Retrospective Study of the Impact of Three Years of Budget Support on Rural Water

Uganda is one of the pioneering countries in testing the new Bank lending instrument, the PRSC Budget Support Instrument (BSI), which was launched in September 2000. BSI is new concept in performance contracting and a redefinition of the Bank’s relationship with a client government. A critical aspect of the new lending instrument is that it puts the Government of the borrowing country in the “driver’s seat”. The underlined principle for BSI along with the Sector Wide Approach to Planning (SWAP) is the inclusion of the Comprehensive Development Framework (CDF) into PRSC Bank lending instrument.

The purpose of this study was to assess the impact of the PRSC BSI that had been in operation since July 2001under the 5-year Operational Plan (OP5) for Rural Water and Sanitation. Skat carried out a participatory impact assessment (technical, financial, social and economic), identified aspects that might impact the sustainability, and proposed mitigation measures. It appraised impacts and effectiveness of the various aspects of the instrument and provided a guide for the design of future programs and interventions.

Findings:

A functional Budget Support Instrument, the BSI in the context of decentralisation and SWAP is still a very young and in progress of being established. It was too early to pronounce judgment on the efficacy of the instrument. It was feared that the radical change of the implementation method would lead to a considerable set back in the service delivery due to the need to build capacity at district level. Despite system changes and the associated learning curve, the coverage increased at the rate as during Pre-PRSC period.

Many of the essential elements, guidelines and politics, human resources for effective functioning of the BSI have been put in place and valuable experience has been gained. Understandably, the BSI has still several shortcomings and it should be perfected gradually. A bridge has been crossed and there is no reason for returning to the old way of executing development projects without participation of the poor and the local government institutions, as the BSI has proven to be a good pro-poor instrument.

Recommendations:

• Further support to the PRSC and encouragement of Inter-district co-ordination should lead to optimised structures, including a three years budget guarantee
• Decentralised procurement should become more flexible aiming at long-term public-private partnership rather than at cheapest price.Quality and sustainability should come more into the foreground. Innovative approaches shopuld be adopted to support the establishment of sustainable supply chains
• District level SWAP; use one combined planning and budgeting process; including all donor projects
• District equity; to address inequalities with a policy that will eliminate disproportions
• Fund releases; central government and donors should do their utmost to ensure that the budgeting process is realistic and that the protected sectors really receive the budget allocation
• Monitoring; the present system would need to be consolidated