Uganda - Public Enterprise Project

 Public enterprises project Report No: ; Type: Report/Evaluation Memorandum ; Country: Uganda; Region: Africa; Sector: Public Sector Management Adjustment; Major Sector: Public Sector Management; ProjectID: P002954 Uganda: Public Enterprise Project (Credit 1962-UG) The Implementation Completion Report (ICR) for the Uganda Public Enterprise Project (PEP, Credit 1962-UG, US$15 million equivalent, approved in FY89 and closed on schedule in FY95), was prepared by the Africa Regional Office. The ICR does not include Appendix B, the Borrower's contribution; however, the Borrower contributed to the preparation of the ICR by providing professional assistance to the ICR mission and contributing views reflected in the mission aide-memoire (attached to the ICR). The PEP was one of several technical assistance credits approved by the Board to improve the capacity of the public sector to implement a comprehensive Economic Recovery Program (ERP) of adjustment initiated in May 1987. The ERP was supported by an IMF Special African Facility and by an IDA Economic Recovery Credit. The general objective of the PEP was to increase productivity and output and reduce financial losses in public enterprises. The PEP components aimed at: (a) defining a program of divestiture and liquidation of industrial public enterprises; (b) preparing and implementing a program of management and technology assistance to industrial enterprises that were to remain the public sector; and (c) defining a longer-term policy framework for the management of the public enterprise sector. The ICR concluded that the objectives of the PEP were only partially achieved. While the PEP supported the preparation of a Sector Administrative Reform and Planning Study (SARAP) and a Divestiture Design Study (DDS), it did not achieve its main objective of increasing productivity and reducing losses in public enterprises. The PEP suffered from lack of coordination and cooperation between Government ministries and from the late release of counterpart funds. Inadequate preparation and weak implementation of the program led to poor supervision of enterprises under public ownership, inadequate information about parastatals, lack of specific divestiture policies, lack of transparency and poor use of divestiture proceeds. Also, the divestiture program was designed at a time when the financial capacity of Uganda's private sector was very limited, opposition to the program by the Parliament had led to delays in project implementation and foreigners perceived Uganda as a high risk environment due to the recent history of civil war, the existing civil wars in neighboring countries and the persistent AIDS epidemic. The ICR rates the project outcome as unsatisfactory, sustainability as uncertain, institutional development impact as partial and overall Bank performance as satisfactory, although noting that supervision was less than satisfactory. OED agrees with these ratings. The ICR is of satisfactory quality and provides a candid assessment of project achievements and shortcomings. On lessons learned, the ICR emphasizes the need for internal consistency of the Bank's country assistance strategy. In particular, the project's emphasis on restructuring parastatals rather than full divestiture required funding that was at odds with the fiscal objective of the structural adjustment program. No audit is planned.