Uganda - Sugar Rehabilitation Project

 Sugar rehabilitation project Report No: ; Type: Report/Evaluation Memorandum ; Country: Uganda; Region: Africa; Sector: Perennial Crops; Major Sector: Agriculture; ProjectID: P002921 Uganda: Sugar Rehabilitation Project (Credit 1893-UG) The Uganda Sugar Rehabilitation project, supported by Credit 1893-UG for US$25 million, was approved in FY88. In addition, IDA redirected about US$7.5 million from other credits toward the financing of this project. The project was closed in FY95, a year later than expected. Final disbursements took place in November 1995, at which time a small balance of about US$200,000 was canceled. Co-financing for the project was provided by the African Development Bank. The Implementation Completion Report (ICR) was prepared by the FAO/World Bank Cooperative Program. The borrowers evaluation is appended to the ICR. The project's objectives were to restore sugar production at the Kakira sugar estate, saving the country scarce foreign exchange through import substitution; to promote institutional development (in this case, the government's capacity to monitor the sugar industry); and to aid in developing a sound pricing policy based on market and price liberalization. Central to the design of the project was a joint venture between the government and the domestic private sector. The project consisted of a major investment program for replanting and rehabilitating the Kakira sugar estate. Also a sugar industry unit was to be created in the Ministry of Trade and Industry to monitor the sugar industry and provide policy advice to the government. The agricultural development objectives were largely met, and factory rehabilitation is being completed to the revised throughput requirements. Sugar production and import substitution objectives will be met, although with delays and cost overruns (about 27 percent). The ICR reestimates the rate of return to be 23 percent compared to the SAR estimate of 28 percent. While the achievements of the sugar unit have been modest, sugar production and processing was liberalized. The project also made a major contribution to the government's privatization strategy, so that the government's share in the estate has been reduced from 51 to 30 percent. In accord with the ICR, the Operations Evaluation Department (OED) rates project outcome as satisfactory, sustainability as likely, and Bank performance as satisfactory. Mid-term reviews and support for project management and administration were very good during supervision, despite the perception by company managers that Bank procedures were not fully suited to a private sector project. The ICR rates institutional development as negligible, largely because the sugar unit has become redundant. However, the reason for its redundancy is the liberalization of, and price policy changes in, the sector that were a key part of the project strategy. OED therefore rates institutional development as substantial. The project does not present major replicable lessons. The ICR is comprehensive and fully satisfactory, except for the fact that the co-financier--the African Development Bank--does not seem to have been asked to comment on the draft ICR. No audit is planned.