COSTING THE MILLENNIUM DEVELOPMENT GOALS
UGANDA COUNTRY STUDY
Economic Policy Research Centre (EPRC)
51 Pool Road Makerere University Campus
P. O. Box 7841 Kampala, Uganda
Table of contents
NATIONAL DEVELOPMENT PROGRESS: 1990 – TO DATE......................................................... 1
THE POVERTY ERADICATION ACTION PLAN (PEAP)................................................................ 2
UGANDA’S EXPERIENCE WITH THE DECENTRALISATION .................................................... 5
LINKING THE MDGS AND THE PEAP –A DISCUSSION OF SECTOR PLANS.......................... 6
THE HEALTH SECTOR ............................................................................................................................... 6
HIV/AIDS ............................................................................................................................................... 8
EDUCATION .............................................................................................................................................. 9
PROGRESS TOWARDS ACHIEVING THE MILLENNIUM DEVELOPMENT GOALS ........... 10
INCOME POVERTY .................................................................................................................................. 11
HEALTH ................................................................................................................................................. 12
HIV/ AIDS ............................................................................................................................................ 13
EDUCATION ............................................................................................................................................ 15
RESOURCE REQUIREMENTS FOR THE MILLENNIUM DEVELOPMENT GOALS ............. 18
INCOME POVERTY .................................................................................................................................. 18
IMPACT OF GROWTH ON POVERTY ............................................................................................ 18
POVERTY PROJECTIONS ............................................................................................................... 19
GOVERNMENT’S COSTING OF SECTOR PLANS.......................................................................................... 21
THE OVERALL PEAP....................................................................................................................... 21
EDUCATION .................................................................................................................................... 23
HIV/ AIDS ......................................................................................................................................... 25
PROJECTIONS BY THE POPULATION SECRETARIAT ................................................................................. 26
EDUCATION .................................................................................................................................... 26
SIMULATED COSTS OF SECTORAL PLANS ................................................................................. 27
List of Tables
Figure 1: PAF EXPENDITURE BY SECTOR: 1998 – 2003. 5_______________________________iii
Figure 2. Education Budget: Sectoral Allocations. 23 _____________________________________iii
Figure 3. Indicative cost of the health sector strategic plan: 2001 – 2005. 24 ___________________iii
Table 1: Trends in Selected Macroeconomic Indicators: 1995 to 2000 _________________________ 1
Table 2: Income and Human Development in East Africa, Selected Indicators __________________ 2
Table 3: The evolution of government’s economic policy____________________________________ 2
Table 4: Uganda’s health sector and MDG health related targets _____________________________ 7
Table 5: Trends in Selected Health Indicators ___________________________________________ 12
Table 6: National Estimates of the HIV/ AIDS pandemic in Uganda _________________________ 14
Table 7: UPE enrolments (2001) ______________________________________________________ 15
Table 8: ESIP Primary Education Indicators 2001 (percentages) ____________________________ 16
Table 9. Increase in the number of rural safe water sources: 1991 – 2001. ____________________ 16
Table 10: Achievements in the provision of safe water_____________________________________ 18
Table 11: Impact of growth and inequality on poverty _______________________________ 20
Table 13: Annual costs of sector plans under the PEAP ___________________________________ 22
Table 14: Targets for the UPE programme ______________________________________________ 23
Table 15: Resource Envelope for funding the HSSP (‘000 US $) ____________________________ 24
Table 16: Cost estimate (US$) of NSF for HIV/AIDS activities by goal _______________________ 25
Table 17: Health costings under different fertility scenarios ________________________________ 26
Table 18: UPE, HIV/AIDS and Health Costings ___________________________________ 30
Table 19: Poverty headcount projections for Uganda - assuming constant growth rates
and constant elasticities__________________________________________________________ 31
List of figures
Figure 1: PAF EXPENDITURE BY SECTOR: 1998 – 2003. __________________________________ 5
Figure 2. Education Budget: Sectoral Allocations._________________________________________ 23
Figure 3. Indicative cost of the health sector strategic plan: 2001 – 2005. ______________________ 24
The paper provides an overview of Uganda’s key national development targets and
strategies, relates the targets and strategies to the Millennium Development Goals
(MDGs), and assesses the feasibility and the costs of achieving the MDGs via the
strategic sector plans that are aimed at realizing specific goals in the country’s Poverty
Eradication Action Plan (PEAP). On the basis of the progress made to date towards
achieving the national economic and human development goals, the paper concludes
that according to the base case scenario, Uganda can attain the international income
poverty targets. Similarly, the main educational goal of 100% net enrolment rate at
primary level by 2015 is achievable via the Universal Primary Education program but
spending in by 2015 will have to double the current levels. The progress made in
reducing the incidence of HIV/AIDS is sustainable – hence the associated MDG is
attainable, however, with a projected expenditure increase of about 83% over the
current levels. But the realization of the broader health sector targets such as those
pertaining to child and maternal mortality might prove more challenging because the
attainment of the country’s minimum health care requires an increase in expenditure by
more than 213% between 2001 and 2015.
The United Nations Declaration at the Millennium Summit in 2000 sets specific goals
(the Millennium Development Goals – MDGs) that are to be achieved by 2015 through
a comprehensive development agenda that broadly aims at realizing global human
development. The global cost of meeting the MDGs are estimated in the Zedillo Report
(June 2001) to be approximately US$ 50 billion per year. The recognition that there is
need for country-specific costing prompted the United Nations Development Program
to commission a series of case studies, the primary objective of which was to review
country level progress towards achieving the MDGs and estimate the financial
requirements for attaining the goals. In this paper we highlight the experiences and
project the case of Uganda in progressing towards the MDGs via the implementation of
programs that are aimed at achieving the country’s medium- and long-term economic
and human development targets.
Uganda is a low-income landlocked East African country with a per capita income of
about US$ 330 and an estimated population of 22 million. The economy is largely
dependent on agriculture, which accounts for 43% of GDP and 90% of total exports. In
addition, 80% of Ugandans derive their livelihoods from this sector. In terms of human
development, Uganda is ranked 158th out of 174 countries world-wide1. Currently, it is
estimated that 35% of Ugandans live on less than a dollar a day, and are unable to meet
their basic requirements.
NATIONAL DEVELOPMENT PROGRESS: 1990 – TO DATE
During the nineties, Uganda’s economy more than doubled, averaging a growth rate of
over 5% per annum. Annual inflation rate, which was over 100% in the late 1980s, fell
sharply, and has remained in single digits since 1993/4. Currently it is below 5%. The
country’s impressive economic performance was achieved through the implementation
of macroeconomic and structural reforms, including liberalisation of foreign exchange
and interest rates regimes, as well as the current and capital accounts. Although the
early nineties saw an increase in revenue collection, from seven to eleven percent of
GDP in four years, there has been little improvement since 1995 (table 1).
Table 1: Trends in Selected Macroeconomic Indicators: 1995 to 2000
1995/96 1996/97 1997/98 1998/99 1999/2000
GDP Growth rate 7.8 4.5 5.4 7.4 5.1
GDP per capita growth rate 4.7 1.7 2.7 4.7 2.5
Inflation rate 7.5 7.8 5.8 -0.2 6.2
Revenue (as a % of GDP) 11.0 11.8 11.5 12.3 11.9
Source: Background to the Budget, various years.
However, Uganda’s impressive macroeconomic record during the nineties was not
matched by improvements in human development indicators. The table below depicts
trends in human development for the three East African countries. It shows that
although as a result of economic growth, Uganda’s GDP per capita was higher than
Tanzania’s, and almost as high as Kenya’s, it had the lowest life expectancy and adult
literacy rates, and had the highest infant mortality rate in the region.
UNDP Human Development Report 2000.
Table 2: Income and Human Development in East Africa, Selected Indicators
Country GDP per Life Adult Infant Safe
capita (US expectancy literacy rate mortality water
$) 1995 (years), 1995 (%), 1995 Rate (1998/99) (%)
Uganda 240 40.5 62 88 46
Kenya 280 53.8 78 61 53
Tanzania 210 50.6 68 93 38
Source: Ministry of Finance, Planning and Economic Development.
Analysis of national household survey data reveals that inequality has risen since 1997,
owing to a higher income growth in urban than in rural areas and exacerbated by
insecurity-related welfare declines in rural northern region of the country. Between
1997 and 2000 real consumption levels for the richest 10% of the population grew by
20%, compared to 8% for the poorest 10%. Recognition of the fact that the benefits of
economic growth have neither been equitably distributed nor translated into significant
across-the-board improvement in the welfare of Ugandans led to a change in the policy
emphasis of government from macroeconomic management to poverty reduction. Table
3 shows the changing policy focus over the nineties, from rehabilitation and
reconstruction to efficient and effective social and public service delivery for poverty
reduction, the main goals of which are specified in the Poverty Eradication Action Plan
Table 3: The evolution of government’s economic policy
Period 1986 – 1994 1994 – 1996 1996 - 2000 2000 - date
Economic - High inflation - High rates of - Continued economic - Reduced
Situation - Lack of economic growth growth growth due
macroeconomic - Reduction in to external
stability inflation shocks
- Lack of budget
Economic - Rehabilitation - Focus on - Macroeconomic - Poverty
Policy and sustaining stability focus
reconstruction growth and - Privatisation - Improved
- liberalisation macroeconomic - Poverty focus service delivery
- deregulation stability
Source: Ministry of Finance, Planning and Economic Development.
THE POVERTY ERADICATION ACTION PLAN (PEAP)
The government’s major development plan for economic transformation and
improvement in living standards is the (PEAP). It was developed through a consultative
process that involved all major stakeholders. The first edition was adopted in 1997 and
the revised version was produced in 2000. The overall goal of the PEAP is the
reduction of absolute poverty to less than 10% by the year 2017. The PEAP has four
specific goals, under which sectoral plans and programs for poverty eradication are
articulated. The four goals are:
1) Creating an enabling environment for rapid and sustainable economic growth
and structural transformation. The main objectives of this goal are:
• Maintenance of macroeconomic stability and provision of macroeconomic
incentives for private sector development; and
• Equitable and efficient use of public resources.
2) Good governance and security. This covers decentralisation, law and order,
increased transparency, accountability for public expenditure, and public
3) Actions, which directly increase the ability of the poor to raise their incomes.
Under this, the main areas of focus are:
• Feeder roads;
• Agriculture, particularly extension services;
• Small scale enterprises;
• Vocational education; and
• Energy for the poor.
4) Actions, which directly improve the quality of life of the poor.
This is aimed at increased provision of basic social services namely:
• Health care
• Water and sanitation
• Primary education
• Adult literacy
Government’s priority spending areas have evolved from the articulation of these goals.
Under 1), private sector development has been identified as crucial to rapid and
sustainable economic growth. In order to maintain long-term growth, the rate of
investment, both foreign and domestic, needs to be increased. A key constraint to
investment is poor infrastructure. As a result, government committed itself to the
improvement of existing infrastructure, as well as the development and maintenance of
new infrastructure. The main targets in this regard are roads and telecommunication.
Spending on roads is a key budget priority, and considered crucial in the overall
poverty eradication drive. Also, other proposed measures for the creation of an enabling
environment for private sector development are contained in the Medium Term
Competitiveness Strategy (MTCS).
Under 2), the government is developing Sector Wide Approaches for the Law & Order
and Accountability components. Furthermore, reduction of court case backlog and
criminal justice system reform have been added to sectors that receive priority
programme funding under the Poverty Action Fund (PAF).
The third and fourth goals of the PEAP are the ones considered to contain interventions
that impact directly on the welfare of the poor. The goals of the PEAP are inter-linked,
so that a specific intervention identified under one goal may appear again under
another. This is the case with infrastructure, which not only contributes to the
maintenance of a stable macroeconomic environment through the promotion of private
sector development, but can also be identified as a means through which the poor’s
ability to increase their income is enhanced.
Because the majority of Ugandans are employed in agriculture, and it contributes a
significant amount to the country’s GDP, the transformation of the agricultural sector
has been identified as catalytical to overall national development. In this regard, the
government has developed the Plan for the Modernisation of Agriculture (PMA), which
aims at contributing to the fight against poverty by transforming subsistence agriculture
to commercial agriculture. Another intervention identified under goal 3) therefore, has
been the provision of agricultural research and extension services.
Health, education and water & sanitation fall under the fourth goal of the PEAP. A
direct link exists between the promotion of primary education and poverty reduction
through improved health, increased incomes and societal awareness, thereby improving
one’s ability to make better and informed choices that impact positively on welfare.
Under education, government’s spending priorities include primary education, with
emphasis on maintaining the quality of education provided while simultaneously
increasing enrolment. Similarly, health and water and sanitation are considered central
to poverty reduction and eventual eradication. Good health leads to increased
productivity, while water and sanitation contribute to good health and a better quality of
Funding for these development goals has three main sources: Government revenue;
Development aid which accounts for 53% of the national budget; and Savings from
debt relief for which a special fund was created – the Poverty Action Fund (PAF).
PAF was established in 1998 in order to channel savings from debt relief under the
Highly Indebted Poor Countries (HIPC) initiative, as well as additional funds from the
government and donors, towards key poverty eradication sectors under the PEAP.
These sectors were identified as rural feeder roads, agricultural extension, primary
education, primary healthcare, and rural water and sanitation. PAF funds are disbursed
to the districts as conditional grants, in order to ensure that they are used for key PEAP
programmes only, or remitted through the development budget.
The conditional grants channelled through PAF in 2000/01 were meant to finance rural
roads, agricultural extension, primary health care, NGO Primary Health Services,
District Water Development, and Primary Education. The PAF is therefore an effective
mechanism that helps the government to maintain focus on, and implement, key PEAP
programmes while encouraging more donors to provide budgetary support budget. All
savings from debt relief as well as additional contributions from the government and
donors are channelled into the PAF and targeted specifically to finance poverty
Figure 1 shows the composition of PAF expenditures by sector from 1998/9 to 2002/3,
where “other programmes” include funds for HIV/AIDS, accountability, agricultural
extension, micro-finance, cattle restocking, adult literacy, and environment protection..
Expenditures for 2000/1 to 2002/3 are projections, while 1998 – 1999 are out-turns.
The largest share of PAF funds is targeted at primary education. Overall, the
effectiveness of public service provision using disbursements under the PAF anchors
largely on the resource absorptive capacity of local government under the decentralized
financial management system.
Figure 1: PAF EXPENDITURE BY SECTOR: 1998 – 2003
(Billions of Uganda shillings)
1998/9 2000/01 2002/3 Rural Roads
Adapted from the Budget Speech, 2000.
UGANDA’S EXPERIENCE WITH GOVERNANCE DECENTRALISATION
Uganda’s decentralisation process started in 1993 with the primary aim of fostering
good governance through devolution of development decision-making power from the
centre to the lower levels of government. The desired ultimate outcome of the process
is a more effective poverty-reduction process through improved service delivery.
The Ministry of Local Government is responsible for the overall design, development
and facilitation of a management system that can enhance the decentralisation process.
The Ministry is supposed to co-ordinate the activities of all local governments.
Specifically, it is charged with providing supervisory, monitoring, technical assistance,
and training services to all local governments.
One of the major challenges that faced the decentralisation process arose from the
multiplicity of local-level donor funded programs that required different donor-specific
accountability systems. The establishment of a decentralisation implementation plan
that streamlined the modalities of funding and accountability minimised this problem.
The problem was further alleviated via increased subscription of donors to budget
support rather than project funding assistance programs. However, several challenges
Initially, devolution of responsibilities was not marched by disbursements of resources
from the centre. After significant efforts were successfully made to accelerate the flow
of resources from the centre, new challenges pertaining to local government resource
absorption and accountability were revealed. For example, because of corruption, only
36% of the revenue released from the centre reached the final recipient facility
according to a study conducted by the Economic Policy Research Centre in 1996. But
due to transparency (for example, publishing disbursement information in the
newspapers), over 90% of the releases now reach the local facilities.
Insufficient capacity at local levels also inhibited the local governments to plan and
deliver services using locally generated revenue and transfers from the centre.
Inadequate capacity coupled with strict central government accountability requirements
meant that even the resources that were appropriately utilised could not be accounted
for properly within stipulated timeframes.
Transfers from the centre comprised unconditional, conditional and equalisation grants.
Local governments have the leverage to utilise unconditional grants according to their
development priorities. Conditional grants constitute a major instrument through which
the national government directs local government program priorities towards poverty
reducing activities and overall national goals. Equalisation grants are special funding
provisions for the benefit of districts that fall below national standards with respect to
Because conditional grants have constituted about 80% of the transfers from the centre,
local governments do not have the power (that was supposedly devolved from the
centre) to finance programs according to their own priorities. In recognition of this,
provisions have been made in the national Medium Term Expenditure Framework to
ensure continued increases in the share of unconditional grants in the transfers. But this
requires that capacity to plan and prioritise development programs at the local level
increase more than proportionately. Furthermore, local authorities have complained that
the increases in unconditional grants are not commensurate with the growth in local
The overall implementation of decentralisation of powers and responsibilities is
undermined by the fact that local government generated revenue is on the average less
than 20% of their total revenue. The constraints in raising local revenue include lack of
capacity to assess and collect taxes, and an unfavourable central government share in
revenue collected from locally situated taxpayers. Because of limited capacity,
accountability requirement by the centre is a major bottleneck in the decentralisation
process. There are at least 26 conditional grants that have to be operated on separate
accounts, and are also to be accounted for separately, by local government. The
accountability requirement is very challenging; in many cases the local governments
have failed to comply, and have missed subsequent disbursements as a consequence.
LINKING THE MDGS AND THE PEAP –A DISCUSSION OF SECTOR PLANS
There is a lot of similarity between the millennium goals, as outlined in the Zedillo
report and the Millennium Declaration, and the specific components of the fourth pillar
of the PEAP as outlined above. The PEAP encompasses sectoral plans, which detail
sector-specific strategies for development. The plan for the education sector is called
the Education Sector Investment Plan (ESIP). The one for health is the Health Sector
Strategic Plan (HSSP). The water sector has not yet finalised its strategic plan. Below,
we examine the available plans in detail.
The Health sector
Health is a key element of social and economic growth, and in the PEAP, it is identified
as a major sector the development of which is expected to directly impact poverty. The
government has developed and defined a minimum health care package, and budgetary
allocations to health care delivery have increased. In addition, financial support has
been extended to NGO facilities operating in the health sector. This is directly in
accordance with one of the principles, which the government set for itself when
budgeting for the PEAP, namely, that NGOs would be used for service delivery if they
were the best and most cost effective providers available.
According to the Health Sector Strategic Plan (HSSP) 2001 – 2005, the delivery of
health care is to be undertaken by the district health system, in line with government
policy of decentralising services, thereby taking the services closer to the people. At the
Centre, the Ministry of Health is responsible for policy formulation, issuing standards
and guidelines, and overall supervision and monitoring. It is also responsible for
ensuring that guidance, technical support, and resources are available to the districts
and other health providers. The District Health Management Team co-ordinates all
activities, and ensures that the supplies and logistics required are available for
implementation of the programmes as designed by the Centre.
The HSSP sets out a number of targets over the stipulated five-year period. These
targets are remarkably similar to the MDGS. Table 4 illustrates the similarity.
Table 4: Uganda’s health sector and MDG health related targets
HSSP target (by 2005) MDG target (by 2015)
Reduce infant mortality from 97 to 68 per Halve under 5-child mortality. (For Uganda
1000 live births (30% reduction). this translates into a reduction from 147 to 74
Reduce under 5-child mortality from 147 to per 1000 live births).
103 per 1000 live births (30% reduction).
Reduce maternal mortality from 506 to 354 Reduce maternal mortality by three quarters
per 100,000 live births (30% reduction). (From 506 to 126 per 100,000 live births)
Reduce current levels of HIV prevalence by Begin to reduce the incidence of HIV/AIDS.
at least 25%.
The targets set out in the HSSP indicate that realisation of the MDGs would be well
within reach if they are achieved over the stipulated five-year period, and the trends
maintained thereafter. These targets are planned to be realized through the delivery of
the minimum health care package (MHCP) to the population. The MHCP is a collection
of cost effective technical health care programmes that are thought to be the most
effective way of reducing vulnerability to the major causes of death and disease in
Uganda. The programs in the package include:
1. Control of Communicable Diseases (CCD): Malaria; STD/HIV/AIDS;
2. Integrated Management of Childhood illness;
3. Sexual and Reproductive Health and Rights;
5. Environmental Health;
6. Health Education and Promotion;
7. School Health;
8. Epidemic and Disaster Prevention, Preparedness and Response;
9. Improving Nutrition;
10. Interventions against diseases targeted for elimination or eradication;
11. Strengthening mental health services; and
12. Essential Clinical Care.
Each of the above health care programmes affects the realisation of the MDGS.
However, STD/HIV/AIDS, childhood illness management, sexual and reproductive
health, and immunization are specified in the MDGs. The Integrated Management of
Childhood diseases addresses the problem of infant and under five mortality. Its
components include the control of diarrhoeal diseases, immunisation and case
management of malaria and child nutrition. These elements are responsible for 70% of
childhood illnesses in Uganda. Specific targets for each element have been set over the
five-year period, for example, the Ministry aims at halving diarrhoeal disease incidence
from 30 to 15 per 1,000, and reducing the case fatality rate from diarrhoeal diseases of
epidemic potential from 6% to 1% by 2005.
HIV/AIDS was first identified in Uganda in 1982. UNAIDS estimates that in 1999
about 1.9 million Ugandans had lived with HIV/AIDS from the onset of the disease.
Today, AIDS is responsible for up to 12% of deaths annually. It is the leading cause of
death among individuals aged 15 to 49. There are varying estimates of the level of
infection among Ugandan adults. WHO puts the figure at 10% for 1999. Projection
models based on the baseline data of 1998 and data from special population groups
shows a national sero - prevalence of approximately 7% in the general population.
In 1986 the government created an AIDS Control Program (ACP) in the Ministry of
Health as the first major step in mainstreaming HIV/AIDS in the policy circle. In 1992,
the Uganda Aids Commission was formed under the Office of the President, and
charged with co-ordinating multi-sectoral efforts against the epidemic. The government
has been open and committed to combating the spread of HIV/AIDS both internally
and internationally. In addition, a number of NGOs have also played a key role in
providing logistical support and counselling services to infected people and their
families. These concerted efforts led to an enhanced level of awareness about the
dangers and methods of prevention of the disease. As a result, national AIDS
prevalence rates declined, from 18% in the early 1990s to 8.3% in 2000.
An immediate social impact of the HIV/AIDS pandemic has been the large and
increasing number of AIDS orphans. UNAIDS estimated that by 1998 up to 1.1 million
children in Uganda had lost either one or both parents to the disease. The traditional
African extended family social network has been severely over-stretched by AIDS-
related burden. Recent data from the 2000 Demographic and Health Survey (DHS)
reveal that one in every four families rears an orphan. Orphaned children usually bear
the brunt of domestic work, and girls are especially vulnerable to HIV infection through
early marriages, defilement and sexual abuse.
AIDS has also had an adverse effect on the economy, through its decimation of the
labour force, which has affected production. The young and working adult population
(15-49 years) has been most affected by the disease. Investment in human capital has
been severely undermined by the loss of well-trained, highly skilled professionals.
Also, the time and money that has gone into treating and caring for AIDS sufferers has
had a negative impact on productivity, investment and saving.
HIV/AIDS is therefore considered to be a crosscutting aspect affecting development.
Consequently, the government has developed the National Strategic Framework (NSF)
for HIV/AIDS activities in Uganda. It runs from 2000/1 to 2005/6, and is a partnership
involving the government, the Uganda AIDS Commission, the Joint United Nations
Programme on AIDS, and other stakeholders in HIV/AIDS, including non-
governmental and community-based organizations. Among other objectives, the
National Strategic Framework aims at providing overall guidance for activities geared
towards preventing the spread of HIV/AIDS and mitigating its effects within the
framework of the PEAP. It also aims at establishing indicators for measuring the
progress and impact of anti HIV/AIDS interventions, as well as serving as the basis for
the costing and mobilisation of resources to implement the national AIDS programme.
The first goal of the NSF corresponds to the MDG for HIV/AIDS. However, it is more
specific, in that it aims at 25% reduction in the prevalence rate by 2006. The NSF has
six main objectives:
1. To promote behavioural change (abstinence, faithfulness and safer sex) among
the sexually active population, particularly young people aged 15 – 24;
2. To reduce the current risk of blood borne HIV transmission by at least 50%;
3. To reduce sexually transmitted infections by 25%;
4. To reduce the vulnerability of individuals and communities to HIV/AIDS with a
focus on children, women and youth by intensifying awareness;
5. To reduce the current risk of mother to child HIV transmission by a third; and
6. To promote therapeutic and preventive HIV vaccine development and trials in
different categories of the population.
The provision of educational services is a key aspect of government’s strategy to
improve the quality of life of the poor. The sector plan for education, as mentioned
previously, is the ESIP. It was approved in 1998 and sets out the following as the key
goals of the sector:
• To give highest priority to efficient public spending on education, with increased
levels of cost sharing at post-secondary levels;
• To increase non-salary recurrent spending levels for the sector in order to sustain
quality of services; and
• To guide communities in streamlining use of their contributions to primary
education by improving its targeting and effectiveness.
In 1997, the government of Uganda introduced the policy of Universal Primary
Education (UPE), in line with the recommendations made in the 1992 White Paper on
education. The minimum necessary facilities and resources required to achieve this goal
were to be provided by the government. These included the provision of text books for
all classes. Parents are expected to give their children meals, uniforms and stationery.
The introduction of UPE saw enrolment rates almost triple, from 2.6 million in 1996, to
6.5 million in 1999, an increase of 150%2. The challenge facing the education sector is
ensuring the sustainability of the UPE programme, as well as embarking on the
expansion of secondary school facilities early enough to meet future enrolment
demands. Within the UPE programme, the recruitment of more teachers to meet the
increased demand for education, classroom construction and the maintenance of
academic standards are the key issues demanding constant attention.
The population projections used to calculate enrolment rates are known to be too low. This is
demonstrated by the fact that net enrolment for primary: (number of pupils aged 6-12)/(number in the
population aged 6-12), is calculated to be over 100%. Until the next Population Census is undertaken by
UBOS there are no alternative population projections available at district level; rates presented should
therefore be treated with caution.
During consultations with the poor in the 1998 Uganda Participatory Poverty
Assessment Project (UPPAP), water was identified as a key requirement for welfare
enhancement in the fight against poverty. Consequently, its status in national
development plan was elevated to a programme priority area. This meant that it was
protected from budget cuts. Furthermore, with the advent of the HIPC initiative and the
creation of the Poverty Action Fund (PAF), the water sector was identified as one of the
programmed beneficiaries of these funds.
The 1997 version of the PEAP included the provision of safe drinking water to 100% of
the population by 2015 as one of its objectives in the water sector. Other objectives
included building the community’s capacity to operate and maintain water facilities,
and increasing community ownership through their participation and financial
contribution towards the construction of these facilities. According to the PEAP (2000),
by 1999, an estimated 47% of the rural population had access to safe water. However,
coverage varied across districts, with 10 districts having coverage of 30% or less.
Currents estimates from the Ministry of Water put rural coverage at approximately
54%. The National Water and Sewerage Corporation (NWSC), which is the authority
responsible for the provision of safe water and sanitation services in 12 urban centres,
puts urban water coverage estimates at about 58%.
The Directorate for Water Development (DWD) in the Ministry of Water, Lands and
the Environment (MWLE), has defined its mandate under four sub-components,
namely, rural water and sanitation, small towns water and sanitation, water resources
management and institutional development. Districts and town councils are responsible
for overseeing the management and operation of larger systems. The water sector also
has a significant number of projects that are being funded by various donors. The
government is in the process of developing a sectoral programme that will incorporate
ongoing activities into one comprehensive sector wide plan. This has already been
achieved in other sectors, and has greatly enhanced co-ordination and prioritisation of
plans and programmes.
PROGRESS TOWARDS ACHIEVING THE MILLENNIUM DEVELOPMENT
A major component of the PEAP’s monitoring mechanism is the Poverty Status Report
(PSR), which is produced every two years. It provides an overview of the poverty
situation, and the status of anti-poverty programmes. Based on evidence on the progress
in implementing the national anti-poverty agenda, the report identifies challenges
requiring urgent attention in order for the anti-poverty program to proceed successfully.
To date, two issues of the PSR have been published. The first one was released in 1999,
and the second in 2001. In each issue of the PSR, the progress towards achieving the
goals outlined in the PEAP is discussed. In this section we review the achievements to
date in each sector in order to provide an indication of the progress being made towards
meeting some of the MDGs.
The approach adopted by the government to realise a reduction in income poverty is
generally welfaristic in nature, and has paid off significantly in the sense that
consumption expenditure as a measure of welfare has steadily increased since 1992.
Estimates from the 1999/2000 national household survey data indicate that real
consumption per adult equivalent grew by about a third in rural areas and by about one
half in urban areas between 1992 and 2000 (Appleton, 2001). Between 1997 and 2000
alone, consumption rose by 22%.
However, there are three distinct disparities that are worth noting, using the 1997/98
and the 1999/2000 survey data. First, the growth was urban biased because there was a
42% increase in real consumption per adult equivalent in urban areas as compared to
15% in rural areas. Second, whereas consumption expenditure for the richest 10% grew
by 20%, that of the poorest 10% grew by only 8%. In urban Uganda, although the
welfare gain from the economic reforms of the nineties was more pronounced (37%)
among the richest 10%, there was a substantial gain (24%) among the poorest 10% as
well. Third, regional imbalance between the North and the rest of the country has
persisted at a deteriorating rate as evidenced by the result that it was only in the North
where per capita consumption declined between 1997 and 2000. The picture is
expected to have been worse if the war-ravaged northern districts of Gulu and Kitgum
were included in the analysis.
According to the income poverty lines developed from the national household survey
data, poverty declined from a national average of 56% of Ugandans being unable to
meet their basic requirements in 1992 to a corresponding figure of 35% in 2000.
Although at a much lower rate, the rural areas also registered a decline in the
percentage of poor people, from 60% in 1992 to 39% in 2000. In urban areas, poverty
declined by about the same percentage points as was the case at the national level –
from 28 to 10 percent between 1992 and 2000. On the whole, poverty in Uganda is
largely a rural phenomenon, with 96% of the poor found in the rural areas in 2000 – up
from 93% in 1992.
A regional perspective of poverty in Uganda shows that poverty is highly concentrated
in the Northern region, where poverty headcount initially declined from 72% in 1992 to
59% in 1997 after which it rose to 65% in 2000. Although Northern region is home to
only 19% of Uganda’s population, its share of the country’s poor is 35%.
A disaggregation of the national poverty trend by economic sector indicates huge
disparities in the ability of different socioeconomic groups to exploit the economic
opportunities created by the enabling (largely macroeconomic) environment in the
country. Of the sectors reported by household heads as the main areas of household
heads’ economic activities, the food crop sector was found to be the poorest in 1992.
Poverty headcount in this sector declined from 65% in 1992 to 35% in 2000 (Appleton,
2001). Although cash crop farming was the second poorest sector in 1992, it
experienced a substantial decline in poverty from 62% in 1992 to 30% in 2000. It was
in manufacturing and trade where the greatest proportionate decline in poverty occurred
during the same period.
These trends in income poverty reveal that the economic reform programs that Uganda
embarked on from the beginning of the last decade generated substantial welfare
increasing opportunities that enabled a significant fraction of the population to move
out of poverty. However without specific measures to address welfare inequality, the
full potential of growth-led economic reform programs to reduce poverty will not be
achieved as illustrated in the next section.
Evidence from the Uganda National Household Survey data shows that the Gini
coefficient measure of welfare inequality declined from 0.36 in 1992 to 0.35 in 1997
(Appleton, 2001). But this change is not statistically significant (Okidi et al., 2000).
Furthermore, by 2000 welfare inequality in Uganda had increased to a Gini index of
0.38. The insignificant decline in welfare inequality between 1992 and 1997 followed
by the upward swing after 1997 has important policy implications of the welfare
growth and distributional impacts of Uganda’s reform programs.
Applying standard decomposition analysis, Appleton (2001) estimates that had there
been no growth between 1992 and 2000 poverty would have increased by a three-
percentage point. The same analysis shows that within the shorter period between 1997
and 2000 poverty would have increased by about a four-percentage point if there had
been no growth.
The growth that Uganda experienced during the nineties led to significant welfare
improvements and reduction in poverty, irrespective of the choice of a poverty line
(Deininger and Okidi, 2001 and Okidi et al., 2000). This issue is explored further in a
later section by providing a basis for estimating various levels of poverty under
different growth scenarios with and without controlling for welfare inequality.
An improvement was registered in child health indicators between 1991 and 1995.
Since then, however, a declining trend has been observed (table 5).
Table 5: Trends in Selected Health Indicators
INDICATOR 1991 1995 2000
Infant mortality rate (per 1000 live births) 122 81 88
Under 5 mortality rate (per 1000 live births) 180 147 152
Full immunisation coverage (%) 31 47 38
Stunted children under 5 years (%) 45 38 39
Source: Selected Indicators of Uganda’s Population, Population Secretariat.
Various attempts at explaining these negative trends have been made3. It is thought that
the poor performance of the sector is due to the delayed review of to the poor reform
policies that governed the health sector in the 1980s, as well as the circumstances and
fragmented nature of the sector during this period. Another school of thought argues
that certain prerequisites outside the control of the sector have had a direct negative
bearing on health service delivery. The prerequisites include peace, income, education,
food, and access to safe water. Although government has made social service delivery
one of its key priorities, the policy change is quite recent, and therefore may not enable
revamping the structure of this sector in the immediate run.
See Uganda Health Bulletin, Vol.7, No.4, Oct – Dec 2001.‘The paradox of Uganda’s poor and
worsening health indicators in the era of economic growth, poverty reduction and health sector reforms.’
The stagnation in the number of deliveries supervised by trained medical staff is
thought to be a major cause of increased child and infant mortality, and little changing
maternal mortality. Participatory research has attributed these trends to the attitudes of
health workers, who allegedly discriminate against women because they do not have
money to pay for services compared to men, in addition to embarrassment by the health
workers. Health workers have also been known to solicit bribes for attending to
patients. All these factors discourage women from seeking professional help.
Poor health indicators have also been attributed to the significant decline in
immunisation coverage. Between 1994/95 and 1998/99 immunisation coverage rates
for all the major diseases affecting infants dropped significantly. Measles fell from 82
to 49%, DPT from 74 to 46%, BCG from 96 to 69%, and tetanus for pregnant women
from 74 to 38%4. The fall in immunisation rates has been blamed partly on the
changing structure of service delivery mechanism through the ongoing implementation
of decentralisation policy. Shifts in donor priorities have also contributed to this
negative trend. In 1997, UNICEF stopped paying for vaccinations. While resources
could easily have been shifted from the Centre by government, it was more difficult for
all the districts to individually shift resources. Indeed, many districts failed to do so.
Thirdly, there has been a reduction in national support for the immunisation program,
as a result of public misconceptions and ignorance about the merits of immunisation.
Other contributing factors include limited community involvement and inadequate
However, the Ministry of Health is optimistic that the next round of statistics will
present a more optimistic picture. According to its Health Policy Statement for
2001/02, the Expanded Programme on Immunisation is gaining momentum. Mass
measles and Vitamin A supplementation campaigns were implemented in 18 districts,
with an average coverage rate of 80%. In addition, the two rounds of polio
immunisation carried out in August and September 2001 both achieved national
coverage rates of over 100%. More efforts need to be expended in training health
workers in attitudinal and behavioral change, and in implementing pay reform
recommendations. A provision for health workers’ lunch allowances has been included
in the health sector budget as an incentive for improving the quality of service.
Table 6 gives AIDS statistics for different population groups in 1999 and 2000. The
estimates are based on projection scenarios by the Surveillance Unit of the Sexually
Transmitted Disease (STD)/AIDS Control Program (ACP) Surveillance Unit. Estimates
of the number of new AIDS cases has dropped from 112,000 to 99,081, an 11.5%
decrease, while the cumulative number of AIDS deaths has increased by 1.25% from
838,000 to 848, 492 during 1999/2000.
UNEPI 1999, ‘Immunisation Coverage for children aged 12 – 24 months, 1994 – 1997’, Entebbe.
Table 6: National Estimates of the HIV/ AIDS pandemic in Uganda
No. of people living New AIDS cases Cumulative AIDS deaths
with HIV/AIDS since the epidemic began.
1999 2000 1999 2000 1999 2000
Women 761,300 543,753 54,982 48,640 411,382 416,510
Men 532,900 453,127 45,818 40,533 342,818 347,090
Adults 1,294,200 996,880 100,800 89,173 754,200 763,600
Children 143,800 110,880 11,200 9,908 83,800 84,892
< 15 yrs
TOTAL 1,438,000 1,107,644 112,000 99,081 838,000 848,492
Source: HIV/ AIDS Surveillance Report, June 2001
The Surveillance Unit publishes annual reports on the national HIV/AIDS status.
According to the latest report (June 2001), prevalence rates have continued to decline at
different surveillance sites all over the country. The weighted overall antenatal
prevalence rate fell from 6.8% in 1999 to 6.1% in 2000. This rate was skewed towards
urban areas, where the weighted average fell from 10.9% in 1999 to 8.7% in 2000,
compared to rural areas where it fell from 4.3% in 1999 to 4.2% in 2000.
The health sector has continued to play a leading role in the struggle against the
HIV/AIDS pandemic. Since 1999/2000 several strategic actions have either been
maintained or initiated:
• A strong Information, Education and Communication (IEC) campaign has been
maintained to keep the level of awareness in the population high.
• Government procured infection drugs under the STI Project for managing the major
opportunistic infections including TB. The drugs were distributed throughout the
country to all health units including NGO facilities.
• Home based care, voluntary counselling and testing and HIV surveillance are
ongoing and being strengthened.
• Infrastructure and capacity to monitor those on anti-retro-viral drugs (ARVs) is
steadily expanding. Patients can now access the drugs at major AIDS clinics and
centres, as well as the national referral hospital. Efforts are being made to extend
this facility to the regional referral hospitals. Unfortunately, the high cost of AIDS
drugs is a binding constraint for many people. Currently, costs of treating one
patient per month range from US$214 (370,000 Ug. Shs) to US$ 740 (1.28 million
Ug. Shs). These estimates do not include laboratory and other accompanying costs.
• The 20 HIV sentinel surveillance sites remain functional. A new strategy for HIV
surveillance (second generation sentinel surveillance) was launched to track HIV
infection in the lower age group.
• The Palliative Care Centres started training district medical officers, ward nurses
and community nurses in palliative care for people with AIDS.
• Distribution and procurement of adequate numbers of condoms is ongoing.
• Interventions on mother to child HIV transmission prevention have started in two
districts, Kampala and Arua. Districts of Kabale, Mbale, and Gulu are being
considered for this initiative.
• Vaccine trials that started about two years ago are ongoing.
In 2000, the government identified the control of HIV/ AIDS as a priority area eligible
for funding under PAF. It has also been proposed, and it is being debated, that each
sector earmarks a certain amount of funds for AIDS activities.
The high enrolment rates resulting from UPE has necessitated construction of more
classrooms, training and recruiting of more teachers and the provision of more
instructional materials. The main delivery modality for classroom construction has been
the School Facilities Grant (SFG) programme, which is a community based
decentralised initiative. The national requirement is that 147,151 classrooms will have
been built by the end of the ESIP period, and a corresponding 147,151 teachers
employed. However, the available resources can only allow 24,657 classrooms to be
built by 2002/3. This leaves a deficit of 68,999 classrooms. With effect from 2001/02,
local governments are also required to use 15% of their SFG to build teachers’ houses
In December 2000, a massive teacher recruitment exercise was launched, aimed at
increasing the number of teachers in order to fill existing vacancies. Between May and
September 2001, 10,515 teachers were added to the government payroll. 3,000
unqualified teachers5 were also recruited and enrolled in a three-year in-service training
programme under the Teacher Development Management System (TDMS).
Table 7 shows primary enrolment rates by gender for 2001. There are more males
enrolled than females, and the difference in each class gets more pronounced with class
level. This shows that girls are more likely to drop out of school than boys, a reflection
of the various social and cultural disadvantages that girls face. However, in the
formulation of the UPE policy, a specific provision was made to address the issue of
gender imbalance. Where there were both boys and girls in a family, at least two of the
four eligible children were required to be girls. This stipulation went a long way in
addressing the gender inequality that existed in primary education. Furthermore,
children with disabilities had priority over able-bodied children, and orphans were
entitled to free tuition.
Table 7: UPE enrolments (2001)
Class Male Female Total Proportions (%)
P1 803,803 797,005 1,600,808
P2 551,453 537,072 1,088,525 58%
P3 537,622 526,931 1,064,553
P4 488,468 478,142 966,610
P5 408,509 384,272 792,781 42%
P6 316,162 282,382 598,544
P7 228,385 179,337 407,722
Total 3,334,402 3,185,141 6,519,543 100%
Holders of ‘Ordinary’ and ‘Advanced’ level certificates.
Source: Ministry of Education and Sports.
Table 8 shows that although girls have a higher survival rate than boys for the lower
classes, the situation is reversed in the higher classes. Anecdotal evidence suggests that
this could be due to lack of adequate sanitation facilities in schools. The majority of
toilets in schools lack doors or shutters that provide any form of privacy. Others are
mixed sex toilets. These are very unfavourable conditions for older girls who require a
certain degree of privacy especially with the onset of puberty. Other possible causes of
dropping out have been identified as inability to afford school uniform, and the absence
of school lunch.
Table 8: ESIP Primary Education Indicators 2001 (percentages)
INDICATOR MALE FEMALE OVERALL
1. Apparent (gross) intake rate: new entrants in 28.32 28.48 28.29
primary grade as a percentage of the population of
official entry age
Net intake rate: new entrants to primary grade 1 68.98 71.51 70.05
who are of the official primary school – entrance
age as percentage of the corresponding population
132.91 127.76 129.85
Gross enrolment ratio (primary)
75 80 77
Percentage of primary school teachers having the
required academic qualifications
9 9.5 10
Repetition rates for primary school
61 62 61.5
Survival rate to Primary 4 (percentage of a pupil
cohort actually reaching Primary 4)
Survival rate to primary 7 (percentage of a pupil 67 59 64
cohort actually reaching Primary 7)
Source: Ministry of Education and Sports.
Over the past ten years, the water sector has expanded to provide services in a number
of key areas. The number of people in rural areas having access to safe water rose from
2.5 million to 10 million over the past decade. Table 9 gives a breakdown of the
increase in the number of safe water sources between 1991 and 2001.
Table 9. Increase in the number of rural safe water sources: 1991 – 2001.
Safe Water Source 1991 1996 2001
Protected Springs 4,329 15,081 19,029
Deep Bore holes 7,613 12,982 17,905
Shallow wells - 1,364 4,576
Gravity Fed Schemes (Public taps) 6 (50) 67(640) 129(3,384)
Population served 2,553,369 6,191,857 10,383,270
Coverage 18.4% 39.4% 53.8%
Source: Directorate of Water Development (DWD)
In rural areas, household sanitation coverage increased to 50% through improvements
in household latrines, as a result of intensified mobilisation and concerted hygiene and
School sanitation has also been improved. With the advent of UPE, the government
made budgetary provision for this. As a result, by June 2000, 4,206 latrines and 950
rainwater tanks had been constructed in primary schools all over the country. It is
increasingly being recognised that rainwater harvesting is one of the key strategies
through which the goal of safe water for all can be achieved. The Uganda Rainwater
Association (URWA) is an NGO working in this area. It complements government
efforts in the promotion of rainwater harvesting through the provision of advisory and
technical support, networking and advocacy.
In urban areas, coverage improved from 20% in 1986 to 58% in 2000. This involved
the rehabilitation of existing facilities, as well as the construction of new ones.
Sewerage facilities were also revamped by NWSC, increasing sewerage coverage in
Kampala from 3% to 6%. Other towns, like Masaka, Mbarara , Tororo, Mbale, Kasese
and Fort Portal also had their systems expanded.
A Department for water resource management was created in the Ministry of Water,
Lands and the Environment. It has instituted the following measures to ensure
sustainable water use.
1) Introducing the water permit system to regulate the use of water resources. Under
this arrangement, permits are issued for water abstraction, waste discharge, drilling
and construction. To date, 142 permits have been issued for these activities, and a
2) Regular monitoring of surface and ground water resources, as well as water quality,
so as to provide the data needed for proper management. Databases have also been
established for these activities.
3) Carrying out water resource assessments in a number of areas. These include
hydropower development, water supply, valley dam and tank design, pollution
control and low water flow. In the last two years, six water resource assessment
studies have been completed, as well as the evaluation of a number of
Environmental Impact Assessment (EIA) reports.
4) Regional collaboration under the Nile Basin Initiative and the Lake Victoria
Environment Management Programme. These initiatives provide opportunities for
harnessing the benefits of shared water resources.
Table 10 depicts sector performance for the financial year 1999/2000. From the table, it
can be seen that although the sector over-performed in extending coverage, it did not do
so well in areas concerning protection of water sources. This showed that communities
were more oriented towards developing new water projects, and less keen on
rehabilitating and maintaining old ones. Indeed, the maintenance of communal assets
has proved to be a challenge in other sectors as well, for example, roads. Consequently,
more emphasis is being placed on community participation and ownership, so as to
build a sense of collective responsibility towards shared resources.
Table 10: Achievements in the provision of safe water
Activities Water coverage (%)
1999/2000 Boreholes Springs Shallow wells Rural Urban
drilled protected protected
Target 1,060 900 1,000 49 60
Achieved 1,540 561 643 49.8 60.3
Source: PEAP, 2000.
Although one of the key sector goals had been to ensure that water was within easy
reach of 75% of the rural population by the year 2000, this target has not been met.
Officials in the water sector blame the slow progress on decentralisation. According to
them, between 1991 and 1995, they doubled coverage from 18% to 36%. However,
over the last five years they have only been able to add another 14% coverage. The
slackness is attributed to lack of implementation capacity at the district level, and the
receding water table, which has increased the cost of drilling.
RESOURCE REQUIREMENTS FOR THE MILLENNIUM DEVELOPMENT
This section discusses several projections of some of the indicators for the MDGs and,
where possible, estimates of the associated financial requirements are provided. We
start with a discussion of income poverty, and make poverty projections under different
growth scenarios. Next, we review the costing contained in the government sectoral
plans for each of the relevant areas – water, health and education, followed by a review
of similar analytical work done by the Population Secretariat. Lastly we provide own
calculations and projections for sector goals based on available information for each
Impact of growth on poverty
Our analysis of growth and poverty is drawn from the study on welfare and inequality
done by Okidi et al. (2000). Although the study is limited to Uganda National
Household Survey data for the period 1992 to 1997, the parameters it presents are
sufficient to serve as a basis for projecting and discussing growth-based cost
implications of achieving the MDG of halving income poverty by the year 2015.
The impact of growth on poverty, while controlling for its distributional aspects, is
demonstrated in this section based on analysis that exploits a five-year time series of
cross-sectional data to construct rural/urban sub-regional panels. Although five years is
a relatively short period to establish the long-term relationship between key economic
variables, the results of the analysis provide useful insights on the responsiveness of
poverty to growth and inequality.6
The use of the available household survey data to monitor changes in living standards
has relied on household consumption expenditure as a measure of welfare. Researchers
The results of the regression analysis do not depict any causality; they are simply a measure of
correlation between growth and poverty.
use adjusted household consumption expenditure and the poverty lines generated by
Appleton (1999) to calculate sub-regional poverty headcounts, mean consumption
expenditures and Gini coefficients based on rural/urban categorization. The
consumption expenditure data is measured in 1989 shillings to adjust for intertemporal
nominal price changes.7 Variation in regional price movements is also accounted for by
adjusting the expenditure data using regional price indices.
If mean consumption expenditure in a given sub-region is equal to the corresponding
sub-regional poverty line then it means that on average households barely meet their
basic needs. Growth is therefore measured as changes over time in household
consumption expenditure per adult equivalent as an indicator of households’ ability to
meet basic needs.
The work from which this section is derived divides each of the four regions of Uganda
into rural/urban sub-regions using data from the five consecutive annual surveys
(1992/93 to 1996/97) to yield forty observations that are used in a regression equation
to estimate the impact of growth and inequality on poverty headcount. A double log
specification is applied to the data such that the estimated correlation coefficients are
directly interpreted as the elasticities of poverty with respect to growth and inequality.
The results of the estimated correlation are presented in Table 11.8
The estimation results indicate that growth and its distributional aspects are strongly
correlated with poverty incidence at any level of statistical significance. Controlling for
inequality, a one-percent increase in real mean consumption expenditure per adult
equivalent reduces poverty headcount index by 1.67 percent. From Appleton’s (1999)
adjusted consumption expenditure data, there was a national increase of 16.5% in mean
consumption expenditure per adult equivalent between 1992 and 1997. During this
period, poverty headcount ratio declined by a twenty-one percentage point, from 0.56
to 0.44. Using the estimated elasticity of poverty to distribution-neutral growth, the
16.5% increase in mean consumption expenditure would have resulted in a twenty-
eight-point decline in the poverty headcount index (more than the above-referred
twenty-one point change).
The difference between the two percentage-point changes in the headcount index could
be explained as follows. Whereas the estimation procedure for the twenty-eight-point
change controls for inequality, the twenty-one-point change is arrived at without
holding inequality constant. Furthermore, in as far as inequality was high in 1992 and
did not change significantly thereafter, we can appeal to Ravallion’s (1997) proposition
that the higher the initial level of inequality, the less elastic poverty is with respect to
growth. Essentially, the persistent welfare inequality during the period of analysis did
not enable a fuller response of poverty to growth.
Appleton (1999) verifies that the Uganda poverty line is approximately equal to one dollar per day in
per capita terms in constant 1985 PPP dollars.
The various specification test statistics presented in the table show that: (i) at the four percent level of
significance, the null hypothesis that there are no sub-regional fixed effects is accepted; (ii) there are no
random effects that are sub-region specific; and (iii) the differences in correlation coefficients in the
fixed versus random effects models are not systematic. These test results dictate that the ordinary least
squares estimates are not only consistent but are the most efficient. We therefore base the interpretation
of the poverty impact of growth and inequality on the OLS results with robust standard errors.
On the basis of the above-discussed relationship between growth and poverty, we can
make predictions about poverty level for a given rate of growth. The key statistic to use
in this regard is the elasticity of poverty with respect to growth. The elasticity of
poverty headcount to growth, holding inequality constant, was estimated at –1.67
(Okidi et. al, 2000). In addition, we estimate an elasticity of –1.39 when changing
inequality is allowed for (Table 12). The elasticities from both specifications are much
higher than the -0.59 that was estimated by McGee (2000) who used four years of the
Uganda National Household Survey data to construct regional level variables yielding
only sixteen data points. The McGee study applies OLS methods with log of poverty
headcount as the left-hand-side variable and log of mean consumption expenditure as
the right-hand-side variable.
The estimated elasticities (–1.67 and –1.39) that we apply in this paper are within the
poverty elasticity of -1.5 estimated by Hanmer and Naschold (2000) for low inequality
developing countries under broader-based growth scenario.9
Table 11: Impact of growth and inequality on poverty
Dependent variable: Log of poverty headcount index
OLS Fixed Effects Random Effects
Coefficient P-value Coefficient P-value Coefficient P-value
Log of MCPAE** -1.6681 0.0000 -1.8739 0.0000 -1.6750 0.0000
Log of Gini coefficient 1.3622 0.0000 1.1550 0.0000 1.2972 0.0000
Constant 15.6148 0.0000 17.2846 0.0000 15.6098 0.0000
Number of observations = 40
F-test for fixed effects F(7, 30) = 2.511; P-value = 0.037
Breusch and Pagan Lanrangian multiplier test for random effects, chi2(1) = 1.58; P-value = 0.2086
Hausman Chi-squared specification test for fixed versus random effects, chi2(2) = 2.76; P-value =
Source: Okidi et al.(2000).
**MCPAE = mean consumption per adult equivalent.
Table 12: Impact of growth on poverty, allowing for inequality
Dependent variable: Log of poverty headcount index
Log of MCPAE** -1.3946 0.0000
Constant 11.6725 0.0000
Number of observations = 40
Source: Authors' estimation using 1992 - 1997 survey data
**MCPAE = mean consumption per adult equivalent.
The relevant comparison to make in this regard is between the elasticity of –1.39,
which was generated without holding inequality constant and the –1.5, which was
estimated using a similar specification. The two elasticities are within range for
practical purposes. The elasticity of –1.39 also compares well with the –0.82 that
Broader-based growth scenario makes the following assumptions: the maintenance of low level of
inequality; a more open economy, especially with respect to trade; investment which grows faster than
the labor force; efficient use of capital to complement labor-intensive production techniques; and faster
productivity growth in agriculture than in manufacturing and services.
McGee (2000) site as the figure for Sub-Saharan Africa – for low inequality countries.
Where low inequality in this case is defined to mean a Gini coefficient of less than
Given that inequality reduces the impact of growth on poverty and given that Uganda’s
Gini coefficient was estimated at 0.38 for 2000, coupled with the fact that Uganda’s
economy has performed much better relative to other Sub-Saharan African countries, it
is not surprising that Uganda’s poverty elasticity is higher than that for the combined
low-inequality Sub-Saharan African countries. Therefore, on the basis of the growth
path of Uganda since the early nineties, reinforced by its current policy emphasis on
pro-poor and private sector led growth, it is realistic to adopt the broader-based growth
scenario for the Uganda case study of meeting the MDGs. Furthermore, there are no
signals of potential policy reversal in Uganda. However, because growth initially takes
on a rapid path in response to opening up of the economy, infrastructure reconstruction,
and restoration of investors’ confidence, it is crucial that the poverty impact of different
growth scenarios be simulated.
The projections of poverty headcounts based on different growth rates that are initially
assumed to remain constant over time are presented in table 19. We use the results to
assess the country’s potential to meet both its target of reducing poverty to less than
10% by 2017 and the millennium goal of reducing poverty to 17.5% in 2015 from its
2000 level of 35%.
According to the simple simulation, if inequality remains constant, any rate of growth
from 4.5% to 7% would enable Uganda to meet both the millennium poverty goal and
its own 2017 goal, as long as the responsiveness of poverty to growth is 1.67%.
However, if we allow for inequality (which has been increasing in recent years), the
impact of growth on poverty is reduced to 1.39%. At this level of responsiveness,
Uganda still meets the millennium poverty goal if the economy grows by at least 3.5%
per annum. However, if the responsiveness of poverty to growth in Uganda was to taper
off to the Sub-Saharan African rate of 0.82%, then a minimum growth rate of 5.5%
would be needed to achieve the poverty MDG. But under this scenario the country
would not achieve its more ambitious country goal of reducing poverty headcount to
less than 10% by 2017 unless its annual growth rate jumps to at least 9%.
What are the associated costs for the different scenarios highlighted above? This is an
issue that the country study team is still to resolve. But given Uganda’s experiences
during the nineties, the Medium Term Expenditure Framework (MTEF) could provide
a good basis for cost requirements.10 After all it is the MTEF that has been
implemented to yield the realized growth and poverty reduction patterns.
Government’s costing of sector plans
The overall PEAP
In costing and budgeting for the implementation of the PEAP, the government sets the
following principles to guide its intervention:
The MTEF is a rolling three-year spending plan that provides links between priority spending areas for
the mid-term, available resources, and immediate expenditure. Operating within the framework ensures
that the government spends money according to its most pressing priorities and needs, while
simultaneously remaining within budgetary limits.
• It would only intervene where markets functioned poorly or produced few
• It would operate as cost effectively as possible, and use NGOs for service delivery
if this was the best available option. This has been done for health and agriculture.
• It would ensure that donor aid was concentrated on government priorities.
• It would ensure that cross cutting issues – gender, the environment and children’s
rights were taken into consideration.
• Strategies followed would be guided by the design of necessary inputs and outputs
required for the formulation of sector-specific outcomes.
The emphasis by government on non-intervention underlines its decision to oversee and
regulate without direct participation using specific measures in any given sector. In its
role as an overseer and regulator, government recognises that improved service delivery
is key to the betterment of the population’s welfare.
The costs of the sector plans under the PEAP are estimated on an annual basis, with
investment costs included as part of the annual funding requirements for delivering
programmes over a five or ten year period. Estimates of recurrent costs are also made
on a similar medium- to long-term perspective. Furthermore, existing implementation
capacity or absorptive constraints are projected to be alleviated in the next five years.
The costs of pay reform, which has been identified as an essential component of
successful service delivery, have been incorporated into each sector’s costing. As a
result, one of the largest cost components in the PEAP is that of implementing the
recommended 72% pay increase for primary teachers, from 72,000 Uganda shillings
(US$ 42) to about 123,840 Uganda shillings (US$ 73) per month. This item alone
would require 99 billion shillings a year (about US$ 57 million).
Table 13 shows the costs of the sector plans according to the PEAP based on sectoral
plans, on an annual basis, for some of the sectors concerned with the realisation of the
MDGs. HIV/AIDS, maternal and infant mortality are aggregated under the health
sector. However, HIV/AIDS qualifies for funding as a separate item under the Poverty
Action Fund (PAF), given the crosscutting nature of the disease, and the multi-sectoral
approach that has been adopted in the design and implementation of the anti-HIV/AIDS
Table 13: Annual costs of sector plans under the PEAP
Sector Scenario One Scenario Two
Current spending PEAP requirement
Ushs (bns) US$(mills.) Ushs (bns) US$ (mills.)
1 Education 413 243 788 464
O/w Primary Education 236 139 519 305
2 Health 226 133 421 248
3 Water and sanitation 89 52 212 125
Source: PEAP, 2000.
Of the three sectors in table 13, water and sanitation is currently the most under-funded,
receiving less than half of its estimated cost requirement under the PEAP. This is due to
a number of factors. Initially, only education and health were identified as key sectors
in the fight against poverty – leaving out the water sector. But after participatory
poverty assessment exercises identified water and sanitation as key contributors to well
being, the sector was accorded high priority status. Consequently, funding levels were
also revised, and although funding for the sector has gained momentum, it is still much
lower than the required estimate.
Over the last three years, spending on primary education has more than tripled. This
sector enjoys a lot of support from donors, with DfID, USAID, the Netherlands, Ireland
and the EU providing substantial budgetary support to it. The budget for education
comprises 31% of the discretionary recurrent budget and 27 % of the entire government
budget. Primary education is classified as a priority area under the Poverty Action
Fund, and as a result, has greatly benefited from the HIPC debt relief initiatives. Within
the education sector as well, the greater share of the budget has been appropriated to
primary education, as shown in Figure 2.
Figure 2. Education Budget: Sectoral Allocations.
Adapted from the Budget Framework Paper 2000/01 – 2002/3
Note: TVET stands for Technical and Vocational Education and Training.
However, according to the PEAP, annual spending to the tune of 519 billion shillings
on primary education is required if set targets are to be met. Currently, only 236 billion
Uganda shillings is being spent. This leaves a shortfall of 283 billion Uganda shillings.
The two programmes that require the bulk of this funding are classroom construction
and pay reform for primary teachers. Table 14 outlines target and current levels of
primary education indicators.
Table 14: Targets for the UPE programme
Target Implications if current funding levels are
Pupil: teacher ratio 40:1 Pupil: teacher ratio remains at 55:1
Each class to have its own classroom Will take 10 – 15 years to achieve.
within 5 years Current classroom pupil ratio is 104:1
Pay increase of 72% for teachers Not possible
One 2-volume set of text books per pupil Will take more than 20 years to achieve
within 5 years Currently thought to be about 6:1
Source: PEAP 2000
The Ministry of Health estimates that 954 million US dollars is required to implement
the sector’s plan (HSSP), with an average annual cost of 190 million US dollars. Of this
amount, delivering the minimum health care package (MHCP) is estimated to cost 649
million US dollars, with an average annual cost of about 130 million US dollars. Figure
3 depicts the funding requirement and illustrates the proportion of the MHCP in the
sector’s estimated annual cost.
Figure 3. Indicative cost of the health sector strategic plan: 2001 – 2005.
Yr 1 Yr 2 Yr 3 Yr 4 Yr 5
O th e r co s ts 49 6 1 .7 6 8 .9 6 8 .9 5 7 .5
MH C P 1 0 9 .6 1 1 6 .9 1 3 8 .3 1 3 9 .7 1 4 3 .6
Adapted from the HSSP: 2001 – 2005
The breakdown of the available resource envelope and the budgetary shortfall are
provided in table 15. For 2002/3 and 2003/4, the HSSP has a deficit of about 2 and 3.5
million dollars respectively. However, it is possible that this shortfall can be met by the
surpluses of the first, second and fifth years of the HSSP.
Table 15: Resource Envelope for funding the HSSP (‘000 US $)
Year 1 Year 2 Year 3 Year 4 Year 5
Total resources 159,622 180,822 205,047 205,047 205,047
O/w GOU/ Donors 141,731 162,931 187,156 187,156 187,156
Communities/NGOs/Local Revenue 17,890 17,890 17,890 17,890 17,890
Total costs 158,794 178,609 207,175 208,631 201,059
Resources Minus Costs 828 2,212 (2,128) (3,585) 3,988
Adapted from the HSSP: 2001 – 2005
The World Health Organisation recommends a minimum expenditure level of US$ 12
per person per annum. Although the PEAP estimates currently stand at only one half of
the WHO recommended amount, the government plans to increase it to US$ 11 dollars
per person in the medium term.
Government’s allocation to the health sector has increased steadily over the past ten
years – from 2.5% of the national budget in 1987/88 to 9% in 1997/98. In addition, the
Primary Health Care Conditional Grant has increased from 1.7 billion for 1997/8 to 6.4
billion for 1998/99. Grants to NGO hospitals have also increased from 1 billion
shillings for 24 hospitals in 1997/8 to 1.9 billion in 1998/99 for 42 NGO hospitals, with
an additional 1 billion shillings for lower level NGO health units11.
The total cost of the activities of the National Strategic Framework (NSF) for
HIV/AIDS for the period 2001 to 2006 is estimated at US$ 181,466,030. Of this, 16%
is expected to be financed under the HSSP, while 16 to 30 percent are planned to be
funded under other sectoral programs. Overall, the NSF has a funding gap estimated to
range between US$ 94m and 122 million. It is hoped that this gap will be reduced by
funding contributions from NGOs, which are not included in the above-referred
funding estimates. Table 13 gives a breakdown of the cost of implementing the NSF by
Table 16: Cost estimate (US$) of NSF for HIV/AIDS activities by goal
Goals 5yr cost estimate %
25% reduction of HIV infection by 2005/6 83,707,680 46.1
Mitigation of effects of HIV/ AIDS 59,672,693 32.9
Strengthening national capacity for response. 38,085,657 21.0
Source: NSF for HIV/ AIDS Activities in Uganda 2000/1 to 2005/6.
The first goal in Table 16 corresponds to the MDG goal of beginning to reduce the
incidence of HIV/ AIDS. Its importance is underlined by the fact that almost half of the
total estimate for the NSF is dedicated to it.
The identification of water and sanitation as a key sector in poverty eradication has
resulted in substantial increase in resource allocation to this sector. The entire funding
for the water sector comes from the Poverty Action Fund (PAF). Districts are eligible
for district water development grants that are supposed to be used to facilitate the
provision of water and sanitation to rural areas and small towns with populations of less
than 5000 people. These grants will amount to 23, 42.4 and 48.78 billion shillings for
the period 2000/01, 2001/02 and 2002/03 respectively. In addition, the government has
introduced conditional grants for the operation and maintenance of water systems to
local governments, for example, the rehabilitation of boreholes.
Besides conditional grants there are a number of other donor-supported funding
programmes and projects, which are expected to continue into the medium term in spite
of the general move from project to sector budget support. These include various water
and sanitation programmes supported by different donors like the French, the EU and
There are four main sub-sectors within the water sector. These are rural water and
sanitation, small towns water and sanitation, water resources management, and
institutional development. A new addition, water for livestock production, was recently
transferred from the Ministry of Agriculture to the water sector. The national target for
The National Health Policy Plan 1999.
rural areas is 100% access by the population to safe water by 2015. This goal is beyond
the corresponding MDG that aims at halving the population without sustainable access
to safe drinking water. Costs of realising this objective have been put at 800 million US
dollars. The target for urban areas is also universal coverage, but the time horizon is
2010. Its cost has been estimated at 706 million dollars for 75 towns. Unit costs are
higher for the urban population than they are for the rural, because the former is
generally better off.
Projections by the Population Secretariat
In order to plan for future social and economic development, one needs to calculate
population projections for different future points in time. The Population Secretariat
estimates the population by 2015 using two scenarios of high and low fertility rates.
Currently, the total fertility rate (TFR) is estimated at 6.9 births per woman. The high
fertility scenario estimates that in 2025, the rate will still be high, at approximately 6
births per woman. The low fertility scenario projects that by 2025, the TFR will have
declined to 3 births per woman. Using the high fertility projection, it is estimated that
the population of Uganda will be 36.8 million in 2015. With the lower fertility rate, it is
estimated at just over 33 million. Based on these scenarios, the Secretariat has derived
estimates of the corresponding socio-economic facilities required in terms of education
and health services only. There are no estimates for water and HIV/ AIDS.
In terms of health coverage, government aims to have one Level II Health Centre in
every parish, catering for about 5000 people. Currently, there are 746 Health Centres of
this nature, with about one for every 30,000 people. Based on the two TFR scenarios –
low and high, the required number of health centres by 2015 would be 2400 and 2600
respectively. In terms of health personnel, the goal is to have one midwife/nurse per
1000 people by 2025. In order for this goal to be achieved, about 10,000 more nurses
would need to be trained by 2015 for both scenarios. The table below illustrates the
estimates for the two scenarios.
Table 17: Health costings under different fertility scenarios
Unit Current High TFR Scenario Low TFR
cost status Scenario
2015 2025 2015 2025
Health Centre IIs 746 2600 10,740 2400 8,580
No. of doctors US$27,500 1200 3250 10,700 3000 8,600
No. of midwives/ US$4,800 2,800 12800 53,000 12800 42,000
Annual Health US$6 per US$262 US$1,500 US$1200
Expenditures capita mill. mill. mill.
Adapted from ‘Uganda: Population, Reproductive Health and Development,’ Population Secretariat.
It is estimated that there are currently 6.6 million pupils enrolled in primary school.
Using the high fertility projection, this number will increase to 10 million by 2015.
With the low fertility scenario, the number of pupils in primary school will be around
8.7 million. According to the Population Secretariat, the Ministry of Education spent
about 210 billion Uganda shillings on primary education in 2000. This translates into a
unit cost of about 32,000 shillings per pupil. If this trend in expenditure is maintained,
the government’s recurrent budget for primary education would increase to 275 and
325 billion shillings respectively for the low and high fertility scenarios.
Other inputs into providing quality education to children include teachers. Currently,
the teacher pupil ratio is estimated at 1: 59. If it is to be reduced to 1: 40, the number of
teachers would need to increase from 110,400 today to just over 200,000 in 2015 for
the high fertility scenario, and to about 180,000 for the low fertility scenario.
A second required input is primary school buildings. In 2000, there were 11,600
primary schools in Uganda, yielding a school-to-pupils ratio of 1:566. If this is to
reduce to 1:450 by 2025, then for the high fertility scenario, 8,400 more schools will be
required by 2015, compared to 5,900 for the low fertility scenario.
The overall goal of the UPE policy is to ensure that by 2003, all children of primary
school going age (6 to 12 years) are enrolled in primary schools with 100% retention
rate. If the current trends towards achieving this target continue, then the target will be
realised much earlier than the international 2015 goal. However, in the bid to meet the
international development targets of universal primary education, a distinction has to be
made between the attainment of universal enrolment and universal provision of
educational needs (McGee, 2000). Furthermore, although enrolment figures have been
impressive, outstanding quality issues call into question the effectiveness of several
aspects of the UPE program. Completion rates are low, and ratios of pupils to teaching
aids and infrastructure, as outlined above, are still high.
SIMULATED COSTS OF SECTORAL PLANS
This section presents cost projections for UPE, HIV/AIDS and Health based on
simulations over a 15-year period (2001-2015). According to the Population
Secretariat, from 1948 to 1991, the national annual population growth rate was 2.9
percent, this population growth rate is assumed for all sector simulations. Two
scenarios are constructed for each sector. The first scenario assumes that public
spending will be maintained at current levels over the simulation period. The second
scenario assumes that government will increase spending to optimal levels that would
enable the achievement of the millennium goals for each sector.
For UPE, current spending levels are estimated to be around Ug. Sh. 236 billion (US$
139 million). This translates into approximately Sh.38,125 (US$22) per primary school
student per annum. Optimal spending for the education sector under the PEAP is
estimated at 519 billion Ug. Sh. (US$ 305 million) annually. This translates into an
annual unit cost of 79, 607 shillings (US$ 46). Using the current enrolment levels,
population growth rate, and per unit cost, the cost of implementing UPE is computed
for the two scenarios.
For health, the first scenario assumes that government will maintain the current level of
spending at US 46 per person per annum. The second scenario assumes that annual
spending will reach US $11 per person as planned in the PEAP, just short of the US
$12 per person per annum that is recommended by the World Health Organisation
For HIV/AIDS, the first scenario assumes that the prevalence rate will remain at 8.3
percent and that current levels of spending are maintained. The second scenario
assumes increased spending, and a 5 percent annual reduction in the HIV prevalence
rate with increased spending in the sector to the desired level as estimated in the
National Strategic Framework (NSF) for HIV/AIDS.
The cost simulation results, together with their shares in GDP for the three sectors are
presented in Table 18. Spending in each of the three sectors would be about 50% higher
by 2015 in order to achieve the MDGs. However, to attain the UPE goal, resource
spending would have to rise by 109% from current levels. For health an increase of
213% is required in order to provide the minimum health care package. Reduction in
the prevalence of HIV/AIDS would need an increase in spending of 83% above current
levels. However, it should be noted that the type of simulations done do not account for
efficiency gains across sectors and over time. For instance spending on UPE might
have a positive effect on AIDS because more people will be exposed to HIV/AIDS
information since they will be able to read and that may lead to a reduction in the
incidence of HIV and hence a reduction in the cost.
The close similarities between Uganda’s national goals, which are outlined in the
Poverty Eradication Action Plan and the Millennium Development Goals ensures that
the implementation of the national development strategies provide adequate foundation
for achieving the international targets. Sustained macroeconomic stability, budgetary
discipline, provision of public services for enhancing private sector led growth, and
policy time-consistency will remain the cornerstones for steady progress towards the
The satisfactory track record in implementing key programs in the PEAP using funds
channelled through the Poverty Action Fund and other instruments implies that most of
the MDGs are potentially achievable, even under the current financing scenario. In
particular, the elimination of gender and urban bias in primary education access, the
reduction in the infection rate of HIV/AIDS, and the significant decline in income
poverty throughout the nineties, indicate tremendous degree of success towards
meeting the associated MDGs.
Nevertheless, the country faces several challenges on the path towards the MDGs,
ranging from ensuring long-term favourable perspective for foreign direct investment to
increased private sector productivity and domestic resource mobilization. The crucial
resource mobilization problem that could severely constrain the country’s development
concerns the stagnation of tax revenue at about 11% of GDP and the non-declining
share of foreign aid in the national budget. Because more than half of the national
budget is financed by foreign aid, the country is highly vulnerable to changes in the
political economy of aid. For instance the Danish government has just announced a cut
in aid to Uganda, a move that will significantly affect the implementation of the road
sector development plan.