1. INFRASTRUCTURE AND PUBLIC INVESTMENT
Presentation for the High level Growth Forum, 14th – 15th September, 2017
At Commonwealth Resort Munyonyo
KAMPALA - UGANDA

2. Outline Introduction State of Uganda’s Public Investment
Key Challenges and Solutions
Uganda’s PIMS Framework
Outcomes for Strengthened PIMS
Conclusion

3. Introduction
Faced with market failures, Public sector has a role to play in infrastructure investment to catalyze economic growth
Infrastructure Investment requirement in Africa estimated in 2010 at $93 Bn per year (World Bank)
Significantly, improving budget and project execution could increase public investment returns by 50% without necessarily increasing budgetary resources

4. Introduction cont’d
Public Investment efficiency in Uganda stands between 0.33 and 0.36, implying that over 60% of the resources invested in public projects go to waste.
With increased Fiscal policy emphasis on infrastructure to deliver economic growth since 2008, Uganda’s economic slowdown over last 5 years correlated to inefficient infrastructure investment delivery.

5. State of Uganda Public Investment
Of total NDP II cost of Shs trillion, over 52% (Shs Trillion) is for public investment.
Since the inception of NDP1 there has been increased prioritization of Capital Investments – majorly in energy and transport infrastructure
At the inception of NDP1 (FY 2010/11), the biggest share of budget was on recurrent expenditures (59%), Dev’t was at 41%
Between 2011/ /15, both Dev’t and Recurrent Shares averaged 50%
In 2016/17, share of dev’t budget outstripped recurrent up from 47% in 2014/15 and 2015/16 to 53% indicating a major shift in prioritization as illustrated in Figs. 1 and 2

8. State of Uganda Public Investment
NDP I midterm review concluded that projects performance was unsatisfactory.
Uganda is estimated to lose up to $300M annually due to inefficiencies in spending which must be addressed for increased rate of capital accumulation and envisaged significant positive social-economic transformation (World Bank 2017).

9. Key Challenges
Low Absorption Capacity, which requires strengthening MDA capacity to implement projects
Limited options for Infrastructure Investment financing, which requires exploring all sources of infrastructure financing including PPPs, blending, bonds, etc.,
Supply driven projects & distortionary off- budget support; which requires harmonization with Development Partners

10. Key Challenges…(cont’d)
Varying sources of project information leading to unreliable data for decision making; requires an integrated Bank of Projects
Weak legal framework
Insufficient counter part funding and budgetary allocations; requiring rigorous compliance to Multiyear commitments provision in the PFM Act, 2015

11. Key Challenges…. (cont’d)
Poor Coordination among implementing Agencies, requiring alignment of processing such as joint planning for related projects, joint monitoring , e.t.c.,
Inadequate Project Implementation capacity, requiring all MDAs to prioritize specialized training for public investment management

12. Uganda’s PIMS Reforms
PIMS framework developed in 2016 following Diagnostic Study of Public Investment Management in Uganda
PIMS Framework aims to:-
streamline project selection, preparation and appraisal before projects are approved for financing
strengthen Institutional arrangements for project appraisal and monitoring, including migrating externally funded projects onto IFMS
Build capacity for project appraisal, to improve Project Quality at Entry

13. Progress in strengthening PIMS
A new PIMS framework was adopted in streamlining project selection, preparation and appraisal before projects are approved for financing
Streamlined the Development Committee to include PPDA, OPM, NPA, Solicitor General, Office of the President & MOFPED

14. Progress in strengthening PIMS…Cont’d
Established a Department to spearhead projects and Public Investment reforms, Projects Analysis & Public Investment Department
Strengthened Budget Monitoring & Accountability Unit (BMAU) for enhanced Monitoring
Migrating Externally funded projects to IFMIS
Developed National Standards Indicator (NSI) framework to support National Devt

15. Progress in strengthening PIMS..Cont’d
Developed a Manual for Project preparation and Appraisal
Currently, Developing National Parameters in support of project appraisal in Uganda
Also undertaking stock-taking exercise of Government Commitments in the Public Investment Plan (PIP)

16. Outcomes for Strengthening PIM
Strengthening Uganda’s Public Investment Management System would increase efficiency and yield the following benefits:
enable decision making to increase returns to public investments
guide Government efforts to maximize social welfare
help in ascertaining the impacts of projects and investments
Introduce discipline in Government to follow through all stages of project cycle
Select and implement only those Projects that yield highest economic returns

17. Conclusion
The PIMS Reform process is faced with such challenges; highly politicized, capacity challenges across Government.
Improving Public Investment Management System (PIMS) around the World will result into US$ one trillion potential efficiency gains (IMF, 2015).
Governments which can efficiently deliver public infrastructure investments therefore have better guarantees to sustainable economic transformation and growth.

18. THANK YOU