 2010/11, adults in about50 percent of the households had two mealsper day, 38 percent could afford three meals perday and 2 percent had four meals per day. Sincethe NAADS intervention, the proportion eatingonce or twice per day has reduced slightly whilethose eating three or four times per day haveincreased modestly (Figure 2.6).14 MFPED, 2012f.Figure 2.6: Households by number of meals eaten by adults before and after NAADSSource: MFPED, 2012f.These findings indicate that the country still hasclose to 10% of the population that take onemeal a day and another over 40 percent that take2 meals a day which is not adequate. Enhancingfood production and productivity in the countryremains a major challenge for feeding thepopulation adequately. The Government needsto work closely with the private sector and civilsociety to bring agricultural services closer to thepeople and ensure that they are affordable sothat farming can be scaled up in all regions in thecountry using improved inputs and technologies.
2928Performance of the Agricultural Sector in Uganda - Case Study of Donor-Funded ProjectsDuring the planning stage, a value chainapproach to the vegetable oil subsector wasadopted implying working with a variety ofvegetable oil crops, stakeholders, institutionallevels, and geographical areas. It requiredcoordination with many public and privateinstitutions at national, district and local levels.Protracted discussions to bring on board theprivate sector OPUL (also referred to as BIDCO)and the public to surrender their land to theproject resulted in a five year delay in projectimplementation. Another two-year delay wasexperienced to give time to establishment of theKOPGT. Hence, although the project was officiallyapproved in April 1997, implementation did notcommence until 2005. The project had to beextended four times to enable implementationto take place. The delays during the planningphase negatively affected project outcomes asdiscussed below.3.1.3 Budgeting and financingTotal project costs were originally estimatedat US$60 million, consisting of an IFAD loan ofUS$20 million, US$33.1 million in co-financingfrom a private-sector partner, and contributionsof US$3.8 million and US$3.1 million, respectivelyfrom the Government and the beneficiaries.However, the scale of the oil palm subprojectwas later increased to ensure its financial andeconomic viability. The private investor and theGovernment increased their contributions toUS$120 million and US$12 million, respectively,thereby bringing the total project costs toaround US$156 million1.The delay in project start up and the loanextensions necessitated re-allocations betweenbudget lines: there was a reduction in vehiclesand equipment and civil works and operatingcosts rose significantly. Overall expenditure waswithin budget limits and on schedule. There wasan increase in Government commitments whileIFAD disbursements lagged behind schedule.Expenditure in the oil palm component wasat 88% of the disbursed funds, reflecting afairly good absorption capacity (Table 3.1). Theincreased Government expenditure on oil palmresulted from the high costs of the new ferry,the purchase of land for the project and effortsto counteract negative publicity. IFAD’s lowdisbursement rate (64 per cent) was attributedto the slow enrolment of smallholders and outgrowers in the oil palm subproject.1 IFAD, 2011.Table 3.1: Financial performance of theVODP by Sub-component (US$ ‘000)Sub-component IFAD Loan Government Beneficiaries TotalBudget Actual % Budget Actual % Budget Actual % Budget Actual %Oil Palm 10,790 5,393 50 2,080 6,334 305 4,000 3,200 80 16,870 14,927 88Traditional oil seeds andessential oils6,640 4,976 75 1,360 1,346 99 - - - 8,000 6,322 79Institutional support 2,480 2,284 92 340 834 245 - - - 2,820 3,118 111Total costs 19,910 12,653 64 3,780* 8,514 225 4,000 3,200 80 27,690 24,367 88*The Government’s contribution was increased toUS$12 million after the oil palm revisions in 2000.Source: IFAD, 2011.3.1.4 Project ImplementationThe first phase of the VODP had 6 core targets,among others namely:1) Develop 10,000 ha of oil palm on BugalaIsland: 6,500 ha on a nucleus plantation and3,500 ha planted by out growers and smallholders organized by KOPGT2) Construct, furnish and equip an office blockfor KOPGT3) Construct a processing mill at the nucleusestate4) Construction of 250 km of road network.5) KOPGT to provide of inputs and loans tofarmers.6) Harvesting and collecting fresh fruitbunches from farmers.By project closure date, almost all the abovetargets for physical performance had beenachieved, as garnered from field findings bythe Budget Monitoring and Accountability Unit(BMAU)2. OPUL planted 6,100 ha of the targeted6,500 ha; land planted by smallholders andout growers was 2,362.4 ha against the targetof 3,500 ha (67.5% achievement); the KOPGToffice was constructed and furnished; the millfor processing Fresh Fruit Bunches (FFB) startedoperation in February 2010 with an installedcapacity of 10 metric tonnes (MT) expandable to30 MTs per hour; 210km out of the 250 km wereconstructed;By March 2012, the total amount loaned outto farmers to cater for their financing needs at10% interest rate stood at Ugshs 19.5 billion,having risen from Ugshs 12.8 billion in 2011and Ugshs 8.8billion in 2010. The KOPGT hadrecovered Ugshs 450 million from the farmers.Yields were still low as most trees were yet togain maturity. The harvest rose from 680 tonnesin 2010 to 2,900 tonnes of fresh fruit bunches2 MFPED, 2012e; MFPED, 2008.in 2011. The average harvest per month rosefrom 200 tonnes in 2010 to 500 tonnes in 2012,as more farmers started harvesting and appliedfertilizers.A major shortcoming of the project howeverwas the lack of focus on involving specialinterest groups such as widows and orphansas they lacked land to effectively participate inthe project. Other challenges included: farmersexpressed discomfort with regard to the lack ofclarity on how the deduction by KOPGT of 33percent from proceeds to recover the loans andtransport costs was being computed; wastage offruits as KOPGT did not have enough trucks totransport the produce from the farmer fields tothe processing mill. The escalating value of landwas another constraining factor in acquisition ofland for the oil palm plantations.The IFAD evaluation report highlighted a numberof factors that affected implementation results:the five year delay in identifying the private
3130Performance of the Agricultural Sector in Uganda - Case Study of Donor-Funded Projectsinvestor and concluding negotiations resultedin delayed planting maturing of the crop. Thesetting up of KOPGT, establishment of thenucleus estate and smallholder and out groweroil palm plantings, the harvesting of FFBs andconstruction of oil mill were all delayed. Thedelays substantially increased costs for boththe Government and the private investor. In theearly years, there was much public opposition tothe project from some NGOs, donors, oppositionpoliticians, civil servants and subsectorcompetitors. This further delayed projectimplementation and dampened the results.3.1.5 Key Gender IssuesGender mainstreaming in the VODP wasaddressed mainly from the perspective oftargeting women and youth to be amongthe beneficiaries. Women were encouragedto participate in the project in their ownright as landowners or tenants, as wives oflandowners or tenants or as plantation workers.They were also encouraged to participate inthe membership and leadership of growerorganizations and access loans and inputs fromKOPGT. Youth, on the other hand, were targetedas members of smallholder households and theybenefitted from skills in financial management,succession planning and HIV/AIDS Sensitization.Oil palm being a commercial crop, more menthan women participated in the project. Forexample, by January 2009, women constituted31% of the total beneficiaries (Table 3.2). Thewomen tended to get involved in smaller scaleprocessing, transportation of fruits and helpingtheir husbands in tending the plantations.Widows hardly participated as many lackedaccess to land.Table 3.2: Number of VODP beneficiaries bygender in 2009Category No. ofSmallholdersNo. ofOut growersTotal Proportion(%)Men 396 53 449 69Women 183 19 202 31Total beneficiaries 579 72 651 100Source: IFAD, 2010.A major challenge was that the project did notdevelop a detailed strategy of reaching outto the targeted groups once the project wasunderway. Follow-up meetings were held withblock groups and to speed uptake, the projectincreasingly focused on any willing participant,especially those with land.3.1.6 Lessons andrecommendationsOverall, the VODP achieved a sizeable numberof its targets, despite the delayed start toimplementation. The delayed start of theintervention led to delayed disbursementof funds, escalated project costs and somekey outcomes not being realized. GenderBy March 2012, the total amountloaned out to farmers to caterfor their financing needs at 10%interest rate stood at Ugshs 19.5billion, having risen from Ugshs12.8 billion in 2011 and Ugshs8.8billion in 2010.are required for putting in place large donorfunded projects and forging partnershipswith Government and private sector.2) Funds absorption: The VODP exhibiteda fairly good absorption capacity of theearmarked funds, indicative of properbudgeting and identification of priorityexpenditure items, functional financialmanagement systems and adequatecapacity building within the implementingagencies.3) Mainstreaming gender: althoughgender issues were integrated in the VODP,not much attention was paid to this aspectas implementation progressed. Genderplanning should be part and parcel of theproject design, planning, implementationand monitoring process. Clear gendermainstreaming strategies should be put inplace during the implementation process,and progress should be regularly monitored.3.2 Agricultural ImprovedRice Production3.2.1 Brief Project ProfileThe Agriculture/Improved Production project3was a GoU intervention during 1st September2008 – 31st August 2010 with the principalobjective of “increasing rice production andincome of resource poor farmers throughpromoting innovative NERICA rice basedtechnologies in Northern Uganda”. The projectwas implemented by MAAIF in collaboration withthe Food and Agriculture Organization (FAO)and with funding from the Government of Japan.Implementation was undertaken in 9 districtsnamely: Amolotar, Amuru, Apac, Dokolo, Gulu,Kitgum, Lira, Oyam and Pader. The interventionwas a successor to a previous project known as“Dissemination of NERICA and Improved Riceproduction Systems to Reduce Poverty andFood Deficit in Uganda” implemented by MAAIF/FAO during 2006 to 2008 estimated to cost US$1,239,983.The first project operated in the districts of Mpigi,Wakiso, Mbale, Tororo, Gulu, Lira, Hoima andMasindi. Target beneficiaries are IDP returnees,poor farmers, women farmers and small-scalefood insecure households. The project also3 The full project name is “Agriculture and RuralDevelopment through improved rice based farming systems forfood security and poverty reduction in Northern Uganda”.focuses on strengthening the capacity forrice seed (breeder/foundation) production atNational Crops Resources Research Institute(NaCRRI) and the capacity for certified seedmultiplication and storage at community level.3.2.2 Planning and project designphaseConsultations held between MAAIF and BMAUin 20114indicated that once the project wasapproved by GoU in 2007/2008, the initialplanning processes were largely undertaken atthe offices of the development partners (FAOand JICA) with involvement of MAAIF Senior staff.The project design was such that the substantiveactivities would be implemented directly by FAOwith MAAIF playing the advisory and monitoringrole. Hence, FAO worked directly with DistrictProduction Offices to organize the farmers toparticipate in the project.The project used a Farmer Field School (FFS)approach where farmers were organized ingroups of 30 members and trained in improvedrice production technologies. Each district had 8farmer groups that benefited from the project.Provision of seed, input and equipment by theproject was done through a revolving fund sothat the outputs could be sustained beyond theproject life. The intervention was implementedby a Project Coordination Unit based in Liradistrict.4 BMAU Monitoring Visits in FY 2010/2011 Q2.The project used a Farmer FieldSchool (FFS) approach wherefarmers were organized in groupsof 30 members and trainedin improved rice productiontechnologies.mainstreaming was partially addressed, mainlyfocusing on participation of women and youth inthe project. Other key gender dimensions suchas supporting land access by the disadvantagedand enhancing access to extension and inputswere not addressed. A number of lessons andrecommendations emerge from the analysis:1) Implementation modalities: Delaysin implementing projects can have grosscost implications and organizationalproblems that negatively impact on projectimplementation. For large complex projects/PPPs, sufficient time should be allocatedto the planning process before projectapproval and all the key stakeholders shouldbe adequately sensitized and involved inthe project design and planning processes.Considerable time, resources and flexibility
3332Performance of the Agricultural Sector in Uganda - Case Study of Donor-Funded Projects3.2.3 Budgeting and financingBudgeting for the donor funds that accountedfor over 90% of the disbursements was mainlydone by the Government of Japan, with inputfrom FAO. The MAAIF was involved in budgetingfor the counterpart funding from GoU whichformed less than 10% of the available resource.The MAAIF officials, when consulted by BMAU5,indicated that they were not fully aware of theexpenditure patterns for the donor funds asthese were exclusively handled by the donor andimplementing agency FAO.The end of project evaluation report6indicatesthat a total of US$ 1,499,400 was spent on thisproject, donated by the Government of Japanand channeled through FAO as the spendingagency. In addition, GoU provided counterpartfunding to MAAIF for monitoring this project: UShs149,650,000 in FY 2009/10 and UShs 119,800,000in the first and second quarter of FY 2010/11, alltotaling to UShs 269,450,000. Table 3.2 shows theutilization of the donor funds.5 BMAU Monitoring Visits in FY 2010/2011 Q2.6 MAAIF/FAO, 2010.Table 3.2: Utilization of Donor Funds inAgriculture Improved Rice ProductionProjectItem Budget US$ %age of total costsPersonnel 105,600 7.04Equipment and Machinery 424,700 28.32Material and supply 155,000 10.34Contract 144,800 9.66Consultants for Capacity Building(training and workshop and technicalmanual)142,000 9.47Capacity Building(FFS support, training and workshop andtechnical manual)106,900 7.13Duty Travel 187,900 12.53GOE 60,000 4.0Overhead (13%) 172,500 11.50GRAND TOTAL 1,499,400 100MAAIF/FAO, 2010About 39% of the project funds were used forpurchasing equipment, machinery and suppliesand 61% used in over head costs, capacitybuilding and other expenses. All the fundsreceived from GoU were used by MAAIF forsupervision and monitoring of the project.3.2.4 Project ImplementationThe project was implemented as scheduled overa two-year period. The mid-term and end ofproject reports7indicate that the interventions7 MAAIF/FAO, 2009; MAAIF/FAO, 2010.Table 3.3: Farm tools distributed to farmers byAugust 2010Item Total quantitydistributedQuantitydistributed perdistrictQuantity perfarmerSerrated Sickle 2,160 pieces 240 1 piece per farmerHoes 2,160 pieces 240 1 piece per farmerPanga/Machine 2,160 pieces 240 1 piece per farmerShovels 2,160 pieces 240 1 piece per farmerWheel barrows 2,160 pieces 240 1 piece per farmerTarpaulins 2,160 pieces 240 1 piece per farmerTape measures 72 units 8 1 piece per groupOx-ploughs 72 pieces 8 1 piece per groupOxen 144 heads 16 2 heads per groupLine marker 216 pieces 24 3 pieces per groupJab planter 216 pieces 24 3 pieces per groupSource: Project Coordination Unit – Lira; MAAIF/FAO, 2009.benefitted 72 farmer groups with a total of 2,160farmers in 9 districts of Northern Uganda. Inaddition to training on improved rice production,the farmers were provided with farm tools andpost harvest equipment as shown in Tables3.3 and Table 3.4. Certified NERICA rice seedsfrom Namulonge Research Station, fertilizer andherbicides were distributed to seed growers inthe first season of 2009 for seed multiplication(Table 3.5). Tools and equipment (tractors,pumps, threshers and rice mills) were providedto farmers’ groups or farmers’ associations. Inthe second year, seeds were procured fromfarmers for distribution in the production area.Table 3.4: Post harvest equipment distributed by August 2010Items QuantitydistributedMode of DistributionRe-circulating Batch Dryer 1 piece 1 piece for NaCRRIAir screen Seed Grader 1 piece 1 piece for NaCRRIHold-on motorized rice thresher ontrolley or cart29 units 1 piece per sub-countyMill-top SB30 rice mill 9 units 1 unit per DistrictSefex 25 HP Diesel Engine 9 units 1 unit per DistrictWeighing Scale 0-100kg 72 units 1 unit per groupNERICA Signposts 9 units 1 unit per DistrictSource: Project Coordination Unit – Lira; MAAIF/FAO, 2009
3534Performance of the Agricultural Sector in Uganda - Case Study of Donor-Funded ProjectsTable 3.5: Inputs distributed in 2009Type of input Quantity Quantity per farmerNERICA Seed (1,4,10)* 29,625kg (season 1)23,600kg (season II)10kg per farmer200kg per seed growerUrea Fertilizer 900 bags of 50 kg 33 bags per seed growerDAP Fertilizer 450 bags of 50 kg 16 bags per seed growerSatunil herbicide 250 litres per district 83 litres per seed growerSource: Project Coordination Unit – Lira; MAAIF/FAO,2009The project provided 9 units of rice millingtechnologies for use in rural areas where accessto milling facilities is a challenge. To improvemanagement of the mills and ensure return onthe investment, the equipment is managed ona public-private sector partnership model. Theprivate sector managing the mills was requestedto meet the costs for housing and installation ofthe equipment. Over 850 metric tonnes of ricewere produced from a total of 1,700 hectaresestablished under project support8.Field monitoring findings by the BMAU in 69out of the 9 implementing districts 2010 and201110indicated that the farmers and farmergroups received all the inputs as planned,with modest variations. Four key challenges toimplementation were: (1) inadequacy of theinputs and inappropriateness of some of thefarm equipment (ii) lack of supervision and followup by MAAIF (iii) very low project coverage asonly a few parishes were targeted (Iv) The projectdid not empower the farmers adequately on8 MAAIF/FAO, 20109 Amolator, Kitgum, Lamwo, Lira, Oyam, Pader and Gulu.10 MFPED, 2010a; MFPED, 2011c.2) Funds utilization and disbursementmodalities: the donor funds werebudgeted for and disbursed to beneficiariesfrom the donor offices. The Ministry ofAgriculture was not involved in guidingexpenditure and ensuring efficiency andeffectiveness of the project. The donorrecords indicated the bulk of funds wereused for recurrent expenses which isindicative of poor allocative efficiency. Futureprojects should allow for the Governmentagency to have a more active role inbudgeting and utilization of the funds.3) Project design: the approach of providinga small input package to a few farmersin every geographical locality does notgenerate meaningful impacts in terms ofenhancing agricultural production andhousehold incomes. Future projects shouldbe designed to cover a larger project area,target a significant number of farmers andprovide adequate inputs for economicviability and sustainable impact.community participation and group dynamics.Hence, sustainability of the project became aproblem (v) Poor quality of inputs. FAO disbursinginputs directly to farmers without verificationby the district led to some poor quality inputsbeing disseminated. For example immature oxenwould not be accepted if the district veterinaryofficer had inspected them first.3.2.5 Key Gender IssuesThe project addressed gender from oneperspective: selecting farmer groups thatwere largely constituted of women to be thebeneficiaries. Many of the farmer groupsthat benefitted from the inputs had adisproportionately larger representation ofwomen than men. However, the seed growerswho were responsible for seed multiplicationand received larger input packages werepredominantly male. This was attributed to theneed for land to undertake seed multiplicationwhich women did not have access to generally.3.2.6 Lessons andrecommendationsThis project met its set objectives of increasingrice production and income within NorthernUganda. All the donor funds were absorbedby the end of the project. However, the inputsthat were provided to the farmers weregrossly inadequate, some of poor quality andinappropriate. A year after end of project,rice production had ceased for some of thegroups that had been targeted indicating lowsustainability of the intervention. A number oflessons and recommendations emerge from thisanalysis:1) Planning and implementationmodalities: The approach of the donorstaking lead in planning and implementationled to less involvement and follow up ofthe interventions by the Governmententities, the MAAIF and the Districts.Poor quality inputs were delivered by thedonors and the sustenance of the projectand its impacts was low. It is critical thatdonor funded projects use the approachof Government taking the lead in planningand implementation which will enhancesupervision of the interventions and longterm impacts.
3736Performance of the Agricultural Sector in Uganda - Case Study of Donor-Funded ProjectsPerformance of ongoing Agricultural LoansChapter 44.1.1 Brief Project ProfileUganda is one of the six countriesimplementing the regional Creation of Tsetse &Trypanosomiasis Free Areas (STATFA) project,other countries being Kenya, Ethiopia, BurkinaFaso, Mali and Ghana. At the African Continentlevel, the project is coordinated by the PanAfrican Tsetse and Trypanosomiasis EradicationCampaign PATTEC. Although the implementationperiod was indicated as April 2006 to 2011, theproject is still ongoing. The project is funded bythe African Development Fund (ADF) and GoU.The total loan amount is UA 6,550,000 and GrantAmount UA 240,000.The project objective is “to eradicate Tsetseand Trypanosomiasis from Uganda”. Theproject is for implementation in the districtsof Rakai, Lyantonde, Masaka, Kalangala,Mpigi, parts of Sembabule, Wakiso, Kampala,Mukono, Kayunga, Kaliro, Jinja, Mayuge, Iganga,Bugiri, Tororo, Butaleja and Pallisa. Expectedoutputs include: complete refurbishmentand expansion of insectary at NaLIRRI; Tsetsepopulation reduced by 95%-98% using aerialspraying; Entomological, parasitological andsocioeconomic baseline Survey; Strategiesfor controlling tsetse and Trypanosomiasis;Operationalise the geographical informationsystem1. The analysis in this section focuses onthe first four years of implementation (2006-2010) as the project was originally scheduled tobe completed in 2011.4.1.2 Planning and project designphaseBeing a regional project, planning for theSTATFA project involved a wide cross-sectionof stakeholders at national and continentlevel to ensure uniformity in implementationof the interventions. Hence, the planning anddesigning stage continued even after the projectwas approved for implementation. The MAAIFwas at the centre of the planning processtogether with officials from ADB and MFPED.There was not much documented evidence ofthe details of how the planning process wasactually undertaken. Discussion notes from the1 MAAIF, 2010e; MFPED, 2009.4.1 Creation of Tsetse and Trypanomiasis Free AreasTable 4.1: Fund disbursements for STATFAproject by March 2010Category ADF Loan ADF Grant GoU (15% contribution)UA US$ UA US$ UA US$Amount signed for 6,550,000.00 9,497,500.00 240,000 348,000 982,500 1,424625Disbursement todate886,314.09 1,285,155.43 195,782.69 283,884.9 61,711.68 89,481.94Undisbursedamount5,663,685.91 8,212,344.57 44,217.31 64,115.1 920,788.32 1,335,143.06% Disbursement 13.57% 13.57% 81.56% 81.56% 6.28% 6.28%Note: 1UA = 1.45US$ = 2465 UShsSource: MAAIF, 2010eTable 4.2 shows the extent of utilization ofthe funds that had been disbursed. Slightlyover a half (54%) of the disbursed funds hadbeen utilized by the project over the four yearperiod. This suggests a very slow rate of fundsabsorption and project implementation, giventhe fact that only 15% of the total resources hadbeen disbursed. The project was extended foradditional years to allow project implementationto take place.Table 4.2: Funds utilization of the STATFAproject during April 2006-March 2010Source Amount received(UA)Amount utilized(UA)Balances (UA) % UtilisationLoan 886,314.09 406,547.59 479,766.50 45.87Grant 195,782.69 151,565.38 44,217.01 77.41GoU 61,711.68 60,477.45 1,234.23 98Source: MAAIF, 2010e.The STATFA project staff and the reviewdocuments indicated three key challenges thatexplain these financial trends3:1) Government took long to fulfill some ofthe loan prior conditions such as hiringthe required staff and putting in place amanagement committee. The Accountantswere changed twice leading to a disruptionin project activities. In the financingagreement, GoU is supposed to providepermanent management staff.2) Bureaucracies in procurements – using twoprocurement systems of ADB and GoU – ledto excessive delays.3 MFPED, 2010a.BMAU2indicate that ADB funded projects sufferfrom bureaucracies that lead to excessive delaysin project execution. All major payments areeffected from the donor offices after rigorousassessment procedures.4.1.3 Budgeting and financingTable 4.1 presents the disbursement of theSTATFA project funds as of March 2010. After4 years of implementation of the donor projectand close to the completion date, the bulkof funds under the ADF loan had not beendisbursed. Only 13.57% of the ADF loan hadbeen disbursed. About 81% of the ADF Grantand only 6.28% of the GoU contribution hadbeen disbursed. Overall, only 15% of the totalproject funds have been disbursed over the fouryear period. About 85% of the funds remainedundisbursed, one year to the scheduled projectclosure date.2 Budget Monitoring Visits during January-March 2010.3) Low counterpart funding which is itemizedin a manner that does not meet therequirements of the project. Forexample, there is a large budgetline reserved for donor staffsalaries yet the project had onlyone staff to be paid.4.1.4 ProjectImplementationThe STATFA project has been reviewed andreports are available on overall progress inimplementation4. A year before completion date,the project was behind schedule in addressingthe key objectives and activities. The mainactivities undertaken were focusing on capacitybuilding, procurement of inputs and someimplementation focusing on deployment of trapsand screening in Kalangala district.Procurements have been completed for officeequipment, vehicles, audio visual equipment,insecticide (400 litres of deltamethrin 20%and 6152 litres of pour-on insecticide 1%)and 1 outbound engine and 20 life jackets allcosting UShs 226,206,640 orUS$ 118,650. Procurements areongoing for 90,000 tsete traps,insecticides, veterinary drugs,lab supplies, 10 motorcycles,protective wear, generators andother items estimated to cost4 MAAIF, 2010e. STATFA Project, 2009.
3938Performance of the Agricultural Sector in Uganda - Case Study of Donor-Funded ProjectsUS$ 2,245,913. Entomological, parasitological,environmental and socio-economic baselinedata. The human sleeping sickness analysiswas conducted. Out of the 12,000 insecticidetreated tsetse traps that were supposed to bedeployed, 2,300 were deployed in Kalangaladistrict in 3 parishes. In addition, 100 litres ofpour-on was delivered to treat cattle. A totalof 26 entomologists were trained, study toursundertaken in other countries, 60 of the 120laboratory technicians and assistants had beenrecruited, regional workshops held in Jinja andMasaka.A physical verification visit by the BMAU5indicated that there was no physical presence ofthis project in any of the districts to be targeted,other than Kalangala district. The district officialsacknowledged receipt of the tsetse trapswhich had been deployed in 3 parishes. Themost infected areas, Bufumbira and MugoyeSub-counties were yet to be reached by theproject. MAAIF had distributed 100 litres ofpour on chemicals for treating livestock. Therewas evidence of farmers whose livestock hadbeen treated by the district officials and theirassistants using these chemicals.The main challenges related to the slow pace ofproject implementation and the limited reach.Many of the traps that had been deployed weredestroyed by weather elements or dislodgedby stray animals. The beneficiaries of the trapslacked requisite skills and materials to repair5 MFPED, 2010athe destroyed nets hence their usage wasfor a limited time period. The district had fewentomologists to implement the project andthe project management committee was notfunctional.4.1.5 Lessons andrecommendationsThe STATFA project lagged behind schedulein implementation in line with the slowdisbursement and absorption of funds. Mostobjectives of the project had not been achievedone year before project closure. Hence theproject was given an extension of additionalfive years to continue to complete the pendingactivities and is still ongoing. A number of lessonsand recommendations emerge from the analysis:1) Prior conditions and bureaucracies:the ADB loans had stringent prior conditionsand lengthy bureaucratic procedures thataffected the pace of project implementation.It is critical that the prior conditions infuture donor funded projects are wellnegotiated at planning stage to ensurethat they are flexible and implementableby the Government. Delays in projectimplementation can be avoided if thedonors trust and use the Governmentprocurement systems rather than imposingtheir own systems or allowing for parallelprocurement channels.2) Low counterpart funding: the unavailability of sufficient counterpartfunding from GoU grossly affected the paceof project implementation. The Governmentshould only accept projects for which it hasassured counterpart funding; this shouldbe disbursement in a timely manner inadequate amounts for triggering projectimplementation.3) Limited outreach and projectsustainability: this project distributedlimited traps to 3 parishes in Kalangaladistrict. The beneficiaries had no skillsand materials for replacing the trapsimplying low reach sustainability of theproject. Future projects should provideadequate equipment and inputs that covera larger geographical area and also trainthe beneficiaries in replacing worn outequipment to ensure reasonable projectimpact and sustainability.The project aims at improvingincomes, rural livelihoodsand food security throughsustainable natural resourcesmanagement and agriculturalenterprise development.4.2 Farm IncomeEnhancement Project –Irrigation Component4.2.1 Brief Project ProfileThe Farm Income Enhancement and ForestConservation Project (FIEFOC) under theMinistry of Agriculture, Animal Industry andFisheries (MAAIF) commenced in 2005 and wasscheduled to end in 2010. The mid-term reviewconducted in April 2009 recommended a furtherextension of this project to December 2012to complete unfinished activities. The projectaims at improving incomes, rural livelihoodsand food security through sustainable naturalresources management and agriculturalenterprise development. The project hastwo components: i) Agricultural EnterpriseDevelopment Component coordinated bythe Ministry of Agriculture, Animal Industryand Fisheries (MAAIF) ii) Forestry SupportComponent coordinated by the Ministry of Waterand Environment (MWE). The total project costfor the five-year period (2005-2010) is estimatedat UA51.15m funded by ADB/ADF and GoU6.Within the Agriculture Enterprise Developmentcomponent was a sub-component to build small-scale irrigation schemes. In 2009, the project was6 GoU and ADF, 2009.restructured to focus on four irrigation schemes.The overall objective of the project is to inducea commercially sustainable agriculture forimproved income level for the community andhelp in poverty alleviation.4.2.2 Planning and Project DesignPhaseThe planning for the project was done jointlyby MAAIF and officials from the donor ADB.The Ministry of Water and Environment andthe Ministry of Works and Transport (MoWT)were also involved in the planning processesto ensure that environmental and engineeringaspects of the project are taken care of.Although the project was flagged off in 2005, thevarious stakeholders continued negotiating overthe various aspects of the large multi-sectoralproject leading to delays in implementation. Theoriginal design focused on construction of manysmall scale irrigation schemes at farm level in thedifferent parts of the county.The mid-term review conducted in April 20097reported very slow progress in implementationof this component and very high operationaland maintenance costs. It was recommendedthat the sub-component is restructured to focuson rehabilitation of four existing large scaleirrigation schemes namely: Mubuku IrrigationSettlement Scheme in Kasese District, Doho RiceIrrigation Scheme in Butaleja District, Olweny7 GoU and ADF, 2009.Swamp Rice irrigation Scheme in Dokolo districtand Agoro Irrigation Scheme in Kitgum district.The rehabilitation was to be completed byDecember 2010.An ADB Supervision mission conducted in April2011 found that no work had been done byMAAIF and recommended cancellation of theproject if the trend of slow implementation wasnot rectified. It was noted that due to passageof time, the funds that were available were nolonger sufficient for four irrigation schemes.To rectify the situation, a Presidential Directivewas issued on 6thApril 2011 to restructure theproject. The main elements of the restructuredproject were to concentrate on 3 irrigationschemes, transfer implementation of civil worksto Ministry of Water and Environment. ThePresidential directive was actualized startingJune 2011 whereby all existing contractsunder MAAIF where transferred to MWE andimplementation of works started thereafter.4.1.3 Budgeting and financingBased on the technical engineering estimatesby MAAIF in collaboration with the Ministryof Water and Environment (MWE), therehabilitation costs for each medium scalescheme were budgeted in 2009 as below (Table4.3): The total estimated cost of the project is UA11,951,624 or UShs 35,890,882,670, inclusiveof contingency. Exclusive of contingencies, therehabilitation of the four schemes is estimatedto cost UA 9,551,935.2 or UShs 28,674,909,692.
4140Performance of the Agricultural Sector in Uganda - Case Study of Donor-Funded ProjectsTable 4.3: Costs for the four irrigationschemesIrrigationschemeCivil works costs(UShs)Consultancysupervisioncosts (UShs)Total costs (UShs) Beneficiaries(households)Mubuku 5,508,174,368 1,489,264,293 6,997,438,661 1,200Doho 6,340,265,738 1,346,213,384 7,686,479,122 2,350Olweny 14,911,718,038 1,096,425,352 16,008,143,390 3,300Agoro 4,102,396,145 1,096,425,352 5,198,821,497 1,000Total 30,862,554,289 5,028,328,381 35,890,882,670 7,850Note: The schemes’ civil works costs include 15% pricecontingency and 5% physical contingency.Source: GoU and ADF, 2009Table 4.4 shows the expenditure incurredby MAAIF by end 2010. By December 2010,UShs 1,728,873,094 had been spent on theIrrigation component, inclusive of expendituresincurred during FY 2006/07 – FY 2007/08 onthe small scale irrigation sub-component thatwas suspended in April 2009. The bulk ofthe expenditures were on general operatingexpenses (54%) and specialized services anddemonstration (24%). During FY 2009/10, thebulk of expenditures on the four irrigationschemes (87%) was on general operatingexpenses, indicative of poor allocative efficiency.It is at this point that the remaining funds forfunding were transferred from MAAIF to MWEduring 2011.Upon completion, the irrigation schemes wouldbe handed back to MAAIF for management.4.1.5 Lessons andrecommendationsThere are a number of lessons andrecommendations that can be drawn from thisproject:1) Institutional and Implementationcapacity: MAAIF lacked sufficientcapacity to supervise construction andimplementation of irrigation schemes. Theabrupt change in project design withoutanalyzing the capacity of the ministry toimplement 4 large irrigation schemes wasa major constraint. MAAIF had only oneresident Engineer at project start who couldnot supervise such a large project singlehandedly. Other Engineers where co-optedfrom other ministries but they were stillinadequate. Future projects that are largelyof a civil works nature require recruitmentof adequate engineers and other requisiteskills before project start to ensure smoothimplementation. Implementation andinstitutional capacity of the responsibleagency should be properly scrutinized atplanning stage and stepped up accordingly.Joint ventures such as was done betweenMAAIF and MWE should be encouraged toharness capacity where it exists.2) Allocative efficiency: For the periodwhen the project was under MAAIF, itexhibited poor allocative efficiency as over80% of the funds were being spent onoperational expenses without any tangibleoutput. Absorption was high but for lesscritical expenditures. For future projects,entities should only be allowed to spendafter establishing that they have adequatecapacity to manage and spend fundsefficiently and effectively. Value for moneyshould be promoted in donor fundedprojects.3) Decentralised planning andexecution: The relevant district officials(District Engineer, District Water Officer andDistrict Community Development Officer)were brought late in the implementationprocess. They were not fully involved inthe planning process and yet they wereexpected constantly supervise the project.The Local Governments should be broughton board at project inception stage tohelp in implementation and setting upmanagement structures at communitylevel to ensure project sustainability.Decentralized planning and executionshould be encouraged as the districts arethe final beneficiaries of the project; theyshould own it right from planning andexecution phase.Table 4.4: Irrigation Expenditure by Category 2006/7, 2007/8, 2008/9, 2009/10for MAAIF H/Q (UShs)LightEquipmentSpecializedServices andDemonstrationTrainingandCapacityBuildingVehicle andEquipmentmaintenanceGeneralOperatingExpensesTotal2006/07 67,300,500 51,353,400 4,306,698 14,427,100 137,387,6982007/08 21,555,000 285,974,000 10,960,000 37,649,400 37,714,000 393,852,4002008/09 21,698,000 212,197,000 12,531,382 335,182,120 581,608,5022009/10 38,054,213 - 40,484,629 537,485,652 616,024,494TOTAL 21,555,000 413,026,713 274,510,400 94,972,109 924,808,872 1,728,873,094Source: MAAIF data, December 2010.4.1.4 Project implementationThe only activities undertaken whilethe project was in the hands of MAAIFwere procurement of contractors andpreparation of Bills of Quantities (BoQs).The documentation was transferredto MWE in 2011 which concentratedon construction of Agoro Scheme inLamwo district, Doho Scheme in Butalejadistrict and Mobuku Scheme in Kasesedistrict. A discussion held with officials ofMWE in November 2012 indicated that 85%construction/rehabilitation works had beenachieved and construction would be completedby December 2012. The beneficiary farmerswere being trained in proper management of theschemes, including operations and maintenance.