World Bank may cut aid
Publish Date: May 16, 2005
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By Paul Busharizi

A World Bank-commissioned study has recommended aid cuts to Uganda over the next three years, warning that recent political developments have jeopardised the country’s development agenda.

A team headed by Prof. Joel Barkan of the University of Iowa, Senior Consultant on Africa Governance for the World Bank, visited Uganda last year before preparing the report entitled “The Political Economy of Uganda - The Art of Managing a Donor-Financed Neo-Patrimonial State”.

“Extreme prudence is required,” the confidential report says, adding, “we regret that we cannot be more positive about the present political situation in Uganda, especially given the country’s admirable record through the late 1990s.”

The report recommends that, “The Bank should plan for the possibility of a “low case” lending program in Uganda during the period of the forthcoming Country Assistance Strategy (CAS). Second, the Bank and other donors must rethink the appropriateness of continued budget support, and especially, the appropriateness of increasing budget support”.

“Low case” would mean reducing aid to a bare minimum, which in Uganda’s case would limit it to humanitarian issues.

The reports adds, “Since the Bank cannot weight in explicitly on Uganda’s political process, this is the only mechanism at its disposal to signal its concern. Conversely, the continued provision of high levels of budget support, especially when such support can be diverted into classified budgets and used for political purposes, indirectly involves the Bank in the political process”.

“To continue budgetary support at present levels risks embarrassment to the Bank, especially after it has been warned, not only by this report, but in what is common knowledge and discourse among leading members of the diplomatic community in Kampala,” the report says.

The report recommends a move back to closely-monitored project lending in the ongoing three-year aid programme up to 2008 although government has been urging donors to shift further to budget support, where the government decides how to allocate funds.

The 74-page report commissioned to establish the risk to World Bank lending programmes in Uganda agreed that the government had been able to establish a legitimate and effective government, restore the economy and involve the major tribes in a one political system.
However, it stated that “Progress has stalled and to some extent—particularly in the north—unraveled.

The Government has largely failed to integrate the country’s diverse peoples into a single political process that is viable over the long term…. Perhaps most significant, the political trend-lines, as a result of the President’s apparent determination to press for a third term, point downward.”

The study found that, “Museveni’s bid for a third term has split the Movement…raised the prospect for political violence…and significantly increased the impetus for corruption as the campaigns to change the constitution and reelect the President will require large sums of money.”

It goes on to warn that “with elections not due until March and June 2006, the next two years are likely to be years of increasing political conflict. Whether Uganda will be able to manage this heightened level of conflict is difficult to predict.”

The report concludes its findings by warning that the uncertainty surrounding the political transition, the war in the north and the growing corruption mean “Uganda is facing a period of rising political uncertainty.”

World Bank country representative Grace Yabroudy was unavailable to comment on the report.

The joint authors of the report with Barkan were Jack Titsworth, Africa Governance Consultant for the World Bank, Prof Njuguna Ng’ethe of the University of Nairobi and Saillie Kayunga, a political science lecturer at Makerere University.

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