Report No. 5322-UG

UgandaReport on Urban Finance and Management

September 6, 1985

Water Supply and Urban Development DivisionEastern and Southern Africa Projects Department

FOR OFFICIAL USE ONLY

Document of the World Bank

This document has a restricted distribution and may be used by recipientsonly in the performance of their official duties. Its contents may not otherwisebe disclosed without World Bank authorization.

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Currency Equivalents(1983)

Currency Unit: Uganda Shilling (USh)

I USh US$ 0.003

310 UShs US$ 1.00

Weights and Measures

All weights and measures are metric. Abbreviations used include:

ha hectarekm kilometersq km square kilometer

Abbreviations and Acronyms

CDC Commonwealth Development CorporationDAPCB Departed Asians' Property Custodian BoardDC District CommissionerEC European CommunityHFCU Housing Finance Company of UgandaIPA Institute of Public AdministrationKCC Kampala City CouncilLALF Local Authorities Loan FundMHUD Ministry of Housing and Urban DevelopmentMLG Ministry of Local Government.-ow Ministry of WorksMPED Ministry of Planning and Economic DevelopmentNHCC National Housing and Construction CorporationNWSC National Water and Sewerage CorporationRDC Reconstruction and Development CorporationUEB Uganda Electricity BoardULC Uganda Land Commission

Fiscal Year

Government: July 1 - June 30

FOR OFFICIAL U ONLY

UGANDA

REPORT ON URBAN FINANCEAND MANAGEMENT

Table of Contents

Page

Introduction and Summary of Recommendations .... ...... i

CHAPTER I: THE URBAN POLICY FR.AHEWORK ...... . ................ .. . ....... 1

A. Urbanization Policy and the Recovery Program ............ 1

B. Public Control of Urbanization: Major Themes ........... 2

1. How Much Control? . .......................... 22. Who Should Control? ............................. ...... 33. Resource Generation and Cost Recovery ............... 4

C. Implications for Urban Strategies ............... ......... 5

D. Structure of the Report 5

CHAPTER II: THE FINANCING OF URBAN SERVICES ............. ............. 7

A. Revenue Structures and the Financingof Municipal Investments ..... .. -.. ........................ 7

1. Structure of Revenues and Collections ............... 72. Sources of Financing for Urban Services ............. 8

B. Major Issues ........ ...... ............................ 9

1. Local Revenues and Expenditures ...................... 102. Financial Management and Control .................... 133. Housing Finance .................................. 17

This report is based on the findings of a mission which visitedUganda in November 1983. Mission members were 0. Grimes and F. Johnson(Eastern and Southern Africa Water Supply and Urban Development Division)and A. Kennefick and V. Newcombe (consultants). The participation of Mr.Newcombe and of his associate C. Ruben was arranged by the UN Centre forHuman Settlements (UNCHS), Nairobi.

This document has a restricted distribution and may be used by recipients only in the perforrnanceof their oflicial duties. Its contents may not otherwise be disclosed without World Bank authorization.

Page

CHAPTER III: THE MANAGEMENT OF URBAN SERVICES ........................ 19

A. Strengthening Urban Management: Major Issues ........... 19

1. Organization o ................................ .... 0 ...... 192. Regulations and Standards ........................... 233. Capacity ... ........................................ 25

B. Strengthening Urban Management: Implementation ......o... 26

1. Municipal Services .*********. ...... see&. 272. Land .... .................... .......... ........ 293. Housing ............................................. 31

CHAPTER IV: RECOMMENDATIONS FOR IMPLEMENTATION ..... .................. 34

A. Immediate Action Program .... ......... .......... ...... 34

1. Local Government Financial Management ............... 352. Maintenance Equipment .. .... ...... ............. ...... 393. Training ................... e... ........................ 394. Regulations .............. - -.-........ -- ....... 395. Small Scale Brick Producers ......................... 41

B. Medium-Term Measures ................................... 41

1. Local Government Financial Management ............... 412. Local Government Administration ..................... 42

4. Land and Housing ..................... ... ... 43

ANNEXES

Annex 1: Urban Population Trends ................................ 45

Annex 2: An Estimate of Income Distributions for Urban Areas ... 47

Annex 3: Revenue and Expenditure, Jinja Municipal Council,1981-1984 ........ 50

Annex 4: Revenue and Expenditure, Entebbe Town Council,1981-1984 ......... 51

Annex 5: Housing Finance Company of Uganda: History and CurrentCondition ....... 52

Annex 6: Summary of Urban Housing and Environmental Conditions,1981 .... 56

Annex 7: Urban Management Training Requirements and Institutions .57

Annex 8: Selected Source List of Reports and Papers ............. 64

Page

CHARTS

Kampala City Council: Functional Organization .................. 66Jinja Municipal Council: Functional Organization ........... .... 67Entebbe Town Council: Functional Organization .................. 68

MAPS IBRD No. 18521: Uganda: Major Cities and Towns

IBRD No. 18534: City of Kampala

Introduction and Summary of Recommendations

Purpose of the Report

a. For the foreseeable future, Uganda's macroeconomic strategywill continue to emphasize rehabilitation of the productive and foreignexchange-earning sectors. There can be little scope for meeting investmentneeds in non-priority sectors, either in the original Recovery Program(1982-84) or in the revised 1983-85 Program. The emphasis on directproduction is clearly necessary until the restoration of the economy isfurther advanced.

b. Awareness in the Government is growing, however, that thegoals of the Recovery Program become jeopardized by breakdowns in essentialsupport services such as water supply, road maintenance, andcommunications. Reliable supplies of water and electricity are criticalaspects of the rehabilitation of key industries and the greater use of allindustrial capacity. The maintenance of such infrastructure networks, oncerehabilitated, is an equally critical element of economic recovery thatreduces the need for future investments in infrastructure capacity. Sincethese services are typically provided in cities and towns, the attainmentof Recovery Program objectives is linked to the effectiveness with whichurban services are managed and financed.

c. Better-managed cities can contribute to the recovery processby taking on financial and service burdens that the national budget is notable to assume. Since urban service improvements generally confer specificbenefits on urban residents, there is a strong case for the cost of theseimprovements to be met from local rather than national resources. This inturn implies that local government authorities as well as urban residentsthemselves will have to bear a much greater share of the financing of suchinvestments than at any time in the past.

d. The purpose of this report is to suggest feasible ways ofimproving local government administration and finance. It proposesmeasures to strengthen the local revenue base so that urban authoritieswill become less dependent on transfers from the central government. Italso suggests several means of building a more harmonious relationshipbetween central and local governments, lessening the tensions that are nowevident. Finally, it examines the effects such improvements would have onthe provision of essential urban services, land and housing.

Approach and Content

e. Because the main focus is on urban administration, management,and finance, the report does not attempt comprehensive coverage ofurbanization trends. It does not formulate or systematically review anurban investment program, for two reasons. First, although physical

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investment needs are huge, the Recovery Program priorities suggest thatlarge-scale investments of this kind should be deferred unless they can beshown to be fully in line with Program objectives. Second, even if it weredecided to launch such investments now, most financial control andmanagement procedures at both central and local levels are not yet up tothe task. Hence, the lower priority now given to urban-related investmentsallows some time to correct the most serious deficiencies in urban financeand management, as a prerequisite to starting any major investmentsafterward.

f. As the Recovery Program moves forward, local authorities willhave increased revenue requirements to maintain existing and newlydeveloped facilities. The local councils will also have to move towardgreater financial self-sufficiency, depending less on block grants from thecentral government. In municipal and town councils the Graduated Tax,which is their main revenue source, will have to be greatly supplemented byother revenue sources. Among the most promising of these sources is marketstall fees, which appear to be substantially below levels that demand wouldallow. The effectiveness of the present budgeting process for localauthorities will also need improvement through training and staffdevelopment at both the council and central government levels. Particularattention will have to be given to budgeting and setting aside funds forcapital loan repayments and for extensive maintenance programs. This willhave to be done under the necessary conditions of rising salary costs andongoing efforts to increase council revenues.

g. Clarification, and in some cases redefinition, of the lines ofresponsibility between central and local authorities is critical for themanagement of urban services to become more effective. It is suggestedthat written regulations be put into effect to formalize informalprocedures that are already in place, as well as to codify new workingrelationships that reserve key roles for both councils and centralgovernment agencies in the provision of services such as water and townplanning. The report also recommends that a study be launched to clarifythe functions of local and central authorities in the management of Kampala.

h. Priorities for the training of staff for urban management needto be related to the most pressing Recovery Program objectives. Expatriatehelp would be beneficial in this respect, especially so in the areas ofmunicipal finance and financial control. The key institution for this typeof training is the Institute of Public Administration, whose staff needstrengthening by expatriate teachers. The report recommends that newcourses in quantity surveying and in teaching methods be offered at UgandaTechnical College and at the National Teachers College respectively. Itencourages greater support for the Survey Training School, and proposesstrengthened programs of training for the Ministry of Housing and UrbanDevelopment and the Ministry of Local Government.

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Summary of Recommendations

i. The most urgent measures for improving urban finance andmanagement constitute an Immediate Action Program. mhese measures include:

a. Technical assistance, equipment, and materials forstrengthening financial management in Kampala, Jinja,and Entebbe municipalities as well as other towns, and forimproving the effectiveness of the Ministry of LocalGovernment (ref. paras. 2.10-2.38)

b. Provision of equipment and vehicles for Kampala CityCouncil for adequate maintenance of roads; and tools,equipment, and buildings for Kampala and Jinja torehabilitate vehicle maintenance facilities (para. 3.18)

c. Written clarification of central and local governmentresponsibilities and the roles of central authorities inthe management of Kampala. For water supply/sewerage andtown planning, redefinition of present arrangements toensure an effective role for councils (paras. 3.4-3.10)

d. Technical assistance, materials, and teacher training tostrengthen training capabilities at the Institute ofPublic Administration, Uganda Technical College, NationalTeachers College, and the Survey Training School (paras.3.20-3.23)

e. Measures to simplify the regulations governing landservicing and house construction (paras. 3.14-3.16, 3.34)

f. Encouragement of small and medium-scale brick producers(paras. 3.45-3.46).

j. To build on the improvements resulting from the short-termaction program, several critical measures need to be carried out over themedium term. This medium-term program consists of the following actions:

a. Local government financial management

- improved revenue collection systems at Kampala, Jinja,and Entebbe councils (paras. 2.24-2.30)

- program for identifying and recording businesses forlicensing purposes (paras. 2.24-2.30)

- planning and initiation of a comprehensive property rateadministration program (paras. 2.28-2.29)

- assessment of capacity for capital investment throughpreparation of revenue forcasts and cash flowprojections (paras. 2.15, 2.19, 2.21)2.9)

- implementation of a strategy for increasing publicdeposits and mortgage lending capacity at the HousingFinance Company of Uganda (para. 2.39-2.42)

b. Local government administration

- creation of a Traffic Management and Transport Planninkg

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Section within the Kampala City Engineer's Department(para. 3.3)

- review and implementation of proposals to legalizeselected illegal markets (para. 3.30)

- assessment of the feasibility of more private sectorparticipation in solid waste management, especially inthe central areas of Kampala (para. 3.29)

c. Training

- Establishment of a two-year higher diploma course inSettlement Development at Uganda Technical College(para. 4.21)

- Creation of a one-year post-graduate course in RegionalDevelopment at Makerere University (para. 4.22)

- Expansion of facilities to increase the output ofartisans in the building trades (paras. 3.45-3.46).

d. Land and Housing

- Issuance of a policy statement on civil servant housingthat would clarify the prospects for an overallreduction in housing subsidies and for moving to asystem of housing allowances (paras. 3.41-3.42)

- Research on the cost of local building materials andtheir implications for maintenance (paras. 3.44-3.46)

- Preparation of an "Area Development Plan' for theNamuwongo/Wabigalo/Kisugu districts of Kampala(para. 3.43)

- Preparation of a restructuring plan for the NationalHousing and Construction Corporation (para. 3.41)

- Proposals for ensuring the timely development of "mailo"land to accommodate the expansion of built-up areas inthe Kampala region (paras. 3.37-3.38).

k. The measures listed above consititute a set of priorityactions in urban management and finance in support of Recovery Programobjectives. It is recommended that the Ministry of Planning and EconomicDevelopment (MPED), together with the Ministry of Housing and UrbanDevelopment (MEUD), the Ministry of Local Government (MLG), and theKampala, Jinja, and Entebbe councils, take the lead in establishing anagenda for rapid implementation based on these measures. MPED is also wellplaced to secure Government approval of the priority measures and to seekfinancial help from outside donors. However, MHUD and the councils shouldalso move forward with their available resources on the recommendationsdirectly concerning them.

UGANDA

REPORT ON URBAN FINANCE AND MANAGEMENT

CHAPTER I: THE URBAN POLICY FRAMEWORK

A. Urbanization Policy and the Recovery Program

1.1 Since civilian government was restored in 1979, Uganda'sdecimated physical and human resources have had to be devoted to restoringinternal security and reviving the foreign exchange-earning sectors.Restoration of productive capacity in agriculture and other activities,promotion of exports, and greater fiscal discipline have necessarily beenthe main focus, of both the original Recovery Program (1982-84) and therevised Program issued in September 1983. Rehabilitation of housing andbasic infrastructure could receive little attention. This consciousdecision not to deal systematically with problems of city management andservices until later also extended--justifiably-to the institutional andpolicy framework. Before local government policies and procedures could bemade more effective, work procedures, salaries, and morale in nationalministries and agencies had to be restored.

1.2 Awareness is growing, however, that postponement of the mosturgent reforms in the way services in cities are provided and managed canprevent the goals of the Recovery Program from being reached. In thecurrent Recovery Program social infrastructure comprises 20% of totalinvestment planned for 1982-1985, compared with 15% in the originalProgram. Several major projects in the urban sector are underway orplanned. These include the rehabilitation of Kampala City roads, financedby EC; the rehabilitation of war-damaged towns of Masaka, Mbarara, and Aruaby the Reconstruction and Development Corporation (RDC); the rehabilitationof water supply systems in Kampala and in 6 other major towns; and urbanwater supply schemes for several secondary towns. It is increasinglyrealized that to strengthen the capacity of central but not localauthorities to undertake these investments is to leave resources that arecritically needed for economic recovery unproductive and unused.Well-managed cities contribute to recovery by meeting costs and taking onburdens that national agencies for the foreseeable future cannot beexpected to assume. To achieve greater management effectiveness as well aslower costs of services, the central and local authorities which jointlymanage these cities must pull together.

1.3 There is equal awareness that these concerns are immediate andpractical. As shown in Table I below, the urban population grew at anexplosive rate during the 1960s and even during the Amin years grew fasterthan the national average of 2.8%:

Table 1Urban Population, 1959-1980

Urban Growth RateCensus Population (million) since previousYear Total Urbar % Urban Census year

1959 6.5 0.3 4.8 -1969 9.5 0.7 7.8 9.01980 12.6 1.1 8.7 4.0

Source: Ministry of Planning and Economic Development

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Urban growth since 1980 has probably averaged about 5%, still.ess than the combined rate of the last two decades. If internal securitycontinues to improve, migration to the cities and towns can be expected tointensify. Even at 5%, however, the urban population will double in 15years, and Kampala will have a populatlon of 1 million by the end of thecentury.

1.4 Large investments are being conceived and programmed forrehabilitation of the war-damaged towns of Masaka, Mbarara, and Arua; forreconstruction of decrepit infrastructure; and to meet housing backlogs.The first significant improvements in urban services in over a decade, inroad rehabilitation for Kampala and in water supply and sanitation forseven towns, are being launched. As is widely acknowledged, however, thefinancial control and management procedures required to make theseinvestments fully productive now must often be re-learned, when notreinvented. The fact that so little is working well at thp local levelactually provides a good opportunity to look critically not only at theprocedures themselves, but at the philosophy they reflect and theassumptions, often implicit, underlying them. The basic idea of thisreport is that through such a critical assessment, strategies for improvedurban finance and administration can be devised and implemented in supportof the goals of the Recovery Program.

B. * bli,c Management of Urbanization: Major Themes

How Much Control?

1.5 Uganda shares with all urbanizing countries the issue of how muchgovernment control over the urbanization process is desirable. Generallyspeaking, urban policies in Uganda over the past two decades have favoredmore rather than less public involvement. Local authorities and theNational Housing and Construction Corporation (NHCC) have been givenprimary responsibility for putting up housing to meet the demands of urbanfamilies. Building and land use regulations set out in detail what is alegitimate construction technique and material and what is not."Acceptable' (Grade I) construction is distinguished from 'temporarilyacceptable" (Grade II) construction, and city and town councils take stepsto hasten the conversion from Grade II to Grade I. Town plans includedetailed descriptions of land uses and investment requirements for publicinfrastructure, which are reflected in Zoning Plans with the force of law.

1.6 It should be recognized that this relatively active role ofgovernment is partly unintended. Before the expulsion of Asians in 1972,the Kampala City Council (KCC) used private contractors, most of whom wereAsians, to carry out its road maintenance and rehabilitation operations.With the collapse of this part of the construction sector since 1972, whatlittle maintenance could be done has had to be performed directly by KCCthrough force account. Nevertheless, the prevailing trend has been to seeksolutions to problems of urban management through publicly financed andimplemented programs.

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1.7 To be consistent with the Recovery Program, howeve.-, suchsolutions will require that government be a facilitator of privateinitiative much more frequently than an active participant. This sort ofre-examination is already underway. As one example, discussions on futurehousing policies have emphasized the need to steer away from large-scalepublic construction toward more active private involvement in housing.The specific measures discussed include rehabilitation of the existingstock and the possibility of cash allowances for civil servants to findtheir own housing on the private market. This report argues that suchmeasures move in the right direction, but should also be applied tobuilding and land use standards, investment programming, and theregulatory environment.

Who Should Control?

1.8 Public responsibility for urban programs, whatever is decidedabout how far this responsihility should extend, is shared between centraland local governments. Historically in Uganda, the powers of localauthorities have been defined in quite different ways ranging from a greatdeal of local sovereignty to very little. Before the Protectorateintroduced standard systems and procedures over the whole territory ofUganda, local management of local affairs was virtually absolute. Acritical concern of all governments since independence has been to find theright balance between local autonomy and central control, a process whichis still far from complete.

1.9 Uganda has a local administration everywhere in the country andlocal governments in the largest cities and towns. This distinctionbetween local administration and local government is of centralimportance. The basic unit of local administration in Uganda is thedistrict, headed by the District Commissioner (DC). Whether for a well, amarket, or police protection, residents of the district traditionally turnto the DC to get things done. Onto chis system has been, in a sense,grafted a structure of city, municipal, and town councils each consistingof a Council, a Mayor, Town Clerk, and town engineers, treasurers, medicalofficers, and other officials.l/ In law, the prerogatives and duties ofcouncils are for the most part clearly defined. In practice, however, twokey factors have combined to blur lines of responsibility, givinginconsistent and often conflicting signals about the pace at which thenational government is allowing real autonomy and accountability to devolveupon local governments. First, financially the councils have been living ahand to mouth existence, unable to realize significant tax revenues fromthe economic base of the towns. Second, the mandate of the most importantcouncil (Kampala) is to a large extent duplicated by the responsiblilitiesthat continue to be exercised since 1974 by the Kampala DC, whosegeographical territory is identical to that of the KCC. Strategies fordealing with these two issues are presented in later chapters of thereport.

1/ Town Boards, in the smallest urban centers, are one rung below the TownCouncils in importance. They are not designated as -self-accounting,"(i.e., with autonomous responsibilities), and so will not be a major focusof this report. Moreover, the term "councils' or "council governments-refers to the entire city or town government, not just to the members ofthe deliberative body.

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1.10 The position taken in this report is that no major changes in thestructure of central and local government responsibilities are necessaryfor the appropriate balance between central control and local autonomy tobe struck. On paper, local governments have more powers ani duties thanthey have been able to exercise. In most cases the strategies recommendedin the report involve enabling local governments to do what they arealready legally empowered to do, within accepted limits set out by thecentral government. In other cases, described more fully in Chapter III, aclarification or redefinition of the boundary between central and localresponsibility would make both levels of government more effective.

Resource Generation and Cost Recovery

1.11 As the Recovery Program is carried out, councils in their effortsto improve their financial performance will have to ensure that plannedinvestments remain within the limits of resource availability and thatcosts are recovered from those who benefit. At the same time as revenuerequirements for new projects and for maintenance of existing facilitieswill increase, councils will have to move further toward financialself-sufficiency, depending less on block grants from the centralgovernment.

1.12 Part of this process will involve a reconsideration of pricingpolicies for publicly provided services, so that the prices paid moreclosely reflect the economic cost of providing the service. Land andhousing are the two most important commodities in urban areas beingacquired at prices essentially unrelated to their production cost.Government officials are well aware that public housing is rented at afraction of the rents that are obtained on the private market, and thatland leasehold rents as well as customary (-kibanja-) land rents often liebelow market-clearing values. But they see no alternative if such goodsand services are to be affordable. One way of resolving this servicepricing dilemma is to question whether the service should be providedpublicly at all, as is already being debated in the case of housing builtby NHCC and KCC. Another, explored in greater detail in Chapter III, is toensure that regulations governing service provision are flexible enough toallow for a range of acceptable alternatives rather than only one or two.

1.13 The need for more effective mechanisms of cost recovery arisesnot only from budget stringencies at the national and local levels, butfrom the nature of urban investments themselves. Such investments,especially improved water, drainage, and transport networks, play a rolebeyond the city boundaries in the support they give to productiveactivities elsewhere in the economy. However, they also confer specificbeneflits on urban residents, particularly owners of the land or housingwhose value has been increased by the investments. As a result, there is astrong case for these residents, rather than all taxpayers in the country,paying most or all of the cost of providing the service.

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1.14 For city and town councils, achieving cost recovery objectiveswill require much improved performance in all revenue categories, with therate tax on real property being especially critical as the major source ofcouncil revenue. This in turn requires improvements in procedures for realproperty valuation, records management, and assessments as well ascollectious. It also implies that urban services will be governed by thesame pricing and cost recovery features whether they are managed by localauthorities or by national ministries.

C. Implications for Urban Strategies

1.15 Much attention has been devoted at the technical level since 1979to the question of how to improve the functioning of towns and towngovernments, even though the decision makers have not given this questionhigh priority. Statements of policy direction have been prepared inhousing and solid waste management, and policy alternatives in most otherfields of urban investment have been intensively discussed. This hasproduced wide recognition of the range of policies that could be applied,and also of policy instruments that have been successfully appliedelsewhere. What is lacking is a sense of priorities.

1.16 For this reason the report focuses primarily on what should bedone first. It does not argue that a comprehensive strategy should be putin place immediately to deal with all problems of urban growth, finance,and administration. Long descriptions of deficiencies in equipment,staffing, or transport will not be found in the report. Such deficiencieshave been well documented by the public agencies themselves (see Annex 8,No. 10). Moreover, the object is not to encourage an attempt to return toa golden age- when equipment was more ple-ntiful. The report neitheraccepts the present nor proposes a reiurn to the past. Instead it buildson the discussions now underway to offer suggestions on how the capacity ofboth central and local governments to manage the urban economy can beimproved. Some measures are especially urgent, and constitute an ImmediateAction Program. Others may be dealt with more gradually, and compriserecommendations for the improvement of urban management and productivityover the medium term.

1.17 Because good intergovernmental relations are critical to thesuccess of any urban strategy, the institutional framerork proposedinvolves a sharing of central and local responsibility for almost all urbaninvestments. To anticipate one example discussed in Chapter III, urbanwater supply was the responsibility of city and town councils prior to1972, and has been with the National Water And Sewerage Corporation (NWSC)since then. The report maintains that a redefinition of responsibilitieswhich reserves roles for both the councils and NWSC will have a higherpayoff in effective and appropriate water supplies than if fullresponsibility were given to either alone.

D. Structure of the Report

1.18 Major constraints on the financing of urban services and housingare described in Chapter II. The main issues are presented, together with

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suggestions for a strategy to improve local government finance. In asimilar manner, Chapter III presents the principal issues of organization,procedures, and capacity facing urban authorities in the provision ofserviced land and housing and the maintenance of existing facilities.Training needs for tecbnicians and managers are presented and an assessmentmade of the capacity of local training institutions to respond. Finally,the elements of the recommended strategy, both imediate and medium-term,are described in detail in Chapter IV.

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CHAPTER II: TEE FINANCING OF URBAN SERVIC(S

A. Revenue Structures and the Ftnancing of Municipal Investuents

2.1 Local governments in Uganda are divided into urban authoritiesand town boards. Urban authorities are generally self accounting", inthat financially they are supposed to be self-sufficient and operate withtheir own budgets. Urban authorities comprise one city council (Kampala),nine municipal councils, and thirty town councils, ten of which areself-accounting. These council distinctions tend to reflect differences incouncil size, financial resources, and need for central budget support.There are sixteen town boards, which administer very small towns financedby the central government through an "administrative center' structure. _

Structure of Revenues and Collections

2.2 Local government revenues are derived from the following sources,and are credited to a general municipal fund:

Local Taxation

a. Property taxes (referred to as property rates or assessmentrates)

b. Graduated local income tax payments by individuals (referredto as the Graduated Personal Tax, GPT, or more commonly, theGraduated Tax).

Fees, Charges, and Other Local Receipts

c. Licenses, permits, fees and finesd. Rents from land leased out by councilse. Public market rents and duesf. Interest on investmentsg. Gifts

Gr.mats

h. Block grants from the central government.

2.3 Urban authority revenues are viewed in three categories forplanning and budgeting purposes: regular cash receipts; balancingrevenues; and re-charged or recovered costs. The first two categoriesusually constitute almost all of a council's revenues. Regular cashreceipts are the fixed statutory revenues over which a council has littlecontrol, and which do not vary appreciably. The Graduated Tax, licensefees and market rents are the principal regular cash receipts. Forplanning purposes these receipts establish a basic working balance for a

1/ The basic legal framework for the financial management of city,municipal, and town councils is set out in the Urban Authorities Act(1958), chapter 27. As used in this report, -urban authorities", -localauthorities," and 'local governments- refer interchangeably to city,municipal, and town council administrations.

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fiscal year. Property rates and central government block grants, on theother hand, are not related to any specific service and hence are regardedas "balancing- revenues. That is, they are subject to variation by acouncil or the central government to meet the overall annual budgetrequirements of a council. Municipal budgets are supposed to be preparedat the council level, for review and approval by the Ministry of LocalGovernment (MLG), to ensure that the budgets are reasonable and that localand national priorities are consistent. In practice, however budgetpreparation and review procedures are in disorder.

2.4 The large majority of local revenues have traditionally come fromthe property rate, tne Graduated Tax and central government block grants.The significance of each of these revenue sources to individual councilshas depended mainly on two factors. First, the size of the employedpopulation within a council's boundaries affects the amount of GraduatedTax revenue. Second, the extent of infrastructure developxent affects theamount of the property rate revenue. Hence, the major beneficiaries ofthese two sources of local taxes have been Kampala City Council and themunicipal councils of Jinja, Mbale and Masaka (in that approximate order).Also, the dependence on central government block grants to balance urbanauthority budgets has been highest with the town councils, followed by themunicipal councils and then by. Kampala City Council.

2.5 Collection methods differ from one kind of tax to another, anddepend partly on the population makeup of individual councils. Three basicapproaches are used:

a. Taxpayers remit an assessed levy directly to a counciloffice. This approach is most common for property ratepayments, license fee payments, and Graduated Tax pay-ments by self-employed individuals. It assumes that tax-payers have reasonable access and transportation to the maincash office, or to field offices of a council.

b. Graduated Tax deductions are recovered by employers from thewages of their workers, and are remitted monthly to councilcash offices.

c. In cases of delinquency or where taxpayers would have totravel long distances to a council cash office, councilrevenue collectors visit taxpayers to obtain direct payment.

Sources of Financing for Urban Services

2.6 Traditionally, the following sources of funds have been availableto local governments to finance municipal investments:

a. Current revenues and general cash reserves

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b. Renewals funds and receipts from the sale of depreciatedassets

c. Receipts from the sale of council landd. Grants from the central governmente. Loans from the Local Authorities Loan Fund.

2.7 During the 1960s, the urban authorities usually realized annualoperating surpluses which accumulated as general reserves. These reserveswere used as a primary source of capital financing. Since their liquiditypositions were generally good, the urban authorities also budgeted andfinanced some investments from current revenues. When the urbanauthorities could build general reserves, they also contributed to renewalsfunds. The resources in these funds were set aside as short-term invest-ments or as deposits in commercial banks. The proceeds were eventuallyused for acquiring new vehicles and equipment, for repair and maintenanceof civil works, or for minor civil works construction. The balances ofthese renewals funds typically were supplemented by proceeds from the saleof assets such as vehicles which had become uneconomic to maintain.

2.8 Amounts collected from land sales made by the Ministry of Lands,Minerals and Water Resources on behalf of local authorities have beendeposited in a statutory council fund called the "land premia" fund. Thisfund has been used for financing infrastructure for housing plotsdesignated by councils.

2.9 Other sources of capital funds for local governments have beendirect grants from the central government and low-interest loans from theLocal Authorities Loan Fund. This fund has been managed by a Boardappointed by MLG. In the past, urban authoritles also have received giftsof plant, machinery and equipment from foreign governments andinternational agencies.

B. Major Issues

2.10 Local government financial operations in the 1960s were generallysound, and the outlook for development was optimistic. However, throughthe 1970s to the present, political and economic events have interacted tocause a steep decline in the financial condition and management of theurban authorities. This decline has been so serious that the presentsituation has reached crisis proportions.

2.11 In 1971, with the establishment of the military regime, blockgrants from the central government were substantially reduced. Since thelocal authorities were dependent to various extents on these grants togenerate operating surpluses, subsequent annual operating deficits becamethe norm. To cover these deficits, general reserves which had been builtup in previous years were depleted. At the same time operatingexpenditures were rising at unprecedented rates, mainly due to extremelyhigh domestic inflation.l As operating costs increased, land premia andrenewals funds in the urban authorities were also drawn down to meetrecurrent operating expenses. During the same period the Local Authorities

1/ One index of domestic prices rose to a level exceeding 9,800 in 1982,compared to a base of 100 in 1966; another rose to more than 13,000 duringthe same period.

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Loan Fund was not replenished, and central government grants for capitalprojects had ceased. Hence, by 1973 new municipal investments had stopped.

2.12 While costs were rising, local tax collections began to declineprecipitously. Government ministries became delinquent in remitting theGraduated Tax deductions on behalf of their employees. Properties left bythe Asians expelled in 1972 have been administered by the Departed Asians'Property Custodian Board (DAPCB). DAPCB is legally responsible for payingproperty rate taxes on the more than 4,000 properties it administers, buthas not done so, partly because of massive arrears on rents owed it bygovernment ministries. Increased tax evasion by the general public furtheraggravated the situation. The consequence of reduced revenues and risingcosts (especially the wage bill, due to increased domestic inflation) was aserious deterioration in municipal facilities and services and an exodus oftrained staff. The departure of financial staff, especially at managerialand supervisory levels, was critical for the local authorities.

Local Revenues and Expenditures

2.13 Issues arising from analysis of the finances of Kampala, Jinja,and Entebbe councils were considered to be representative of the financialproblems facing all local authorities. Revenue and expenditure trends forthese councils could be assessed to different extents because of thevarying condition of their books and records. Kampala City Council has notposted its general ledger since 1977. Entebbe Town Council has kept itsposting current, but has not prepared abstracts of accounts since 1979.Jinja Municipal Council, on the other hand, has maintained current booksand abstracts, and has received an unqualified opinion from independentauditors on their 1982 financial statements. Given these conditions, therevenue and expenditure data obtained from Kampala were not as specific asthose from Entebbe and Jinja, and could not be displayed in a comparablemanner.

2.14 Kampala City Council (KCC). The disarray of the accountingrecords in Kampala became a major issue after the current Mayor took officein November 1982. The poor controls and records in the Council Treasurer'sOffice, as well as allegations of fraud and mismanagement, became topics ofdiscussion in Parliament. In response, MLG appointed a Commission ofInquiry, and the Deputy City Treasurer and Chief Accountant of Kampala wereput on "forced leave" in September 1983, pending the outcome of theinvestigation.

2.15 KCC is faced with trying to meet sharply increased salary andwage costs with limited revenue flexibility. The central governmentapproved two salary increases in 1983 for public service staff, in reactionto the rapid rise in domestic inflation and the devaluation of the UgandaShilling. The resulting increases in salary and wage costs to KCC willamount to some 80% in 1984 over 1983. In addition,

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general expenditures for other goods and services have increased sharply.The approximate trend in KCC expenditures is UShs 385 million in 1982, UShs580 million in 1983, and UShs 940 million in 1984. The Council anticipatestotal revenue requirements of about UShs 1 billion to meet anticipatedexpenditures for 1984. This figure recognizes that block grants of aboutUShs 90 million will not cover the entire increase in salary costs, eventhough it reflects about a UShs 40 million increase over the amountreceived in 1983. Hence, the Council is planning increases of about 50% inmarket rentals, housing rentals, and taxi and bus park fees. Also, arecent revision in the schedule of graduated taxes should increase thisrevenue from UShs 100 million in 1983 to some UShs 300 million in 1984.The Council has also budgeted for about UShs 300 million of revenues fromthe property rate tax. However, this assumes 100% collection efficiency,when actual collections since before 1979 have been estimated at 10%.About half of the uncollected property rate tax is due from goverumentagencies and corporations which habitually have been delinquent in theirpayments. The likely outcome is for KCC to run at least 25% below itsrevenue budget in 1984, as it probably has done over the past five years,resulting in minimal cash available for anything but salary and wageexpenditures. As a result, until revenue collection efficiency can beincreased and general price levels become stable, service delivery in theCouncil will continue to deteriorate, and new municipal investments willnot be affordable.

2. 16 Jinja Municipal Council. In contrast to Kampala, Jinja hasmaintained reasonable control over its finances despite the nationaleconomic decline. It has kept its accounting records current and has hadan independent audit of its Abstracts of Accounts at December 31, 1982.Revenue and expenditure trends for Jinja, from 1981 through 1984, are shownin Annex 3. Total revenue increased by an average of 83% in 1982 and 1983,reaching a current level of some UShs 160 million per annum. An additionalincrease of 50% has been forecast for 1984. While this increase appearssubstantial, it may be required simply to absorb the effect of priceincreases which have averaged 70% per year from 1977 through 1982.

2.17 More than 90% of the revenue increases in Jinja Council over thepast two years have come from increases in service 'ncome, mainly fromincreases in property rentals and market fees. At the same time, annualincreases in central government block grants have been needed to meetCouncil operating budgets. In 1983, service income was estimated at 64% oftotal revenues; block grants, 21%; the Graduated Tax, 11%; property rates,2X; and licenses and other income, 2%. In 1984, the Council expectsrevenues to increase to UShs 246 million, resulting from an increasedproperty rate levy, new Graduated Tax rates already announced by thecentral government, increased rents and fees (principally in markets), andan increase in block grants. These increases appear to be achievable,although the block grant amount could be less than expected because ofnational financial constraints.

2.18 Expenditure patterns tor Jinja have been fairly uniform over thepast three years. Civil works programs have averaged 37% of total

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expenditures; administrative operations, 32%; public health programs, 22%;and education and other programs, 9%. In 1983, overall expenditures inthese programs were distributed as follows:

Salaries and wages 44%Fuel and other transport costs 25%Administrative supplies and expenses 19%Building and road maintenance materials 7%Other 5%

2.19 Jinja Municipal Council's estimate for 1984 anticipates anoperating surplus of some UShs 50 million (21% of total revenue), which isintended for capital outlays. This amounts to slightly more than the UShs44 million forecast for block grant income. Effectively the Council canmeet its operating fund requirements (at existing service levels) fromlocally generated revenues, but will need continued central governmentsupport to cover any new investment. Some elasticity exists in servicerevenues, particularly in market rents and fees, to further increase localrevenues. However, if block grants continue at present or reduced levels,these service revenue increases will probably be needed to cover futuresalary and wage costs, or to increase municipal services to higher levels,and no additional funds will be available for capital investments.

2.20 Entebbe Town Council. The financial health of Entebbe TownCouncil has depended on central government block grants, which currentlycomprise about 55% of Entebbe's total revenue. Annex 4 shows estimatedrevenue and expenditure trends for Entebbe for 1981-83. The Council'stotal revenue approximately doubled from 1981 to 1983, to a level of someUShs 32 million per annum. About 57% of the increase was due to increasedblock grants, with the remainder coming from higher market rents andservice fees. Operating expenditures during 1981-83 were proportionatelyincreased to absorb the revenue increases. The Council has thereforedepended on the block grants to meet recurrent operating costs, at lowmunicipal service levels, with no reserves available for investment.

2.21 After the block grants, the Graduated Tax is the next significantrevenue component, at about 24%, followed by service fees and market rentsat 18%, and property rates at only 3%. In practice, about 80% of Entebbe'srevenue base is determined by central government activity. Block grantsare determined directly by the national authorities; about 95% of theassessed property in Entebbe is government-owned; and a large number ofwage earners subject to the Graduated Tax are employed by the government inEntebbe or Kampala. The Council has identified an additional UShs 2million in local taxes and fees which it can raise, but while such actionis necessary, it will be much less than what is required to meet risingoperating costs or capital investment needs. Mhe increase in the GraduatedTax by the central government should materially increase Entebbe's totalrevenue in 1984, but this increase probably will be absorbed by risinglabor costs and a need to raise municipal service levels. Hence, in theforeseeable future the financial capacity of Entebbe will continue to bedetermined in large part by central government block grants.

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Financial Mbnagement and Control

2.22 The deterioration of economic conditions in Uganda has also beenreflected in financial administration at the councils. For several revenuecategories at both the national and local levels, amounts collected aremuch lower than amounts due. Expenditure control is poor, and financialplanning and budgeting has become largely unreliable.

2.23 Accounting Systems and Control. The basic organization ofaccounting functions and records at the councils is a continuation of thatused in the early 1960's. In principle it is sound, reflecting goodseparation of functions, adequate audit trails within the books andrecords, and provision for continuous internal audits. In practice,however, systems and procedures are not uniform among councils, and theireffectiveness has been reduced by a number of underlying problems. Theseproblems exist in each of the councils studied, but are most serious inKampala and Entebbe. The principal problem is inadequately trainedfinancial and accounting staff. The major consequence has been aninability to develop, document and supervise procedures for clerks who mustrely completely on on-the-job training to be effective. In addition, thesituation has been worsened by old and inoperative machines for postingrecords, and by a chronic lack of office supplies, including such basicitems as paper stocks. Finally, since council staff have not been able tosupport their families on their salaries alone, absenteeism and low staffproductivity have become significant contributory problems.

2.24 Revenue Collection and Arrears. Revenue collection in thecouncils is a general problem, with the severity and reasons for theproblem varying for different types of revenue.

2.25 The Graduated Tax is the councils' most reliably collected levy.A collection rate of about 90% usually can be expected because of existingcollection procedures and the traditional public view of the tax.1/ Mostof this tax is deducted from employees' wages and remitted monthly byemployers to council offices. The key control feature in the collectionsis a Graduated Tax Ticket which each working adult carries as a primaryform of identification. When remittances are made to councils, this ticketis marked and returned to the worker. Traditionally, the paying of theGraduated Tax and holding of the tax ticket has been a symbol of coming ofage in the community. This is also an incentive for self-employed personsto pay the tax.

2.26 Systems within the councils should be capable of efficientlyreceipting the Graduated Tax Tickets, controlling cash receipts, postingindividual taxpayer records, and monitoring the records for delinquencies.In each of the councils visited the machines for receipting the ticketswere old and had become unreliable or inoperative. The control of cash

I/ The stated collection rates are for taxes collected in the year theyare billed. No major additions to receipts are realized fromcollections in later years.

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receipts, when payments are made at the main council offices, is adequate.The condition and maintenance of taxpayer records, however, varies amongthe councils. Jinja's records are well managed: The Jinja Council uses amanual system of records from which an individual record can be easilyretrieved using either a permanent taxpayer number or the taxpayer's name.The records at Kampala and Entebbe are not as well organized and managed,with those of Kampala being in a serious state of disarray.

2.27 Entebbe and Kampala have an additional problem with theirGraduated Tax administration. Taxpayers are supposed to pay the GraduatedTax to their council of residence, rather than to their council ofemployment. A large number of government employees work in either Entebbeor Kampala, but live in the other council. In practice, the taxes deductedby the employers are simply remitted to the council where the employer islocated. To a large extent the differences cancel out, but Entebbeprobably loses some revenues from this practice.

2.28 Collection of property rates is a major problem in Kampala CityCouncil and the municipal councils. In the town councils the property rateis not a major income source, and the associated recordkeeping andcollections are not complex. Entebbe Town Council, for example, has onlyabout 600 property rate records, and has achieved a collection efficiencyof about 85%. The arrears are mainly with government agencies, who ownabout 95% of the ratable property in Entebbe. However. collectionefficiency for property rates is only about 10% in Kampala, and about 50%in Jinja. In contrast to Entebbe, Kampala has about 50,000 property raterecords to manage. In general, the poor collection performances at Kampalaand Jinja can be attributed to personnel and systems that are not equippedto effectively administer the property rate program. Personnel haveinadequate training; recordkeeping systems are not well designed, up todate, or well managed; and basic transportation for necessary field work islacking. Also, agents following up delinquencies and collections in thefield run the risk of physical harm.

2.29 In Kampala, private property owners and government agencies eachaccount for about half the shortfall in property rate collections.Collection problems among private owners are traceable directly to poorrecordkeeping and administration at the KCC. Owners may also bewithholding payments because municipal services are poor. Turning to theother half of the shortfaLl, arrears to KCC from government entities inSeptember 1983 amounted to some UShs 245 million. About 80Z of this amountwas owed by only four agencies: the Departed Asians' Property CustodianBoard (UShs 79 million); the Uganda Land Commission (UShs 44 million); theNational Housing and Construction Corporation (UShs 37 million); and theNational Water and Sewerage Corporation (UShs 35 million).

2.30 Collection of other council revenues such as rents and fees ishampered by poor records and weak systems and procedures. The collectionsare especially unreliable where cash must be collected in the field. Insuch instances lack of transportation and security are major problems.Kampala, for example, has been experiencing about three to five thefts of

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cash per month at remote collection sites. Such thefts may have amountedto UShs 20 to 30 million in 1983.

2.31 Role of the Central Governament. The central government, vainlythrough the Ministry of Local Government (MLG), has a close relationshipwith local councils in matters of financial planning and control, includingdevelopment projects. There is in principle the basis for a healthypartnership, especially in instances where local capabilities are lacking.In practice, however, MLG lacks the staff and equipment to do its job. Theissue is that to be successful, any program to improve urban finances willhave to include improving and working through certain central governmentagencies, particularly MLG.

2.32 Through the Urban Authorities Act and various administrativeprocedures, the national government exercises considerable control over thefinancial management of local authorities. MLG has primary supervisorycontrol over council finances, and is responsible for:

(a) Allocation of block grants to councils(b) Establishment of financial policies and directions through

budgetary control procedures(c) Review of monthly financial reports prepared by councils(d) Inspection and audit of council development programsCe) Establishment and enforcement of council accounting

practices(f) Appointment (by the Minister) of city, municipal and town

Councilors, in cases where the Minister deciles that theCouncilors will not be chosen by election, and

(g) Management of the Local Authorities Loan Fund.

2.33 National entities other than MLG also affect local authorityfinances and management. The Public Service Commission appoints, hires andfires key financial staff, including Council Treasurers. The AuditorGeneral's office is charged with carrying out year-end financial audits ofcouncils, in instances where the councils do not retain independentauditors. Moreover, the power of a council to levy local taxes isrestricted by the national taxing authorities under the Ministry ofFinance. The Ministry of Finance also controls the total amount of blockgrants going to urban authorities, as well as any capital contributions tothe Local Authorities Loan Fund. Finally, the Ministry of Commerce setsbusiness license fees (presently at very low levels) in the urbanauthorities.

2.34 While in theory MLG has an important function in supervising andenhancing local authority financial management, its role in practice hasbeen largely ineffective. Like the urban authorities it is supposed tosupervise, it suffers from a serious lack of trained management andtechnical staff, equipment, supplies, transport, and budget allocations.The consequences are that:

(a) No written budgetary or policy guidelines have been preparedfor local authorities;

(b) Monthly financial reports from councils, when they are sub-mitted, are not reviewed;

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(c) No guidelines have been established for monitoring councilfinancial operations;

(d) No up-to-date local authority accounting guidelines havebeen prepared;

(e) No procedures have been developed for reviewing andauditing council development programs;

(f) The Local Authorities Loan Fund is inactive; and(g) Councilors have not been appointed in all the local juris-

dictions in which they were not chosen in the 1981elections.

2.35 The Ministry of Finance budgets the overall block grant which isdistributed among the councils, and has the significant prerogative ofdesignating taxes as central government revenue sources, pre-empting theiruse for local revenue. Block grants were originally intended as asupplement to local revenues, but in practice have become a primarysource. A formula was developed in 1979 for computiig the amount of blockgrants, but because of financial constraints nationally this formula hasnever been applied. Instead, the grants have been based on availablenational revenues and the past expenditure needs of councils. Block grantsare presently being made to help local governments meet the increasingsalary requirements of their staff. In 1983, however, the grants tocouncils were inadequate to cover all the mandated salary increases, aproblem which stems primarily from difficulties in raising revenue at thenational level. The national income tax, for example, suffers from weakcollection systems and widespread fraud and evasion. For the foreseeablefuture block grants will remain an unstable source of revenue for councils,increasing the pressure on them to become financially more self-sufficient.But at the same time the councils are likely to be increasingly dependenton these grants. Consequently, any short-term strategy to improve localfinance should also address improvements in central government financialmanagement and revenue collections. One approach worth consideration wouldbe to tie national income tax collections from individuals (which arenoticeably inefficient) into the more reliable local Graduated Taxcollection system. In this manner the Income Tax Department of the FinanceMinistry could use the list of taxpayers produced by the local assessingcommittees. Urban authorities could earn a fee for this service. Cashcollection controls would have to be strengthened before such an approachcould be considered seriously.

2.36 In the medium term, some amount of continuing block grants tourban authorities would be a sound policy. However, a strategy should bedeveloped for the larger urban authorities (i.e., the city and municipalcouncils) to meet operating expenses entirely from local revenues. Ihiswill necessitate reconsidering and implementing formulas for calculatingindividual block grants, and over the medium to long term will necessitatean evaluation of national taxes for possible transfer to localjurisdictions.

2.37 Financial Personnel. The departure of trained accountants fromUganda, together with the decline in accounting and financial trainingprograms, has resulted in a shortage of skilled financial staff in bothlocal and central governments. The shortage exists at all skill levels,from accounting clerks through financial managers. Ihe situation is most

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serious at the intermediate and senior levels, where accounting, auditingand financial analysis skills are normally acquired through collegeprograms and some years of practical experience. Near-term rempdies usingintensive training programs, together with expatriate advisors in keypositions, are feasible and necessary. However, to sustain anyimprovements made with this approach, longer term programs will be neededfor educating professional accountants for public sector careers, and forpossibly attracting back those professionals who have left the country.

2.38 National Economic and Security Conditions. The effectiveness of anyprogram to improve the financial well-being of local authorities willdepend very largely on trends in national economic and securityconditions. Until wages and salaries have been adjusted to prevailingprice levels, the budgeting and matching of municipal revenues andexpenditures will be seriously hampered. In addition, stable currencyvilues and adjusted wage levels will be required before nublic savingsdeposits can be increased substantially, and any realistic housing programscan be planned. Improved economic stability and physical security alsowill be needed for urban authorities to reliably obtain and control basicequipment, parts and supplies; to make field collections of revenues; andto adequately manage a property tax administration program.

Housing Finance

2.39 The primary source of finance for housing in Uganda is theHousing Finance Company of Uganda (HFCU). At present, HFCU is operatingessentially as a savings bank, relying on short-term investments foroperating profits. New mortgage business was suspended in 1982, andrestued on a limited basis in 1984. Commercial banks in Uganda are not inthe home mortgage loan market. Consequently, the viability of HFCU as asource of financing for housing is central to any housing developmentstrategy. Annex 5 presents a history of HFCU operations and its currentmanagement position and financial prospects.

2.40 HFCU currently offers 8-10% interest on savings deposits, and isnow charging 15-18% interest on mortgage loans. Interest rates offered andcharged by the company are controlled by the Central Bank of Uganda.Meanwhile, commercial banks in Kampala are offering higher interest onsavings accounts. Since the comwn.Aial banks do not offer long-termmortgage financing, HFCU has continuied to attract mainly small depositorswho want to remain in good standing with the company in case they may wanta mortgage loan. Nonetheless, the higher rates offered by the commercialbanks should make it difficult for HFCU to attract new deposits to levelsthat would be needed to cover a substantial increase in mortgage loans. Onthe other hand, if HFCU raises deposit interest rates to be morecompetitive, loan rates also will have to be increased to maintain aprofitable spread. This could make beneficiary affordability an even morecritical issue in any housing development program.

2.41 Continued improvements in the administration of HFCU should putthe company in a position to manage a higher volume of lending. However,essential requisites for increased lending will be substantial increases inpublic deposits and in the company's capital base. The central governmentand the Commonwealth Development Corporation (CDC) have been negotiatingan increase in their capital contributions to HFCU.

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2.42 To the extent that earnings continue to accrue and additionalcapital contributions are made available to HFCU, the company's lendingceiling will be limited only by the amount of public deposits it canattract. As a general rule, total loans should not exceed about twentytimes the company's overall capitalization. At present deposit levels, anadditional loan capacity of about UShs 400 million could prudently berealized, increasing at about 10% per annum. This is an insignificantamount. Given an average cost of about UShs 7 million for a housing unit,these additional loans would finance less than 60 units. Hence, very largeincreases in public deposits will be needed to cover the loan levelsrequired to finance any meaningful housing development at present costs.For this to be achieved, personal inucmes will have to rise dramatically tomeet the general price inflation, and then the HFCU will have to competewith the commercial banks for new deposits. In addition, as discussedfurther in Chapter III, lower-cost housing solutions can be promoted.

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CHAPTER III: THE AENT OF URBAN SERVICES

A. Strengthening Urban Management: Major Issues

3.1 Improvements in the design, implementation, and management ofurban investments will require a strengthening of both the capacity of thecentral and local agencies responsible for such investments and of theability of these agencies to work cooperatively. It is useful to visualizesuch institutional strengthening as consisting of improvements in (a) thestructure and organization of institutions; (b) regulations, standards, andprocedures; and (c) resources and capacity. The first part of this chapterdiscusses major issues of organization, capacity, and the regulatoryenvironment that are reflected in current practice in town planning,building regulations, and central-local government relations. For capacityissues the emphasis is on equipment and especially training needs, sinceproposals for improving financial, capacity were presented in Chapter II.The second part of this chapter describes how the application of measuresto deal with these issues would affect programs in urban water supply,solid waste collection, land tenure, and housiag.

3.2 Structure of Local Governmoent. The present organization of localcouncils is by and large adequate for the tasks they have to perform.While the fuUl official structure is quite complex, the effectivefunctional organization of the Kampala, Jinja, and Entebbe Councils, givenin Charts 1-3, shows a consistent pattern familiar to Anglophone EastAfrica. The Council is the deliberative body, headed by a largelyceremonial Mayor in the case of Kampala and Jinja. Day to day affairs arerun by the Town Clerk's, Engineer's, Treasurer's, Public Health, andEducation Departments into which are fit all the functional responsibiltiesof the Council.l/ All Departments report to the Town Clerk, who is thechief administriative officer of the Council. Committees of the Councilreview expenditure proposals prior to their consideration by the fullCouncil. In its capacity as financial controller, the Ministry of LocalGovernment is charged with reviewing budget forecasts, monitoring theprogress of budget spending, and auditing council development programs (seealso para. 2.31).

3.3 What improvements can be recommended in this structuregive first priority to coordination between Departments, and secondly tofilling gaps in responsibility. Consideration should be given toformalizing the contacts between Departments in a 'Program ReviewCommittee' (PRC), a management team consisting of the five Department headswith the Town Clerk as chairman. The PRC would review and approve majorexpenditure proposals before presentation to the council committees. This

1/ The smaller units are often retained in the Town Cj.erk's Office untilthey are large enough to stand on their own. Thus, Jinja in 1984 madeeducation, formerly with the Town Clerk, a separate Department.

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would make more systematic the present informal and essentially haphazardtechnical review, and would save time and effort in the long run. As asecond major function, the PRC would coordinate the work schedules of unitsserving more than one Department. In some councils responsibility forsolid waste collection is shifting from the Engineer's to the Public HealthDepartment, while maintenance and repair of vehicles, including refusetrucks, reirains with the Engineer. With vehicle fleets in almost totaldisarray, the first few new vehicles acquired will be much in demand, andthe PRC would advise on their allocation. In about 4-5 years Kampala willalso need to consider establishing a separate traffic management andtransport planning section in the City Engineer's Department, toconsolidate functions now split between two sections and to remedy theabsence of responsibility for urban transport planning.

3.4 Even more than the structure, however, priority should begiven to clarifying the function of councils in areas where the linebetween central and local management has been left undefined. The area ofelectricity supply and street lighting provides the model for such anarrangement. The respective roles of KCC and of the Uganda ElectricityBoard (UEB) are recorded in an agreement specifying the services UEB asagent provides to the KCC as client or consumer of electricity. Each sidehas been aware of the responsibilities of both, and as a resuit theagreement has worked well in practice.

3.5 A similar relationship, that has also worked satisfactorily,prevails between the Commissioner of Lands and Surveys (Ministry of Lands,Minerals, and Natural Resources) and KCC in land valuation, land registry,and plot attribution. This relationship, however, has never been writtendown. It is recommended that an agent-client agreement be drawn up toformalize the working arrangements that have evolved between theCommissioner of Lands and KCC. The framework of such an agreement isprovided by statutes already in force, such as the Urban Authorities Actand the Town and Country Planning Acts. Like the UEB/KCC text, thisagreement would specify:

(a) the form of relationship linking the parties;(b) the undertakings of each party;(c) ownership of assets;(d) terms of payment for services rendered;(e) responsibility for maintenance of assets; and(f) procedures for additions to the stock of assets (e.g.,

network extensions, valuation and registry of new land,etc.).

3.6 The Commissioner of Lands-KCC agreement pertains to acritical area of central-local relations that having worked well on the

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ground, should not be difficult to put on paper. Next, this procedureshould be applied to a central-local issue which has been a source oftension for 15 years: road maintenance in Kampala. When the boundaries ofKampala City Council were enlarged in 1968 from 22.2 sq km to 195 sq km,the demarcation for road maintenance and rehabilitation between KCC and theMinistry of Works (MOW) was not adequately clarified. While WOW has takenthe view that KCC is responsible for all trunk roads within its expandedboundaries, KCC maintains that responsibility for the western and easterndistricts of the expanded KCC remains with MOW. Resolution of thisdispute, in written form, is urgently required to avoid misallocation offuture investments. A large KCC road rehabilitation project being launchedwith financing from the European Community (EC) concerns only the CentralDistrict of Kampala. Simultaneously, MOW is planning to rehabilitatetheKampala-Jinja Road beginning not at the Central District line of Kampalabut 4-5 miles farther out, at the eastern extremity of the KCC.

3.7 Central-Local Relations In Kampala. The key management issue facingKampala is the duplication of vertical lines of control between the centralgovernment and the KCC. On the one hand, MLG as the supervisory ministryof all local governments is empowered to carry out the financial managementand quality control functions already described (see para. 2.31). On theother, the Kampala District Commissioner (DC) has important authority inboth law and practice over the growth and management of Kampala.

3.8 The DC is the President's personal representative and ChiefGovernment Agent in the capital. He is appointed by the President andreports to the Permanent Secretary, Office of the President. Largelybecause the military regime questioned KCC's capacity to handle security inthe Kampala area, the post of DC Kampala was created in 1974. The DCpresides over the District Intelligence Committee, which has met monthlysince that time to review security. Enforcement of security measurespasses from the DC to local chiefs, as it does elsewhere in the country.However, local chiefs since 1968 have been incorporated into the KCC asCouncil Agents, and report to the Town Clerk. Especially as the KCC limitscontain extensive semi-rural and rural areas which traditionally are formedinto districts, local chiefs/Council Agents effectively report to both theTown Clerk and the DC in their duties of tax collection, monitoring ofcompliance with security, and interpretation of government policy at thelocal level. In this sense the roles of the Town Clerk and of the DC areoverlapping at the same level. However, in another sense the roles arehierarchical. The DC presides over the important District Team andPlanning Committee, which sets guidelines for the development of the KCCregion. The KCC Town Clerk is a member of this committee.

3.9 It is recommended that the Public Service Commission launchas soon as possible a study leading to proposals for sorting out the roles

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of MLG, KCC, and DC in the management of Kampala. Scenarios to beconcidered would likely include the following:

Scenario A: The present structure is retained but with formalcoordination between DC and KCC (joint planningcommittees, task forces). Similar linkages areestablished between DC and M1G to clarifyresponsibilities for control of KCC activities.DC/KCC coordination is possibly achieved bygiving DC a seat on KCC committees, as is truefor councils elsewhere in the country.

Scenario B: DC retains authority over security matters andbecomes an advisor to KCC on development issues.The District Team and Planning Committee becomesthe District Planning Advisory Committee, stillchaired by the DC. Some traditional developmentfunctions of the DC (e.g., veterinary services)remain with the DC until the periphery of the KCCis more urbanized.

Scenario C: DC remains in charge of security but most or alldevelopment functions are vested in KCC. TheDistrict Team and Planning Committe isabolished. The DC, however, is regularlyinformed (for example, through accounts ofmeetings of the proposed PRC; see para. 3.3) ofupcoming development programs so that securityimplications can be evaluated.

Scenario D: The post of DC is abolished. The pre-1974arrangement is reinstated, with an Assistant DCfor Kampala reporting to the DC Mpigi.

Scenario K: The post of DC is abolished along with theDistrict apparatus in Kampala which is handedover to KCC. The territory of the DC Mpigi (lessKampala) is split into two, largely so that eachDC would have less ground to cover.

3.10 Although to anticipate the conclusions of this review wouldbe premature, the impression is inescapable that Scenario C has much torecommend it. Line authority from the central government to localauthorities remains split between MLG and the DC, but there is a cleardistinction as to the powers of each. MLG would gain greater stature asthe sole supervisor of KCC's programs for the growth and management ofKampala. Because development programs in Kampala depend heavily on furtherimprovements in security, the DC retains a vital, though now more indirect,

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role in the city's future. Retaining the present structure (Scenario A)appears completely unworkable: given the confusion of roles and authority,there is bound to be tension between the DC and the KCC Town Clerk evenwith coordination linkages. Scenario B does not materially reduce thisconfusion. and perpetuates problems of service coordination (e.g., DCveterinary services and KCC health services in the same locality).Finally, doing away with the DC post (Scenarios D and E) would appear tomake it much more difficult to manage the security situation in Kampala.

Regulations and Standards

3.11 Town Planning. Regulations and procedures governing the preparationof urban land use plans suffer from three main shortcomings. First, theyassume it is possible for economic activity to be allocated spatially bypublic decision. Although it is true that town planning choices (such asthe location of bus terminals and health clinics) affect the spatialallocation of residences and employment, it is not true that the spatialallocation of residences and employment can be determined by town planningchoices. Physical plans could be improved in their coverage of socio-economic conditions in the towns, which in any case change rapidly makingthe plans soon obsolete. Second, no one (except, perhaps by default, thecounclls) has responsibility for costing out the municipal infrastructureplans and translating them into investment programs. In the rare caseswhere this is done, as for example with Structure Plans for Masaka andMbarara prepared recently by consultants to the Reconstruction andDevelopment Corporation (RDC), it is found that lack of attention to issuesof financing, economic viability, and cost recovery casts serious doubt onthe feasibility of the final result. Third, although councils approveplans before the final submission to the Town and Country Planning Board,they typically play little or no part at the preparation stage.

3.12 The first priority to improve the to-wn planning process is todraw up an agent-client agreement between councils and the Ministry ofHousing and Urban Development (MEUD, where responsibility for preparationof town plans has been located since its removal from MLG in 1981) similarto the existing KCC/UEB agreement and that proposed for KCC/Commissioner ofLands. For greatest efficiency and economy of resources, actualpreparation of plans should continue at MEUD. However, the PhysicalPlanning Department of MHUD should be strengthened and enlarged so that itcan develop capabilities in the design and evaluation of urban investmentprograms. This Department would require the blending of economist andfinancial analyst as well as planning skills and those of otherspecialists. Technical expertise would be necessary to help with the shiftfrom physical planning to investment planning. As the clients, councilswould (a) initiate the process by requesting that the Department prepare anArea Development Plan justifying capital investments from the socioeconomic

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as well as physical standpoints; (b) be kept informed by MHUD duringpreparation; and (c) as at present, approve the plans before their finalconsideration by the Town and Country Planning Board. Although M1G has notbeen directly involved in town planning since 1981, this redefinition ofthe objectives and composition of plans requires importent inputs from MLG,particularly judgments as to the viability of the financ'ng plans,availability of finance, and cost recovery measures proposed for theinvestments.

3.13 Building Regulations. Legislation governing building constructiondiffers markedly according to whether the construction will occur in aPlanning Area or a Residential Settlement Area. For Planning Areas the1964 Public Health Act (Building Rules) specifies in detail the materialsand methods permitted for acceptable Grade I construction. Primaryresponsibility for enforcement of the Building Rules lies with the councilEngineer's Department. To obtain a building permit, a plot owner mustsubmit plans in quadruplicate and structural drawings in duplicate to theengineer. The plans are then checked for conformity with the structuralaspects of the Rules and circulated to other council officials forcompliance with planning, land tenure, and health regulations. The plansthen return to the Engineer's Department for dispatch to the DevelopmentCommittee of the council and the Council itself. After a permit has beenapproved, inspections are to be carried out at seven stages ofconstruction.

3.14 It is not suprising that only a few house builders have theresources and patience to meet these requirements. Housing developmenttherefore mostly takes place outside the areas where the Building Rulesapply, either in Residential Settlement (Grade II) areas or in unrecognizedcommunities. These settlements are generally far from the city centers andhence remote from job opportunities. The Grade II building rules are muchsimpler and are stated in terms of performance criteria rather thanspecifications of materials and methods.1/ Although a few materials (grassfor roofing) are allowed only in specialTy designated areas, the Grade IIRules and their administration are basically flexible. Even the Grade IRules do not prohibit innovation in design or the use of new materials.However, the detailed specifications of materials and building methodspromotes rigidity of techniques, favors established and experiencedbuilders, and discourages innovation.

3.15 Existing regulations do allow councils to define their ownperformance standards. KCC, for example, could take advantage of thisprovision by asking the Physical Planning Department (MHUD) to prepareperformance criteria after carrying out tests of local building materials.The resulting criteria would quite likely legitimize a wider range ofacceptable materials and techniques for construction and finish.

3.16 It is important to note that although the local authoritieswould in this manner continue to be concerned with establishing guidelines

1/ Foundations, for example, are required to be ...adequate to support theload transmitted to them.-

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and criteria for construction, they would not need to be concerned abouthow quickly a lower-standard house is upgraded to a higher standard one.This preoccupation would disappear because any house would be acceptable aslong as it meets the performance criteria. Councils would no longer incurthe irritation of residents feeling pressured to improve their housesfaster than their incomes permit.

Capacity

3.17 Equipment. Since most municipal vehicles and equipment weredestroyed or stolen during the war of 1979, equipment needs are pervasive.For lack of transportation, ambulance and solid waste collection units incouncils have been inactive, and mobile health workers have not been ableto reach the majority of urban families who do not live within walkingdistance of a dispensary.

3.18 A program to rehabilitate vehicle fleets should concentratefirst on (a) acquisition of road maintenance equipment and vehicles forKampala, and (b) repair of the Sixth Street Maintenance Workshop in Kampalaand of vehicle maintenance facilities in Jinja and Entebbe. In theEC-assisted road rehabilitation project being launched by KCC, no provisionis made for maintenance equipment. Without a maintenance capacity thestreets will quickly revert to their present state, and this investmentwill have been wasted. Replacement of vehicle maintenance equipment,purchase of tools, and repair of the premises, especially at the SixthStreet Workshop, should precede even the purchase of spare parts so thatthe repair of wrecked vehicles can begin immediately once the sparesarrive. Also, equipment needs of Masaka, Tororo, Mbale, and other townsshould be evaluated so that similar rehabilitation programs can beprepared.

3.19 The desperate shortage of equipment for survey of landboundaries is a major bottleneck in the issuance of land titles by theCommissioner of Lands. Since the Ministry follows the Torrens landregistration system, survey plans showing the precise plot limits must beattached to title documents. Restoration of survey equipment is necessaryto speed up the ponderous process of land surveying and plot attribution.

3.20 Traiuimg. Turning to the human aspects of capacity issues, thetraining needs of local governments were reviewed in terms of what isrequired to fill existing vacancies in their establishments. Annex 7presents the results of the surveys undertaken at Kampala, Jinja, andEntebbe councils, together with an assessment of the capacity of keytraining institutions in Uganda to meet the most urgent needs.

3.21 The most serious training deficiencies are at the middlemanagement and senior technical levels. Engineer's departments lacktrained works supervisors and assistant foremen, while the treasurer's

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departments make do with far fewer principal tax officers, accountants,collection agents, and auditors than are required. These gaps in middlemanagement harm those both above and below. On the one hand, seniormanagers by default become engulfed in matters that would have been handledby their subordinates. On the other, the implementation staff are eitherpromoted too quickly to lower and middle management or, more typically,carry out their technical duties without guidance or feedback. As analternative to training, staff without the right skills could theoreticallybe reduced through attrition and others hired in their places. This wastried in early 1983 at KCC and proved to be politically impossible, evenhad the required skills been available on the market.

3.22 The first priority is therefore training to enable localauthorities to improve their administrations and their financial andrevenue collection procedures. The most senior council officials wouldbenefit from exposure to local government operations abroad, through forexample 1-2 months' visits in the UK or the USA. Most training courseswould however be provided locally, in the first instance by the Instituteof Public Administration (IPA). IPA diploma courses in Local AuthoritiesAdministration, in Office Management, and the Finance Officer's Diplomawhich had been eliminated in 1981 were reinstated in July 1984. To achievethe course objectives, expatriate teaching assistance and equipment will berequired. Early consideration should also be given to reinstating theaccounting diploma course, also discontinued in 1981. For administrativestaff under the supervision of MLG, the main emphasis should be on trainingadministrative secretaries and township officers for improvedadministration of the very small towns designated as "new administrativecenters.2

3.23 The second set of major training requirements concernsredirection of the Physical Planning Department of MEUD toward urbaninvestment planning. There are two conditions for this to occur. First,the planners and engineers now in the Department should be complemented byfinancial analysts and economists immediately, and later by otherspecialists such as statisticians and demographers. Second, responsibilityfor deciding whether proposed investments are consistent with the RecoveryProgram lies with the Ministry of Planning and Economic Development(MPED). Proposals for strengthening MPED, in part through training, havebeen made in the framework of the IDA Third Reconstruction Credit.1/Because of its vital role in the monitoring of investments, the trainingneeds of MPED should be met in parallel with those of MHUD's PhysicalPlanning Department.

B. Strengthening Urban Management: Inplementation

3.24 The previous section described changes in organization,systems, and capacity that are associated with improved urban management.

1/ See Michael L.O. Stevens, Review of Planning and Economic Management

Machinery," November 1983.

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This section outlines how actions of local and central government toprovide municipal services, land and housing would be improved by suchchanges.

municipal Services

3.25 Water and Sanitation. Under the Water Supply and SanitationRehabilitation Project being launched with IDA assistance, water and sewagetreatment networks in the seven largest towns of Uganda will berehabilitated. At the same time, the capacity of the National Water andSewerage Corporation (NWSC) to respond effectively to pressing demands inother towns will be strengthened through technical assistance andtraining. However, as the institutional capacity of NWSC is built up, itis equally important to redefine the statutory relations between NWSC andthe councils.

3.26 Prior to 1972, local authorities were fully responsible forconstruction, operation, and maintenance of water supply and seweragenetworks. This responsibility was transferred to the newly-created NWSC in1972. Councils were left without authority, but as the most visible andaccessible government bodies continued to be blamed by their constituentsfor the lack of service. Up to the present day, councils have maintainedthat water and sewerage networks should be returned to their management.

3.27 By means of a written agent-client agreement of the typerecommended for town planning (see para. 3.12), the effectiveness of both.WSC and local authorities in the provision of water and sanitationservices would be enhanced. Councils would ask NWSC to prepare plans fornetwork extensions and plant rehabilitation on the basis of councils' ownprogramming priorities. NWSC will undoubtedly have to be selective inmeeting these requests, until its own capabilities improve further.Councils would monitor the preparation of designs and, as at present,consider the final product in the Development Committee and later the fullCouncil. In doing its work in accordance with stated priorities of thecouncils, NWSC's role in the design, implementation, and maintenance ofinvestments would be facilitated since it can count on the more activesupport, or at least the lack of resistance, of councils. On their partthe local authorities would again play a significant role in the process,even if this role is conception and monitoring and not line responsibility.

3.28 Road and Vehicle Maintenance. The most serious shortcomings in theroad maintenance capacity of councils can be traced to inadequate trainingand equipment. Both routine and periodic maintenance were done fairly wellbefore 1971, and each was budgeted for separately in the council RoadsFunds. Subsequently, periodic maintenance funds were removed from thebudget and routine maintenance resources were drastically reduced. For the

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foreseeable future, local authorities will therefore continue to contractout the reconditioning and reconstruction of roads to the private sector.This is entirely appropriate. Meanwhile the focus would be on acquiringtools and equipment to rehabilitate vehicle maintenance workshops,especially the Sixth Street Workshop in Kampala. Equipment needs will bevaried, since street surfaces vary from 97% paved in central Kampala to5-15% in the Western and Eastern Districts of Kampala, but they should notbe considerable (in the first round of acquisitions) to get the maintenanceworkshops and street patching crews back in operation. Any subsequentpurchases would be tailored to progress in local financial reforms, so thatrecurrent costs and provision for renewal of equipment can be met throughlocal taxation.

3.29 Solid Waste Management. Trucks, bins, hand carts, and otherequipment provided under the IDA-assisted Water and SanitationRehabilitation Project should dramatically improve the solid wastecollection capacity of councils in Kampala, Jinja, Entebbe, Masaka,Mbarara, Mbale, and Tororo. At different times, the Public Cleansing unitsof councils charged with solid waste collection and disposal have beenlocated in the Engineer's Department; the recent trend is to shift them toPublic Health departments. The exact placement of these units appears tobe less important than the coordination required with vehicle maintenancestaff in the Engineer's Department, so that the skip trucks and carts willbe regularly serviced. Although scheduling would theoretically be easierfrom within the Engineer's Department, there is no reason why PublicCleansing units located in Public Health should not be able to liaise aseasily with vehicle maintenance staff in the Engineer's Department. Forexample, equipment maintenance schedules for all Departments should bereviewed regularly by the Program Review Committee (see para. 3.3).

3.30 Markets. The way in which the local councils' monopoly of foodmarkets is managed illustrates the benefits to be obtained from a moreflexible institutional framework that treats similar economic entitiessimilarly. In Kampala, 52 food markets with a total of about 7,100 stallshave been licensed by the KCC. Licensing ostensibly maintains healthstandards by admitting for sale only goods passed by health inspectors.However, these intentions are thwarted since goods that are believed not topass the city inspection are sold under the table to people in illegalmarkets, now numbering 43 in Kampala with,about 2,000 stalls. When it isconsidered that of the 52 legal food markets, 43 are "undeveloped,- andthat physical differences between -legal, undeveloped" and "illegal"markets are often negligible, it makes both financial and economic sense tobring as many presently "illegal" markets as possible under the purview ofthe councils. In the KCC a survey of all markets was undertaken in 1981,with the result that 10 markets were subsequently legalized. It isrecommended that this process be expanded in Kampala and initiated inJinja, where the impacts on local revenue can be substantial (see paras.2.16-2.19).

Laund -29

3.31 With the exception of one municipal council (Bombo) and 18town councils, all cities and towns in Uganda have the authority toallocate and manage the land within their borders. Ownership of the landis vested in the Uganda Land Commission (ULC), which transfers effectivecontrol to the local governments through a 199-year lease at a symboliccharge of USh 1 per year. Individuals may then obtain a leasehold titlefrom the local authorities upon completion of the following steps:

a. A cadastral survey is conducted by the Chief Registrar ofTitles, provided there is an approved Zoning Plan for thearea

b. Councils declare the plots open for leasec. Applications for a plot are made to the Chief Registrar of

Titlesd. Land records are checked to make sure the plot is

availablee. A Government Valuer determines the "land premium," or

market value based on location, amenities, etc.f. The application form is sent to the Town Clerk, who puts

the item on the agenda of the Development Committee of theCouncil

g. After review by the Development Committee, the item isvoted on by the full Council. The Chief Registrar ofTitles is represented at the Council meetirg

h. Minutes of the Council meeting are forwarded to theChief Registrar of Titles

i. If the Chief Registrar indicates "approval' on theminutes, a lease offer is extended to the applicant. Theapplicant is asked to pay (a) the full land premium; (b)all survey fees; and (c) title insurance

j. A lease document ("Lease by Urban Authority") is preparedand sent to the applicant who signs, pays a stamp duty,and returns the lease to the Chief Registrar of Titles

k. The Chief Registrar of Titles forwards the lease to thecouncil, which seals it

1. The sealed lease is returned to the Chief Registrar ofTitles, who issues a Leasehold Certificate. Leases run 5years (2 years in Kampala), and are extended to 49 yearsin rural areas or 99 years in urban areas provided theplot has been developed. The longer leases arerenewable. Ground rents equal to 1OZ of the land premiumare paid annually, and revised every 10 years.

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3.32 As shown in Table 2 below, those who complete this longprocess and obtain a leasehold title represent a small fraction of thepotential demand (although a larger fraction of the high-income residentsthat are able to afford the costs involved):

Table 2: Ldx Leasehlds Awrded in relatimnto Potenial Dmmu, 1979-1983

AnmuaL New PlotsPqplation Reqlred leasebolds (OCnificates of Title) Awarded Total

Tbwn Increase a/ Eah Year b/ 1979 1980 1981 1982 1983 1979 -1983

Kampala 16,O0 2,960 107 211 345 230 330 1,223Jinja 1,575 290 13 31 12 18 22 96Etebbe 790 145 7 6 13 12 21 59

/ At 3.5% armal pouation gw-th.b/ 5.4 person per bxuebold. Assam one hxsetDld per plt.

Swuroe: Coazdssioner of Ladi Surveys.

3.33 Several factors combine to produce this result. First,surveying of new development areas has been virtually halted by the lack ofboth survey equipment (see para. 3.19) and financing. The national budgethas not been able to pre-finance cadastral surveys, even though their costis recovered from plot applicants at the time of the lease offer.Moreover, the review of individual plot allocations by the DevelopmentCommittee and by the full Council further draws out the attributionprocess. This review also applies to applications for lease extensions,where a judgment must be made about how much effort over the previous twoor five years -as gone into developing the plot. Given the shortage ofbuilding materials in Kampala, the two-year initial lease period istypically not long enough to finish construction. Finally, land premiumsare higher than can be afforded (especially without credit) by manyapplicants, although they may still lie well below the full market value.Of the applicants for a plot in Entebbe who completed all steps in theprocess over the past three years, less thav half actually accepted theleaseholds that were finally offered them because they discovered theycould not meet the payment terms.

3.34 As was also suggested for building regulations (para.3.15), abroadening of the range of acceptable solutions would both simplify theprocess and permit its extension to areas not yet in the system. Theobjective should be to confer security of tenure, as a means of channelingprivate savings into investments in housing. In parallel with the titleaward process described above, the granting of an Occupancy Permit to othersegments of the urban population is likely to be welcomed as a measure ofsecurity by those having no written evidence whatsoever of tenure.Following this line of reasoning, Occupancy Permits would be issued

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by councils to low and middle income residents whose house locations do notinterfere with plans for the future provision of services. In one or twopages, the Occupancy PermiL would (a) confirm officially the right ofplotholders to remain where they are; and (b) be changed into a fullleasehold title when the plot is surveyed and the land premium is paid.Because ownership remains with the council when an Occupancy Permit isdelivered, no land premium or ground rents would be due.

3.35 As building regulations become more performance-oriented (seeparas. 3.15-3.16), there would be much less need for detailed distinctionsamong land uses. Consequently, the process of awarding land leaseholds canalso be simplified. The shift from physical planning to investmentplanning would imply a move away from the present Zoning Plans. Thetendency instead would be to prepare what can be called Area DevelopmentPlans, which would indicate the broad land use implications of futureinvestments without need for details on what each type of use will be.Low to middle income residential", or even an unqualified "residential,"could replace the current Grade I-Grade II designations. The basictransportation network would be indicated, and land reserves for communityfacilities would be shown. Although the Development Committee and the fullCouncil would review and approve Area Development Plans, there would belittle need afterward to approve each plot application since the layout ofall plots is acceptable. These time-consuming steps can be saved.

3.36 Once the plot is awarded and construction begins, homebuildersshould not be penalized if outside forces such as the scarcity of buildingmaterials prevent them from finishing within two years. Considerationshould be given to lengthening the initial lease period in Kampala to fouror five years. In contrast, the period between revision of the groundrents (10 years) is too long. In nominal terms, grm'nd rents would have tobe raised astronomically to cover the inflation of a decade and maintaintheir real value. It is recommended that the period between revision ofground rents be reduced immediately to five years, and be further redunedwhen staff of the Commissioner of Lands are geared up to manage morefrequent revaluations.

3.37 Mailo Land. Over half the land area of Kampala liesoutside the jurisdiction of the Uganda Land Comission and consequentl' ofKCC. Mailo land, located primarily in the western and southern districtsof the KCC, is privately owned land with titles granted under customaryrights before and during the Protectorate. Mailo land ceased to existunder 1975 legislation aimed at forcing mailo owners either to develop orrelinquish ownership. This legislation, however, was never enforced.

3.38 Fortunately, ULC land in Kampala has not all been used up.This will allow time to sort out the complexities of the mailo ownershipissue and examine the impacts of alternative control measures. Meanwhile,as the city expands, it can be expected that mailo owners will respond toeconomic incentives to use their land more intensively.

Housing

3.39 As in other countries, central and local authorities in Ugandahave found it impossible to meet the demand for housing with affordablepublicly constructed housing units. It is widely recognized that a change

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in policy is justified not only oecause the existing public housing stockhas deteriorated badly, but also because its scarcity perpetuatesinequities between those with access to it and those without.

3.40 The problems are similar whether the public housing is ownedby the National Housing and Construction Corporation (NHCC) or by localcouncils. Most of the KCC's 1,760 council housing units, for example, cameonto its books in 1958 when the African Housing Department of the Ministryof Works, which had built them, was dissolved. Since only 150 units havebeen built since 1962 (one third of these to replace existing onesdeteriorated beyond repair), there has been virutally no new constructionin over 20 years. Table 3 below shows that fixed 1983 rents in KCC councilhousing bear no relation to market rents for the same type of house:

Table 3 Rents in relation to MarketValues of Comparable UnitsKCC Council Housing, 1983

KCC EstimatedCouncil Fixed Monthly - Market Rent,Housing Rent, 1983 1983Unit (USh) (USh)

1 room 165 3,0001 bedroom 240 8,0002 bedrooms 615 12,0003 bedrooms 1,830 16,000

The argument that this is a necessary in-kind wage supplement for underpaidcity employees loses validity when it is considered that two-thirds of suchhousing is not occupied by city employees but by the general public. Asidefrom council housing, KCC has 88 units available to senior staff. In thestaff housing the difference between fixed KCC rents and market rents iseven wider. For a 3-bedroom house in a Grade I area, renting monthly onthe open market perhaps for USh 20,000, a senior staff member of KCC paysUSh 142.

3.41 The fact that neither central nor local authorities shouldaccept unlimited responsibility to house their staff was recognized as farback as 1954. Now, both levels of government appear on the verge ofredefining their roles as facilitators in the housing market rather thanparticipants. In-cash housing allowances, permitting public officers toobtain their housing privately, are being given more serious thought. Thisis a wove very much in the right direction. However, such an initiativewill need to develop in parallel with a reorganization plan for NHCC thatwould permit devestiture of its unproductive assets (essentially its publichousing stock). NHCC could then take on the management of programs todevelop surveyed plots for private house construction, along the lines ofthe -reception area programme' now being considered.

3.42 The practical problems of introducing a housing allowancescheme will need to be carefully reviewed. Given the steep rise in houserents and in the costs of new construction, the financial burden will needto be reduced through a phased introduction of allowances together with theestablishment of long-term loan arrangements. MHUD is assembling a team ofconsultants to advise Government on the issue of civil servant housing.The scope of work of this team should include an in-depth evaluation of theimpacts of introducing a housing allowance system.

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3.43 Since surveyed plot programs can be administratively complex,the redirection of NRCC to acquire competence in this area will take time.In the near term, however, neighborhood upgrading holds a better promiseboth of improving the living conditions of poor families and ofdemonstrating the redefined public-private roles in housing. Proposals forslum improvement in the Namuwongo, Wabigalo, and Kisugu districts ofKampala show that a start has been made toward developing a workableprogram. To more closely reflect the mix of public coordination andprivate initiative, these proposals should be redefined to (a) reduce thescope to what is within the repayment capacity of residents; (b) focus onbasic services, with an optional credit program for house construction andimprovement; and (c) improve security of tenure through introduction ofOccupany Permits. Families with Occupancy Permits could then build innon-permanent materials on a 4- or 5-year lease, provided the materialsmeet the performance criteria set forth in the building regulations.

3.44 Building Materials. To satisfy these construction needs, criticalshortages of building materials must be addressed. Roofing sheets andnails continue to be almost lOOX imported, as there are no alternativesfor completing most buildings. It is recommended that MHUD closely monitortrends in the productior of locally-based materials (primarily bricks andconcrete blocks), so that complementary imports of roofing sheets and nailscan be assured. The production of bricks in turn requires large amounts ofenergy, currently derived from coffee husks and firewood. Wood resourcesare being badly depleted in many semi-urban and rural areas, raising theopportunity cost of using coffee husks as fuel for brickmaking rather thanin agriculture. For brickmaking, alternatives such as recycled diesel fuelrather than coffee husks should be explored, since the larger brick kilnsaccommodate several types of fuel.

3.45 Industrially-produced bricks are affordable to only a smallsegment of the population, but artisan and small-scale producers makebricks suitable for single-story houses and use less capital in smallertranches. Programs being designed by the Ministry of Industry to helpsmall-scale producers should be funded and put in place as rapidly aspossible. Coordination with the larger producers (particularly UgandaClays) would help get these programs off the ground: since the currentdemand far exceeds the supply of building materials, the industrialproducers do not see small suppliers as a threat and have shown an interestin providing technical assistance. Other programs such as those at theKiteredde Construction Institute near Masaka are designed to develop localmaterials and train artisans in their use. They deserve support as part ofa reorientation of policies in central government ministries toward theproduction of local materials. Finally, the Building Research andMaterials Development Unit of MHUD will also reqcire more equipment andgreater staff capabilities if it is to fulfill its role in the design,testing, and demonstration of local materials.

3.46 Unless regulations and standards are also made more flexibl ,these direct actions will probably have only a limited impact.Performance-oriented building regulations would automatically give greaterscope for the use of local materials. Moreover, some local authoritiesprohibit the firing of bricks within their boundaries, despite the numberof suitable sites and the high cost of transporting finished bricks fromoutside the town limits. A review of these regulations is a necessarycomplement to the managerial and financial advice provided under Ministryof Industry programs in the promotion of local building materials.

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CHAP=ER IV: RECGIHHEDAXIONS FOR LS INITATIO5

4.1 The recommended strategy for improving urban management andfinance in Uganda builds selectively on the strengths of central and localauthorities and addresses the most commonly shared weaknesses. Theoverriding purpose of such a strategy is to support the goals of theRecovery Programme by improving local services and the capacity to generateand pay for essential investments. More specifically, what is proposed isdesigned to:

a. Set clear guidelines for urban institutions by formalizingthe successful informal procedures and clarifying rolesand responsibilities

b. Improve the financial administration of local authorities,the financing of urban investments and the recovery ofcosts from those who benefit

c. Establish similar regulations and prices for similiarcoTnmodities and services

d. Introduce more effective measures for servicing of land,granting of tenure, and house construction.

A. lumediate Action Program

4.2 From the set of recommendations presented in earlier chapters,measures making up an Immediate Action Program to be carried out as rapidlyas possible include the following:

a. Technical assistance, equipment, and materials forstrengthening financial management in Kampala, Jinja, andEntebbe municipalities and for improving the effectivenessof MLG (paras. 2.10 - 2.38) 1/

b. Equipment and vehicles in KCC for adequate maintenance ofroads, and equipment, works, and tools in Kampala andJinja to rehabilitate vehicle maintenance facilities(para. 3.18)

c. Written clarification by the agencies concerned of centraland local government responsibilities and the roles of MLGand DC in the management of Kampala. For watersupply/sewerage and town planning, redefinition of presentarrangements to ensure an effective role for councils(paras. 3.4-3.10)

d. Technical assistance, materials, and teacher training to

I/ Although equipment and technical assistance needs of these threemunicipalities are critical, requirements are also urgent in at least 12major cities and towns. At the same time, the capacity to use and maintainthe equipment will need to be strengthened in these other towns, as is alsothe case for Kampala, Jinja, and Entebbe.

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strengthen training capabilities at IPA, Uganda TechnicalCollege, National Teacher's College, and the SurveyTraining School (paras. 3.20-3.23)

e. Measures to simplify the regulations governing landservicing and house construction (paras. 3.14-3.16, 3.34)

f. Encouragement of small and medium-scale brick producersand construction artisans (paras. 3.45-3.46).

Specific aspects of the measures proposed for immediateaction are discussed in paras. 4.3-4.17 below.

Local Government Financial Management

4.3 Overall Strategy. Recommendations for strengthening local governmentfinancial management would initially concentrate on improving andsupplementing the capabilities of in-country staff, using expatriateadvisers. Concurrently, established training institutions and theircurriculums would be strengthened to provide more formal financialtraining. The curriculums would have to meet two general areas of need:college-level training for professional accountants; and functional shortprograms in specialized areas of municipal accounting, auditing, financialanalysis, and municipal finance. The expatriate advisers would provideinput to ongoing curriculum needs at the training institutions, and wouldcomplement the formal training by providing on-the-job training to localand central government staff.

4.4 The tasks of the expatriate advisers would be to (a) serve as"mentors' to key in-country staff; (b) take a lead role in improving anddocumenting systems and procedures; and (c) provide policy and operationaladvice on municipal revenue strategies and budgeting. Three advisers wouldbe needed for a period of two to three years each. They would be assignedto the Ministry of Local Government. 'One adviser would assume a lead rolein addressing issues of financial policies, inter-ministerial issues, localand central government relationships, and systems and procedures wichin theMinistry. A second adviser would work full time with the KCC,concentrating on improving systems and procedures, developing staffcapacity, and advising on financial management issues. The third adviserwould play a similar role for Jinja and Entebbe, and also provide back-upsupport at MLG.

4.5 The near-term efforts of the advisers would focus onstreamlining financial management policies and practices; improving,standardizing and documenting systems and procedures; dnd upgrading staffcapabilities. Opportunities to increase specific revenue sources atcouncils would also be addressed, but this should not be an immediateemphasis. As results are realized in the management areas, and as thenational economy improves, the focus of the advisers would shift towardincreasing municipal revenues and capital financing resources to supportdevelopment programs. This effort would include (a) reactivation of theLocal Authorities Loan Fund; (b) improvement of revenue collections; (c)

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development of programs for making larger councils financiallyself-sufficient; and (d) initiation of a comprehensive property taxadministration program.

4.6 Program Elements. The following tasks comprise a recommendedimmediate action program for improving local government financialmanagement. They are listed in approximate order of priority.

a. At the Ministry of Local Government:

(1) Prepare a plan and schedule for the payment of taxesin arrears to councils from central governmentagencies and corporations.

(2) Develop and document a formula for allocatingavailable block grants to urban authorities (to bedone ±n consultation with the Ministry of Finance).

(3) Appoint Councilors where vacancies exist in the urbanauthorities.

(4) Assess policies and procedures for the appointmentand retention of financial staff to urban authorities(to be done in consultation with the Public ServiceCommission).

(5) Assess the feasibility of having urban authoritiesset business license fees within their jurisdiction(to be done in consultation with the Ministry ofCommerce).

(6) Update current records of the Local Authorities LoanFund.

(7) Prepare written policies and guidelines to be used bycouncils in budget preparations.

(8) Establish and document local authority accounting andreporting requirements.

(9) Develop and document analysis guidelines to be usedin reviewing local authority financial reports.

(10) Develop and document records, systems, and proceduresfor the eventual resumption of the Local AuthoritiesLoan Fund.

(11) Develop and document detailed procedures to be usedin auditing local authority development programs.

- 37 -

b. At the Ministry of Finance:

(1) Review, change if appropriate, and plan forimplementing the existing formula for calculatingoverall annual block grants (to be done inconsultation with the Ministry of Local Government).

(2) Develop a strategy for increasing public employeewages to meet general price level increases.

(3) Assess the feasibility of tying the collection ofnational personal income taxes into the system oflocal Graduated Tax collections.

(4) Assess the feasibility of transferring selectednational tax sources to urban authority jurisdiction.

c. At the office of the Auditor General:

(1) Review, and as necessary, revise and documentfinancial auditing standards and programs for urbanauthorities.

(2) Establish criteria and a plan for using independentaccountants for auditing urban authorities, to theextent Auditor General resources are not sufficientto conduct the audits beginning with 1983.

d. At Kampala City Council:

(1) Update accounting records and prepare abstracts ofaccounts for the year ending December 1983.

(2) Review, revise and document systems and proceduresfor controlling cash disbursements.

(3) Review, revise and document systems and proceduresfor controlling revenue collections.

(4) Determine immediate needs for accounting equipmentand supplies, and prepare a related acquisitlon plan(to be done in consultation with MLG).

(5) Review, revise and document systems and proceduresfor maintaining records for property rate taxes, theGraduated Tax, and for licenses and fees.

(6) Update individual taxpayer records.

(7) Review and revise public market rents and fees.

- 38 -

e. At Jinja Municipal Council:

(1) Review and revise public market rents and fees.

(2) Review, revise and document systems and proceduresfor maintaining records for property rate taxes, andfor licenses and fees.

(3) Update individual taxpayer records.

(4) Review, revise and document systems and proceduresfor controlling cash disbursements.

(5) Review, revise and document systems and proceduresfor controlling revenue collections.

(6) Determine immediate needs for accounting equipmentand supplies, and prepare a related acquisition plan(to be done in consultation with MLG).

f. At Entebbe Town Council:

(1) Prepare abstracts of accounts for the year endingDecember 1983.

(2) Review and revise public market rents and fees.

(3) Review, revise and document systems and proceduresfor maintaining records for property rate taxes, theGraduated Tax, and for licenses and fees. Entebbeshould use the Graduated Tax system and procedures inJinja as a model.

(4) Update individual taxpayer records.

(5) Review, revise and document systems and proceduresfor controlling cash disbursements.

(6) Review, revise and document systems and proceduresfor controlling revenue collections.

(7) Determine immediate needs for accounting equipmentand supplies, and prepare a related acquisition plan(to be done in consultation with MLG).

- 39 -

Mainteumnce Equipment

4.7 A municipal engineer or municipal technical services specialist wouldbe required for a period of one month to determine immediate needs in roadmaintenance and vehicle maintenance equipment. The task of this adviserwould be to prepare descriptions and estimates of capital and operatingcosts for (a) equipment for KCC to ensure adequate maintenance of roads tobe rehabilitated under the EC-assisted project; and (b) equipment,materials, and tools to restore minimum operations at vehicle maintenanceworkshops in Kampala, Jinja, and Entebbe. Financing for acquisition of theequipment should be sought from ongoing reconstruction or technicalassistance loans or from bilateral donors.

Training

4.8 IPA. Assistance to local authorities enabling them to improve theiradministrations and their financial management and revenue collectionprocedures has top priority as support to implementation of the RecoveryProgram. Directly linked to this issue is the training capability of theInstitute of Public Administration. Expatriate teaching assistance,equipment, and materials will be required for at least two years to helprestore the Diploma courses in Administration for Local Authorities and inOffice Management and the Finance Officer's Diploma to effectiveoperation. If the accounting diploma course can also be re-established,financing for similar teaching assistance and equipment would also beurgently required.

4.9 A New Course in Quantity Survey at Uganda Technical Collge. TheCollege already provides two 3-year Diploma courses followed by a 2-yearHigher Diploma course which trains building technicians suitable foremployment in architects and engineers' offices, construction offices, andas inspectors and site foremen in the public and private sectors. Aquantity surveying option could be introduced by modifying the syllabus tofree up 8 hours per week for insertion of the new course. Initially, anexpatriate course leader will be required together with materials andequipment.

4.10 Support for the Survey Tralning School. To accelerate the grantingof titles to land, it is important to improve the effectiveness of theSurvey Training School to enable it to take in more students and tore-introduce the course in Valuation. To achieve these objectives theSchool will need expatriate teaching assistance and equipment.

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4.11 A Nev Course in Teaching Methods at the National Teacbers Colnege.The teaching staff of the Survey Training School are seconded fromgovernment departments. Although they have the necessary expertise intheir technical subjects, they usually have no previous teachingexperience. It is recommended that a three-week orientation course inteaching methods be established at the National Teachers College. Thiscourse would require two or three teachers from the College's Department ofProfessional Studies, and could accommodate about 30 students.

4.12 NHUD. To assist with the reorientation of the Physical PlanningDepartment, an adviser would be required for at least six months to (a)help in the consultation process with MPED, MLG, KCC and other agencies toreach a consensus on the broad outlines of the Department's new functions;(b) prepare a detailed work program for the Department for review andapproval by MHUD; and (c) define the staffing and re-training requirementsof the Physical Planning Department.

4.13 KLC Trainlng. Management training in MLG should focus on improvingstaff knowledge of municipal finance operations and capacity in financialcontrol. Training which must take place abroad should first consist ofimproving the financial and management skills of MLG inspectors. In thisrecard, the Glasgow District Council (U.K.) is offering training of 20mid-career finance officers, as well as the possibility of a 10-weeklecture program in urban management at Kampala, with support from theBritish Council.

Regulations

4.14 Agent-client Contracts. Among the urban authorities, KCC is bestplaced to take the lead in discussions with national agencies leading towritten clarification of roles and responsibilities. In order of priority,thc first two agreements to be signed should be:

a. KCC/Commissioner of Lands for land valuation, landregistry, and plot attribution

b. KCC/MOW for road maintenance and rehabilitation inKampala.

Next, it is recommended that either Jinja or KCC hold discussions with NWSCaimed at signature of a similar agreement for water supply and sanitation.The final agreement should be concluded between KCC and MHUD for urbaninvestment planning, in the view of the shift in mandate of the PhysicalPlanning Department in this direction.

4.15 Central Control in Kampala. In recommending ways of removing theoverlap in authority among MLG, KCC, and the DC Kampala, the Public ServiceCommission would need to ensure that all points of view are heard. In thisregard, a series of technical discussions with the agencies directlyinvolved could precede the Commission's own deliberations.

4.16 Advisory assistance will also be required for the preparationof performance-oriented building regulations and for introduction of a newland tenure instrument. The process of introducing an Occupancy Permitwould be most effective if technical staff from KCC and from theCommissioner of Lands' office drafted the legislation jointly in a workingparty. This group could also provide an implementation plan for changes inthe initial land leasehold period for Kampala and in the frequency ofrevision of ground rents.

- 41 -

Small-Scale Brick Producers

4.17 ahe Ministry of Industry is in the early stages of developinga program of assistance to small-scale brick producers. Technical adviserswould most readily be available from industrialized local producers likethe Butende mission and Uganda Clays, greatly reducing the need for outsideassistance. However, for financial aspects short-term advice would berequired. The financial adviser would (a) design a training program forsmall-scale producers in accounting and record keeping, and (b) establish acost-effective credit attribution and cost recovery program in coordinationwith commercial banks. Local authorities would make important inputsrelated to the location of brickmaking sites, creditworthiness of therecipients, and repayment of the credits.

B. Medium-Tern Masures

4.18 The following medium-term measures are recommended to build onbasic improvements that will result from the short-term action program. Thetiming of these measures would depend on the completion of the short-termtasks, and on general improvements in the national economy. The mediumterm measures should be reflected in the terms of reference for theexpnitriate advisers, and comprise actions in (a) local government financialmanagement; (b) local government administration; (c) training; and (d) landand housing.

Local Government Financial ManmAement

4.19 The priority measures for the medium term include:

a. Implementation of improved revenue collection systems andprocedures at Kampala, Jinja, and Entebbe Councils (paras.2.24 - 2.30).

b. Initiation of a program to ensure that all businesses areidentified, classified, and properly recorded forlicensing purposes in the records of Kampala, Jinja, andEntebbe councils (paras. 2.24-2.30).

c. Planning and initiation of a comprehensive property rateadministration program. The program should encompass thetax mapping of properties, design of uniform recordsmanagement systems, property valuation policies andprocedures, and related billing and collection systems.The program should be planned to encompass all localauthorities, using Kampala, Jinja and Entebbe as pilot

- 42 -

councils. It should be expected that only the planningand initiation of the program will be feasible over thenext two to three years, and that completion of theprogram in the pilot councils will require additional timeand technical assistance (paras. 2.28-2.29).

d. Preparation of revenue strategies and cash flowprojections, to assess the levels of capital investmentswhich can be afforded by Kampala, Jinja and Entebbecouncils (paras. 2.15, 2.19, 2.21).

e. Reactivation of the Local Authorities Loan Fund as asource of development loan funds for relatively smallprojects. This fund should also include provision foraccepting interest-bearing time deposits of availablelocal authority cash reserves (para. 2.9)

f. Implementation of a strategy for increasing publicdeposits and the related mortgage lending capacity atHPCU. This should include an assessment of thefeasibility of further raising interest rates on depositaccounts to make the company competitive with commercialbanks. At the same time, an assessment should also bemade of the feasibility of commercial banks entering theconstruction loan and home mortgage loan markets. Theresults of these efforts shoudd be incorporated into anynational housing development program (paras. 2.39-2.42).

Local Government Administration

4.20 When tax collections have begun to improve and central-localroles are further clarified, several steps should be taken to improve theorganization of council activities. One of the first of these is toformalize the informal working relations among Department heads by creatingthe Program Review Committee, which would furnish to the DevelopmentCommittee of the council the justification required for proposed programs.Other measures include:

a. Creation of a Traffic Management and Transport PlanningSection within the City Engineer's Department of KCC,responsible for implementation of traffic managementmeasures and initiation of transport planning studies forthe Kampala region (para. 3.3).

b. Review of proposals to legalize selected illegal markets,followed by implementation if approval is obtained fromthe Development Committee and the full Council. In thisevent, consideration should be given to establishing aMarkets Section in the Public Health Department by

- 43 -

separating this responsibility from others of the currentFood and Drug Section (para. 3.30).

c. Assessment of the feasibility of more private sectorparticipation in solid waste management, especially in thecentral areas of Kampala where private firms should beable to assume responsibility for collection and disposal(para. 3.29).

Training

4.21 Settlement Technicians. As the economy revives and the demand forhousing increases, low-income families will need skilled guidance to enablethem to build improved houses for themselves. In this regard, the firstpriority for training over the medium term is to expand training capacityin the fields of highest immediate need (local administration, finance,accounting). Second, a new two-year higher diploma in SettlementDevelopment should be considered at Uganda Technical College to meet therequirement for specialists to guide low-income families in housebuilding.The subjects to be taught would include social survey techniques, communitydevelopment, site organization and administration, traditional and improvedbuilding techniques, and low-cost sanitation. There shoule be considerableemphasis on practical experience during the course. Diploma holders of acourse of this kind would become technicians teaching practical methods ofconstruction in rural and urban areas, and could be employed by MHUD or bylocal councils throughout the country.

4.22 Regional Development Speclalists. Concern can be expected to grow,as the economy moves forward, about how to promote the development ofspecific regions of the country. The formulation of regional developmentpolicies is necessarily based on teamwork, since it blends thecontributions of economists, geographers, statisticians, and all relatedskills. To this end, a one-year post-graduate course in RegionalDevelopment at Makerere University would help prepare specialists foremployment at MPED, MHUD, and in offices of the District Commissioners.Five Departments (Geography, Sociology, Economics, Political Science, andSocial Works and Social Administration) of the University could contributeto the teaching on an inter-disciplinary basis. There might be an annualintake uf 15-20 students. When fully established the course could alsoprove attractive to students from other countries.

Land and Rousing

4.23 Several medium term measures reflect the adoption of policieswhich give greater scope for private initiative in land servicing and houseconstruction. In approximate order of priority, these include:

a. Issuance of a policy statement on civil servant housingthat would clarify the tasks to be expected of central and

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local authorities, the prospects for an overall reductionof housing subsidies, and the feasibility of moving to asystem of cash grants for government officers to obtainhousing on the private market. Such a statement wouldindicate which new public-private in.tiatives ("receptionarea programmes," surveyed plots, etc.) would be preparedto implement the recommendations (paras. 3.41-3.42).

b. Research on the cost of local building materials and theirimplications for maintenance. Ihese studies would includetesting of current procedures and development of localmaterials, and would be aimed at broadening the range ofoptions that meet acceptable performance standards. Inorder for these efforts to have the desired effects onproduction, the findings would need to be widelydisseminated. The most effective means of dissemintionwould be through the advisory service for smallenterprises of the Ministry of Industry, as well as moredirectly through mass uedia and community demonstrations(paras. 3.44-3.46).

c. Preparation by the Physical Planning Department (MHUD) ofan Area Development Plan for the Namuwongo/Wabigalo/Kisugudistricts of Kampala, reflecting comparisons of servicestandards with household incomes, proposals for recoveryof on-site costs, and recycling of funds recovered intofuture operations (para. 3.43).

d. Preparation of a restructuring plan for NHCC reflectingdecisions on its role in policies toward civil servanthousing and area development (para. 3.41).

e. Proposals for ensuring the timely development of "mailo"land to accommodate the expansion of built-up areas withinKCC (paras. 3.37-3.38).

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ANNEX 1UGANDA Page 1

REPORT ON URBAN FINANCE AND MANAGEMENT

URBAN POPULATION TRENDS

1. More so than usual, averages of urban population movements inUganda mask large differences between time periods, shifts in cityboundaries, and changes in the definition of urban populations. All citiesand towns grew substantially during the 1960's, at an average rate of 9percent between the first two population censuses in 1959 and 1969.Kampala's growth was about equal to this average, although this was in partdue to the 1968 extension of the city limits. However, the expansion ofseveral secondary towns (Masaka, Nbarara, Kasese, Mpigi, and Mukono) wasmuch greater.

2. As Annex Table 1.1 indicates, this pattern was interruptedduring the military regime. As cities became dangerous places to live, therural-urban migration that would normally be observed slowed dramatically.Many families left the towns to return to the rural economy. Recent censusfigures for Masaka, Mbarara, and especially Arua (see Annex Table 1.1)reflect the dislocations stemming from the 1979 overthrow of the militaryg,vernment. Even so, urban growth between 1969 and 1980, when the thirdpopulation census was carried out, averaged 4 percent.3. In theabsence of any population figures since 1980, an appreciation ofcurrent urban growth must be based on sketchy, almost intuitiveinformation. From these sources it appears that urban growth is picking upbeyond the pace of the recent past, but does not equal the rate seen duringthe 1960's. It is plausible to assume that growth rates for all urbanareas are now about 5 percent per year, and for Kampala about 4 percent.However, if the security situation continues to improve, urban populationgrowth could accelerate dramatically. It is not uncommon for capital citiesin Africa to have been growing recently at 7-9% per year. If Kampala'sgrowth averages 6%, it will have one million people by 1995, only a decadeaway.

Annex 1-46- Page 2

Annex Table 1.1: Urban Population Trends, 1959 - 1980

('000)

AnnualPopulation Growth Rate

cityl 1959/ 1969/Town 1959 1969 1980 1969 1980

Kampala 146.0 330.7 458.5 8.5 3.2Jinja 29.7 52.5 45.1 5.9 -1.3Mbale 13.6 23.5 28.0 5.6 1.6Masaka 4.8 13.0 29.1 10.5 7.6Mbarara 3.8 16.1 23.3 15.5 3.4Kabarole 8.3 7.9 26.8 -0.5 11.7Arua 4.6 10.8 5.4 8.9 -6.0Gulu 4.8 18.2 15.0 14.2 -1.8.roto 2.1 5.5 8.1 10.1 3.6Bombo - 0.6 5.6 - 22.6Bushenyi - 1.0 2.1 - 7.1Bundibugyo 1.6 2.9 2.3 6.1 -2.0Entebbe 10.9 21.1 21.2 6.9 0.0Edoia - 1.6 2.7 - 4.9Iganga 3.1 5.9 9.9 6.7 4.9Kasese 1.5 7.2 9.9 17.0 3.0Kitgum 3.4 3.2 4.9 -0.6 4.0Lira 2.9 7.3 9.1 9.7 2.1Lugazi - 2.5 10.4 - 13.8Luwero - 0.7 4.2 - 17.7Masindi 1.6 5.2 5.0 12.5 -0.4Moyo 2.0 2.6 3.2 2.7 1.9Mpigi 0.6 3.4 4.6 18.9 2.8Mubende 1.9 6.0 6.6 12.2 0.9Mukono 0.5 3.6 5.8 21.8 4.5NJeru 2.0 4.6 3.8 8.7 -1.7Soroti 6.6 12.4 15.0 6.5 1.8Tororo 6.4 16.0 16.7 8.5 0.4

Source: Ministry of Planning and Economic Development

-47-Annex 2Page 1

AN ESTIMATE OF INCOME DISTRIBUTIONS FOR URBAN AREAS

1. The 1981 Rousing Survey conducted in 10 towns and partiallycompleted for Kampala provides the most recent information on how urbanincomes are distributed. However, the income classes into which househollsare assigned range from USh 0 to 5,000 for the 10 tovns1/ and from USh 0 to50,000 for Kampala. This range does not reflect the combined effects ofdomestic inflation and the floating of the shilling since 1981. Toincorporate current conditions more accurately, the income classes must besubstantially adjusted.

2. Without reliable benchmarks to assist with this rajustment, theresult can be little more than a first guess at the evolution of money andreal incomes in the recent past. The calculations presented below sbouldthus be viewed with a good deal of caution and taken as an approximateimage of reality. The Kampala data have the additional drawback of beingbased on only seven neighborhoods. 2 J

3. The assumptions reviewed with officials of MHUD and used in thecalculations are the followLng:

a. The combined effect of inflation and float fromearly 1981 (when the Housing Survey was conducted) tothe end of 1983 raised domestic price levels by 350%;

b. In both Kampala and the 10 towns, the top income classmanaged a small increase in real income, while thenext class broke even;

c. Real incomes declined for all other income classes, withthe decline being more pronounced the lower theincome level;

d. At all income levels, the greater opportunities to earn extraincome in Kampala made the declines-in real income less steepthan in the 10 towns.

4. The percentage adjustments in each 1981 income class that arederived from these assumptions are given below:

I/ Jinja, Tororo, Nbale, Soroti, Lira, Gulu, Lugazi, Kabale, Kasese, andKabarole.

21 Kasubi, Makerere, Mulago, Nakulabye, Bwaise, Kamwokya, and Wandegeya.These neighborhoods were reported to represent low to fairly highincomes.

-48-Annex 2Page 2

Kampala

Income IncreaseClass (USh) in Class

0- 2,000 2002,001- 5,000 2305,001-10,000 26010,000-20,000 29020,001-35,000 32035,001-50,000 350

50,000 + 400

Ten Towns

Income IncreaseClass (USh) in Class0-500 100

501-1000 1331001-2000 1662001-3000 2003001-4000 2754001-5000 3505001 + 400

5. The resulting distributions for Kampala and for the 10 towns areshown in Annex Tables 2.1 and 2.2 below.

Annex Table 2.1: Income Distributionin Kampala, 1983

Income Percent of CumulativeClass (USh) Population Percent

0-6,000 5.7 5.76,001-16,500 19.5 25.2

16,501-36,000 25.0 50.236,001-78,000 24.8 75.078,001-147,000 13.4 88.4147,001-250,000 4.2 92.6

250,001 + 7.4 100.0100.0

Source: Based on 1981 survey of 7 localities within Kampala (Ministry ofHousing and Urban Development).

Annex Table 2.2. Incom.e DhstrLbutton Ln Ton Urban Coenterst, 1983

(percent of population)

Income Jinja Tororo 1'bale Soroiti Lira CuIu Lugazi Kabala Kesase KabaraleClass -(Ush)

0-1,000 3.1 M3. 5.5 3.8 - - 11.5 9.5 6.2 39.2

1,001-2,330 19.2 28.6 20.9 36.8 22.3 16.4 33.8 11.5 22.3 20.8

2,331-5,320 39.8 32.4 25.6 27.9 30.8 32.8 23.1 33.0 23.4 20.0

5,321-9,000 23.6 14.8 23.2 14.0 23.1 30.1 11.5 24.0 16.2 8.1

9,001-15,000 7.7 8.2 14.2 3.7 9.2 11.0 10.0 10.0 6.9 4.2

15,001-25,000 2.2 1.2 5.1 7.4 6.9 5.6 9.3 3.0 8.4 2.7

25,001 + 4.4 1.6 5.5 4.4 7.7 4.1 0.6 9.0 14.6 5.0

100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0

8ourgee: Based on 1981 hiousing Survey (Ministry of Housing and Urban Developmeant).

- 50 -

Annex 3

Revenue and Expenditure,Jinja Municipal Council, 1981-1984

(UShs thousands)

1981 1982 1983 1984

UShs z UShs z UShs Z UShS %RT&VENUE

Income from 21,462 44 60,451 58 103,007 64 126,515 51Services

Block Grants 14,799 30 21,493 21 33,776 21 44,422 18

Graduated Tax 9,054 18 18,082 17 18,200 11 68,006 28

Property Rates 2,879 6 2,929 3 2,930 2 5,232 2

Licenses and Other 913 2 1,020 1 2,753 2 2,578 1

Total 49,107 100 103,975 100 160,666 100 246,753 100

EXPENDITURE

Civil Works 19,906 40 40,306 39 53,843 33 62,995 26

Administration 15,067 31 33,751 33 51,090 32 61,209 25

Public Health 11,792 24 20,870 20 35,194 22 43,202 17

Education 1,200 2 2,543 2 8,262 5 11,410 5

Other 903 2 2,620 2 11,409 7 16,893 6

Total 48,868 99 100,090 96 159,798 99 195,709 79

Surplus 239 1 3,885 4 868 1 51,044 21

Note: 1981, 1982: Audited accounts1983: Estimates1984: Forecasts.

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Annex 4

Revenue and Expenditure,Entebbe Town Council, 1981-1983

(UShs thousands)

1981 1982 1983UShs Z UShs z UShs %

REVENUE

Block Grants 8,727 53 17,000 60 18,000 55

Graduated Tax 5,124 31 7,800 27 7,800 24

Market Rents and Dues 789 5 1,135 4 2,500 8

Property Rates 826 5 968 3 968 3

Licenses and Other 966 6 1,649 6 3,361 10

Total 16,432 100 28,552 100 32,629 100

EXPENDITURE

Civil Works 6,223 38 9,820 34 11,168 34

Administrative 5,935 36 9,362 33 9,772 30

Public Health 2,338 14 5,139 18 4,652 14

Education 1,065 6 2,530 9 3,620 11

Other 871 6 1,701 6 2,483 8

Total 16,432 100 28,552 100 31,695 97

Surplus -0- -0- -0- -0- 934 3= =e= . fr all .ers= =

Note: Estimates for all years.

-52-Annex 5Page 1

HOUSING FINANCE COMPANY OF

UGANDA: HISTORY AND CURRENT

CONDITION

History of HFCU operations

1. The company was incorporated in 1967 with capital of UShs I mill-ion contributed 60% by the Commonwealth Development Corporation (CDC) and40Z by the National Housing and Construction Corporation (NHCC). Thecompany was formed by transferring the Ugandan assets and liabilities ofthe First Permanent (East Africa), Ltd., to HFCU. First Permanent was abuilding society operating in Kenya, Uganda and Tanzania. The initialmortgage assets of HFCU were about UShs 8 million, and public depositsamounted to UShs 15 million. In 1968, a formal agreement was reachedwhereby CDC and NHCC were to provide additional capital through loans of500,000 British Pounds and UShs 3 million, respectively, subject to thepassing of legislation to allow HFCU to repossess properties mortgaged toit. During this same year, applications were accepted for new mortgages,and the company began a policy of encouraging development of housingestates in the main urban areas with a view to reducing building costs.During 1969 the share capital of the company was doubled to UShs 2 millionand the shareholder's equities of CDC and NHCC were equalized at 50% each.By the end of 1970 the company was operating profitably, and in 1972another loan agreement was reached with CDC for 1.25 millionBritish Pounds, most of which was to be used to finance mortgages on ahousing estate developed by CDC. However, this loan, as well as the 1968loan agreements with CDC and NHCC, were never executed because thegovernment did not pass the legislation to allow HFCU torepossess properties when borrowers defaulted. Hence, HFCU has conductedits business relying only on its initial share capital and publicdeposits. Both the 1968 and 1972 loan agreements have since lapsed.

2. Key financial data depicting the operations of HFCU from 1974through 1982 are shown in Annex Table 5.1. Estate development activity inUganda was slow in the late 1960s, and then stagnated and declined throughthe 197 0s to the present. The mortgage asset position of HFCU increasedonly from UShs 38 million to UShs 132 million from 1974 to 1982, while thenumber of mortgage accounts actually declined some 35% during the sameperiod. This decline in accounts was caused mainly by loan defaultsresulting from failure to complete construction projects. The company hasbeen providing 80% bridge financing to developers during construction,since the commercial banks have not wanted to make these loans because ofthe risks involved. Severe shortages of building materials beginning inthe 1970s prevented completion of much construction which was on landleased to the developers by councils. If development was not completedwithin two years, the land reverted back to the councils, prompting thedefaults and leaving EFCU with no collateral with which to recover loanlosses. Nevertheless, public deposits with EFCU grew at a faster rate thanmortgage loans, enabling the company to realize operating profits from

-53-Annex 5Page 2

Annex Table 5.1: Housing Finance Company of Uganda:

Key Financial Data

(UShs thousands)

Number of After-taxYear Mortgage Mortgage Public Operating

End Accounts Assets Deposits Profit (Loss)

1974 530 38,119 49,280 848

1975 529 40,411- 61,015 1,076

1976 450 49,068 74,776 875

1977 414 71,200 96,703 769

1978 492 95,000 115,974 1,008

1979 558 112,284 178,678 1,213

1980 543 117,-236 233,559 190

1981 423 130,003 343,863 (44,714)

1982 346 132,250 436,230 (33,534)

Year-End 1983 Estimates (USh '000):

Fixed assets (less depreciation) 164,000

Mortgage assets (less provision for unsecured loans) 89,000

Short-term inwestments 222,000

Accounts receivable and cash 50,000

Current liabilities 18,000

Public deposits 477,000

Operating profit 8,000

Reserves 77,000

Capital 2,000

ANNEX 5-54- Page 3

short-term investments from 1974 through 1980. The growth of publicdeposits was due partly to public confidence in the company to safeguardsmall deposits during turbulent times.

3. After HFCU was established in 1967, CDC provided neededmanagement and consultancy support. But, as relationships cooled betweenUganda and Britain during the 1970s, this support was withdrawn. At thesame time there occurred the out-migration of trained financial staff fromUganda. The consequence was a deterioration of accounting systems andcontrols in HFCU. A series of frauds and misappropriations began toaccumulate until they were uncovered in 1981-82 routine audits of HFCUrecords by independent accountants. The consequences were substantiallosses reported by HFCU in 1981 and 1982.

4. CDC resumed technical assistance to HFCU in 1981, providing aconsultant who served as the company's Chief Accountant for one year.During this time significant improvements were made in reconciling andupdating the books of accounts. CDC then provided a follow-up team of fourfinancial experts during 1982-83 to establish better controls, and to makefurther recommendations for improving accounting systems, general financialmanagement, and staff training.

Current Management and Financial Prospects

5. The management of HFCU is working toward implementing the CDCconsultants' recommendations. The company's accounting machines (NCR299s), while old and outmoded, are functioning to keep deposit and loanledgers up to date. These ledgers can now be reconciled tocontrol-accounts, and overall internal controls are being strengthened. Anew general manager has been appointed, and new supervisory personnel havebeen recruited. A recent report by one of the CDC advisors concluded thatthis new management team can sustain the operational improvements realizedin 1983.

6. The company suspended mortgage operations in 1982, and in 1984reintroduced mortgages of not more than UShs 1 million to enable developersto complete unfinished buildings. The floating of the Uganda Shillingproduced a sharp depreciation of the Shilling, which in turn inflated thecost of construction to the point where HFCU's deposits could not supportfuture loans. A house which would have cost UShs 1.5 million before thefloat, cost about UShs 10 million afterward. Also, people's incomes havenot kept up with inflation, and will not qualify them for even modestresidential loans. Finally, the rate of default was noticeably high evenbefore the Shilling was floated.

7. Based on estimates of key financial data for HFCU at year-end1983 (see Annex Table 5.1), the short-term liquidity ratio is expected tobe about 2.8, a conservative and safe position. Mortgage asset amountswill have been reduced by one-third to reflect further defaults ofunsecured loans. At the same time public deposits are expected to havegrown about 10% over 1982. The ratio of loans to deposits is expected tobe about 1 to 5. With normal lending activity, loan amounts should about

-55-Annex 5Page 4

equal deposits, depending on loan and deposit maturity schedules. Theexisting low ratio of loans to deposits means that the major revenue sourceof the company continues to be short-term 4nvestments. The company expectsto realize an operating profit of about UShs 8 million in 1983 from theseinvestments. The existing share capital of UShs 2 million is the originalamount from HFCU's incorporation in 1967, and has been rendered negligiblein face of the Shilling depreciation. However, the company has about UShs77 million in reserves which provides adequate capitalization coverage forpresent loans.

&muy of Uibui HoI4g amd bawmuta Cnditim, 1981.

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TXo 17,000 5.8 63 64 25 42 33 53 6 85 65 4

Ibaa 28,0 5.4 29 :0 a) 60 20 68 18 70 75 7

xboti 15,000 5.2 a) 23 Mi 67 7 68 31 6Z 76 17

Lz 9,000 6.5 36 45 56 19 27 19 78 67 21

QAU ISOOOD 6.5 14 2S 45 36 19 66 38 44 94 2

1Ltd 10,500 4.3 69 19 35 47 *18 5 - 95 85 4

KimIe 21,500 5.7 56 5B X 56 14 34 16 83 89 14

1mm 10,000 5.4 22 29 45 33 22 87 42 52 87 8

Kbo1a 27,000 5.9 78 12 4 67 29 28 3 90 8D 12

9ir: Hinhtry of 1uoirg k mm eiA2o =t, U mg S&Wy 1981.1larm rwo1

-57- Annex 7

URBAN MANAGEMENT TRAINING

REQUIREMENTS AND INSTITUTIONS

A. Training Requirements

Local Authorities

1. In order to obtain up to date information regarding the staffsituation in urban management, questionnaires were supplied to the Kampala,Jinja, and Entebbe councils to record the employment situation in theirdepartments and the need for training. The results are tabulated in AnnexTables 7.1-7.3. It should be noted that training needs are identified inrelation to existing vacancies rather than to requirements over the mediumterm, which cannot now be accurately determined.

2. Kampala. In the KCC Town Clerk's Department, while there are 87 en-forcement assistants in post, vacancies exist for another 63. No CityAdvocate, Assistant City Advocate, or Senior Personnel Officer is presentlyin post. In the City Treasurer's Office serious deficiencies at middlemanagement and senior technical levels persist, especially in the GraduatedTax and Audit sections. There are substantial vacancies in the Rates andValuation Section, and vacancies for 8 accountants at different levels.The City Engineer's Department lacks 18 building inspectors, 9 foremen ofworks, 11 planners, and 18 land inspectors. Similarly, vacancies in thethe Public Health Department occur in all departments in a range ofpositions. The Public Health Laboratory has one person, leaving 10vacancies. The Nursing section has 44 midwives, but also 32 vacancies.Especially critical from the standpoint of environmental health is theabsence of 13 senior health inspectors, and 35 vector control officers andforemen of various grades.

3. Although on a much smaller scale, the situation in Jinja and Entebbe isas serious as that for Kampala. In Jinja the Town Clerk's and Treasurer'sdepartments emphasized the need for training of personnel in all sections.The Treasurer's Department in Entebbe stressed the need to train its staffin local authority finance, assessment, collection, and tax management.

Central Government

4. Ministry of Housing and Urban Development. The present staff of thePhysical Planning Department is very modest considering the role assignedto it. There is a need for many more well-trained technicians tosupplement the work of the existing staff. These requirements willincrease if, as is suggested, the Department's activities are redirectedtoward urban investment planning. The Department has at present 15qualified planners. Two geographers and one sociologist are attending

Annsx758- pag-ue

Annex TabLe 7.1: Staff tn Pose and Vacancieas KamalaCity Council, 1983

---- Staff in Post--- ---- Vacanct-Mid- Mid-

Departmnt/Unit Senior Level Support Senior Level Support

A. Town Clerk

Adminincraeton 2 8 1 4 8 6Welfare 2 20 - 3 7Houstng - 5 - 1 7Enforcement/eecurity 2 13 87 2 12 63Field Adminatcration - - - 2 7Legal 4 I - 2 4Establishuent/permonnel - - - I

Sub-Total 6 47 88 15 45 69

B. City Treesurer

Administration 4 44 e2 1 21 14Purchasing/stores 4 3 11 2 7 2Graduated Tax 5 15 16 5 248/ 2Rates/Valuation 6 15 25 1 8b 15s 14Parking - I 10 3 A 5Audit 4 10 1 4 7 3Accountancy 4 11 9 4 10 10

Sub-Total 27 99 134 37 88 50

C. City Engineer and Surveyor

Miinistration 8 - 13 1 2 2Development Control 4 A 9 9 21c/ 12Main Drainage 1 - - 7 4 3Traffic Slgnals. Electricity 1 13 - 5 9 2Traffic Engineertng - - - 2 27 1Transport, Plant I 8 1 4 18 3Depot, Maintenance 1 9- 3 12Town PlanaLng 1 - 2 a IHighway Maintenance 2 17 7 5 21d/ 6Design 4 A - 6 3 6Stone Quarry I - - 1 12 2Architectural - 7 - 6 5 IPuhlic Land Control 2 17 - I Is 2Parks. Open Spaces _ 6 I 1 4Ae/ 9

Sub-Total 26 85 31 53 201 52

0. Public Health

AdminIstration 3 63 3 2 31 1Laboratory - - - 3luraing 6 o7 - 3 48Clinic, general 3 10 - 6 23Vector control 2 56 1 1 28f 10Water. drainage,

sanitation 3 IB 6 1 10 4Health Education 1 5 2 8 4 1Food Drugs S IOZS/ - 1 2 -Cemeteries I I - - 5 3Cleansing 2 5 - 1 -

Sub-Total 27 327 10 30 I58 22

TOTAL 86 558 263 135 492 193

Mote: Senior qtaff: Chief officers. deputtes, principal officeraMid-level staff: Aestatant officers. inspectorsa foremenSupport staff: Clerical, stenographers. typitecs

Including a/ 16 Senior Clerical OfficersK1 In Executive Off icera (Rates) and 5 Valuation Officers'E 18 Bluilding InspectorsT/ 15 ForemenV1 32 Fo remenT/ 16 Sanitary OverseersT/ 82 Market Masters

- 59 -

Annex 7Page 3

Annex Table 7.2: Staff in Post and Vacancies,Jinia Municipal Council. 1983

--- Staff in Pout------Mid- Mid-

Department/Unit Senior Level Support Senior Level Support

A. Town Clerk Entablishmenc 7 20 8 3 54

Housing 7 4 1 1 4 4Enforcement 4 a 4 - -Lands - 2 2 - 2 2

Sub-Total 18 34 19 8 11 10

B. Municipal TreasurerSecretariat - 2 6 - 1 3Audit 2 2 - 3af 1 -Supplies - 8 - - 3 -Education Accounts 3 - - 3 - -Expenditure 7 1 - - - -Graduated Tax 7 5 1 - - -Gceneral Revenue 2 1 - - - -Income 2 2 - I I -Valuation 1 1 - I I -Markets 2 3 2 1 - -Parking _ 2 1 1 - -

Sub-Total 26 27 10 10 7 3

C. Municipal Engineer

Addinistration 5 6 6 5 7 -parks 1 2 - - 4 -Roads - 4 - 1 7 3Street Lighting -- -- -Utility Yard -- I - 1 -Electric. Building - 4 - - 8 3Carpentry workshop - 5 - - - 9Nechanical 1 3 - 1 9 3Architectural - 1 2 _ _ _

Sub-Total 7 25 9 8 36 18

D. Public Health

Inspectorate 3 3 - - - -Markets 2 1 2 1 - IVector Control - - - - 2 _Cleansing 1 1 - - 1 -Health Visitors 1 8 - 1 5 -Health Education 1 - - - - -Clinics 3 29 - 3 5 -Abattoir I I - _ 1 I

Sub-Total 12 43 2 5 14 1

TOTAL 63 129 40 31 68 32

Note: Senior staff: Chtef officers, deputies, principal officersMld-level staff: Assistant officers, inspectors, foremenSupport staff: Claerical, stenographers, typists

*/ For external audits.

- 60 -

Auex 7Page 4

Annex Table 7.3: Staff In Post and Vacancies,Entebbe Town Council, 1983

-- Staff in Post VacanciesMid- Mid-

DepartmentJUnit Senior Level Support Senior Level Support

A. Town Clerk

Town Clerk 2 4 8 - -Enforcement - 13 - I 1Chiefs 4 4 - - -Land - 2 - - -Rousing -I 1 _

S&b-Total 6 24 14 2 1

B. Town Treasureral - - - 2 3

C. Town Engineer 1 7 6 - -

D. Public Health

Health Inspections 1 4 - - 7Health Visitors - 5 - - 3Nursing - 3 - 3Vector Control 3 2 _ 2

Sub-Total 1 15 - - 15

E. Education 3 - 5 - -

Total 11 46 25 4 19 2

Note: Senior Staff: Chief officers, deputies, principal officersMid-Level Staff: Assistant officers, inspectors, foremenSupport Staff: Clerical, stenographers, typists

a/ Appointments to be confirmed.

- 61 -Annex 7Page 5

planning courses abroad, while two engineers and one architect are beingtrained in-house prior to being sent to planning courses abroad. The otherhigher-level staff consist of two geographers, two sociologists, onestatistician, and one economist. At present the Department's activitiesare wholly centered on Kampala. Through both expansion andretraining of staff, the Department's capacity needs urgent improvement toprovide sound advice and assistance in urban investment planning to cityand town councils.

5. Reconstruction and Development Corporation. The Corporation wasestablished in 1981 to plan and manage the reconstruction of the towns ofMasaka, Mbarara, and Arua damaged during the 1979 war, as well as tostimulate their development. Of the 66 established positions, only 8 havebeen filled. Ten technical advisers financed by UNDP and furnished throughthe UN Centre for Human Settlements reinforce the small staff complement.There is an acute shortage of architects, economists/financial analysts,engineers, planners, and surveyors.

B. Training Institutions

Institute of Public Administration (IPA)

6. Formed in 1967 and supervised by the Ministry of PublicService and Cabinet Affairs, IPA is the basic training agency for Ugandancivil servants. Teaching is organized in five divisions:

a. Public Enterprise Management Division: Post-graduateDiploma Certificate in Business Management; Managementand Development Training Program

b. Public Administration Training Division: Post-graduateDiploma in Public Administration; Diploma in NursingAdministration; Diploma in Income Tax Administration;Project Planning and Management Program; PerformanceImprovement for Secretaries

c. Learning Resource- Development Division

d. Library and Documentation Division

e. School of Journalism.

7. By December 1982 IPA had trained about 16,000 students in thevarious divisions. The bulk of the students, some 13,000, were trained inshort courses and seminars. Courses of most relevance to urbanmanagement-the Uganda Finance Officers' Diploma and diplomas inAdministration for Local Authorities and in Office Management-- trainedover 350 students before being removed from the program in 1981. Thethree-year course leading to a Diploma in Accoun.ancy was also discoutinuedat that time, without explanation. Deteriorated buildings, lack ofequipment, and teacher vacancies amounting to 70% of available positions

- 62 -Annex 7Page 6

have resulted in sharply reduced programs which now include only 126students against a maximum intake capacity of 250. IPA has requested theservices of expatriate lecturers financed by UNDP and by the CommonwealthFund for Technical CDoperation to keep its remaining programs inoperation.

8. Fortunately, restoration of IPA programs is being given highpriority. The Ministry of Public Service and Cabinet Affairs is trying tohave the Accountancy diploma course reinstated, and is considering measuresaimed at making salary levels more attractive. Repair and renovation ofbuildings and restoration of equipment will be carried out under theSecond IDA-assisted Technical Assistance Credit approved in December 1983.Finally, the Finance Officer's Diploma and the diplomas in OfficeManagement and Local Authorities Administration are being re-established asof July 1984.

Management Training and Advisory Centre

9. The Centre was established in 1969; it reports to theMinister of Industry. Every year a large number of short courses (mostly 2to 3 weeks) are provided in all areas of management including office'management, personnel management, principles of accounts, financialmanagement, training of trainers, and accounting for non-accountants. Some700 to 1,000 participants attend courses each year. Only 20 teachers outof 45 are currently in post. Although the courses relate mainly toIndustry and commerce, the Centre is also interested in training staff oflocal authorities and other central government ministries. In this senseits work is complementary to that of IPA.

Uganda College of Commerce

10. The College provides three post 'A7-level courses leading to aDiploma for chartered secretaries and administrators, and diplomas inMarketing and Business Studies. Some 600-700 students take part in thesecourses. There are also post 0"-level courses in stenography andpart-time courses in stenography, commercial subjects, and accountancy.The College has had difficulty retaining qualified teachers for the moreadvanced post "A'-level courses. Although most students prepare forcareers in commerce and industry, the course work is relevant to therequirements for clerical staff of local authorities and other centralgovernment ministries.

Uganda Technical College

11. The Department of Civil Engineering and Building of theCollege provides basic diplomas in Civil Engineering and Building and inArchitectural Draftsmanship. The College also offers a Higher Diploma inConstruction, a two-year full time course which trains buildingtechnicians. The annual intake is about 30 students.

- 63 -

Annex 7Page 7

Technical Schools and Institutes

12. Training of skilled craftsmen is the responsibility of 23Technical Schools and 16 Technical Institutes. The former provide three-year basic technical training in eight subjects including carpentry,brickwork, and electrical installations. The latter provide more advancedtraining (two-year courses) in similar subjects. The teachers are trainedat the Uganda Technical College in a one-year full time technical teacherscourse. There is at present a shortfall of about 170 teachers in theTechnical Schools and Institutes.

Survey Training School

13. Operated by the Ministry of Lands, Minerals and WaterResources, the Survey Training School offers three-year diploma courses inland surveying, valuation, and cartography. Partly because of a severeshortage of teachers, there have been no students in valuation for the pastthree years, and only 80 students are currently studying land surveying andcartography. The buildings are badly maintained, and the school suffersfrom a shortage of equipment, books, and transport.

-64-

ANNEX 8Page 1

SELECTED SOURCE LIST OF REPORTS AND PAPERS

1. Auditor's Reports, National Housing and Construction Corporation, 1978-1982.

2. H.P. Gauff Consulting Engineers, Feasibility Study reports for WorldBank-assisted Water Supply and Sanitation Rehabilitation Project,September 1982.

3. G. Glentworth, I. Mackinson, and C. Batala, "Public Administration inUganda: Support for the Four Central Guidance Ministries and theUIPA," March 1984.

4. Kampala City Council, 'Procedure for Collecting Revenue and Spending ofFunds by the Town Clerk's Department," October 1983.

5. Kampala Development Plan, Structure Report, April 1972.

6. Anthony Lubega, "The Financing and Production of Private Houses inUrban Districts of Kampala," December 1969.

7. Ministry of Industry, "Strategies for Spreading Small-scale Industriesin Uganda," conference report, 1981.

8. Ministry of Local Government, Urban Authorities Association of Uganda,The Storage, Collection, and Disposal of Refuse in Urban Areasof Uganda, Kampala, March 1983.

9. G.T. Mwesigye, Administration of Access to Basic Services in Kampala,M.A. Thesis, Development Planning Unit, University CollegeLondon, September 1983.

10. Papers prepared by Government in conjunction with the Study of UrbanFinance and Management, 1983:

Capital financing of local government programsDevelopment codes and building regulationsGeneral assessment of the housing situationHousing Finance Company of Uganda: Retropective review and

future programmeLow cost sanitationMaterials industries for low income housing and basic

infrastructureNational housing -policyPreparation and approval of urbanization policiesRefuse collection and disposalRoad maintenanceRoles and responsibilities for urban policies and programmesSurvey of manpower requirements and training facilities for

urban technical and managerial staffThe new administrative centers: their needs and requirements

-65-

ANNEX 8Page 2

Trends in urban populationUrban housing (NHCC)Valuation, rating, and collection of local taxes

11. Reconstruction and Development Corporation, "Working Paper: ImmediateRequirements," Masaka, November 1983.

12. Schroeder-Planung consulting engineers, Kampala City Roads Study,1983.

13. Michael L. O. Stevens, "Review of Planning and Economic ManagementMachinery," consultant report prepared in connection with theThird IDA Reconstruction Credit, London, November 1983.

14. Terraplan consultants, Outline Structure Plan for Masaka, UgandaUN Centre for Human Settlements and Reconstruction andDevelopment Corporation, November 1983.

15. Alfred P. Van Huyck, "Housing Policy Review in Uganda," PADCO andOffice of Housing and Urban Programs, USAID, June 1984.

16. F.G. Weaver and I.R. Lane, "A Pre-Investment Appraisal Mission forUganda National Housing Development Programmes," UN Centre forHuman Settlements, January 1982.

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