1. Strengthening budget mechanisms for sanitation financing in Uganda Presentation to the WSP / ODI / Water Aid Regional Workshop on Finance and PRSPs 2 February 2004 Mike Thomson, Delta Partnership

2. Introductory note This presentation is based on on-going WSP funded work in Uganda The assignment will last 27 days, but is not yet complete The findings and recommendations contained in this presentation are therefore still at an early draft stage A final report will be produced by the end of February

3. Background The Government of Uganda (GoU) has identified the improved uptake of sanitation as one of the key issues facing the water and sanitation sector Progress has been made with the Memorandum of Understanding (MoU) between the Ministry of Health, the Ministry of Water, Lands and Environment and the Ministry of Education and Sport to clarify Ministerial responsibilities with respect to sanitation Work is now required to establish clear budget mechanisms for sanitation that effectively allocate resources to all levels of government and ultimately to the end users of services

4. Trends in sanitation coverage in Uganda

5. Indicative trends in sanitation funding Note: These are very very rough estimates and must not be quoted. Some of the data is based on verbal estimates of expenditure. The figures do not include salary costs of officers involved in hygiene promotion or NGO contributions to sanitation projects. There is a major problem in Uganda in that accurate estimates of resources used for sanitation activities are not known. There is a pressing need to develop an integrated sanitation budgeting mechanism.

6. Key issues for the budgeting study Clarifying what is meant by sanitation and what is meant by improved sanitation Understanding current and planned resource flows Assessing institutional roles and responsibilities Identifying constraints to, and opportunities for, the better use of resources Estimating future resource needs and the scope for non-GOU budgetary finance Agreeing budget categories and developing an integrated budgetary framework Presenting options for resource allocation Addressing staff and system development needs

7. Sub Counties Sub Districts Comm- unities MoFPED MoH MoLG 55 Districts DWD MoES MoWLE MoGLSD 13 Munic. Councils KCC 60 Town Councils NWSC Community Contributions Development Partners Financial Instns. Private Sector NGOs Micro Finance LC5 LC3 LGDP SFG Programme aid PHCCG Equalisation Grant WSCG On-budget Off-budget Indicative sources of funding for sanitation activities Project aid User charges

8. Example draft findings 1 Uncertain resource flows There is no easy way of finding out how much money has been and is being invested in sanitation due to: Fragmented and sometimes unclear responsibilities Multiple budget sources Lumping of sanitation with water budgets However, it is likely that overall investments have focused more on latrines in new schools and growth centres and less on hygiene promotion Poor systems at all levels of government for recording sanitation activities in plans and budgets There is little evidence to suggest that resources have been targeted at priority programmes and on activities that will have the biggest impact on health outcomes

9. Example draft findings 2 Diminishing central control over the allocation and use of resources A higher proportion of resources are now channelled through local government There is potential conflict between fiscal decentralisation and earmarking of funds – districts now have more autonomy on how to spend money – sanitation is often not seen as a priority There is anecdotal evidence to suggest that the MoU and the move away from centrally controlled project based aid has led to less effective joined-up working at the grass roots

10. Example draft findings 3 Scope and need for more innovative ways of raising funds There has been a reliance on on budget funding sources The move from project based aid to programme based aid may have caused a reduction in sanitation financing There is a policy of no subsidy for household latrines, but this does not cover sanitation / hygiene promotion

11. Example draft recommendation 1 Development of an overall budget framework linked to sanitation objectives and targets Integrate and summarise all budgets into one Itemise all key functions clearly Assign clear responsibilities, funds and planned results Use as a basis for negotiating for resources with the Ministry of Finance Assign responsibility for the management of this process to the sanitation sub-sector working group Cascade down to the district level

12. Example national budget framework for sanitation Source of fundingPlanned outputs Activities MoHDWDNWS C MoESMoGMoLGNGOsDonorPriv. sector Com m- unity Total NarrativeNo.Unit cost Rural household sanitation Construction of latrines 20010050103010400Household s with latrines 40000.10 Hygiene promotion600400200 1001500Household s with good hygiene 1500000.01 Urban household sanitation New sewer connections Sewer maintenance Hygiene promotion Schools sanitation Construction of latrines - new schools Construction of latrines - old schools Hygiene promotion Total budget Note: This is for illustration purposes only – it is simplified and figures are fictitious

13. Example draft recommendation 2 Better management of budgets and resource use at local government levels Prepare pro-formas for District Health Inspectors to plan and prepare budgets Assign clear responsibility for the preparation of an integrated sanitation plan and budget at the sub- county level Develop systems for monitoring the performance of districts based on key sanitation output and outcome indicators Greater linkage of resource allocation to outputs / performance indicators Review criteria for allocating overall resource levels to local government

14. Example sanitation performance indicators The following indicators are contained in the recent PEAP revision document for water and sanitation Number of domestic latrines constructed Number of urban sewerage connections Pupil / latrine stance ratios in schools % of households with hand-washing facilities * % of people that have access / use hygienic latrines * % of people who properly dispose of childrens faeces % of people practicing hand-washing after defecation * these are being reviewed for inclusion in a set of 8 water and sanitation sector golden indicators – if districts perform well against these, they could be given more resources

15. Example draft recommendation 3 Developing innovative ways of increasing off-budget finance Examples might include: Micro-finance directed at masons for latrine construction (but is there enough demand?) Micro-finance directed at groups of individuals for community sanitation (but is this possible without sufficient income generation?) Build-own-operate (BOO) contracts for latrine construction and maintenance in urban areas Better district-NGO collaboration for hygiene promotion work Accessing challenge funds? Encourage private sector firms, e.g. soap manufacturers, to support hygiene awareness campaigns

16. End note These are draft example findings and recommendations – others will be contained in the final report Further consultation is required For more information contact Meera Mehta, WSP Nairobi or Mike Thomson, mike@deltapartnership.com