Module 12 - Uganda: Cross-Sectional Programmatic Adjustment Lending Focusing on Poverty Reduction

Eradicating poverty is the number-one priority on Uganda’s development agenda. Despite significant progress in poverty reduction in the 1990s, 35 percent of the population still lives below the poverty line. Poverty is mainly a rural phenomenon: 85 percent of the Ugandans and 96 percent of the country’s poor live in rural areas. Agriculture remains the backbone of Uganda’s economy, accounting for 43 percent of the GDP and 80 percent of employment; hence increasing agricultural growth rates, diversifying agricultural production, and expanding nonfarm employment are essential for effective poverty reduction.

In response to these challenges, the government developed a Poverty Eradication Action Plan (PEAP)—a home-grown medium-term development plan to guide government policy and the development of sector and district plans. The overarching goal of PEAP is to reduce poverty to 10 percent or less by 2017. Specific goals include achieving universal access to primary education, primary healthcare, and safe drinking water. As part of PEAP, through a broad-based consultative process the government developed the Plan for Modernization of Agriculture, which promotes the transformation of subsistence agriculture to commercial agriculture. Because PEAP’s objectives are fully consistent with the PRSP process, a summary of the PEAP was used as a basis for the Uganda PRSP.

Objectives and Description of Poverty Reduction Support Credits

The Uganda Poverty Reduction Support Credit (PRSC) is a series of single-tranche programmatic structural adjustment credits to support the implementation of PEAP/PRSP. The first PRSC (PRSC1) established a rolling medium-term policy framework that set out a three-year reform program with performance benchmarks, policy measures, and outcome targets. Subsequent PRSCs have refined and expanded the program, each adding a new year to the three-year rolling program. The reform program selectively focuses on policy and institutional reforms in PEAP/PRSP with the highest poverty impact.

The objective of the reform program supported by PRSC is to improve public service delivery, because weak public sector performance is one of the main constraints to economic development and poverty reduction. The reform program supports activities that improve access to and quality of education, health, water and sanitation, and rural services, aiming to raise quality of life and incomes of the poor. Since increasing access to and quality of these services requires more broad-based action than merely addressing sector-specific constraints to their delivery, the program focuses heavily on activities to enhance efficient and equitable use of public resources and promote good governance. The following key areas of reform support the implementation of the Plan for Modernization of Agriculture: