Document ofThe World Bank

FOR OFFICIAL USE ONLY

1Repoirt No: 243§9

1Plv1LEMI N7A'I HDN CO PLEP JN REPOR7(IIA-27360; PPIFffPO750; 71F-M296; TIF-M692)

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1IU THE AMODUNT OIF SHDR 2S.0 MKLLhCN(US$360A MELLMDN IEQU1IVALENT)

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ffN57ETU7HPINAL CAJACETY BUILDHNG PRGOIECT

J1UNE 26 2002

1UNk DeDe $tou ReThrm and Cgapalcky BufldhnF UnmaA¢fio lReegiim

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

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CURRENCY EQUIVALENTS

(Exchange Rate Effective June 2002))

Currency Unit = Uganda Shillings (USH)USD 1.00 = USH 918.17000 (5/9/1995)

USH 1797.30005 (6/26/2002)USH I = US$0.00109 (5/9/1995)

= US$0.00056 (6/26/2002)

FISCAL YEAR

July 1 to June 30

ABBREVIATIONS AND ACRONYMS

ATC Accounting Technicians CertificateCAPEP Capacity and Performance Enhancement ProgramCAS Country Assistance StrategyCBP Capacity Building PlanCBS Capacity Building SecretariatCPA Certified Public AccountantsCPPR Country Portfolio Performance ReviewCSR Civil Service ReformDRTF District Revolving Transport FundECSAFA Eastern Central and Southern African Federation of AccountantsEFMP Economic and Financial Management ProjectFMS Fiscal Management SystemsGOU Government of UgandaICPAU Institute of Certified Public Accountants of UgandaIDI Institutional Development ImpactIFAC International Federation of AccountantsIFMIS Integrated Financial Management Information SystemILI International Law InstituteLDC Legal Development CenterLGDP Local Government Development ProgramMFEP Ministry of Finance and Economic PlanningMJCA Ministry of Justice and Constitutional AffairsMOLG Ministry of Local GovernmentMPS Ministry of Public ServiceMTEF Medium-Term Expenditure FrameworkNRM National Resistance MovementNSDS National Service Delivery SurveyPAEB Public Accountants Examination BoardPSC Project Steering CommitteePSC Public Service CommissionPSRP Public Service Reform ProgrammePSRRC Public Service Review and Reorganization CommissionROM Results-Oriented ManagementTFC Training Funds ComponentTNA Training Needs Assessment

Vice President: Callisto MadavoCountry Director: Judy O'Connor

Sector Manager: Brian LevyTask Team Leader: Navin Girishankar

UGANDAINSTITUTIONAL CAPACITY BUILDING PROJECT

IMPLEMENTATION COMPLETION REPORT

CONTENTS

Page No.

1. Project Data 1

2. Principal Performance Ratings I

3. Assessment of Development Objective and Design, and of Quality at Entry 5

4. Achievement of Objective and Outputs 12

5. Major Factors Affecting Implementation and Outcome 25

6. Sustainability 27

7. Bank and Borrower Performance 30

8. Lessons Learned 32

9. Partner Comments 34

Annex 1. Key Performance Indicators/Log Frame Matrix 35

Annex 2. Project Costs and Financing 38

Annex 3. Economic Costs and Benefits 40

Annex 4. Bank Inputs 41

Annex 5. Ratings for Achievement of Objectives/Outputs of Components 43

Annex 6. Ratings of Bank and Borrower Performance 44

Annex 7. List of Supporting Documents 45

IC lTs ype: Core ICR R eporl Doate: June 26 2002l

1. Project DataName: INSTITUTIONAL CAPACITY L/C/TFNumber: IDA-2736; PPFI-P8750

BUILDING PROJECT

Country/Depart ment: UGANDA Region: Africa Regional Office

Sector/subsector. BA - Civil Service Reform, BD - Decentralization, BF - Public Financial

Management, BI - Institutional Development, BJ - Judicial Reforn

KEY DATESOrizinal Revised/Actual

PCD: 12/15/1993 Effective. 07/01/1995 08/01/1995

Appraisal: 06/27/1994 MTR: 01/01/1998 09/24/1997

A pproval: 06/01/1995 Closing: 12/31/2000 06/30/2002

Borrower/lmplementing Agency: Government of Uganda/Capacity Building SecretariatOther Partners: Government of Austria

Government of Norway

STAFF Current At Appraisal

Vice President: Callisto Madavo Edward Jaycox

Country Manager: Judy O'Connor Michael Carter

Sector Manager: Brian Levy Robert Hindle

Team Leader at ICR: Navin Girishankar Gaiv Tata

ICR Primary Authors: Navin GirishankarSati Achath

2. Principal Performance Ratings(HS=Highly Satisfactory, S=Satisfactory, U=Unsatisfactory, HL=Highly Likely, L=Likely, UN=Unlikely, HUN=l-lighly

Unlikely, HU=Highly Unsatisfactory, H=High, SU=Substantial, M=Modest, N=Negligible)

Outcome: SSustainability: HL

Institutional Development Impact: SUBank Performance: S

Borrower Performance: S

QAG (if available) ICR

Quality at Entry: Not available S

Project at Risk at Any Time: No

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Background. After assuming power in 1986, the National Resistance Movement (NRM)Govemment undertook a far-reaching Economic Recovery Program (ERP) in order to reviveUganda's public and pnvate institutions, and rebuild its human capacities after nearly twodecades of economic mismanagement and political chaos. Underpinning this recovery effort wasa histonc process of state transformation, manifest in a bevy of constitutional, legal, andinstitutional reforms between 1993 and 1997. Over this period, the Government of Uganda(GOU) sought to advance and sustain Uganda's transformation through three long term strategicinitiatives-namely, decentralization, civil service reform (CSR), and a national capacity buildingplan. Each of these initiatives, described below, were well underway when the Government andthe Bank embarked on the identification of the Uganda-Institutional Capacity Building Pr-oject.

Civil Service Reformzs. As part of its fiscal adjustment program in the late 1980s and early 1990s,the GOU successfully undertook several measures to halt the decline in standards and efficiencyof public administration, and create a small, well-motivated civil service to deliver essentialservices in an efficient and effective manner. These included a reduction in the number ofministries from 38 in 1989 to 21 in 1994, rationalization in ministerial structures, withdrawal ofgovemment from direct involvement in productive activities, a significant reduction of CentralGovernment staff from 320,000 to 148,000 by 1994 (through the removal of ghost workers,redundant employees, over-aged civil servants, as well as poor performers), and increases in thereal wages of civil servants.

Notwithstanding these remarkable achievements, a 1990 report of the Public Service Review andReorganization Commission (PSRRC) identified the importance of advancing CSR beyond theimmediate fiscal concerns associated with staff size and wage bill sustainability to longer termissues of incentives, restructuring, and operational effectiveness. The Commission recommendeda more thorough review and revision of public sector remuneration (including salaries andbenefits) and grading policies; improvements in payroll administration; restructunng in line withfunctional decentralization; strengthening of personnel and ethics management; and developmentof policies and procedures for asset and facilities management. Following the completion of thePSRRC report and the downsizing efforts mentioned above, the Govemment-with externalassistance including the IDA-financed Uganda Economic and Financial Management Project(EFMP)-focused on restonrng the efficiency of core central govemment functions such asbudgeting and financial management. It also sought to undertake diagnostic work pursuant to therestructuring of central government ministries. As the Govemment's public sector reform agendaprogressed, however, it became increasingly apparent that democratic decentralization was thedriver of state transfornation in Uganda, and the effectiveness of CSR would depend on whetherit could responsively support the development of local governments.

Decentralization. Since the early 1980s, the NRM viewed decentralization as a central tenet ofits objective of democratizing Ugandan society and polity. Accordingly, Resistance Councils(RCs) were progressively introduced (particularly in rural areas) during the 1981-85 armedstruggle, and following the NRM victory in 1986, were legally established through the ResistanceCouncils and Committees Statute No. 9 of 1987. The 1987 statute conferred considerableadministrative authority to local councils, and in the process, enabled local communities to checkthe hitherto monopolistic administrative, judicial, and political powers of traditional chiefs. Bythe early 1990s, the Govemment was considering even more ambitious and far-reaching optionsfor reorienting the state and its relationship to society. These included plans for constitutionallymandating the creation of local political executives with vast responsibilities and powers (such asservice delivery), and empowering these executives with the fiscal and administrative resourcesto fulfill these new mandates. By 1993, the enactment by Parliament of the Local Governments(Resistance Councils) Statute marked the first of three watershed moments in the elaboration of a

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formal, rule-based framework for democratic, decentralized governance. The statutecircumscribed the role of central ministries, and assigned to district councils expenditure andrevenue responsibilities related to service delivery system and poverty eradication. Furthermoreit supported the decentralization of personnel management through the establishment of DistrictService Committees, as well as the review of district staffing and structures.

The second critical moment in state transformation was the promulgation of the 1995Constitution, which further defined the powers, responsibilities, and mandates of districts andother lower levels of government. The basic elements of an intergovemmental fiscal system-defining three sets of transfer mechanisms, namely, conditional, unconditional, and equalizationgrants-were delineated, and notably, placed significant authority in the hands of District ServiceCommissions to hire, fire, and manage frontline personnel. These changes in the overallconstitutional framework were mirrored by more focused efforts to experiment with fiscal andadministrative decentralization. For instance, the Govemment proceeded with the transfer ofresponsibilities to select districts for managing expenditures on the basis of specific votes forsector ministries that were decentralizing service delivery.

Indicative of the Govemment's commitment to democratic decentralization, the above-mentionedlegal and constitutional reforms were followed by efforts to decentralize recurrent budgets in1994/95, and the initiation of unconditional transfers (or block grants) on a formula-basis in1995/96. Plans for the transfer of broader service delivery responsibilities to districts were beingprepared and discussed. At the same time, major fiscal, personnel, and institutional challengesremained. These included lack of appropriate financial and personnel management systems orregistries, shortage of skilled staff, lack of clarity on the specific of expenditure and revenueresponsibilities of sub-county govemments within districts. Significant assistance was required toensure that districts would be capable of taking on significant service delivery responsibilities inan efficient and sustainable manner.

In retrospect, the 1993-1997 period offered a window of opportunity within which significant-even bold-changes in the formal structure of state institutions were possible. With highlyparticipatory, often contentious debate-interspersed with institutional experimentation, review,and innovation-these formed the critical moments (for example, the enactment of the 1993statute, or the promulgation of the 1995 Constitution) when the "rules of the game" fordecentralized governance in Uganda were formnally established. Many of the opportunities andrisks associated with this rapidly unfolding process were apparent during the identification andpreparation of ICBP. A key issue for the ICR, therefore, is whether and how the strategic choicesconcerning ICBP's design and implementation contributed to a third and crucial moment oftransformation, that is, the passage of the 1997 Local Govemment Act, as well as a subsequentefforts to build an accountable local govemment tier.

Coordination Framework for Technical Assistance and Capacity Building. Several members ofUganda's aid consortia provided early assistance-in the form of technical assistance andcapacity building-to Uganda's institutional transformation efforts. The "first generation" of thissupport tended to be projectized and fragmented. In response, the Government recognized theneed for a strategic framework to coordinate and programmatize much-needed assistance fromdonors. The Uganda Policy on Technical Assistance (as part of a UNDP-funded NationalCapacity Planning exercise) was launched in 1993 and sought to correct the historical biastowards free-standing technical assistance (TA) that was largely comprised of "small disjointedproject intervention that usually have little impact on the overall economic performance."Accordingly, the new policy sought to ensure inter alia that (i) TA activities were in line withnational and budgetary priorities; (ii) the Government would take the lead in project

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identification; (iii) all TA projects would be channeled through the Ministry of Finance andEconomic Planning (MFEP); (iv) TA was focused on the motivation of Ugandan nationals andthe provision of an enabling environment for the civil service; (v) national execution by theGovernment would serve as the primary modality for implementing TA projects; and (vi) TAwould focus on the prnvate sector and non-governmental organizations as well.

In addition, the 1994 Capacity Building Plan (CBP) for Uganda-based on a 1990 sector reporton Capacity Building prepared by the Government of Uganda and IDA-was designed to helpcoordinate donor assistance to the Government of Uganda in priority areas. The CapacityBuilding Secretanat in MFEP was tasked with the policy and coordination role to guide capacitybuilding efforts in Uganda. Several capacity building priorities emerged dunng the preparation ofthe Plan: legal and judicial systems, the accountancy professions, local training institutions,manpower planning, economic policy analysis, return of skilled Ugandans, local consultancyprofession, technical and vocational training, contribution of women to policy development andmanagement, and non-govemmental institutions.

Legal Sector, Accounting Profession, and Local Training Institutions. Three areas identifiedunder the CBP in particular-the legal sector, accountancy profession, and local traininginstitutions-were considered critical to Uganda's private sector-led development strategy. First,the key requirements in the legal and judicial sector included the updating of outdated laws;strengthening of enforcement mechanisms and institutions (such as the Ministry of Justice andConstitutional Affairs (MJCA), the judiciary, the Law Council, and the Law DevelopmentCentre); insufficient staffing of lawyers and paralegal staff; absence of in-service trainingprograms; lack of proper facilities and equipment in legal institutions; and lack of access todocuments on the Laws of Uganda. By the early-to-mid 1990s, the Government had takenmeasures to strengthen the capacity of the sector including increasing the salaries of MJCAlawyers in 1994.

Second, the quality of accounting in Uganda-critical to public sector accountability and privatesector development-had fallen behind other African countries due to lack of support fromGovernment for the profession including a local professional qualification. With only a hundredprofessionally qualified accountants and a shortage in accounting technicians, most accountingjobs in the private and public sectors in Uganda in the early 1990s were filled with personnelwithout fornal accounting qualifications. The demand for increased educational opportunities inaccountancy and a local professional accounting qualification were widely acknowledged.Against this backdrop, the GOU had taken steps to strengthen the profession including thepassage of the Accountants Statute, which established the Institute of Certified PublicAccountants of Uganda (ICPAU) to regulate the profession, maintain standards, and the PublicAccountants Examination Board (PAEB) to conduct accounting examinations. An importantissue related to this legislation was the view of the Institute of Chartered Secretaries andAdministrators whose members sought full (or professional) membership in ICPAU.

Third, the CBP also sought to alleviate problems associated with donor-financed capacitybuilding projects. Technical assistance and training tended to be ad hoc, focused on individualrather than institution-wide needs, and heavily dependent on expatriates. An alternative approachwas envisaged that would focus on expanding the choices available to public sector bodies withregards to training their staff, market-orientation in the provision of training and consultingservices, and the development of service standards for knowledge services.

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3. Assessment of Development Objective and Design, and of Quality at Entry

3.1 Original Objective:

It was against this backdrop that ICBP was appraised on June 27, 1994 and declared effective onAugust 1, 1995. The project sought to establish greater local institutional and human capacity todevelop and implement public policy, and support the growth of the private sector through: (a)supporting the continuation of the Civil Service Reform (CSR); (b) assistance to Government ofUganda (GOU) in its decentralization program; and (c) strengthening the legal and financialaccountability framework and institutions.

Given the significant technical and capacity building requirements of Uganda's rapidly unfoldinginstitutional transformation process in the early to mid-1990s, the ICR rates ICBP's focus on civilservice refonn and decentralization as both relevant and responsive to the client's needs. It wasalso appropriate-subject to the GOU's ability manage project complexity-to include initialsupport for the legal and accountability framework, and local training institutions as a means ofstrengthening the institutional underpinnings of private sector-led development and buildingUganda's "capacity to build capacity."

Specifically, project objectives were relevant because they were closely harnonized withdemocratic decentralization (that is, the key driver of Uganda's transformation process); linked tothe CAS objectives and relevant GOU sector strategies; grounded in timely diagnostic work aswell as lessons from fast evolving and growing portfolio; and strategically focused on longer terminstitutional development.

* Supported unfolding process of state transformation: By initiating support for theGovernment's decentralization program in the mid-1990s, ICBP was well-positioned to meetthe technical assistance and capacity building needs of rapidly evolving changes in theconstitutional, legal, and institutional underpinnings of the Ugandan state. It not onlyreinforced the Government's objectives of developing an accountable local government tier,but also ensured that efforts would be made to harmonize the continuing civil service reforms(such as the development of budgeting and personnel management systems, and ministerialrestructuring) with the requirements of democratic decentralization.

A second dimension of Uganda's institutional change agenda was the withdrawal of the statefrom direct involvement in productive activities, and the creation of an enabling environmentfor private sector-led economic growth. Support for the legal sector reforms and accountancyprofession under ICBP was intended to strengthen the accountability and legal framework forprivate sector development.

* Linked to CAS and relevant GOUsector strategies: The project's objectives were also closelyaligned with three priorities in the 1995 CAS-namely, improving economic growth,supporting human resources development; and enhancing provision of public services. Inaddition, support under ICBP was designed to support implementation of various GOUprograms and sector strategies such as the CSR, the Capacity Building Plan for Uganda, andthe Uganda Policy on Technical Assistance.

* Grounded in timely analytical work and support under earlier operations: A wide range ofupstream analytical work-some of which was supported by IDA early on and in acollaborated manner with the GOU and interested donors-informed the identification andpreparation of ICBP. These included the findings of the 1990 PSSRC; a 1992 IDA-financed

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District Managemnent Study (Report No. 10695-UG), and a 1990 IDA-financed sector reporton capacity building. In addition, the project built on and complemented initiatives financedunder previous IDA operations including the District Reviews of staffing and structures(under the 1993 EFMP); downsizing of civil service staff, restructuring of select ministries,and payroll auditing (under the 1991 SACI and 1994 SACII); monetization of benefits forcivil servants (under the 1994 SACII); as well as strengthening of district level expendituremanagement (under the 1997 SACIII).

Shifted IDA focus to programmatic capacity building for improved perfornmance: ICBP alsorepresented an important shift in IDA's assistance strategy towards long term institutionaldevelopment in Uganda. The project signaled the Bank's intention to move beyondproviding short-term capacity inputs required to implement the ERP, and initiate acomprehensive capacity building program to support the GOU's long term institutionaltransformation objectives such as improving civil service management, deepening democraticdecentralization, and fostering an enabling environment for private sector development.

3.2 Revised Objective:

The objectives remained unchanged through the life of the project.

3.3 Original Components:

The project was intended to achieve its objectives over a five-year period through the followingcomponents: (A) Central Government Capacity Building; (B) Local Govemment CapacityBuilding; (C) Legal Sector Reform; (D) Accountancy Profession; and (E) Training Funds.Component A and B were designed to support the Govemment's civil service reform anddecentralization efforts, while Component C and D aimed to develop Uganda's legal and financialaccountability framework. Component E provided for a cross-cutting, demand-driven instrumentfor financing training on a cost-recovery basis.

The Ministry of Public Service (MPS), the Decentralization Secretariat in the Ministry of LocalGovernment (MOLG), and ICPAU-responsible for the Central Government, Local Government,and Accountancy Components respectively-were adequately resourced and capacitated to supportimplementation of their respective components. While the MJCA did not have a sirmilar level ofcapacity to implement the Legal Sector Component, support from the Capacity Building Secretariat(CBS), established in MFEP in 1991, was to help during the initial stages of the project. The CBSwas adequately staffed and resources to undertake the overall coordination and project managementof ICBP as well as the implementation of the Training Funds Component.

Each component is described below in detail along with original commitments.

A. Central Government Capacity Building Component (USD 6.62 million): This componentsought to support the Govemment's Civil Service Reform (CSR) program by bringing severalongoing reform activities to completion and developing the next stage of the reform process.This involved continued assistance in (i) streamlining of the civil service, (ii) improving thetransparency of personnel management, (iii) focusing on the civil service for efficient andeffective service delivery, and (iv) helping identify institutional training needs.

First, support for streamlining the civil service involved improving central personnel managementsystems; supporting key bodies and staff undertaking a civil service-wide classification ofpersonnel for potential termination as a result of restructuring/redundancy activities; supporting

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the implementation of ministerial restructuring plans, as well as harmonization of new structureswith the requirements of district-level decentralization; and strengthening ministry-levelpersonnel management functions.

Second, improving the transparency of personnel administration comprised strengtheningpersonnel management practices by establishing new salary structure, and introducing civilservice examinations and Performance Recognition System; developing a new Code of Conductfor all civil servants; and strengthening MPS Department of Inspection through development ofinspection procedures and staff training.

Third, focusing the civil service on effective service delivery was to be realized through theintroduction of Results-Oriented Management (ROM) and achievement of definite objectiveswithin specified time targets. The project supported a baseline Service Delivery Survey forCentral Ministries for collating data on quantifiable outputs and user perception surveys. Inaddition, efficiency gains were to be achieved through strengthening of facilities management andrecords management.

Finally, as a complement to support provided under the Training Funds Component (TFC),ministry- or agency-wide training needs were to be achieved through the development of trainingplans and senior management training.

B. Local Government Capacity Building Component (USD 14.72 million): This componentwas designed to assist local governments through the Ministry of Local Government to improvetheir abilities to properly manage and administer their responsibilities, particularly those relatedto service delivery, in a viable and sustainable manner. Specifically, the component sought tocomplement support provided by DANIDA in (i) defining an intergovernmental fiscal systems,(ii) strengthening financial and personnel management systems, (iii) introducing ROM in thelocal level, (iv) supporting the physical infrastructure and transport needs of local government.

First, support for the development a robust intergovernmental system involved the definition andimplementation of an appropriate local government financial system including thedecentralization of the development budget through inter alia a study of options for establishingand capitalizing a revolving development fund.

Second, strengthening of financial and personnel management structures, systems and proceduresconsisted of support for computerization of accounts; preparation and auditing of final accounts;consolidation of payroll processing for all district-level and delegated (formerly centralgovernment) staff; and preparation of resource endowment profiles.

Third, introduction of ROM at the district level was designed to complement similar efforts incentral line ministries. Sensitization and training in ROM were to be provide the basis forincorporation of results-orientation in local government budgeting procedures with the 1996/97budget cycle.

Fourth, support for re-tooling was designed to assist in the procurement of various goods andworks necessary to establish a reasonable level of physical infrastructure, and refurbishing ofexisting structures to provide modest office in district administrations. In addition, a RevolvingFund was to be established to meet the transportation needs of districts through purchase ofvehicles on a cost-recovery basis.

C. Legal Sector Reform Component (USD 8.24 million): In supporting key aspects of theGovemment's National Capacity Building Plan related to pnvate sector development, thecomponent aimed to assist the commercial aspects of the law and the settlement of civil disputes,both of which were in line with the Bank's focus on economic development. Specifically, thecomponent focused on (i) legal education, training, and accreditation of lawyers; (ii) law revisionand reformr; (iii) law reporting; (iv) institutional strengthening of the Ministry of Justice andConstitutional Affairs (MJCA) and the judiciary; and (v) improving the cost efficiency anddelivery of legal services. The project did not seek to finance other aspects of the Government'soverall strategy for the legal sector.

First, in supporting legal education and accreditation, a study was envisaged to evaluate theexisting status of legal education in Uganda, with a view to finding ways and means of making it

more relevant and responsive to the changing conditions in the country. This included a reviewof alternatives to the Legal Development Center's (LDC's) existing monopoly status in the areaof legal education and training. The study was to provide a basis for adoption of a satisfactorypolicy on legal education.

Second, the Credit was to support the revision and amendment of laws in order to modernize theoverall legal framework consistent with the Government's stated objective of promoting privatesector-level growth. In addition, it was envisaged that the component would help finance thereform of Domestic Relations Laws, which primarily impacted the rights of women, and thereforeinfluenced their social status and ability to engage independently in productive economic activity.

Third, the component aimed to support the consolidation of Uganda's laws into a senres ofvolumes to ensure easy access to participants in the legal process. This exercise was to beundertaken through parallel donor financing (specifically, USAID was to assist in theconsolidation of laws, while ODA would support the printing of laws). The component alsosought to reduce the backlog in the preparation and publication of Law Reports.

Fourth, institutional strengthening of the MJCA and the judiciary involved substantial stafftraining, access to legal information (for example, law books, updated and revised Laws ofUganda, the latest case laws), and increased access to other critical inputs.

Finally, the component sought to improve the cost efficiency and delivery of legal services byassisting the Administrator-General's and the Registrar-General's Departments.

D. Accountancy Profession Component (USD 0.98 million): This component sought to supportthe development of the professional association (ICPAU), the establishment of a localprofessional qualification and examining capability, and the introduction of local accounting andauditing standards.

First, assistance to ICPAU to commence its operations and fulfill the following functions:managing membership of its professional and student base, ensunng the maintenance ofprofessional standards amongst members; promoting the usage of internally accepted accountingand auditing standards in Uganda; and securing international recognition.

Second, the component sought to help develop a local professional qualification and associatedexamination, which would include design of a scheme of examinations, with detailed examinationsyllabi and reading lists, and preparation and moderation of examination papers.

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Third, funding under the component was designed to help provide Continuing ProfessionalEducation and training to members of the profession.

E. Training Funds Component (USD 7.02 million): The component intended to develop asystem to strengthen (i) implementation skills in the public and private sectors; and (ii) publicand private sector training institutions through the provision of limited assistance on acompetitive basis. It consisted of two Training Funds managed by the Capacity BuildingSecretariat (CBS) in the Ministry of Finance and Economic Planning (MFEP):

First, the Public and Private Sector Matching Grant Fund (Fund I) sought to provide matchinggrants to public and private sector institutions for training of their staff. For central ministnes anddistricts, Fund I provided 90% of the resources with 10% of the resources being provided by thegovernment entities. Private sector organizations would access Fund I through trade/industryassociations; the cost sharing arrangement was 50% of the costs of training provided by theprivate sector and 50% was provided by Fund I. The Fund was to acquire training needs througha transparent and competitive bidding process which would allow all local training institutions,both publicly funded and private, to participate in service delivery.

Second, the Training Supplier's Strengthening Matching Grant Fund (Fund II) aimed to financecapacity building for selectively identified weak training suppliers with the potential to providehigh quality services on a competitive basis. Under this Fund, each training supplier couldreceive assistance for staff training (up to 90% of cost), acquisition of training-related studymatenals (up to 50% of cost), and equipment (up to 25% of cost).

3.4 Revised Components:

The components remained unchanged through the life of the project.

3.5 Quality at Entry: '

The ICR rates quality at entry for the project as satisfactory because of its integrated support forpublic sector reforms; its participatory approach to design; incorporation of lessons leamed frompast experience; design of innovative mechanisms for demand-driven capacity building;consideration of risk factors and risk mitigation measures (particularly on CSR anddecentralization); and robust implementation arrangements to manage complexity. Thesestrengths in project design outweighed weaknesses related primarily to coherence, sequencing,and realism in terms of the magnitude of certain project tasks.

Strengths. In addition to the factors that contributed to the relevance of the operation, thefollowing elements of design contributed to the ICBP's quality at entry:

Integrated support for client-driven public sector reforrns. The value-added of ICBP's designin terms of the supporting Uganda's public sector reform agenda was two-fold. First, theproject integrated support of Uganda's homegrown civil service, decentralization, andfinancial management reforms. The development of cross-cutting personnel and budgetingsystems along with the restructuring of line agencies was in principle designed to strengthenthe enabling environment (for example, greater predictability and transparency of resourceflows, better incentives for staff) within which local governments functioned, while

Since the project design pre-dates the existence of the Quality Assurance Group (QAG), there is noofficial assessment of the project's quality at entry.

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simultaneously ensuring a coordinated and efficient transfer of responsibilities and core

competencies. Second, ICBP's support for CSR and decentralization marked an importantevolution beyond the fiscal adjustment-inspired downsizing efforts of the late 1980s and early

1990s to longer term capacity building for improved service delivery. Through its design, the

project institutionalized the involvement of the Ministry of Local Government (MOLG)-

along with the traditional lead agencies, namely the Ministry of Finance and EconomicPlanning (MFEP) and the Ministry of Public Service (MPS)-in shaping technocraticresponses to the politics of state transformation. As is discussed later in the ICR, this

arrangement paved the way for a more integrated framework to guide Uganda's public sector

reformns and donor-assisted efforts in this area.

* Participatory approach to design. The design of specific components, particularly the Local

Government Capacity Building Component, followed a highly participatory approach.Ugandan counterparts were involved in all aspects of project processing including

participation in the Appraisal and active involvement in the preparation of the Yellow CoverSAR, and participation in the Bank's Yellow Cover Review Meeting.

* Incoiporation of lessons fromn past experience. Project design was based on lessons learmed

from earlier projects in Uganda, namely the 1987 Technical Assistance Project, the 1992

Second Technical Assistance Project, and the 1993 Economic and Financial ManagementProject (EFMP). The experience with these operations pointed to a more favorable risk-reward ratio when (i) capacity building subprojects/interventions were targeted to areasclosely linked to ongoing reforms or upstream sector work relevant to future reforms; and (ii)TA activities were designed to allow for maximum flexibility with vigorous supervision.

* Innovations in demand-driven, sustainable capacity buildin1g. In its initial design, ICBPincluded several innovations that were incorporated into design, in ways that now provide the

basis for demand-driven, programmatic approaches to capacity building. These included

matching grant schemes to support in-service training in the public sector, along with pre-

qualification criteria for participating training suppliers; and a revolving fund to finance

procurement of vehicles by districts on a cost-recovery basis, with full repayment expectedwithin five years.

* Consideration of risks anid initigatiotn measures on CSR and decentrcalization. An underlying

assumption was that the focus of the CSR and decentralization agendas, including changes in

the constitutional and legal framework, would remain unchanged over the medium-term. In

addition, actions taken on CSR-while exogenous to the project-would continue, includingfurther rationalization of staff and ministries within a hard budget constraint, as well as a

medium-term wage enhancement strategy. As far as decentralization was concerned, the

project team acknowledged central government agencies would likely face increaseddemands on their limited capacities in the short-run, however, the Government's political

commitment to empowering local governments was likely to be sustained.

In addition to linking support for the CSR and decentralization to benchmarks under the SAC

I, II, and HI operations, the ICBP project team incorporated additional risk mitigation

measures in project design. In recognition of the fact that the demands of democratic

decentralization were substantial and dynamic, the project made provisions greater flexibility

in leveraging timely expert assistance a wide variety of issues. In addition, staff involved

with the two of the largest components were chosen based on previous experience with the

Bank projects. It was agreed that the Bank staff would maintain close liaison through a multi-

disciplinary team which would be used to supervise the project and Resident Mission staff

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would also be involved in supervision on an as-needed basis at the request of the Bank orGOU task managers for ICBP.

Clearly defined implementation arrangements. Implementation arrangements were designedto meet the demands of an admittedly complex project, and reinforce the MFEP's strongleadership role and convening power in consolidating the gains of fiscal adjustment whilesupporting efforts to improve the efficiency and effectiveness of the public sector.Coordination and supervision of project components were the responsibility of the ProjectSteering Committee (PSC), chaired by the Permnanent Secretary/Secretary to the Treasury.The Bank requested that a senior level official in MEFP be designated as the GOU TaskManager for the project. The GOU Task Manager chaired a Technical Committee (TC)-accountable to the PSC and comprising all component coordinators-to support projectpreparation and implementation. The Capacity Building Secretariat (CBS), with its projectadministrator/coordinator, provided ongoing support for the TC in the implementation of allbut the Local Govemment Capacity Building Component.

Design dilemmas. Given the strengths in the design of the ICBP, the 1997 Mid-Term Review didnot recommend any change in objectives or restructuring of components. Nevertheless, thefollowing issues, described below, posed dilemrnmas for ICBP's design and should have beengiven more thorough consideration during appraisal-(i) the added complexity of the LegalSector Reform and Accountancy Profession Components; (ii) the project team's assumptions vis-a-vis implementation risks associated with these two components; (ii) lack of clear linkagesbetween the ministerial restructuring and ROM exercises under the Central GovernmentComponent; and (iv) the degree of realism in planning project implementation.

First, the incorporation of the Legal Sector Reforn Component, and to a lesser extent, theAccountancy Profession Component added to the complexity of ICBP. Yet, the specific capacitybuilding and institutional reform requirements of these components were distinct from thoserelated to public sector reform (that is, CSR and decentralization), and more appropriate to (andconsistent with) the objectives of the Private Sector Capacity Building Project, which was beingconcurrently prepared with ICBP. More consideration should have been given to the inclusion ofboth components in the Private Sector Capacity Building operations rather than ICBP.

Second, the ICBP team also appeared to underestimate the risks associated with the Legal SectorReform and Accountancy Profession Components at appraisal. The specific risks identified werethe lack of managerial capacity and the dispute between ICPAU and the Institute of CharteredSecretaries and Administrators over membership rules. In both cases, the team relied on narrowand short term indicators of ownership-namely, the implementation of salary enhancements forlawyers and the passage of legislation establishing ICPAU with more restrictive membershiprules-and therefore made relatively strong assumptions about the risks associated with bothcomponents. In hindsight, further consideration should have been given to the risks of investingin capacity building the legal sector without a clear sector strategy, as well as the possibility thatICPAU's legal disputes could easily resurface.

Third, while the project did seek to leverage complementarities between CSR anddecentralization, more thought should have been given to the design of the ministerialrestructuring process itself. Specifically, the restructuring should have been packaged in waysthat more effectively integrated the ROM exercise and annual budgeting process. Instead, ICBPdesigned the restructuring and ROM as separate activities.

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Fourth, the project preparation team underestimated the magnitude of certain tasks, particularlythose related to the roll-out of operating systems in all districts. The Project Implementation Planshould have been less ambitious about the ability of beneficiaries within the newly createddistricts to implement project activities.

4. Achievement of Objective and Outputs

4.1 Outcotme/achievement of objective:

The ICR rates the overall outcome as satisfactory because ICBP demonstrably achieved itsobjectives of continuing civil service reforms, assisting the decentralization programs, and to alesser extent, strengthening the legal and accountability framework for the private and publicsectors. With regards to the civil service and decentralization programs, in particularly, ICBPprovide timely technocratic, institutional, and capacity building responses to a fast-evolving,GOU-driven-albeit contentious-process of constitutional change and legislative reformdesigned to radically reorder the state-society relations (figure 1). Under the sustained leadershipof a highly committed client, project outputs-such as review and restructuring of civil serviceinstitutions and policies; formulation and review of options for the development of anintergovernmental fiscal and administrative system; investments in the technical capacity (humanand physical) of central and local government-were effectively employed to give forrn,substance, and structure to what were till then largely the political intentions of the NRM todeepen democracy and improve service delivery in a decentralized framework.

ICBP's impact on the legal and accountability framework for the public and private sectors wasmore modest. Capacity building support (primarily involving technical assistance and training)for the legal sector and accountancy profession were not linked to a well-articulated set of sector-wide strategic directives, reinforced by the same degree of political consensus and commitment as

decentralization. Other implementation hurdles involving MJCA and ICPAU limited the impactprimanly to training and setting standards relevant to the legal and accounting professions.

Taken as a whole, the project effectively advanced the Government's objectives of creating anaccountable local govemment tier responsible for the bulk of public management functionsrelated to poverty reduction, while making initial contributions to the development andmodernization of the legal and accounting professions. These achievements are discussed below:

Supported Continuation of Civil Service Reforms. ICBP satisfactorily supported thecontinuation of the civil service reforms including the transition from fiscal adjustment-ledrightsizing activities to longer term institutional development to improve efficiency andeffectiveness. Specifically, the successful restructuring of line ministries, the development ofmerit-oriented personnel systems, and structured, bulk training-financed under Component 1and described below-enabled the GOU, by late 1997, to continue modernizing its centralbureaucracy, while embedding across central ministries the institutional framework for a morefocused,fiscally sustainable "white collar" role.

A major achievement of ICBP was the rationalization of line ministries following the large scaleretrenchment exercises of the early 1990s and the redeployment of staff to local government afterthe passage of the 1993 statute. Implemented under the leadership of an influential and reformistMinister of Public Service, this 1996-7 restructuring exercise was significant in terms of thetrajectory of state transformnation for two reasons (figure 1). The restructuring reviewsunderpinning the rationalization were carried out within a hard budget constraint (requiring afurther reduction in the number of ministries from 21 to 17, and additional retrenchment of 1033

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staff) as opposed to an earlier set of reviews in 1994-5 without an indicative resource envelope(recommending a staffing increase of 30%). The 1996-97 restructuring provided an affordablealternative to the 1994-95 reviews which would have in effect reversed progress made, underUganda's fiscal adjustment program, in controlling the size of the wage bill. Second, the 1996-7restructuring aligned central government roles, functions and structures with the requirements ofthe 1995 Constitution and the 1997 Local Govemments Act-that is, circumscribing ministerialmandates to "white collar activities" such as policymaking, regulation, and coaching, whiletransferring to local govemments the bulk of "blue collar" responsibilities related to servicedelivery and program implementation.

A second achievement was the development of operating systems for personnel and civil servicemanagement. Specifically, the use of standardized, merit-based criteria in the recruitment andselection of public officers was enhanced with the introduction (and regular use) of a civil serviceexamination and related competency-based instruments. Other mechanisms for more effectivelymanaging human resources and other complementary inputs in civil service management wereinstitutionalized including a three-year training plan, a facilities and asset management, and arecords management system.

Underpinning these personnel management mechanisms, and a third important achievement ofthe project, was support for bulk in-service training in areas such as financial and generalmanagement, procurement, and computer literacy. Bulk training for nearly 5000 civil servants(most of whom were central government employees) was financed on a matching or cost-recovery basis in order to encourage proper planning in the area of human resource management.Support was also structured to further the institutional priorities of specific ministries or agencies,rather than the potentially idiosyncratic preferences of individual trainees.

Notwithstanding these achievements, the project was unable to deepen a results-oriented cultureacross the civil service. While a National Service Delivery Survey was successfully financed toestablish a broad set of service delivery benchmarks, the project's support for the introduction ofResults-Oriented Management (ROM) techniques and methods in central ministries and districtsfell short of expectations. ROM failed to tangibly propel these central ministries or districts toorient their operations towards outputs and outcomes primarily because the exercise was notadequately embedded in the routine processes of government. Specifically, ROM was notinitially linked to annual budget and medium term planning processes, improvements in wages orworking conditions, or the strategic review process underpinning ministerial restructuring.

Assisted Government's Decentralization Program. The project satisfactorily assistedUganda's decentralization program at a critical early stage, and demonstrated that the GOU (andespecially districts) could effectively utilize significant long term support for the development ofa viable and accountable local govemment tier. ICBP support for ongoing advisory servicesrelated to fiscal decentralization, development of operating systems, compliance with the basicpublic sector fiduciary obligations, investment in re-tooling and refurbishment, and bulk in-service training helped design the architecture of intergovernmental relations and also makedemonstrable improvements in the productivity of districts. Taken together, these positiveachievements help ensure that decentralization emerged as a politically and technocraticallycredible process, and therefore, one that would continue to drive state transformation.

Timely technical assistance (during preparation and following effectiveness) provided over the1995-96 period helped initiate a process of formulation, implementation, and review-under thetripartite institutional leadership of the MFEP, MOLG, and MPS-by which the Governmenttested and institutionalized increasingly sophisticated fiscal instruments (such as block grants,

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conditional sectoral grants, and eventually multi-sectoral capital grants) to further its dualobjectives of democratic decentralization and improved service delivery (see figure 1). Early onsignificant execution responsibilities were transferred to districts, primarily through thedecentralization of recurrent expenditures through sector-specific conditional grants. Between1995 and 1998, transfers to local governments increased 148% from Ushs. 118 billion in 1995-96to Ushs. 291 billion in 1998-99.

Table 1: Transfers to Local Governments, 1995/6-1998/9 (Ushs millions)

Description 1995/96 1996/97 1997/98 1998/99Unconditional grants 40575 48718 51783 64388

Conditional grants 17935 37200 51150 83461

Conditional salaries 59244 90597 101484 143646

Unconditional as share of transfers 34% 28% 25% 22%

Total 117755 176514 204417 291495

As % of total expenditures 11.1% 15.8% 16.8% 19.9%

Soutree. Backlgrouniid to the Budget. 1998

It is worth noting that as the share of total expenditure transferred to local governments increasedfrom 11.1% in 1995-96 to 19.9% in 1998-9, the degree of expenditure autonomy (share oftransfers that were unearmarked) decreased from 34% to 22%. This resulted from an increasebetween 1995 and 2000 in the number of conditional grants to fifteen, each with separate and attimes idiosyncratic reporting requirements that burden capacity-strained local govemments. Theproliferation of conditional grants in Uganda is illustrative of a strategy on the part of sectoralministries to use the intergovernmental fiscal system in ways that "protect" expenditures inpriority areas (often at the expense of expenditure autonomy). Over the implementation of ICBP,it became apparent that the establishment of an intergovernmental fiscal system did notautomatically guarantee expenditure autonomy for local government tiers.

Rather, the development of the local government fiscal system in Uganda like other countries washeavily contested ground. In this regard, technical assistance under ICBP for "decentralizing thedevelopment budget" between 1995 and 1996 was pivotal in identifying options for structuringthe flow of greater discretionary resources to districts to meet investment needs. This workcontributed to the identification of the Local Government Development Program (LGDP), whichprovides multi-sectoral capital support to districts through the LGD grant. Two tranches of theLGD grant have been coursed through the budgets of 25 out of 71 local governments, the firsttotaling SDR 5.59 million in October 2000 and the second totaling SDR 12.36 million in July2001. Over 80% of the funds provided for these development block grants have financed roads,education, healthcare, water investments, while less than 20% has financed administration. Insummary, quality advice provided under ICBP supported the evolution of an intergovernmentalfiscal architecture that progressively balanced its goals of poverty reduction through servicedelivery in health, education, and water with those of democratic decentralization throughexpenditure autonomy and downward accountability.

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Figure 1. Critical moments in state transformation in Uganda, 1992-2002

Trajectory of Legend

constitutional and Fiscal decentralization Do

legislative reform Jul 94 -Oct 95 ConsiTutieonal/leal reform -Dec 93 ConstitutionalCosiuonleglrfn

Local Government reform process, Mar97 Bank opcrations

(Resistance Councils) promulgation Local Government

Statute passed Act passed

Key technocraticl c _ 4 + -institutionaL capacit I

buiding response II\Jul 95 May 96 Jun 00 Jun 02

Block grants UPE grant Nov 96-Jun 97 15 conditional New chart ofinitiated initiated Role restructiring of grants, 8 funded accounts

central ministries under PAF proposed;y x ~~~~~IFMIS

________________________ _____________ _______ _ J___________-~ I ! architecturedesigned

1992-97 Jun 98 Oct 00-Jul 01Staff reduction from 320,000 to 147,000; Poverty Two tranchesand ten-fold average real wage increase Action Fund of LGD grant

established released

1995-2001Retooling and bulk in-service training

Evolution o1Bank PoMolloI

Bank92ortfolIo Aug 95 Nov 97 Jun 00 Mar02

EFMP effective ICBP effective ICBP MTR LGDP LGDPEFMP~~~~~~~~~~~~~~~~~~~~~~~~fetv MTRciv

Jan 02 Nov 94 Nov 94 Mar98 Feb 01 Jun 02SAC I SAC II SAC il LGDP EFMP2 ICBP

effective effective effective preparation effective closed

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Even as ICBP helped evolve an intergovernmental fiscal system, it financed significantinvestment in equipment, works, operating systems (including some IT- based solutions), andbulk training to expand the productive capacities of district authorities to undertake recordsmanagement, accounting and auditing, payroll and personnel management, strategic planning,and automation of work flow. In cases where staffing was inadequate, the project also financedshort term consultants to help close and audit local government accounts. This offered a

pragmatic approach to ensuring compliance with the basic fiduciary obligations of a functioninglocal government system. The significance of this support was that it enabled districts-from theearly days of the constitutional and legislative reform process-to progressively build anddemonstrate their ability to handle some of the "nuts and bolts" of public management.Moreover, it established for IDA and other donors a foundation for demand-driven and cost-recovery approaches to bulk in-service training and asset management at the distnct level.

Strengthened Legal and Accountability Framework. ICBP support for strengthening the legalframework for the pnvate and public sectors through the revision of laws, a new policy on legal

education, developing professional qualification, and training across legal and justice sectorinstitutions was timely and achieved moderately satisfactory outcomes. Unlike the CSR anddecentralization programs, the legal sector lacked the type of comprehensive and coherentstrategy-backed by a broad-based and committed constituency for private sector-friendly legalreforms-necessary to effectively absorb a significant program of IDA support. Rather ICBP'simpact was more modest, assisting in strengthening certain aspects of the policy framework andinstitutional capacity of the legal sector such as the review and adoption of a more liberal legaleducation policy, revision of some commercial statutes, and training of MJCA staff as well as

members of the judiciary. Poor implementation capacity and managerial follow-through in theMJCA meant that the component was ultimately underutilized.

Over time, this initial assistance did encourage a more intensive engagement by other donors. Inaddition, the policy dialogue conducted during supervision with the Chief Justice and SolicitorGeneral contributed to important institutional innovations in the sector including theestablishment of a Commercial Court. Moreover, recommendations-expressed during theMTR-for the GOU to develop a more coherent sector strategy led to the preparation of a sector-wide approach or SWAP for the Commercial Justice Sector by 2000, and the incorporation of theGovernment's medium-term plans for legal sector into the IDA-financed budget support

framework or the Poverty Reduction Support Credits (PRSCs).

The Credit was more effective in helping establish a basic institutional and regulatory frameworkfor the development of accounting profession including harmonization of Uganda's accountingprofession within institutional standards, the development of an indigenous testing or examinationregime, and registry of members. In spite of the Auditor General's embargo on ICPAU's use ofICBP resources due to the Association's ongoing legal disputes, membership rolls andregistration of students grew significantly. Its examination system is now regularly administeredwith close linkages to higher educational institutions including Makerere University.

4.2 Outputs by comnponents:

Most planned outputs-particularly those under the Central Government, Local Government, andTraining Components-were achieved efficiently and accounted for 72% of total disbursementsunder ICBP. With the exception of the Accountancy Profession Component (which faced anembargo on access to ICBP funds over the project's life), implementation was generally evenacross components over the life of the project. When components did under-perform due to poor

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follow-through on certain activities, legal and administrative bottlenecks outside the control ofcomponent coordinators, or non-performance by consultants, both the Borrower and the Bankresponded quickly to reallocate committed resources to other priority components. Lags incertain activities under the Local Govemment and Legal Sector Components also required twoextensions in the closing date. These extensions were utilized effectively to complete outstandingactivities including the preparation of law reports under the Legal Sector Reform Component, theFiscal Management Study under the Local Govemment Component, and the Design of theRecords Center/National Archives. Furthermore, the presence of the Task Manager in the fieldbetween August 1995 and August 1998 not only contributed to implementation of plannedactivities, but also helped maintain close linkages between project outputs and Uganda's evolvingcapacity building needs.

It is worth noting that certain activities such as some district civil works sub-projects and therestocking of upcountry libraries were not completed in part because of difficulties in supervisingactivities in remote area. These and other constraints such as weak contract supervision andmanagement led to the cancellation of approximately USD 0.6 million at project closing.

Finally, this ICR has been prepared prior to project closing. A review of procurement andfinancial management performance will be prepared within six months of the 30th June, 2002closing date. Recent audits of project financial statements have thus far not identified fiduciaryissues of particular concem. If needed, an update on physical implementation performance willalso be prepared within six months of the closing date.

Specific component-wise outputs achieved under the project are described below along withactual disbursements (inclusive of physical and price contingencies):

A. Central Government Capacity Building Component (USD 5.43 million): The componentsupported streamlining of the civil service through the rationalization of govemment structures in21 ministries (including aligning them with the 1995 Constitution and 1997 Local GovemmentAct, within the available resource envelope) in 1996-97; further reduction in the number ofministries to 17; and the placement of staff in new structures and management of retrenchmentpackages (resulting in an additional reduction of 1033 staff). The main value-added of thiscomponent was to institutionalize the policy, regulatory, and coaching roles of central ministriesin line with the constitutionally mandated transfer of service delivery responsibilities to districts.Unlike the numerous cases of less successful role restructuring in other decentralizing states (forexample, Argentina and Chile), Uganda's 1996-97 restructuring exercise was facilitated by theprior transfer of frontline workers (such as teachers, nursing assistants, and engineers) to districts,the empowerment of District Service Commissions to manage these staff, and most important, theleadership of a powerful Minister of Public Service committed to the stated goals of thetransformation process. The component also financed the preparation and publication ofrestructuring reviews for Constitutional Commissions and Makerere University administration.Implementation of the latter remains an unfinished agenda.

The component also introduced modem personnel management practices as part of its support forthe operationalization of the Public Service Commission (PSC). In addition to helping to definethe PSC's roles and responsibilities in the recruitment, selection, and hiring of civil servants, thecomponent helped develop and implement a new civil service examination for new entrants aswell as a competence-based instrument for senior staff (for example, Pemmanent Secretaries,Directors, Commissioners and Chief Administrative Officers) in 2001. As part of the larger effortto strengthen personnel management at all levels of government, the component financed thepreparation of a Training Needs Assessment (TNA), followed by a public sector training policy

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and a three-year training plan in 1998, which provided the strategic framework within which the

Government provided bulk in-service training.

Several activities were also undertaken to improve civil service effectiveness including the

introduction of ROM techniques across ministries and districts, along with the preparation of

Annual Perfornance Plans by eight ministries. Computers were purchased for ten ministries to

facilitate ROM implementation. Despite these efforts, ROM did not directly contribute to

sectoral inputs to the annual budget or the Medium-Term Expenditure Framework (MTEF)

processes. Nor were the output-oriented techniques in ROM developed early enough to be

incorporated into the 1996-97 role restructunng exercise. Moreover, the MFEP sought to

introduce a similar methodology, under a separate Output-Oriented Budgeting exercise, in

parallel to MPS's ROM efforts. These risked duplication.

As part of the CSR's focus on improving effectiveness, the design and implementation of the

National Service Delivery Survey (NSDS}-which assessed household level access, utilization,

and satisfaction across sectors such as health, education, Justice, water and sanitation, and

agriculture-was successfully completed, albeit with delays. Additional efforts will be required

to use the NSDS findings for the purpose of policy review in the context of the annual budget,

MTEF, and PRSP processes.

Finally, a Facility Management Policy was developed and adopted by the MFEP under the

component. Also, the design of the Records Centre/Archive was completed and will provide the

basis for a construction of a modern facility for central ministries and local govemments to

consolidate archival infornation and establish GOU-wide procedures for effective records

management. Printing of MPS's Annual Report for 2001 was also financed.

The component's overall output performance is rated as satisfactory.

B. Local Government Capacity Building Component (USD 12.79 million): As the

constitutional and legal reformn process evolved through the mid-1990s, this component provided

timely support for analytical advice on intergovernmental relations to meet Government's

decentralization objectives in 1996. A study of options for decentralizing the development

budget and reviews of the institutional strengthening needs of new distncts significantly shaped

the design of the intergovernmental fiscal system including the assignment of revenue and

expenditure responsibilities and identification of administrative structures at the sub-national

level. Reflected in the 1997 Local Govemment Act, these developments in the design of

decentralization-and specifically, their marked departure from the more modest provisions of

the 1993 Local Government (Resistance Councils) Statute-are testament to the political

commitment of the Minister of Local Government and the technical response of key specialists of

the Decentralization Secretariat in the context of ICBP. In addition to the design of fiscal system,

the project also supported the training of GOU officials in intergovernmental finance. As part of

these broader efforts, a study of options for establishing a revolving development fund for

districts was initiated but later aborted due to non-performance by the consultants.

In parallel, the component contributed to the strengthening financial management systems and

practices at the local level in order to enable districts to meet the new fiduciary and administrative

responsibilities. Specifically, ICBP supported the preparation of final accounts and audits for

local governments (inter alia through outsourcing to private consultants); pilot computerization

of accounts and payroll management systems at the district level; installation of a decentralized

records management system (including the installation of and training in the TRIM records

management software across districts); implementation of a Millennium Bug project; training of

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district personnel on the role of local government tender boards and public accounts committees;and the completion of the Fiscal Management Systems (FMS) Study to provide the basis for thedesign of the Govemment-wide Integrated Financial Management Information System (IFMIS).It is worth noting that problems of non-performance on the part of the consultant led to thecancellation of the original FMS Study, financing of which was refunded to the Govemment. Asecond round of procurement led to the selection of a consultant that satisfactorily completed thestudy. A variety of outputs have been produced as part of this effort including an InceptionReport, Business Systems Architecture, Information Systems Architecture, TechnologyArchitecture, as well as the Functional and Technical Specifications. A Financial ClassificationReport, reconmmending a new chart of accounts, was also prepared. Related to budgetmanagement were efforts under the Local Government Component to sensitize district officials nROM methodologies and techniques for planning. Concerns about the linkages between ROM,budgeting processes, and restructuring were compounded by weaknesses in existing budgetsystems and lack of knowledge of medium-terrm planning processes at the local level.

The component also financed the procurement of a wide array of goods and works as inputs toretool district administrations, establish a reasonable level of physical infrastructure, and improveworking facilities in order to carry out basic functions. These included 188 personal computers,131 laser and 132 dot-matrix printers, 182 uninterruptible power supply systems, 1590 back-uptapes, 60 scanners; 8 solar systems; 1090 metallic storage shelves; 132 file cabinets; and severalother sundry items such as map cabinets, photocopiers, typewriters, safes, steel ladders, furniture,calculators, and fire extinguishers. Works activities were undertaken to refurbish registries andcomputer rooms in 48 local govemments under ten contracts. Most of these works subprojectwere satisfactorily completed with the exception of four lots, which contractors abandoned (table2). Alternative modalities were considered for selecting substitute contractor(s) to complete theseworks, however, the project closed before these arrangements could be finalized.

A noteworthy innovation under this component was the establishment of the District RevolvingTransport Fund (DRTF), which enabled districts to cover the full cost of vehicles over a four tofive year repayment period. Forty-four local governments benefited from the scheme. Afterseveral rounds of procurement, a total of 91 double cabin pick-ups, 14 small four-wheel drivevehicles, and 178 motor vehicles were purchased by beneficiary districts on a cost-recovery basis.By project closing, the management of the DRTF was successfully mainstreamed into the MOLGunder the Assistant Commissioner for District/Urban Administration. At the time of hand-over,the DRTF collection account had a balance of Ushs. 647,667,899.

Table 2: Civil Works Activities Undertaken in Districts

Lot Sites CompletionA Kotido, Moroto DA & MC 100%B Apac, Lira DA & MC, Soroti DA & MC, Kumi 100%C Iganga, Tororo DA & MC, Pallisa, Mbale DA & MC, Kapchorwa 55% (Abandoned)D Jinja DA & MC, Mukono, Kamuli 95% (Abandoned)E Mpigi, Masaka DA & MC, Rakai, Kalangala 95% (Abandoned)

F Kabale DA & MC, Mbarara DA & MC, Kisoro, Bushenyi 100%G Kasese, Bundibugyo, Fort Portal MC, Kabarole, Mubende, Ntungamo, 100%

Kibale, RukungiriH Hoima, Masindi, Luwero, Kiboga 100%I Gulu DA & MC, Kitgum 95% (Abandoned)J Nebbi, Arua DA & MC, Moyo 100%

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This first wave of significant IDA support for the development of core public managementsystems and productive assets across the local government tier proved both timely and successfulin expanding capacities of districts to carry out an ever increasing array of responsibilities (forexample, in financial and personnel management). It soon became apparent that any sustainableeffort to deepen decentralization would require not only technical assistance for legal and policyframework but also long term investment in the machinery of local government, including eventhe basic infrastructure required to house district administration. Over the 1990s, these needswere further magnified by the steady transfer of the expenditure responsibilities and workload todistricts as well as the creation of new jurisdictions required more sustainable. This logic,initiated under ICBP, of enhancing the capacity of local government in line with the growth intheir public management responsibilities was scaled up under LGDP and EFMP2 (figure 1).

The ICR rates implementation and output performance for this component as satisfactory.

C. Legal Sector Reform Component (USD 9.84 million): Early progress was made under thiscomponent including a review of Uganda's legal education system, which led to the adoption of anew policy that allowed inter alia for the liberalization the Law Development Centre'saccreditation and participation program. After the establishment of the Legal EducationProgramme, in-country training offered by the Intemational Law Institute-Uganda (ILI) benefitedboth private sector and public sector personnel on various legal aspects relevant to Uganda'sneeds. These included courses in case management, magistrate and judicial training, andcomputer courses for legal professionals. These activities contributed to the component's rapiddisbursement prior to the MTR in 1997.

A second set of activities financed under the component included the revision and reform ofUganda's laws proceeded less rapidly. Specifically, the Uganda Law Reform Commission wassupported in identifying and revising commercial and customary laws, yet only fifteen of the 44identified for reform by the consultants were revised and draft bills submitted. The Commissionalso initiated a review of WTO-related legislation and finalized WTO Agreementsimplementation legislation.

Third, the component financed strengthening of the Ministry of Justice and Constitutional Affairsprimarily through local in-service training as well as longer term courses aboard in negotiationsand contracts; intemational legislative drafting; librarianship; technical assistance management;law reporting; and peace building. Training activities also included participation in the IDLIDevelopment Lawyers Courses, a symposium on private investment and transnational arbitration,and other workshops on international law. Under the component, several legal professionals andpersonnel from the MJCA and judiciary took advantage of training opportunities at ILI. Animportant innovation in the ILO training program was its in-country delivery-a requirement ofthe competitive selection process. As a result of winning the contract under ICBP, ILI not onlyprovided world-class training to a larger number of Ugandans, but also established itself as a localNGO in Kampala. It continues to offer training in Kampala on a cost-recovery basis, and attracts

trainees from neighboring East African countries as well.

Fourth, the component facilitated access to legal information by procuring and distributing caselaws and legal books to 29 stations throughout the country covering institutions such as MJCA,Makerere University, Law Reform Commission, Law Department Center, and the Courts ofJudicature. The computer library program developed under this component has resulted in inter-lending and exchange of library resources among participating stations. Increased access to lawsand case materials served as a cnrtical input to Uganda's precedence-based legal system.

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Plans to improve service delivery and increase cost recovery for legal sector services through thedevolution and autonomization of the Administrator and Registrar Generals Departments fromthe MJCA did not materialize. The cost implications of the proposed institutional arrangementswere considered excessive. The non-performnance of this component also reflects a failure toinvolve the MFEP earlier on in the component.

While several the intended outputs primarily related to legal education and training wereachieved, implementation of other key activities such as the revision of commercial laws or thereform of legal sector service delivery institutions lagged and were canceled. The ICR thereforerates the performance of the component as moderately satisfactory.

D. Accountancy Profession Component (USD 0.44 million): Some activities funded underthis component were completed satisfactorily, however, following the resurging of legal disputesinvolving ICPAU, remaining resources were reallocated to other components. Prior to theembargo imposed on ICPAU by the Auditor General, the component helped procure equipmentand finance training activities to help ICPAU successfully launch its operations.

With this support, the Institute adopted International Accounting Standards and InternationalStandards on Auditing in 1998, introduced the Code of Conduct for Accountants as well as theValue-Added Tax Accounting Standards, and established a library as well as a registry ofmembers. The Institute also successfully trained Examiners, Moderators and Markers forprofessional and technician examination categones; conducted Continuing ProfessionalDevelopment seminars, produced of quarterly accounting joumals, and benefited from a twinningarrangement with a counterpart association in the UK. The Institute is now a member of theInternational Federation of Accountants (IFAC) and the Eastem, Central, and Southem AfricanFederation of Accountants (ECSAFA). By project closure, ICPAU's membership had grown to265; it had issued practicing certificates to 66 firms on an annual basis, and had 700 registeredstudents. It is currently conducting examinations semiannually for both Certified PublicAccountants (CPA) and Accounting Technicians Certificate (ATC) and has started graduatingprofessional accountants. The Makerere Business School and Government institutions fundedunder EFMP2 are supporting applicants in sitting for ICPAU's examinations and qualifying asprofessional accountants.

Despite the exogenous factors such as legal bottlenecks that undermined implementation, ICPAUutilized resources made effective use available under the original component and is thereforerated as moderately satisfactory.

E. Training Funds Component (USD 9.53 million): The Training Funds Component (TFC)supported skills development in a variety of private and public sector institutions on a demand-driven, cost-sharing basis. On the demand-side, the Public and Private Sector Matching GrantFund (Fund I) supported several rounds of procurement for bulk in-service training contracts-tendered competitively on a financial basis amongst a pool of 31 pre-qualified public and privatesuppliers-over the 1998-2001 period. A total of 7013 private, public, and NGO personnelreceived training offered through 290 courses in skill areas such as general management, financeand accounting, IT, computing, and legal services at an average cost per trainee of USD 292.Financing for these courses was provided on a matching basis-each beneficiary institutioncontributed ten percent of the financial cost per trainee and leveraged the remaining ninetypercent from the Fund.2 Total Fund I contributions totaled nearly USD 2.05 million by of June

2 The costs of daily allowances were covered by beneficiary institutions.

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2001. By mid-2001, demand for Fund I resources-evidenced by receipts of matchingcontributions from districts-outstripped the project's ability to finance additional rounds ofprocurement. The consortia of beneficiary institutions that participated in Fund I included 26local governments, 5 central government ministries and departments, 10 NGOs, and 4 private

sector organizations.

On the supply-side, the Training Supplier s Strengthening Matching Grant Fund (Fund II)supported capacity building-also tendered on a competitive and matching basis-of supplierinstitutions in skills areas that were critical to their successful participation in the emergingmarket for in-service training (for example, Training of Trainers, consultancy services, tendering,and contract management). Over the 1997-2001 period, 267 personnel from supplier institutionswere trained in 9 courses, at a total cost of USD 0.48 million and an average cost per trainee ofUSD1 803.3

It is worth noting that significant upstream work was undertaken over the 1995-96 period beforethe Training Funds were made effective. This included the preparation of implementationmanuals-undertaken in a participatory manner with relevant stakeholder groups-to guide theoperations of Funds I and II. Once the operational manuals were finalized, potential beneficiarygroups were sensitized and suppliers were invited to pre-qualify for participation in Fund I overthe 1996-97 period. Those suppliers that did not pre-quality for the first round of procurementwere provided, on a demand-driven basis, capacity building support. After nearly two years ofintensive preparatory work, the Funds were made effective in 1998.

The demand-driven, matching grant schemes under this component represent an importantinnovation in the provision of capacity building support in countries undergoing rapidinstitutional change. The rapid disbursement of both Funds is testament to the feasibility of suchschemes in both the public and private sectors. The ICR therefore rates the component'sperformance as highly satisfactory.

4.3 Net Present Value/Economic rate of returni:

NOT APPLICABLE

4.4 Financial rate of return:

NOT APPLICABLE

4.5 Institutional development inmpact:

In evaluating institutional development impact (IDI), the ICR attempted to assess the extent towhich the project enabled public management systems as well as individual entities (for example,ministries, district governments, professional associations, legal education institutions, trainingsuppliers) to better utilize their human and financial resources, and physical assets; and also toeffectively coordinate and monitor efforts to improve institutional performance. The ICR ratesthe IDI of the project as substantial given its contributions to the operational efficiency of a wideof range of public and private institutions, and its development of the cross-cutting systemsnecessary to improve the public sector enabling environment.

3 Fund II did not support strengthening of supply institutions between 1998 and 2002. This deliberatehiatus was designed to allow "strengthened" training institutions to pre-qualify and competed underFund 1.

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Human resource utilizationThe project substantially improved the ability of public and pnrvate institutions to utilize theirhuman resources by supporting (i) the restructuring and staffing of ministries; (ii) the provision ofstructured in-service and longer term training; (iii) the innovation of incentive mechanisms forenhancing the supply response of indigenous training institutions; as well as (iv) the development ofstandards-setting and other merit-based personnel systems at the central and local levels. These aredetailed below.

• As noted earlier, a major contribution to the project in terms of the utilization of humanresources was the 1996-97 restructuring of central ministries in accordance with the 1995Constitution and 1997 Local Government Act. The exercise formally defined a "white collar"role (policy, regulatory, and coaching) for central ministries as districts took on responsibilitiesfor program implementation and service delivery. Accordingly, the 1996-97 restructuringformalized a major shift in the accountability relationships of frontline personnel from centralministries to districts. Even after they were transferred to local govemments under the 1993statute, frontline staff had been operating in a deconcentrated manner; the 1996-97 restructuringconfirmed that these personnel were in fact devolved and therefore responsible for meetinglocal service delivery needs.

* A substantial number of public sector (and to a lesser extent, pnvate sector) institutions at thecentral and local levels upgraded their human resources through the financing provided underthe Training Funds Component and other components of ICBP. This type of bulk in-servicetraining, particularly in basic skills critical to public management (such as financial and generalmanagement, personnel management, legal services, computing and IT management) served torapidly build up the skills base of Uganda's public institutions to carry out the increasinglysophisticated functions required of modemizing bureaucracies. More specialized training (forexample, in intergovemmental finance, legislative oversight, or case management) ensured thattechnical or managerial staff in central and local govemments institutions were equipped withthe necessary skills to satisfactorily support the Government's evolving civil service reform,decentralization, financial management, and capacity building strategies.

Aside from deepening Uganda's skills base in strategic areas, ICBP ensured that IDA-financedtraining was properly structured in three ways that strengthened the ability of beneficiaryinstitutions to effectively articulate demand over the long run. First, training needs wereassessed against agency- or ministry-wide objectives and functions (rather than the personalneeds of individual civil servants). Second, training needs were financed on a matching or costrecovery basis, which necessarily required beneficiary institutions to budget and plan for thehuman resource development needs of their staff. Third, training support was bundled intosizeable contracts and opened to tender among pre-qualified firms to ensure that beneficiariesreceive higher quality knowledge services at more competitive prices.

* Incentive mechanisms were innovated under ICBP to strengthen the supply response ofindigenous training institutions to structured demand from public and private beneficiaryinstitutions (mentioned above). A key element of this approach was the pre-qualification ofprivate and public training institutions to participate in the demand-driven Fund I. This ensuredthat only suppliers with a minimum level of capacity and quality could compete to provide bulkin-service training, while those that failed to pre-qualify would receive capacity buildingsupport to upgrade their facilities and skills. Taken together, a minimum basic service standardfor suppliers was introduced into Uganda's emerging training market. Such an approach not

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only helped suppliers become acclimated to the workings of a competitive system, but alsorepresented a noteworthy entry point for private sector development in Uganda.

ICBP helped modemize the regulatory framework goveming professional certification andpersonnel management in the public and private sectors. Specifically, testing regimes to governthe certification of accounting professionals and technicians (through ICPAU) as well as merit-based selection of civil servants (through the Public Service Commission) were establishedunder the project. Linkages between ICPAU and tertiary educational institutions such asMakerere University are testament to the emerging credibility of the accounting examinations.Similarly, efforts are underway to implement the civil service examinations to guiderecruitment of civil servants into the public service. Taken together, such measures arecontributing to improving the quality of human resources available in Uganda's private andpublic sectors. An equally important yet elusive condition for sustained skills development is amotivating wage and grading system within the civil service. Identified as a key factor for thelonger term impact of support under ICBP, the need for an affordable, medium-term wagepolicy for the public sector remains a pnronrty for Uganda.

Financial resource utilizationThe ICR rates the impact of ICBP on the ability of public and private institutions to better managetheir financial resources is rated as substantial. The IDI on financial resource utilization wasmanifest in three ways-(i) the design of Uganda's intergovemmental fiscal and financial system;(ii) the broadening and deepening of Uganda's skills base in financial management; (iii) theintroduction of managerial principles such as cost recovery and results-orientation. These arediscussed further below.

. Technical assistance provided under ICBP helped define the "rules of the game" forintergovemmental fiscal relations and contnbuted to the design of a range of fiscal instrumentsto deepen democratic decentralization while achieving service delivery goals (for example,block grants, sector-specific conditional grants, and multi-sectoral capital grants). In addition,provisions for distncts to use private consultants to close and audit their accounts help eddemonstrate the importance of meeting basic public sector fiduciary obligations, especially as aprerequisite for increasing district level expenditure autonomy.

* A sizeable number of trainees upgraded their skills in financial management, accounting, andother areas related to public resource management. This type of bulk training was furtherreinforced by efforts to establish standards (including establishment of a local professionalexamination system and acceptance of ICPAU in regional and intemational accountancybodies) for Uganda's accounting professionals and technicians. Taken together, these effortsenhanced the availability of personnel capable of contributing to the basic fiduciaryrequirements of public and to a lesser extent private sector institutions.

• ICBP incorporated managerialist principles such as cost recovery and results-onentedmanagement into its design. As discussed earlier, the Training Funds as well as the DistrictRevolving Transport Fund (DRTF) were successfully implemented largely on the basis ofdemand-driven, cost recovery arrangements for the procurement of traming and vehicles. Thiselement of the funds provided an incentive to beneficiary institutions to systematically cost out,contribute to, and budget for various recurrent and investment needs. The ROM exercises,while initially carried out in parallel to the MTEF, has helped introduce a focus on effectivenessinto the budget process. As an interim measure of assessing the effectiveness of public sectorbudgets, the National Service Delivery Survey also helped gauge the effectiveness of public

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spending on access, utilization, and satisfaction across a variety basic service sectors (forexample, health, education, water, justice).

Asset managementInstitutional arrangements or procedures for prudent asset management were established under theproject. The DRTF not only structured the purchase of vehicles across districts, but also providedan incentive for them-through its vehicle loan repayment scheme-to budget for and maintainthese assets. Equally important was the development of a Assets and Facilities Management Policyunder the Credit, which required inter alia the maintenance of a proper inventory of assets by GOUministries, departments, and local governments.

CoordinationICBP's success in establishing durable coordination mechanisms across central ministries and tiersof government-especially between MFEP, MOLG, and MPS-was cn'tical in supporting theformulation, implementation, and review of the GOU's decentralization program. At the Mid-TermReview, the need for these lead agencies to also develop a view of the linkages betweendecentralization and CSR was widely acknowledged. In response, the Govemment initiated thedevelopment of its Public Service Reform Programme (PSRP), which sought to harmnonize theCSR, decentralization program, and public financial management reforn. An inter-ministerialsteering committee was established to provide guidance on these various initiatives and to informdonors on the Government's rapidly evolving institutional reform strategy.

Despite these notable developments in the GOU's overall coordination framework, emergingchallenges at the district level became apparent over the course of ICBP implementation. Forinstance, plans to automate local government payroll and financial management systems under theLocal Government Component were stalled due to difficulties in clarifying GOU policies andprocedures on the purchase of hardware and software packages to ensure compatibility betweenvarious systems installed within districts and central govemment ministries. These difficulties attimes have been magnified by donor agencies that continue to finance geographically delimited,self-standing IT-based solutions to meet the immediate processing needs of specific districts.

5. Major Factors Affecting Implementation and Outcome

5.1 Factors outside the control of government or implementing agency:

Three factors outside the control of govemment and the implementing agency for ICBP affectedproject implementation and outcomes-(i) non-performance of consultants and contractors; (ii)legal disputes related to membership in ICPAU; and (iii) transaction costs imposed by changes inIDA procurement procedures.

The non-performance of consultants and contractors (both international and local) did causedelays in implementation, at times involving significant commitments under the project.Even in cases where consultants did deliver the required outputs, GOU counterparts had toexpend strenuous efforts in contract management and supervision. A more systematic reviewof contract management across the Uganda portfolio may be required to identify possibleportfolio-wide measures that could reduce the risks of moral hazard on the part of vendors,particularly those hired to provide services of significant worth.

As mentioned before, the resumption of legal disputes over ICPAU's membership rules andtheir implications for the status of chartered secretaries and administrators resulted in anembargo on the Institute. It was therefore unable to utilize approximately a third of its

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committed resources. The risks associated with a possible legal challenge to ICPAU wereexplicitly considered during appraisal.

* Implementation was at times hampered by changes in IDA's procedural requirements forproject documentation. Specifically, IDA's standard bidding documents for goods and civilworks as well as the Letters of Invitation for consultancies were modified, however, notraining was provided to GOU counterparts in the new requirements. As a result,

procurement activities were delayed as bid evaluations took considerably longer thanexpected.

5.2 Factors generally subject to governiment control:

The efficacy of ICBP depended in large part on factors endogenous to the Government'sinstitutional and policy reform agenda as well as its project management capabilities.Specifically, implementation was affected by (i) the rapidly evolving (often unpredictable)politics of decentralization; (ii) policies concerning the involvement of civil servants on donor-

financed projects; as well as (iii) sustained political commitment to project objectives and themanagerial capability to ensure efficient implementation. These institutional, policy, and project-

specific factors are described in greater detail below.

Broad political consensus and commitment to democratic decentralization was at the heart ofUganda's constitutional and legal reform process, and therefore, central to the efficiency ofsupport provided under ICBP. Closely related to the NRM Government's support fordecentralization was its sustained commitment to other public management reforms including

a hard budget constraint on the wage bill, ministerial restructuring, the introduction of

medium-term expenditure planning, and related financial management reforms. Equallyimportant was the strong leadership of GOU Task Manager(s) for ICB in MFEP and their

activist role in coordinating activities across components, ensuring timely implementation,and reallocating resources towards priority or better performing activities.

It is also worth noting that the constitutional reform processes unleashed new and often

unpredictable political pressures including the drive to create new districts. This proliferationin the number of distncts-from 20 to 56 over the life of the project-presented ever-

growing capacity building challenges for the Government and severely stretched the availableresources and personnel under the ICBP.

* The standard practice immediately preceding ICBP effectiveness involving compensatingcivil servants-though salary supplements, sitting allowances, or hinng of civil servants as

consultants-for supporting certain donor-assisted project activities. During the 1995

Country Portfolio Performance Review (CPPR), the Bank and GOU agreed that these types

of compensatory measures would be phased out as of July 1996 and civil servants would no

longer be hired as consultants. This change in GOU policy-combined with the

Government's delay in implementing a revised salary structure-adversely affected themorale of middle-level civil servants, particularly those working on the Central GovernmentComponent. Implementation of the component lagged early on since the design placed a

premium on the role of civil servants.

* Notwithstanding these generally favorable conditions, project activities were hindered by

inadequate and irregular counterpart funding from the GOU. For instance, supervision of theinstallation of goods under the re-tooling sub-component of the Local GovernmentComponent as well as the implementation of the constitutional commission consultancy

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under the Central Government Component could not be conducted in time due to the absenceof counterpart resources. Other administrative bottlenecks and coordination problems werealso evident. For instance, despite a reallocation of resources to the Legal Sector ReformComponent at project extension, delays in the preparation of law reports resulted from thefailure of the Govemment's Editorial Board to meet and grant its approval.

In addition, poor coordination between ministries (specifically, the MOLG, MFEP, MPS)with regards to the purchase and installation of automated financial and payroll managementpackages initially showed cause for concem. As noted earlier, issues of compatibility andsystems integration were raised when various IT-based solutions were procured for districtsand sectoral ministries even as plans for Govemment-wide automation exercises were beingfinalized. More intensive efforts to ensure that provisions for systems integration-includinghalting the roll out of the NAVISION (financial management) and HRD2000 (payrollmanagement) packages across districts-were undertaken near project closing. However, amore robust framework that allows for the acquisition and use of compatible ITapplications-in line Government-wide priorities as well as the specific (often urgent) needsof districts-will be an enduring concern.

5.3 Factors generally subject to implementiltg agency control:

The key factors subject to the control of the Capacity Building and DecentralizationSecretariats-the two implementing agencies-were (i) compliance with project management andfiduciary requirements, including those related to procurement; (ii) coordination between variousbeneficiary institutions; (iii) contract management and supervision, and (iv) monitoring andreporting on implementation progress. The effectiveness of both implementation agenciessatisfactorily fulfilling the above-mentioned functions dependent in large part on their familiaritywith IDA rules and regulations. Despite early delays, training of key personnel rapidly promotedimplementation progress through the mid-term review and eventually project closing.

5.4 Costs andfinancing:

The total cost of the project was USD38.68 million compared with the estimate, at appraisal, ofUSD 38.27 million. IDA's contribution to the project equaled USD 32.1 million in disbursementswith USD 0.74 million of uncommitted funds remaining as at June 25, 2002. The final disbursedand undisbursed amounts will be supplied after the application deadline on October 31, 2002.

6. Sustainability

6.1 Rationalefor sustainability rating:

Project outputs were hamnonized with the Government's evolving reform agenda in the areas ofcivil service reform, decentralization, and private sector development. Sustained, high levelcommitment (to ICBP and the larger reform agenda) ensured that the flow of capacity buildingbenefits would continue to be intemalized into the GOU's policy framework, budget processes,and day-to-day operations in the foreseeable future. These benefits include (i) policy andinstitutional reforms governing central-local relations, (ii) acquisition of durable assets andoperating systems that make up the basic machinery of local govemment, (iii) agency-wide, in-service training of public servants, and (iv) establishment of innovative institutional arrangementsto channel the demand and supply side of capacity building. The sustainability of these benefitsas well as the ICR's rating of highly likely are explained in greater detail below.

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ICBP's support for capacity building helped provide a timely and robust technocratic andcapacity building response to Uganda's constitutional reform processes, and therebycontributed to two critical developments in the mid- to late- 1 990s-(i) the 1996-97restructuring that institutionalized the "white collar" role of central ministnes, and (ii) thedevelopment of the intergovemmental fiscal system including these use of a wide range oftransfer instruments and the decentralization of the development budget. Recent efforts

(under LGDP, EFMP2, and the PRSCs) to help streamline the grant system, strengthen localrevenue perfonnance, and increase expenditure autonomy suggest that initial institutional and

policy reforms supported under ICBP have been sufficiently locked-in and therefore, notlikely to be reversed. The trajectory of institutional change in Uganda continues to follow thelogic and spirit of the constitutional and legislative reforms of the mid-1990s.

ICBP benefits included the acquisition of durable assets and operating systems that make upthe basic machinery of local government. For instance, field visits confirmed that several-although not all-districts have managed to use the TRIM records management software(including the computers and related hardware) as their primary tool for maintainingpersonnel, financial management, and other types of records. Similarly, efforts to roll outROM to ministries and districts, and more recently, to ensure that ROM techniques areemployed during the pnediu,n-terrn planning and annual budgeting cycles, bode well for itsresilience as a management tool. The examination systems developed for ICPAU, and to alesser extent for the civil service, have also gained recognition (particularly within tertiaryeducational institutions and among their students) as important stepping stones toprofessional careers in financial management and the civil service respectively.

* The project's support for bulk in-service training ensured that skills development under theproject served broader agency or district-wide priorities as opposed to the purely individualpriorities of trainees. As a result, ministries, departments, and districts have been able toutilize newly skilled staff in basic day-to-day activities. In the future, improvements in civilservice wages will be necessary to ensure that this type of bulk training does not precipitatefurther migration of talent from the public sector.

Third, innovative approaches to structunng the demand for training as well as the supplyresponse of indigenous training institutions have been firmly embedded in the private and

public sectors in Uganda, and provide a firm foundation on which to scale up demand-drivenapproaches to capacity building. Specifically, the Training Fund and DRTF helped establish,as a basic principle of capacity building in Uganda, the need to structure the demand fortraining (i) around institutional priorities (a ministry's or a district's) rather than those ofindividual beneficiaries, and (ii) on a matching or cost-recovery basis, i.e., in line with abeneficiary institution's willingness to pay. This approach created an incentive for

beneficiary institutions to focus their capacity building activities, cost them as part of theirannual budget preparation process, and demonstrate that they received value for theirinvestment in such activities. More important, the basic notion of a quid pro quo-providingcapacity building support in exchange for prior actions that strategically focus institutionaldevelopment efforts-has been mainstreamed in various GOU operations.

New rules of the game for ensuring quality and competition in the supply of training has alsobeen strengthened as a result of ICBP. The practice of tendering bundled training contracts

among pre-qualified suppliers has become an expectation on the part of the various consortiaof suppliers that seek to provide training services to Uganda's central ministries and districts.Furthermore, linkages between such suppliers, professional bodies, and Government

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institutions bode well for the transfer of knowledge and development of skills standards on anongoing basis, particularly in areas critical to decentralization, financial management, andcivil service reform.

One of the externalities of the project was to set the stage for a sophisticated and ongoingdialogue on public sector and institutional reform issues that could be supported within a multi-year serial budget support framework through Poverty Reduction Support Credits (PRSCs). Inaddition to its direct impact on the design of the LGFP and EFMP2 operations (descnbed above),ICBP's innovative demand-driven, cost-recovery approach to training also provided the basis forfurther learning-by-doing and innovation under the Decentralized Service Delivery (MakerereUniversity Training) Pilot and the Capacity and Performance Enhancement Program (CAPEP).CAPEP is envisaged as a multi-sectoral capacity building platform, integrated into the annualbudget and medium-termn planning processes, and designed to support the development ofworking systems, improvements in organizational effectiveness, and skills development, andthereby facilitate the institutional reform and performance improvement benchmarks in PRSCs.

6.2 Trantsitioni arrangemenits to regular operations:

The Govemment has taken a variety of steps-at the strategic and operational levels-to buildon and, in some cases, mainstream the technical assistance and capacity building supportprovided under ICBP.

At the strategic or policy level, the Government's Public Service Reform Programme (PSRP) waslaunched to harmonize civil service reform and decentralization efforts. As noted earlier, thePSRP Steering Committee helped the Government monitoring and harmonize efforts to furtherCSR, decentralization, and financial management reforms; it also served as a mechanism tocoordinate donor efforts to assist these programs. Other inter-ministerial and GOU-donormechanisms were establish to facilitate coordination over various aspects of the rapidly evolvingreforn and capacity building programs. These included a joint GOU-donor group ondecentralization, a SWAP for commercial justice sector; series of inter-ministerial committeesand working groups have been formed on discrete issues such as payroll management, fiscaldecentralization, capacity building, and CSR. Other mechanisms for monitoring progress oninstitutional reforms include the annual Public Expenditure Reviews, which are increasinglyfocused on local government performance.

Most recently, the Inter-ministerial Working Group for the PRSCs helped bring together keycontrol and sectoral ministries (such as MFEP, MPS, MOLG, MOH, MOE) and donors (such asthe Bank, DfID, USAID, EU, DANIDA, CIDA, Ireland Aid) to help jointly identify, prioritize,and support various institutional reform and capacity building initiatives. Also, near projectclosing, the Government has undertaken a new round of National Capacity Building Workshopsto identify the needs of "second generation" capacity building efforts. The CBS has providedfollow up support to the Capacity Building Working Group and will likely serve as a CapacityBuilding Focal Point, tasked with coordinating programmatized support from donors.

At the operational level, mainstreaming was one of the design principles underpinning ICBP.Component coordinators were not housed in parallel unit but were already part of Governmentagencies (such as MPS, MOLG, MJCA, or MFEP) or relevant private institutions (such asICPAU). During implementation, policy changes such as the phasing out of consultant fees forcivil servants served to reinforce the overall objective of enhancing the durability of publicinstitutions under ICBP. Furthermore, DTRF was recently integrated into the regular operations

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of the MOLG. Similarly, as mentioned above, the modalities for capacity building innovatedunder the Training Funds Component are been modified and scaled up in the context of CAPEP.

7. Bank and Borrower Performance

Bank

7.1 Lending:

During the early 1990s, the Bank worked closely with the Government to diagnose the constraintson civil service reform, decentralization, and the legal and accountability framework of theprivate and public sectors. IDA also helped the GOU develop strategies in each of these areas aswell as longer term capacity building. Preparation of ICBP was done in a participatory mannerand closely linked to Government policies and programs such as the CSR, decentralization, theTechnical Assistance Policy, and the Uganda Capacity Building Plan. At appraisal, the Bankteam had ensured that the objectives and design-especially of the more innovative mechanismsfor capacity building-were clearly defined and owned by the Government. The Bank alsoexplicitly considcred the risks associated with ICBP, including those related to legal disputes overICPAU membership rules, and identified appropriate risk mitigation measures.

The main concerns with the Bank's performance during lending were two-fold. First, theinclusion of the Legal Sector Reform and Accountancy Profession Components addedconsiderably to the complexity of the project as well as the difficulties in managing the associatedrisks. In hindsight, these components should have been designed as a separate project focused onstrengthening the legal and accountability framework for private sector development. Second, thedesign and sequencing of CSR-related activities within the Central Govemment Component wasnot defined clearly enough to fully leverage economies of scope. For example, the ROM exerciseshould have been more tightly integrated with the annual budgeting and ministerial restructuringprocesses to ensure a more direct impact on frontline deliver performance.

The overall performance of the Bank during lending is rated as satisfactory.

7.2 Supervision:

The Bank took a firm and dynamic role in the supervision of the project implementation. Overthe six years of project implementation, there were 15 supervision missions, about 2.5 missionsper year. At different time, supervision teams comprised experts with a wide arrange of skillsincluding Public Sector Specialists, Financial Analysts, Urban Economists, and Legal Counsels.Aide-Memoires were regularly prepared and transmitted, which alerted the Govemment toproblems with project execution and suggested remedies, in conformity with Bank procedures.The Form 590s and PSRs realistically rated various aspects of performance. Significantprovisions were made for ongoing monitoring and evaluation of project activities (such as theimpact assessment of the Training Funds Components and activities under the Local GovernmentComponents). Over the course of implementation, the Bank proved adaptive to the evolvinginstitutional reform priorities of Government, periodically approving reallocations of committedresources towards high performing components.

The presence of the Bank's Task Manager in the World Bank Country Office in Kampala duringsupervision was found to be critical in identifying implementation issues early on in the project'slife; clarifying for counterparts IDA's expectations regarding procurement, disbursement andproject management; ensuring that project outputs were closely aligned with the needs of

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Uganda's evolving reform programs; and finally, giving the Bank an appreciation of the ever-changing dynamics and needs of large scale institutional change in the public sector. Thedecentralization of task management responsibilities to the field also enabled the Bank toappropriately stagger supervision by technical specialists to fit the normal work flow patterns ofthe GOU. The Task Manager also attended periodic review meetings and respond faster to thosematters which required immediate attention. A close working relationship emerged between theGOU and the Bank including on issues of policy, legislation, and reform strategy. Accordingly,the policy content of GOU-Bank interactions on ICBP implementation was unusually high. Nearproject closing, however, repeated changes in Bank Task Managers showed cause for concern.

In light of this decentralized and adaptive approach to implementation, Bank performance duringsupervision is rated as satisfactory.

7.3 Overall Bank performance:

The benefits of the Bank's innovative approach to design as well as its highly client-orientedapproach to project implementation outweighed the relatively minor problems associated withproject complexity at entry and high turnover of Task Managers near closing. Lending andsupervision activities under ICBP offer useful examples of good practice both in terms of thespecifics of design and process. The ICR rates overall Bank performance as satisfactory.

Borrower

7.4 Preparation:

As noted earlier, the Government's commitment to the process of state transformation andassociated constitutional and legal reforms was remarkable. In particular, this was evident duringthe success of the 1996-97 ministerial restructuring exercise, as well as the development of theintergovemmental fiscal system over the life of the project. The GOU effectively used theBank's assistance to harmonize its approach to CSR, decentralization, and capacity building.Strong leadership on the part of GOU Task Manager(s) of ICBP in the MFEP, the Minister ofPublic Service during the mid-1990s, and various component coordinators allowed theGovernment to effectively design a workable set of project implementation arrangements.

Despite its strong leadership during design, the GOU could have been more selective in terms ofthe inclusion of the Legal Sector Reform and Accountancy Profession Components in ICBP. Itcould have done more to highlight the risks associated with these activities including therelatively low level of managerial capacity in the MJCA as well as the likely resumption ofICPAU's legal disputes.

On the whole, however, ICR rates Borrower performance during preparation as satisfactory.

7.5 Government implementation performance:

As noted earlier, the Government provided strong management of the project imnplementationprocess. Activities were closely monitoring and supervised, and the GOU Task Manager wasquick to identify opportunities to reallocate resources to higher return activities. Componentcoordinators also met both the operational and fiduciary requirements of ICBP implementation.Regular reporting on implementation progress including emerging problem areas facilitatedtroubleshooting by the GOU and Bank Task Managers. Equally important was the learning-by-

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doing that took place on the part of GOU counterparts particularly in terms of contractmanagement, procurement, as well as innovative modalities for capacity building.

It should be noted that the project did experience implementation delays in part due to poorfollow through near closing, particularly under the Legal Sector Reform Component. Thesedelays led to the extension of the project life by eighteen months, which was eventually utilizedto good effect.

Despite uneven progress across components, the ICR rates the Borrower's implementationperformance as satisfactory because of generally strong leadership by the GOU Task Manager,compliance with IDA fiduciary and project management requirements, and an adaptive andlearning by doing approach to implementation, particularly under the Local Government, CentralGovemment, and Training Funds Components of the project.

7. 6 Itnplemenitig Agentcy:

The two implementation agencies-the Capacity Building and Decentralization Secretanrats-generally played supportive roles in project management and coordination. The CapacityBuilding Secretariat (CBS), which served as the primary implementing agency, largely fulfilledits fiduciary and managenal responsibilities. Regular quarterly reports on all project activitiesprovided a rich informnation base for supervision as well as monitoring and evaluation. Closemonitoring and troubleshooting also enabled the GOU Task Manager to identify opportunities forrealizing efficiency gains by reallocating resources. Despite its strong performnance, the CBSexperienced difficulties certain activities-notably the Legal Sector Reform Component-due tolack of adequate follow through by the relevant beneficiary institutions.

The Decentralization Secretariat effectively managed activities across several districts under theLocal Government Component. While the basic project management and fiduciary requirementswere met in a timely manner over the life of the project, the Secretariat was challenged in ternsof contract management (for example, in monitoring the initial consultants for the FMS Study aswell as contractors on the civil works activities in the districts) as well as coordination with otherkey ministries (for example, with MFEP and MPS in the procurement of IT-based solutions forfinancial and payroll management within districts).

The ICR rates implementation agency performnance as satisfactory.

7.7 Overall Borrower performance:

High level commitment and activist management by the GOU Task Manager, coupled with astrong technical level response from most components, contributed to ICBP's efficiency andeffectiveness in driving Uganda's multifaceted institutional reform agenda. The ICR rates overallBorrower performance as satisfactory.

8. Lessons Learned

* In countries undergoing rapid state transformation, operations seeking to respond withcomprehensive institutional reform and capacity building support are more likely to beeffective if they are designed to allow flexibility (for example, in terms of reallocation) andare linked to a clearly defined strategicframework. ICBP was the forerunner for more recentefforts (for example, Tanzania's Public Service Reform Programme, Ethiopia's NationalCapacity Building Programme, and Uganda's CAPEP) to support comprehensive public

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sector capacity building programs covering budgeting and administrative reform anddecentralization in an integrated manner. The success of this type of integrated approachdepends not only on sustained political consensus and commitment, but a robust well-articulated strategic framework that can capitalize on flexibly designed technical assistanceand capacity building support.

During these periods of rapid state transformation, strategically focused capacity buildingoperations-conmplemented by serial budget support operations-can pave the way forincreasingly sophisticated forms of support including demand-driven, performance-basedcapacity building andfiscal support operations. The Bank's success helping to structure therapidly evolving decentralization agenda resulted not only from ICBP but also a series ofcomplementary balance of payment support operations (that is, SAC I, III, and III). This inturn allowed for increasingly sophisticated operations that seek to improve the financialmanagement capacity of local government (for example, EFMP2), while simultaneouslyproviding performance-based fiscal support-and thereby enhance expenditure autonomy-to local authorities (for example, LGDP).

* In-set-vice training for civil servants is most effective when carried out on an agency-wide,demand-driven, cost-recovery, competitive basis. Historically, entrepreneurial individuals indeveloping countries have been able to seek out training opportunities financed by donors.However, these training activities tend not to be aligned with the broader performanceobjectives of public institutions. Moreover, their cost efficiency and quality tend to vary.The advantages of demand-driven, matching grant schemes (such as the ones financed underthe Training Funds Component) are three-fold. The schemes encourage govemmentagencies to assess the strategic training and capacity building requirements for the agency asa whole rather than simply the needs of individuals; (ii) introduce service standards byrequiring the pre-qualification of suppliers, and (iii) reduce unit costs by promotingcompetition between pre-qualified suppliers on a financial basis.

* In the initial stages of developing newly created local authorities, investments in basicinfrastructures, equipment, and vehicles can help meet the start up costs associated with localgovernance. Even at an early stage in the decentralization process, Uganda's districtgovemments demanded support for re-tooling (including the procurement of vehicles,buildings, generators, and equipment). In addition to effectively articulating these demandsand utilizing the assistance provided under ICBP, the newly created local authorities, in manycases, were able to build their capabilities to exercise their autonomy and undertake the basicfunctional of public management.

* Decentralization of task management is an effective means of responding to highly committedclients with rapidly evolving reform and capacity building programs. In posting the TaskManager to the field during preparation and implementation, the Bank was much betterplaced to respond to myriad needs of the client. Specifically, decentralized task managementallowed for closer linkages between project activities and the evolving reforms; staggeringsupervision by technical specialists in line with GOU workflow patterns; and closersupervision and monitoring of project activities. These decentralized arrangements alsoenabled the Bank to provide frank and sound analytical advice in real time.

* The design of multi-sectoral operations to support national capacity building plans requireboth focus to ensure coherence and streamlined design to facilitate rapid implementation.The requirements for efficient capacity building are quite distinct for the private and public

- 34 -

sectors. Attempts to collapse these distinct forms of support into one operation (as in the caseICBP) adds significantly to project complexity and associated nrsks. Even when the focus ofsupport is coherent and mutually reinforcing (for example, civil service reform anddecentralization), there is a need to ensure flexible financing and implementationarrangements, preferably those that disburse funds against robust strategic plans or priorinstitutional reform actions (for example, the Training Funds). In other words, more

traditional projectized design does not offer the client sufficient flexibility to manage the

exigencies and contingencies associated with large scale institutional change.

9. Partner Comments

(a) BorrowerAimplenieniting agency:

The Government provided a completion report on the achievements of ICBP, drawing on detailed

inputs from each component. The report has been archived in the project files. In addition,component coordinators and other stakeholders provided feedback to the Bank during the ICR

mission. The main comments raised were as follows:

* ICBP largely achieved its objectives in an efficient and satisfactory manner, particularly interms supporting the continuation of civil service reforms, deepening decentralization,strengthening the legal and accountability framework, and supporting demand-driventraining. The project provided the basis for ongoing institutional reform and capacitybuilding efforts supported under PRSCs and the proposed CAPEP respectively.

* The Govemment's comprehensive reform and capacity building agenda benefited from a

flexible approach to implementation. The Bank demonstrated pragmatism and adaptability in

supporting periodic reallocation of resources to priority activities, advising the Governmenton various aspects of project management, and ensuring that project outputs were alignedwith the reform program.

* The presence of the Bank's Task Manager in Kampala during supervision greatly facilitatedthis flexible and adaptable approach, and allowed for more informal interactions at the early

stages of project implementation. This proved useful for the Govemment, and particularlyproject staff, who had limited expenence working Bank operations of this size and scale. Asthe project neared completion, the Bank re-centralized task management responsibilities.Subsequently, high turnover of task managers, particularly near project closing and dunng the

period of extension, contributed to implementation delays.

* Early in the project's life, the Bank expected too much in terms of knowledge of procurementand other fiduciary requirements from component coordinators and project staff. This

contributed to initial delays, however, training and advice from the Task Manager on IDA

rules and regulations later facilitated implementation.

* The original project implementation targets were overly ambitious. The Project

Implementation Plan should have been more realistic, given the limited capacities on the

ground (for example, in certain central ministries and districts).

(b) Co-financiers: NOT AVAILABLE

(c) Other partners (NGOs/private sector): NOT APPLICABLE

- 35 -

Annex 1. Key Performance Indicators/Log Frame Matrix

Outcome / Impact Indicators:Indicator/Matrix Actual/Latest Estimate

1. Continuation of Civil Service * Government ministries rationalized within hard budget

Reforn Program constraint, in line with 1995 Constitution and 1997 LocalGovernment Act, and circumscribing role to 'white collar"activities of policymaking, regulation, and coaching

* Personnel and civil service management systemsstrengthened (including recruitment and evaluation)

* Skills developed for civil servants in post

2. Assistance to Decentralization * Intergovermnental fiscal system (consisting of conditional,Program unconditional, and equalization grants) defined including

increase in transfers by 148% over 1995-98 period* Physical infrastructure, asset accumulation, and

development of operating systems (for basic recordsmanagement, accounting, and personnel managementfunctions) strengthened

* Skills developed for local level public servants

3. Strengthening Legal and * Policy on legal education adopted and implementedAccountability Framework * Skills of MJCA and judiciary staff upgraded

* ICPAU membership grown to 265, issuance of practicingcertification to 66 fums, and registration of 700 students

* Development of local professional accounting qualificationand exarnining capability in ICPAU

Output Indicators:Indicator/Matrix Actual/Latest Estimate

1. Central Government Capacity * 1996-97 restructuring of 21 ministries including reductionBuilding in mninistries to 17, redeployment of staff, retrenchment of

1033 additional staff, and management of retrenchmentpackages

* Preparation and publication of restructuring reviews* Consultancy to support operationalization of PSC including

defining its roles and functions* Development of new civil service examination for new

entrants and competence-based instrument for senior staff* Preparation of Training Needs Assessment, training policy,

and three-year training plan* Introduction of ROM techniques through workshops across

central ministries including preparation of AnnualPerfornnance Plans by 8 ministries

* National Service Delivery Survey implemented andpublished

* Facilities and Asset Management Policy developed,adopted and iniplemented

* Design of Records Centre/Archive completed

- 36 -

Annex I (continued)

Output Indicators:Indicator/Matrix Actual/Latest Estimate

2. Local Government Capacity * Preparation of diagnostic studies to define intergovernmentalBuilding fiscal system and decentralize the development budget

* Training related to intergovernmental finance systemconducted

* Preparation of final local govemment accounts and audits* Pilot computenzation of payroll and financial management

systems at district level* Installation of records management system across districts* Implementation of Millennium Bug project* Training of district officials in local government tender

boards and public accounts committees* Completion of FMS Study* Sensitization workshops for district officials in ROM

methodologies and techniques for planning* Re-tooling of districts including 188 personal computers, 131

laser and 132 dot-matrix printers, 60 scanners, 8 solarsystems, 1090 metallic storage shelves, 132 file cabmets, andseveral other sundry items such as photocopiers, typewriters,safes, steel ladders, furniture, calculators, and fireextinguishers

* Establishment and implementation of District RevolvingTransport Fund (DRTF) for purchase of 91 double cabinpick-ups, 14 small four-wheel drive vehicles, and 178 motorvehicles by 44 local governments on a cost-recovery basis

3. Legal Sector Reform * Review of legal education systems and policy* Liberalization of Law Development Centre's accreditation

and certification program* Establishment of Legal Education Programme* Revision a d submussion of only 15 out of 44 commercial and

customary laws identified for reform* Institutional strengthening of MJCA through short and long

term training of staff inter alia through Uganda-ILI* Procurement of law books to increase access to case materials

in 29 stations to strengthen common law system

4. Accountancy Profession * Intemational Accounting/Auditing Standards adopted in 1998

* Code of Conduct for Accountants and Value-Added TaxAccounting Standards introduced

* Library and registry of members introduced* Training of examiners, moderators, and markets for

professional and technician examination categories conducted* Continuing Professional Development seminars conducted* ICPAU Membership in Intemational Federation of

Accountants as well as Eastem, Central, and SouthernAfrican Federation of Accountants (ECSAFA)

- 37 -

Annex I (continued)

Output Indicators:Indicator/Matrix Actual/Latest Estimate

5. Training Funds * Bulk in-service training conducted on a competitive, cost-recovery basis for nearly 7000 private and public sectorpersonnel from 45 different beneficiary organizations

* Skills upgrading provided in a competitive and matchingbasis for 267 personnel in supply institutions

- 38 -

Annex 2. Project Costs and Financing

Project Cost by Component(in US$ million equivalent)

'Appraisal :ActuaLatest Percentage,ofEstimate Estimate Appraisa

Project Cost By ComponentCentral Government Capacity Building 6.62 5.43 82%Local Government Capacity Building 14.72 12.79 87%Legal Sector Reform 8.24 9.84 119%Accountancy Strengthening 0.98 0.65 66%Training Funds 7.02 9.53 136%PPF 0.50 0.44SPFF 0.19

TOTAL BASELINE COST 38.27 38.68

Contingencies 3.92Total-Project Costs' 42.19' 38.68 ' '_-','_:,';,

TotalFinancing Required 42.19. ' 38.68 . -

Project Costs by Procurement ArrangementsAppraisal Estimate

(US$ million equivalent)

_____.______,__..._ Procurement Netlhod

Expenditre ICB NCB OTHER 2.' N. B.F. TB otl Ct-'Cat'egory , . , . . . , , . ,.

1. Works 1.41 1.37 0.00 0.00 2.78(1.22) (1.18) (0.00) (0.00) (2.40)

2. Goods 9.67 0.55 0.24 0.00 10.46(9.20) (0.55) (0.24) (0.00) (9.99)

3. Services 0.00 0.00 24.06 0.00 24.06(0.00) (0.00) (24.06) (0.00) (24.06)

4. Printing 0.00 0.66 0.74 0.00 1.40(0.00) (0.33) (0.37) (0.00) (0.70)

5. Operating Costs 0.00 0.00 3.49 (0.00) 3.49(0.00) (0.00) (0.83) (0.00) (0.83)

Total ~~~~~~11.08 2.58 28.53 0.0 42.19ii' : (10.42) (2.06) ~~~~25.26) (0.00)(398

1/ Figures in parenthesis are the amounts to be financed by the Bank Loan. All costs include contingencies.

2/ Includes civil works and goods to be procured through national shopping, consulting services, services of contracted staff

of the project management office, training, technical assistance services, and incremental operating costs related to (i) managing

the project, and (n) re-lending project funds to local govemment units.

- 39 -

Project Costs by Procurement ArrangementsActual/Latest Estimate(US$ million equivalent)

Procurtement Method

Ex'penditure, ' "C"I N OTHE' ;,,NT. o ' tal Cost..Category _' :_.; .. .. _, .

1. Works 0.00 0.42 0.00 0.00 0.42(0.00) (0.38) (0.00) (0.00) (0.38)

2. Goods 7.01 0.46 2.86 0.00 10.33(7.01) (0.41) (2.57) (0.00) (10.00)

3. Services 0.00 0.00 23.98 0.00 23.98(0.00) (0.00) (22.17) (0.00) (22.17)

4. Printing 0.00 0.12 0.04 0.00 0.16(0.00) (0.06) (0.02) (0.00) (0.08)

5. Miscellaneous 0.00 0.00 3.79 (0.00) 3.79(0.00) (0.00) (0.76) (0.00) (0.76)

Total 7.01 1.00 30.67 0.00 38.68. ' '' ' ''(7.01j ' -(0.85) (25.52) ____ (0.00) (33.38)

I/ Figures in parenthesis are the amounts to be financed by the Bank Loan. All costs include contingencies.

2/ Includes civil works and goods to be procured through national shopping, consulting services, services of contracted staff

of the project management office, training, technical assistance services, and incremental operating costs related to (i)managing the project, and (ii) re-lending project funds to local government units.

- 40 -

Annex 3. Economic Costs and Benefits

NOT APPLICABLE

- 41 -

Annex 4. Bank Inputs

(a) Missions.JStage of Project Cycle Performance Ratingp

Implemenlation De,.elopment'Month/Year . -Count Specialty 'Progress . Ob.jective'

Identification/Preparation04/1994 1 Task Team Leader

I Public Sector Mgt. SpecialistI Training SpecialistI Financial Specialist

Appraisal06/1997 1 Task Team Leader

2 Institutional Specialist2 Legal SpecialistsI Training SpecialistI Financial SpecialistI Procurement SpecialistI Financial Management Spec.

Negotiation12/1994 1 Task Team Leader

I Legal CounselI Disbursement OfficerI Procurement SpecialistI Financial Specialist

Supervision11/1995 1 Task Team Leader HS HS

I Sr. Urban EconomistI Info. System SpecialistI PSM SpecialistI Acctg. Education

.Specialist

05/1996 1 Task Team Leader HS HSI Legal CounselI Acctg. Education Specialist

02/1997 1 Task Team Leader S SI Sr. Urban Economist

06/1997 1 Task Team Leader S S1 Sr. Urban Economist

09/1997 1 Task Team Leader S SI Sr. Urban Econornist2 Public Sector Mgt. Specialist1 Legal Counsel

11/1998 1 Task Team Leader S S03/1999 1 Task Team Leader S S

1 Sr. Urban Economist06/1999 1 Task Team Leader S S

4 Period missions by Legal Counsel and other legal specialists to supervise the Legal Sector ReformComponent were periodic, although not always financed under ICBP's supervision budget. These aretherefore not fully captured in the table.

- 42 -

Stage ofProjectCycle Performance Raling.,Imp,le' eentio evlopment

Month/:Year:' ' Count Specialty .: ." Proress -Objective12/1999 I Task Team Leader S S

02/2000 1 Task Team Leader S SProcurement Specialist

10/2000 1 Task Team Leader S S

. I Legal Counsel02/2001 1 Task Team Leader S S

05/2001 1 Task Team Leader S S

11/2001 I Task Team Leader S S

ICR05/2002 1 Task Team Leader S S

I________ _ 1Operations Specialist

(HS=Highly Satisfactory, S=Satisfactory, U=Unsatisfactory, HL-Highly Likely, L=Likely, UN=Unlikely, HUN=Highly Unlikely,

HU=Highly Unsatisfactory, H=High, SU-Substantial, M=Modest, N=Negligible)

(h) Staff:Stage of Project Cycle . Actual/Latest Estimate.

No. Staff weeks US$Identification/Preparation 20 130,333Appraisal/Negotiation 34 225,444Supervision 85 553,042

ICR 10 36,634

Total 149 945,454

- 43 -

Annex 5. Ratings for Achievement of Objectives/Outputs of Components

(H=High, SU=Substantial, M=Modest, N=Negligible, NA=Not Applicable)

RatingMacro Policies NA

Sector Policies SU

Physical M

Financial SU

Institutional Development SU

Environmental NA

Social

Poverty Reduction NA

Gender NA

Other (Please specify) NA

Private sector development M

Public sector managemenit SU

Other (Legal Sector Refonn) M

- 44 -

Annex 6. Ratings of Bank and Borrower Performance

(HS=Htghly Satisfactory, S=Satisfactory, U=Unsatisfactory, HU=Highly Unsatisfactory)

6.1 Bank performance Rating

Lending S

Suipervision S

Overall S

6.2 Borrower performance Rating

Preparation S

Government implementation performnance S

Implementation agency performance S

Overall S

- 45 -

Annex 7. List of Supporting Documents

Government of Uganda

* Government of Uganda Capacity Building Plan, 1994

* Government of Uganda Technical Assistance Policy 1993

* Constitution of Uganda, 1995.

* Civil Service Reform Action Program and Quarterly Updates

* Local Government (Resistance Councils) Statute, 1993.

* Local Government Act, 1997.

* Public Service Reform Programme, 1998.

* Fiscal Decentralization Policy in Uganda. Draft Strategy Paper, 2002.

* Uganda: Assessment of Public Expenditure Programs 1996/7-1997/8 Prepared for the ConsultativeGroup Meeting, Paris, November 1997.

* Comnmercial Justice Sector Reform Program, Sector-Wide Approach Document, 2000.

* Minutes and correspondences from Donor Meeting on Public Service Reform Programme (PSRP)

World Bank

* Assessment of Capacity Building Activities in the IDA Portfolio in Uganda. World Bank CountryOffice, Kampala, Uganda, 12/98.

* Bevan, David. The Budget and Medium-Term Expenditure Framewvork in Uganda. Africa RegionWorking Paper Series, Number 24, December 2001.

* Uganda: Country Assistance Strategy Document, No. 14460, 9/5/1995.

* Uganda: Country Assistance Strategy Document, No. 16540, 4/30/1997.

* Uganda: Country Assistance Strategy Document, No. 20886, 12/18/2000.

* Uganda: Country Assistance Evaluation, No. 22551, 5/31/2001.

* Third Structural Adjustment Credit Project. Report and Reconmmendation of the Managing Director,No. P7097, 5/1/1997.

* Uganda-Economic and Financial Management Project. Memorandum and Recommendation of thePresident, No. P5633, 7/13/1992.

* Uganda-Second Economic and Financial Management Project. Project Appraisal Document, No.19843, 11/3/1999.

* Uganda-Local Government Development Program Project. Project Appraisal Document, No. 19745,10/28/1999.

* Uganda-Local Government Development Program Project. Mid-Term Review Report, 18 February-9March 2002.

* Uganda-Poverty Reduction Support Credit. President's Report, No. P7442, 3/20/2001.

* Uganda-Decentralized Service Delivery (Makerere University Training) Pilot. Project AppraisalDocument, No. 23762, 3/l/2002.Review of Public Service Reform Programme, 2001.

Proiect Documents

* Institutional Capacity Building Project, Staff Appraisal Report, No. 13610, 5/9/1995.

* Institutional Capacity Building Project, Mid-term Review, 9/24/1997.

* Institutional Capacity Building Project, GOU Completion Report, 2002.

* Training Funds Component: Impact Assessment, 1/21/2000.

- 46 -

Proiect Documents (continued)

* All quarterly reports on implementation progress from the Capacity Building Secretariat.

* All relevant project Supervision Reports with aide-memoires and back-to-office reports.

* All relevant internal correspondences.

* All relevant correspondences between IDA and the Government of Uganda.

* All progress reports submnitted by the Capacity Building Secretariat.

Other

* Langseth P., J. Katorobo, E. Brett, and J. Munene, eds. Uganda - Landrmarks in Rebuilding a Nation

Kampala: Fountain Publishers, 1995.

* Nsibambi, A. Decentralization and Civil Society in Uganda. The Quest for Good Governance

Kampala: Fountain Publishers, 1998.

* Bahl, R. and J. Linn. Urban Puiblic Finance in Developing Countries. A World Bank Book. New

York: Oxford University Press, 1992.

IMAGING

Report No.: 24359Type: ICR