Uganda - Transport Sector Development Project - Implementation Completion and Results Report

Document of

The World Bank

Report No: ICR00002228

IMPLEMENTATION COMPLETION AND RESULTS REPORT

(IDA-46790 IDA-49490 TF-11094)

ON

CREDIT IDA-46790

IN THE AMOUNT OF SDR 120 MILLION

(US$190 MILLION EQUIVALENT)

CREDIT IDA 49490

IN THE AMOUNT OF SDR 47.4 MILLION

(US$75 MILLION EQUIVALENT)

AND

GRANT TF-11094

IN THE AMOUNT OF £6.05 MILLION

(US$ 8.0 MILLION EQUIVALENT)

TO THE

GOVERNMENT OF THE REPUBLIC OF UGANDA

FOR A

TRANSPORT SECTOR DEVELOPMENT PROJECT

June 5, 2017

Transport and ICT Global Practice

Africa Region

CURRENCY EQUIVALENTS

(Exchange Effective Rate December 2015)

Currency Unit = Uganda Schilling (UGX)

US$ 1.00 = UGX 3335

UK£ 1.00 = US$ 1.48

US$ 1.00 = SDR 0.6307

FISCAL YEAR

July 1 – June 30

ABBREVIATIONS AND ACRONYMS

UGANDA

Transport Sector Development Project

CONTENTS

Data Sheet

A. Basic Information

B. Key Dates

C. Ratings Summary

D. Sector and Theme Codes

E. Bank Staff

F. Results Framework Analysis

G. Ratings of Project Performance in ISRs

H. Restructuring (if any)

1. Project Context, Development Objectives and Design

2. Key Factors Affecting Implementation and Outcomes

3. Assessment of Outcomes

5. Assessment of Bank and Borrower Performance

7. Comments on Issues Raised by Borrow/Implementing Agencies/Partners

Annex 1. Project Costs and Financing

Annex 2a. TSDP Outputs by Component

Annex 2b. Operational Risk Assessment Framework

Annex 3. Economic and Financial Analysis

Annex 4. Bank Lending and Implementation Support/Supervision Processes

Annex 5. Summary of Borrower's ICR and/or Comments on Draft ICR

Annex 6. List of Supporting Documents

MAP

The project development objective is to improve the connectivity and efficiency of the transport sector through: (i) improved condition of national road network; (ii) improved capacity for road safety management; and (iii) improved transport sector and national road management.

Not applicable.

1. Disbursement Profile

1

This Implementation Completion and Results Report (ICR) for the Uganda Transport Sector Development Project has a unique significance in that it highlights issues where an overly complex project was designed in a manner that was incompatible with the available capacity in Government. The project was restructured, and additional finance provided, to add a road section that was not initially identified as challenging from a safeguards point of view, despite the fact that it presaged a considerable influx of labor to a poor rural area, where there were also some systemic social issues, without any attempt to appropriately manage the adverse impacts on the affected communities. This resulted in a complaint to the Inspection Panel and acknowledgement by World Bank management that there were serious weaknesses in the preparation, implementation and supervision of the project. The contractor failed to rectify shortcomings on a range of issues that impacted the communities, and the World Bank first suspended disbursements and then took the exceptional step of cancelling the Credits. Following these events, the World Bank carefully reviewed its entire portfolio of similar projects, the way it considers environmental and social issues in project design and implementation, and its Standard Bidding Documents to improve environmental and social provisions in contracts for both civil contractors and supervising engineers. It also issued guidelines for staff on managing the risks of adverse impacts on communities from a temporary project-induced influx of labor. Particular attention has been given in this ICR to the lessons learned from these events.

1. Project Context, Development Objectives and Design

1.1 Country Context

1. Uganda is a landlocked country in East Africa bordered by the Democratic Republic of Congo (DRC), Kenya, Rwanda, South Sudan, and Tanzania. It has a rapidly growing population of 34.6 million people, with 55 percent under 18 years of age.[1] Uganda is classified as a low-income country and in 2015 had a gross domestic product (GDP) per capita of US$670.[2] However, the country has substantial natural resources, including fertile soils, regular rainfall and sizeable mineral deposits of copper and cobalt. More recently, reserves of both crude oil and natural gas have been discovered. Coffee is an important export commodity, but over 80 percent of the population live in rural areas and are reliant on subsistence agriculture.
2. Following independence from Britain in 1962, Uganda sporadically experienced unrest and conflict. Corruption and human rights issues have also caused concern among development partners (DPs), and this has hampered the investment climate. On the other hand, the United Nations Refugee Agency reported that in 2015 Uganda was hosting over half a million refugees mostly from South Sudan, Burundi and the DRC. It recognized that Uganda has a progressive policy toward such people, providing land, protection and the right to be employed or run a business.[3]
3. Beginning around 2009, exogenous shocks, including the global economic crisis and surges in international commodity prices, negatively affected the country’s growth rate. Other issues reinforced this situation—primarily a lower export performance, adverse weather conditions, declining development aid, as well as high inflation. A subsequent tightening of monetary policy reduced GDP growth to 3.4 percent in 2012, down from the 7 to 8 percent range in 2008 and the earlier years in the decade.[4] Nevertheless, Uganda was able to surpass the 2015 Millennium Development Goal of halving the poverty rate.[5] The share of the population living below the poverty line declined from 35 percent in 2001 to 22 percent by 2013. This trend has been attributed in part to a diversification of economic activity away from an over-reliance on farm activities in favor of nonfarm household enterprises.[6]

1.2 Sector Context