Language: English Original: English

PROJECT: COMMUNITY AGRICULTURAL INFRASTRUCTURE IMPROVEMENT PROGRAMME – PROJECT – 2 (CAIIP-II)

COUNTRY: UGANDA

PROJECT APPRAISAL REPORT

Date: 8 August, 2008

Appraisal Team

Team Leader: : Alex Mend, Principal Agronomist, OSAN.1 Team Members: Justus Kabyemera, Senior Agricultural Economist, OSAN.1, Yasser Ahmad, Senior Financial Analyst, OSAN.1, Leon Sanchez, Principal Agro-Industry Expert, OSAN.1, Asaph Nuwagira, Agriculture and Rural Development Specialist, UGFO), Emmanuel Yamoah, Consultant Infrastructure Specialist. Sector Manager: Chiji Ojukwu, OSAN.1 Sector Director: Aly Abou-Sabaa, OSAN Regional Director: Aloysius Ordu, OREA

Peer Reviewers

Mumina Wa-Kyendo, Principal Transport Engineer, OINF.2; Wycliffe Hara, Principal Agricultural Economist, OSAN.1; Gisela Giesler, Senior Gender Specialist, OSHD

TABLE OF CONTENTS1 I – STRATEGIC THRUST & RATIONALE.........................................................................1 1.1 Project Linkages with Country Strategy and Objectives ...........................................1 1.2 Rationale for Bank’s Involvement .............................................................................1

1.3 Donor Coordination……………………………………………………………… 2 II – PROJECT DESCRIPTION..............................................................................................3 2.1 Project components....................................................................................................3 2.2 Technical Solutions Retained and Other Alternatives Explored ...............................3 2.3 Project Type……………………………………………………………………… 3 2.4 Project Cost and Financing Arrangements ...............................................................4 2.5 Project’s Target Area and Population ........................................................................5 2.6 Participatory Process for Project Identification, Design and Implementation...........5 2.7 Bank Group Experience, Lessons Reflected in Project Design.................................5 2.8 Key Performance Indicators ......................................................................................6 III – PROJECT FEASIBILITY ..............................................................................................6 3.1 Economic and Financial Performance .......................................................................6 3.2 Environmental and Social Impacts ............................................................................6 IV – IMPLEMENTATION.....................................................................................................8 4.1 Implementation Arrangements..................................................................................8 4.2 Monitoring ..............................................................................................................11 4.3 Governance ..............................................................................................................11 4.4 Sustainability……………………………………………………………………. 12 4.5 Risk Management……………………………………………………………… 12 4.6 Knowledge Building……………………………………………………………… 12 V – LEGAL INSTRUMENTS AND AUTHORITY............................................................13 5.1 Legal instrument ......................................................................................................13 5.2 Conditions Associated with Bank’s Intervention ...................................................13 5.3 Compliance with Bank Policies ..............................................................................13 VI – RECOMMENDATION................................................................................................13 Appendix I. Socioeconomic Indicators...............................................................................14 Appendix II. Table of ADB’s portfolio in Uganda...............................................................15 Appendix III. Key related projects financed by the Bank and other Development Partners in

Uganda…………………………………………………………………… 16 Appendix IV. Map of the Project Area.................................................................................18 Appendix IV a) Number of Districts and Sub-Counties to be covered under CAIIP-II

(Northern and Eastern Districts)…………………………………………… 19 Appendix IV b) Districts and Additional Sub-Counties in CAIIP-I Districts to be covered

under CAIIP-II (Central and Eastern Districts)………………………………20

1 Technical Annexes are contained in the Project Implementation Document (PID). These include the detailed cost tables, implementation modalities, disbursement and procurement processes, project feasibility, including economic and financial analysis. This report will be used jointly with the PID and the Project Preparation Report.

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Currency Equivalents As of June 2008

Currency Unit = Ugandan Shillings (UGX) UA 1 = UGX 2,730.95 UA 1 = USD 1.62069

Fiscal Year July 1 – June 30

Weights and Measures

1 metric tonne = 2204 pounds (lbs) 1 kilogramme (kg) = 2.200 lbs 1 metre (m) = 3.28 feet (ft) 1 millimetre (mm) = 0.03937 inch (”) 1 kilometre (km) = 0.62 mile 1 hectare (ha) = 2.471 acres

Acronyms and Abbreviations AAMP : Area-based Agricultural Modernization Programme ADF : African Development Fund AWPB : Annual Work Plan & Budget CAIIP : Community Agricultural Infrastructure Improvement Programme DP : Development Partners GoU : Government of Uganda IFAD : International Fund for Agricultural Development MoFPED : Ministry of Finance, Planning and Economic Development MOLG : Ministry of Local Government MoWT : Ministry of Works and Transport NAADS : National Agricultural Advisory Services NCB : National Competitive Bidding NSADP : Northwest Smallholder Agricultural Development Project PEAP : Poverty Eradication Action Plan PMA : Plan for Modernisation of Agriculture PFT : Project Facilitation Team UJAS : Uganda Joint Assistance Strategy WB : World Bank

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Loan Information

Client’s information BORROWER: Government of Uganda EXECUTING AGENCY: Ministry of Local Government Financing plan

Source Amount (UA) Instrument

ADF LOAN

UA 45.00 million

Project Loan

Government UA 5.11 million Equity Recipient Communities UA 0.81 Equity TOTAL COST UA 50.92 million

ADB’s key financing information

Loan currency

UA

Interest type* N/A Interest rate spread* N/A Commitment fee* 0.5% Other fees* 0.75% Service Charge Tenor 600 months Grace period 120months FIRR, NPV (base case) B/C=1.56;NPV

UGX347.8 million EIRR (base case) 30%

*if applicable

Timeframe - Main Milestones (expected)

Concept Note approval

April, 2008

Project approval September, 2008

Effectiveness March, 2009 Last Disbursement December, 2014 Completion July, 2014 Last repayment 50 years; December,

2064

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Project Summary 1.1 Project Overview: The proposed Community Agricultural Infrastructure Improvement Programme Project 2 (CAIIP-II) will cover 15 districts in Northern and Eastern Uganda in 65 sub-counties. In addition, it will also cover another 26 districts in CAIIP-I areas in 32 sub-counties. The project consists of three components with the following outputs: (i) Rural Infrastructure Improvement (ii) Community Mobilization and (iii) Project Management. The project duration is 5 years commencing from year 2009. Total project cost is estimated at UA50.92 million with Bank share of UA45.0million (88.4%) and Government contribution of UA5.11million (10%), while the local communities will contribute UA0.81million (1.6%). 1.2 The project will benefit a population of 5.3 million from 1.02 million households (or 18.5% of the 2007 national projected population). It is expected to increase the volume of agricultural produce marketed by 45% and increase household incomes by 50% at completion. The project will be implemented by the districts and sub-counties with oversight from the Project Facilitation Team (PFT). The beneficiary communities will participate in the prioritization of infrastructure which will be most beneficial to them while their capacity will be improved through training and equipping them with tools to enable their effective management of operations and sustainable maintenance of the infrastructure investments. 1.3 Needs Assessment: The overall concept and actualization of CAIIP was borne through the Bank’s review of Uganda’s agriculture and rural sector in 2005. The review recommended increased investment in community agricultural infrastructure within the framework of the Programme for Modernization of Agriculture (PMA) Pillars where major financing gaps had been identified. CAIIP-2 is among the many initiatives that are geared towards enhancing development in the North with particular focus on restoring the agricultural potential and food security of the region which has been affected by armed conflict for the past 20 years. All socio-economic indicators in Northern Uganda are well below the national average and the Government would like to address this development anomaly in a comprehensive manner and in the shortest time possible. The project will also complement other Government programmes, especially the National Agricultural Advisory Services (NAADS) in increasing production. 1.4 Bank’s Added Value: The Bank’s comparative advantage and added value to finance this project emanates from its accumulated experience acquired through successful implementation of its large agricultural portfolio in Uganda. The Bank financed operations include agricultural infrastructure projects such as the Area-based Agricultural Modernization Programme (AAMP), the Northwest Smallholder Agricultural Development Project (NSADP) and CAIIP-1. The findings of the AAMP Impact Study (May 2008) are indicative of the direct relationship between investments in rural roads improvement and the increase in production and marketing of agricultural produce; hence increased incomes among the rural communities. These attributes have been well articulated into the design of CAIIP-2. 1.5 Knowledge Management: The knowledge gained through the implementation of similar previous projects in Uganda has been duly applied in designing this project. In the same pattern, the knowledge that will be generated by this Programme will be instrumental in designing and managing similar projects in future. The results from various studies under the project will inform the stakeholders on how to put the acquired knowledge attributes into practical use for better results-oriented achievements.

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Results-Based Logical Framework UGANDA COMMUNITY AGRICULTURAL INFRASTRUCTURE IMPROVEMENT PROGRAMME -PROJECT II (CAIIP-II)

INDICATIVE TARGETS TIMEFRAME/

Existence of Baseline

HIERARCHY OF OBJECTIVES EXPECTED RESULTS

AND THEME

REACH

(TARGET

POPULATION)

PERFORMANCE

INDICATORS

Baseline Target

ASSUMPTIONS AND RISKS

Goal 1. Contribute to poverty reduction and economic growth in Uganda through enhanced commercialization of agriculture.

Impacts 1.1 Agricultural production increased 1.2 Average household income increases

Local Communities as a whole Population reached is 5.3 million

Volume of agricultural produce marketed increased Better prices of farm produce obtained

Volume of agricultural produce marketed increased 45% by PY5 Average household income increases 50% by PY 5

i) GOU maintains political stability,maintains security and adheres to e topolicy. ii) District staff may not be sufficientlymotivated iii) The communities may not maintain theinfrastructural facilities

Project Purpose: Increase farmers’ incomes through investments in rural infrastructures and their sustainable management by well mobilized communities

Project Outcomes 1. Volume of staples marketed in Project area by smallholders increased 2. Post harvest losses reduced and quality and prices increased 3. Increase in income of rural farmers participating in project, especially women

1. Communities in each of the 97 participating sub-counties (CAIIP-I and CAIIP-II) 2. Women groups in project area 3. Adjoining sub-counties

1. % increase of staples marketed 2. % reduction in post-harvest losses 3. % increase of agricultural produce marketed, as % of total production, 4. % increase in farmer’s share of the market price 4. increase in number of women involved in marketing

Agricultural produce marketed, as % of total production, 20% (2003)

1. Marketed staples increased by at least 20% by PY5 2. 40% reduction in post-harvest losses by PY5 3. Agricultural produce marketed increased 60/70% in the project areas 4. Farmer’s share of the market increased by 20% by PY5 5. 70% of market stall operators and agro-processing are women

GOU continues to follow its current PEAP, PMA and Decentralization policies and assures their adequate funding

Activities A. Rural Infrastructure Improvement Component Cost : UA 36.151 million 1. Support to Rural road improvement 2. Support to Sub-county Market Structures + Agro-Industry services 3 Rural electrification for markets B. Community Mobilization Component Cost: UA 2.114 million C. Project Management Component Cost : 2.287 million

Project Outputs 1. District and Community Roads rehabilitated and maintained 2. Market structures constructed and maintained 3. Agro-processing units installed and in use 4. Increased access to market information and new skills, especially for women groups 5. Timely and problem free implementation 6. Maintain operations within budget

Rural households in 97 participating sub-counties in the 13 Districts in the North and 28 Districts in Central and East Farming population in project area District and community staff Responsible Unit in Sub-counties and Districts for overseeing the markets

1. Length of feeder and community access roads rehabilitated 2. Number of market places constructed; 3. Number of agro-processing and storage equipment installed. 4. Number and types of power sources installed in the markets 5. Project implemented on time

1. 225 km of district roads and 4365 km of community access roads rehabilitated by PY5 2. 97 Market places constructed; 3. 56 rice hullers; 97 grain mills; 28 honey extractors, 14 peanut past machines, 10 tomato pulpers, 56 cassava chipping machines, 97 produce stores, 22 milk coolers; 28 peanut crackers and 65 cold rooms 4. 97 Solar; 97 Diesel; and energy from 20km of grid extension. provided 5. No slippage on project performance and timely audit report submissions

Timely Project management at both PFTHQ and participating districts Adherence to transparent procurement andfiduciary practice Districts’ and Sub-counties’ commitmentto the programme activities Staff of relevant calibre available recruited& motivated Coordinating ministries committed toproject implementation through IPC

Source of Funds (UA Million): ADF 45.00 GoU 5.113 Beneficiaries 0.808 Total 50.922

6. Number of women members of Infrastructure Management Committee

6. Women make up 30% of the IMC

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PROJECT TIME FRAME (July 2009 – December 2014)

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REPORT AND RECOMMENDATION OF THE MANAGEMENT OF THE ADB GROUP TO THE BOARD OF DIRECTORS ON A PROPOSED LOAN/GRANT TO UGANDA FOR THE

COMMUNITY AGRICULTURAL INFRASTRUCTURE IMPROVEMENT PROGRAMME – PROJECT – 2 (CAIIP-II)

Management submits the following Report and Recommendation on a proposed loan for UA 45 million on ADF terms to finance the Community Agricultural Infrastructure Improvement Programme – Project-2 (CAIIP-II) in Uganda I – STRATEGIC THRUST & RATIONALE

1.1 Project Linkages with Country Strategy and Objectives The CAIIP is consistent with the second Pillar of the third Poverty Eradication Action Plan (PEAP – 2005/ 2008 and extended to 2009) – “Enhancing production, competitiveness and incomes”. The Project is also well aligned with the seventh Pillar of the Plan for Modernization of Agriculture (PMA - 2000) – “Physical Infrastructure”, with emphasis on improvement of rural roads and markets. The PMA is the strategy and operational framework for the PEAP for modernizing the agricultural sector. The project is rooted in the Uganda Joint Assistance Strategy (UJAS, 2005/06 to 2008/09), the harmonized business plan of the Development Partners (DP’s) in Uganda, which is focused towards implementing the Pillars of the PEAP. Hence the Pillars of the UJAS and the PEAP are similar and mutually supportive. The improvement of rural roads will contribute to the implementation of the country’s 10-Year District, Urban and Community Roads Investment Plan (DUCARIP – 2001 to 2011), which derives from the PEAP and aims to facilitate movement of agricultural produce from rural households to rural and urban markets, as well as providing access to social services for the rural population. The project will also complement other Government programmes especially the NAADS in increasing production.

1.2 Rationale for Bank’s Involvement The Bank has a large agricultural portfolio in Uganda with considerable accumulated experience in the Sector. Congruent to Government’s policy shift from conventional production oriented to market oriented agriculture through infrastructural development, the Bank in 2000 and 2001 financed two agricultural infrastructure projects, namely AAMP, and NSADP. The Bank’s review of Uganda’s agriculture and rural sector carried out in 2005 recommended investment in community agricultural infrastructure where major financing gaps were found to exist under the Pillars of the PMA, particularly in respect to infrastructure for access to markets and agro-processing. The Government conceived the CAIIP initiative to extend on a wider scale the successful results and impacts coming from the AAMP and NSADP. The Bank funded the first project (CAIIP-I within the limits of available resources with co-financing from IFAD. CAIIP-II is therefore a roll-over from CAIIP-I. By supporting the implementation of CAIIP-II, the Bank will have contributed to the development of the Northern region of Uganda, which was adversely affected by the armed conflict for the past 20 years. The project also augurs well with the Bank’s response to address the current food crisis in Africa in the medium term, through the enhancement of agricultural production and productivity by investing in rural infrastructure. The Bank’s comparative advantage and added value derives from its cumulative experience and positive achievements from implementing rural infrastructure projects within its large agricultural portfolio in Uganda.

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Project Objective: The overall sector goal of the project is to contribute to poverty reduction and economic growth in Uganda through enhanced commercialization of agriculture. Its specific objectives are to enhance farmers’ access to markets, attract competitive prices and increased incomes through improvements in rural infrastructures and their management by well mobilized communities. 1.3 Donors Coordination

Size

Sector or subsector* GDP Exports Labor Force

Agricultural Sector 26.5% 90% 71%

Players - Public Annual Expenditure (average 2003/2004 to 2006/2007)**

Government Donors

UA m UA 22.7 m UA 25.9 m

AfDB 19.9% % 46.7% 53.3% IDA 18.3%

IFAD 17.4% Danida 14.1% USAID 12.2% EC 6.3% DfID 5.2% Italy 3.1% FAO 2.0% JICA 1.5%

Level of Donor Coordination Existence of Thematic Working Groups Y

Existence of SWAPs or Integrated Sector Approaches Y

ADB's Involvement in donors coordination**** M * as most appropriate ** Years [yy1 to yy2] *** for this sector or sub-sector **** L: leader, M: member but not leader, none: no involvement

Comments on Donor Coordination: The Bank is the lead Development Partner in the agricultural sector in Uganda, with a share of about 19.9% of total financing. In undertaking its agricultural portfolio, the Bank collaborates with other Development Partners, especially IFAD and the EU. In an effort to harmonize Development Partner intervention in the sector, the Bank has partnered with the other DPs in the formulation of the UJAS2 to support the GoU to realize its PEAP outcome targets. The UJAS was drawn in realization of the DPs comparative advantage in choice of sectors and performance in the delivery of development support. An Agricultural Sector Working Group comprising of representatives of Government Officials and Development Partners has been revitalized and tasked, with increased focus sector support programming of which the Bank Group is represented by its Field Office.

1. Germany, Norway, The Netherlands, Sweden, United Kingdom, World Bank Africa Region, IFC Sub Saharan Africa Department, Multinational Investment Guarantee Agency.

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II – PROJECT DESCRIPTION 2.1 Project components Table 2.1: project components

No. Component name Est. cost (UA) million

Component description

1. Rural Infrastructure 45.74 Improvement of Rural Roads Markets, Agro-Processing Units and Storage

Facilities, and Energy for Markets 2. Community

Mobilization 2.49 Community Sensitization

Capacity Building 3. Programme

Management 2.69 Technical Support

Monitoring and Evaluation Financial Management

2.2 Technical Solutions Retained and Other Alternatives Explored The approach to this project supports a shift from traditional agricultural production oriented investment to one in rural infrastructure improvements, as a catalyst for enhancing market competitiveness and incomes. The technical solutions considered for the provision of the infrastructure are simple and locally available and is based on the achievements and lessons learnt from the infrastructure completed under the Bank-funded Area-Based Agricultural Modernisation Programme (AAMP). Initially, it was proposed to construct markets separately from agro-processing facilities, but, after considering the synergetic and added-value effect, an integrated unit combining all the facilities in one location was adopted as an innovative approach. This offers flexibility to farmers to decide on the form in which to sell their produce depending on the available technologies and profitability levels. The other innovation is that the markets will be leased to private operators rather than run by the sub-counties.

Table 2.2: Project Alternatives Considered and Reasons for Rejection

Alternative name Brief description

Reasons for rejection

Water for Production

Dams and Irrigation Already covered by other Bank funded projects such as Farm Income

Ferry transport Supply and Operation of Ferry for lake districts for easy transportation in lieu of road improvement.

Project is for infrastructure improvement. GoU has agreed to finance the purchase of the ferry under a different programme.

2.3 Project Type This is a stand-alone operation, which will be implemented as an individual project. This design was deemed to be the most amenable being a derivative of AAMP and roll out of CAIIP-I. The project has specific outputs and key performance indicators that shall be monitored on a regular basis. The adopted design lends itself to accomplishing this objective more effectively.

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2.4 Project Cost and Financing Arrangements The total project cost, including price contingencies (6% domestic and 2.5% foreign) and physical contingencies (10%), but excluding duties and taxes, is estimated at UA 50.92 million of which UA 23.67 million (46%) is in foreign exchange and UA 27.25 million (54%) in local costs. These costs will be covered by an ADF loan of UA 45.00 million and GoU and local communities contributions of UA 5.11 million (in kind contribution in addition to taxes and duties) and UA 0.81 million respectively. Standard conditions applicable to ADF Loan Agreements shall apply for loan effectiveness. Specific conditions for first disbursement include the opening of Special Account at the Bank of Uganda in which to deposit transfers from the Bank for project operations and provision of a letter of comfort with regards to Government ownership of land for the construction of infrastructure works. These will ensure smooth commencement of the project and the GoU has agreed to them. Adequate resources are available under the current country allocation for the project.

Table 2.3: Project cost Estimates by Component (000’s) (UA '000) Local Foreign Total

% Foreign Exchange

% Total Base Costs

Rural Infrastructure Improvement 19,053.0 17,098.0 36,151.0 47 89 Community Mobilization 772.6 1,341.5 2,114.0 63 5

Project Coordination & Facilitation 649.5 1,637.9 2,287.4 72 6 Total Base Costs 20,475.1 20,077.4 40,552.4 50 100 Physical Contingencies 1,565.9 1,729.5 3,295.4 52 8

Price Contingencies 5,212.4 1,862.0 7,074.4 26 17

Total 27,253.4 23,668.8 50,922.2 46 126

Table 2.4: Sources of Finance

UA'000 Source F.E Local Currency Total %Total ADF 23,668.8 21,331.2 45,000.0 88.4 GOU - 5,113.4 5,113.4 10.0 Beneficiaries - 808.8 808.8 1.6 Total 23,668.8 27,253.4 50,922.2 100.0

Table 2.5: Project Cost by Category of Expenditure ('000)

(UA '000) % Foreign Base Local Foreign Total Exchange Costs I. Investment Costs A. Civil Works 12,824.2 8,549.5 21,373.7 40 53 B. Vehicles 19.8 178.6 198.5 90 - C Motorcycles 20.3 183.1 203.4 90 1 D. Equipment 606.4 5,492.1 6,098.5 90 15 E. Materials and Input 21.3 32.0 53.3 60 - F. Technical Assistance 79.5 696.0 775.5 90 2 G. Studies and Supervision 270.2 1,245.7 1,515.9 82 4 H. Training and Capacity Building 591.8 887.8 1,479.6 60 4 I. Cross-Cutting Issues 73.9 295.6 369.5 80 1 J. AUDIT - 91.5 91.5 100 - Total Investment Costs 14,507.6 17,651.8 32,159.4 55 79 II. Total Recurrent Costs 5,967.5 2,425.6 8,393.1 29 21 Total BASELINE COSTS 20,475.1 20,077.4 40,552.4 50 100 Physical Contingencies 1,565.9 1,729.5 3,295.4 52 8 Price Contingencies 5,212.4 1,862.0 7,074.4 26 17 Total PROJECT COSTS 27,253.4 23,668.8 50,922.2 46 126

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Table 2.6: Expenditure Schedule by Components including Contingencies (UA'000)

2.5 Project’s Target Area and Population

The project target area will cover 15 districts in Northern and Eastern Uganda in 65 sub-counties. In addition it will also cover another 26 districts in CAIIP-I areas in 32 sub-counties. It covers about 32.3% of Uganda’s total land area with a population of about 5.3 million (2002 census projections) belonging to 1.02 million households (about 18.5 percent of the 2007 national projected population). The main direct beneficiaries of the project will include mainly smallholder farmers and the community at large, including traders, vehicle owners and market operators and contractors. The project will increase the volume of agricultural produce marketed by 45% and increase household incomes by 50%.

2.6 Participatory Process for Project Identification, Design and Implementation The process was triggered by an Economic and Sector Work/Agriculture and Rural Sector Review undertaken by the Bank in 2005 and concluded with a stakeholders’ consultative workshop in February 2006. This was immediately followed by a tripartite meeting of the GoU, Development Partners in the Agriculture Sector and the Bank. Both the preparation and appraisal missions consulted a wide spectrum of stakeholders, including central and local government officials, development partners, the private sector service providers; and project beneficiaries in the respective districts and sub-counties. A stakeholders’ workshop was also held to discuss and agree on the activities and coverage of the project.

2.7 Bank Group Experience, Lessons Reflected in Project Design

Pertinent lessons have been drawn from ADB’s current and past agricultural portfolio, especially from AAMP, NSADP and CAIIP-1, as well as those of other DPs. Most relevant are those from the AAMP, whereby a recent Impact Study of the Project (May 2008) found out that: (i) There is a direct relationship between the rehabilitation/construction of rural roads and the increase in production and marketing of agricultural produce; and hence increased incomes; (ii) The participation of project beneficiaries during project preparation and labour incentives facilitate rehabilitation of roads at the community level; (iii) Adequate budgetary allocations at district and sub-county levels is necessary for sustainable maintenance of rehabilitated roads. These have been duly reflected in the project design and include: (i) broad client involvement in priority setting; (ii) decentralisation of the procurement of works; (iii) selection of qualified and committed programme staff; and (iv) involvement of Development Partners from the outset of project design to elicit buy-in, support and creation of synergies with on-going development initiatives.

Financial control, delays in financial transaction and reporting has been a challenge in past projects. This is being addressed by ensuring the training of district accountants on financial

2009 2010 2011 2012 2013 Total Rural Infrastructure Improvement 7,845.7 8,495.6 10,480.5 10,933.4 7,987.5 45,742.8

Community Mobilization 1,152.2 306.5 318.6 348.7 362.7 2,488.7

Project Coordination & Facilitation 604.1 418.4 453.7 679.7 534.8 2,690.7 Total PROJECT COSTS 9,602.1 9,220.5 11,252.8 11,961.8 8,885.1 50,922.2

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management and control systems to enable them to undertake the requisite financial accounting in a timely and efficient manner.

2.8 Key Performance Indicators The Key Performance Indicators (KPI’s) will include:

(i) Attained reach of 5.3 million people (ii) The volume of agricultural produce marketed to increase by 60%; (iii) Share of market price by farmers to increase by 20%; (iv) Length of rural roads rehabilitated (225 km of district roads and 4365 km of

community access roads); (v) 97 market places constructed, and equipped with storage capacity, agro-

processing equipment installed (56 rice hullers; 97 grain mills; 28 honey extractors, 14 peanut past machines, 10 tomato pulpers, 56 cassava chipping machines, 97 produce stores, 22 milk coolers; 28 peanut crackers and 65 cold rooms), and power supply installed (97 Solar; 97 Diesel; and energy from 20km of grid extension. provided)

(vi) Level of timeliness in project implementation achieved (to operate within the permitted 10% slippage in timing of project activities).

III – PROJECT FEASIBILITY

3.1 Economic and Financial Performance Table C.1: key economic and financial figures

NB: detailed calculations are available in Annex B6 The underlying assumptions for economic viability are: (i) The effects of the Programme in economic terms are estimated over a 20 year period; (ii) All duties, taxes, price and physical contingencies were excluded in the calculations; (iii) All investments in social services i.e. within the framework of the Community Development component, is excluded from the economic analysis as it is difficult to quantify; and (iv) Local costs have been shadow prices using a standard deviation factor (SCF) of 0.9 at an inflation rate of 7%. (For more details, see Annex B.7).

3.2 Environmental and Social Impacts Environment The Project is classified as Category 2, as the site specific environmental and/or social impacts can be minimized by the application of mitigation measures. On the positive side, the roads improvement will lead to improved transportation services, which in turn will result in better access to health centres and improved delivery of social services, travel time savings and an increase in the volume of trade and commercial activities. On the negative side, there is air and noise pollution, occupational health and safety risks, increased transmission of HIV/AIDS and STDs, and temporary disturbance during

FIRR, NPV (base case) B/C=1.56 ;NPV=UGX347.8 million EIRR (base case) 30%

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construction and operation phases. Increased run-off, erosion of embankments with resulting wetland/river sedimentation, induced deforestation and loss of water catchments areas are potential negative impacts during the operational phase. The National Environmental Management Authority (NEMA) will review and, if satisfied, provide a Certificate of Approval of EIA for the Annual Work Plan (AWP) to Ministry of Local Government (MoLG) with conditions of approval for environmental mitigation measures identified for each sub-project. In addition, environmental remediation measures around the rural infrastructures, particularly feeder and community roads (tree planting, grass, etc.); and environmental sensitization measures at the sub-counties level by the DEO will be provided. Climate Change In recent years, some districts in the project area have experienced unusual climatic changes resulting into occasions of flash floods, especially in low/flat plains. These have had serious effects on the road infrastructure curtailing transport and movement between districts. The design of the project has taken this aspect into consideration, particularly for the feeder and community roads that will be constructed under the project. This will include ensuring use of quality/certified construction materials, raising the height/camber of the district/feeder roads to facilitate easy drain of rain water off the road surface; installing sizable culverts and drains; and institution of a robust road maintenance plan.

Gender The project will promote gender relations and interaction through a number of initiatives that have been included in the design of the project. The improvement of the feeder and community roads and the construction of markets and installation of agro-processing facilities will positively affect the structure, quality of working conditions and volume of business undertaken by women. It is expected that women will constitute around 70% of operators of market stalls and agro-processing and about 30% of the membership of Infrastructure Management Committees. Women participating as members of the labour gangs (at least 50%) will be remunerated in accordance with the amount of work completed. The added income would facilitate a better livelihood, including an improvement in the health of women and children at the household level. There are no direct negative impacts on gender as a result of project implementation. However, the presence of male labour gangs during the construction phase of the infrastructure and influx of traders from urban centres after their completion and their interaction with local communities could increase the incidence of communicable diseases, including HIV/AIDS and STDs in the project areas.

Social The project is geared to alleviating poverty among the project beneficiaries. This objective will be attained through enhanced economic activity and access to markets as well as value addition to agricultural commodities. With enhance market access and better prices being offered for agricultural commodities, more rural people will be attracted to engage in agricultural production; hence reduce the incidence of poverty with a reasonable distribution of wealth among the beneficiaries. Some of the most pertinent social benefits will include improved access to healthcare facilities, schools and the overall monetisation of the rural communities through growth of markets, new businesses and economic development along the rehabilitated roads. Enhanced interaction between the urban and rural communities especially through marketing of agricultural commodities could increase incidences of HIV/AIDS. This could be mitigated against through increased awareness campaigns and education programmes. Water puddles in

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pits from excavation of earth and gravel for road rehabilitation could be potential breeding sites for malaria mosquitoes. To mitigate against this, provision has been made to ensure the filling of these pits/burrows. Upon closure of the project, the respective District Road Engineers will ensure adherence to this environmental/social requirement.

Involuntary Resettlement The project would not involve any involuntary movement of the population. IV – IMPLEMENTATION

4.1 Implementation Arrangements The MoLG, which is the Executing Agency (EA) for CAIIP-I, will also be mandated with executing CAIIP-II. The Programme Facilitation Team (PFT) for CAIIP-I which currently includes the following staff: Programme Facilitator, Financial Controller, Accountant and Infrastructure Engineer,, will also be responsible for the day-to-day coordination and monitoring of implementation of the CAIIP-II activities. The PFT will be strengthened by the recruitment of two additional staff, an Agro-processing Specialist and a Monitoring and Evaluation Officer. The PFT will be supported by a small Zonal Office, based at Lira, to provide technical support and facilitate and monitor implementation of CAIIP-II activities. The Zonal Office staff shall compose of an engineer, accountant, community mobilisation officer and monitoring and evaluation officer. The implementation of project activities at the District level would be carried out through the established structures under the office of the Chief Administrative Officer (CAO) with the support of the PFT. Procurement and Disbursement Arrangements: Procurement All procurement of goods, works and acquisition of consulting services financed by the Bank will be in accordance with the Bank's Rules of Procedure for Procurement of Goods and Works or, as appropriate, Rules of Procedure for the Use of Consultants, using the relevant Bank Standard Bidding Documents. The procurement arrangements are given in Table 4.1 below. Civil Works: Procurement of civil works (comprising Rehabilitation of District and Community Access Roads and Marketplace Structures, including Housing for facilities, in 41 districts and 97 sub-counties), estimated in aggregate at UA 26.92 million, will be undertaken through NCB procedures. These include the rehabilitation of 225 km of District Roads [valued at UA 2.35 million] and 4,365 km of Community Access Roads [valued in aggregate at UA 17.61 million]. Other civil works include Routine and Recurrent Maintenance of 439 km of District Roads [estimated at UA 120,200], Marketplace Structures in 97 Sub-Counties [valued at UA 4.13 million] and Housing for Agro-Processing Facilities [valued at UA 2.23 million] will all be procured through NCB procedures. The character, location and sizes of these works are such that they are unlikely to attract bids from outside Uganda, and there are local contractors sufficiently qualified and in a number sufficient to ensure competitive bidding. Routine and Recurrent Maintenance of 8,515 km of Community Access Roads

9

[estimated at UA 1.27 million in aggregate] will be undertaken through Community Participation, specifically in the interest of project sustainability. Goods: Procurement of Vehicles and Motorcycles for Monitoring and Supervision, valued at UA 461,700, will be through International shopping. Assorted Agro-Processing Equipment (Milk Coolers, Grain Millers, Rice Hullers, etc), valued at UA 3.66 million in aggregate, and Rural Energy Facilities, valued at UA 3.54 million, will also be procured through Local Shopping procedures. The quantities and character of these goods are such that they could not possibly interest suppliers from outside Uganda, and there are local suppliers sufficiently qualified and in a number sufficient to ensure competitive bidding. Labour implements and materials, valued at UA 71,800, will be procured through National Shopping procedures. This is because the goods are readily available off-the-shelf items, and there is an adequate number of national suppliers and agents of qualified foreign suppliers to ensure competitive prices.

Table 4.1: Procurement Arrangements (UA'000)

N.C.B. Shortlist Other N.B.F. TotalA. WORKS Civil Works 26,439.5 - 1,270.1 - 27,709.6

(26,439.5) (461.3) (26,900.8)B. GOODS

- - 227.7 - 227.7 (227.7) (227.7)

- - 233.4 - 233.4 (233.4) (233.4)

- - 7,354.1 - 7,354.1 (7,354.1) (7,354.1)

- 62.1 - 62.1 (62.1) (62.1)

C. SERVICES - 966.6 - - 966.7

(966.6) (966.6)- - 1,699.9 - 1,699.9

(1,699.9) (1,699.9)- 1,601.0 - - 1,601.0

(1,601.0) (1,601.0) - - 447.4 - 447.4

(447.4) (447.4) - 99.9 - - 99.9

(99.9) (99.9)D. PERSONNEL 5,113.4 5,113.4E. OPERATING COST - - 5,407.1 5,407.1

(5,407.1) (5,407.1)TOTAL 26,439.5 2,667.5 16,701.8 5,113.4 50,922.3

(26,439.5) (2,667.5) (15,893.0) - (45,000)

Studies and Supervision

Contractual Services

Financial Audit

Motorvehicles

Motorcycles

Office and other Equipment

Material and Inputs

Technical Assistance and Consultancies

Training and Capacity Building

Note: Figures in parenthesis are the respective amounts financed by African Development Fund * Other includes: National Shopping, Direct Purchase and Community Participation ** Non-Bank Funded: Items financed by Beneficiaries and the Government

Services: Apart from the allocation of UA 71,500 to NEMA, specifically for environmental baseline studies, to be undertaken on the basis of a memorandum of understanding between the PFT and NEMA, the procurement of consulting services [valued in total at UA 792,500], design studies and supervision [valued at UA 1.609 million], and audit services [valued at UA 100,000], will be undertaken on the basis of shortlists. The selection procedures will be based on technical quality with price consideration. There will be Advance Action for Acquisition (AAA) of consultancy services so as to commence recruitment of the design consultants early. Training and Community Mobilization Services will be procured through Direct Negotiations procedures (using the services of NAADS, PFT, Districts, Sub-Counties, Community Groups, etc.). This is because, given the perfect knowledge of local customs and

10

local environment required, the assignments are considered as requiring single sources of expertise. Miscellaneous Expenditures, especially Operating Expenses will be undertaken using existing GOU systems acceptable to the Bank. National Procedures and Regulations: Uganda’s national procurement laws and regulations have been reviewed and determined to be acceptable. Executing Agency: The MoLG through the PFT will be responsible for managing the procurement of goods, works, and consulting/training services. The resources, capacity, expertise and experience of the PFT (see Annex 4) are adequate to carry out the procurement. General Procurement Notice: The text of a General Procurement Notice (GPN) will be discussed and agreed with the Borrower, and this will be issued for publication in the UN’s Development Business, upon approval by the Board of Directors of the loan proposal. Review Procedures: For all activities requiring the Prior Review of ADF, the following documents are subject to review and approval by the Bank before promulgation (except where post-procurement rules apply): Specific Procurement Notices; Tender documents/Requests for Proposals; Tender evaluation/Evaluation of Proposals' reports, including recommendations for contract award; and Draft contracts, if these have been amended from drafts included in the tender invitation documents. Post Review Procedures: Post procurement review procedures will be applied for individual contracts of value less than the following thresholds:

• Civil Works: UA 100,000. • Goods: UA 50,000. • Services: UA 20,000.

Adoption of New Procurement Procedures: The indicated mode of procurement above will be aligned to the new Procurement Rules and Procedures that will come into force with effect from 1st October 2008. Disbursement Arrangements The Special Account (SA) method and the Direct Payment method will be used. The MoLG will open a SA in foreign currency at Bank of Uganda (BoU) into which part of the loan resources will be deposited. It will also open a Local Currency Account (LCA) at the BoU. Thereafter, funds will be transferred from the SA to the LCA as and when required to finance the project activities. Other expenses, especially for minor works, goods and services and all the expenses under miscellaneous will be paid through the SA. The ADF will replenish the SA after the PFT has provided valid justifications for the use of at least 50% of the previous deposit, plus outstanding unjustified balance of the earlier tranche. The opening of the SA and the LCA will be a condition precedent to first disbursement. The Direct Payment method will be used to finance major civil works, goods, and services. The current arrangements for flow of funds under CAIIP-I will be adopted by CAIIP-II. The overriding principle will be to provide an incentive to each district to account quickly such that a fast performing district, that manages its contracts well, does not get held back because another is slow to account for its expenditures. Following on from the assessment of the financial and audit control environment which was found to be adequate, the ceiling of the

11

SA will be fixed at UA 1.1 million. Current Bank guidelines on disbursement will apply and these will be illustrated in more detail through the issuing of a disbursement letter to the Government. The signatories to both the SA and the LCA shall be the Permanent Secretary (MoLG), the PFT Programme Facilitator and the PFT Financial Controller as is the current practice. Each district will also have a district programme account (DPA) and the signatories to this will be the CAO, the CFO and an alternate signatory, the Programme Support Officer (PSO). Audit Arrangements The PFT will maintain proper financial reports and audited accounts, copies of which will be made available to the Bank not more than six (6) months after the end of each Ugandan financial year. The PFT will be assisted by each of the districts’ accounts offices who will provide a reinforcement function. The Audit reports will be prepared by an independent audit firm under the auspices of the Office of the Auditor General of Uganda, whose costs will be paid for by the Project. The PFT will also submit to the Fund regular quarterly progress reports which will follow the official Bank Group reporting guidelines.

4.2 Monitoring Timeframe Milestone Monitoring process / feedback loop Year 1 Baseline study PFT and Districts to monitor Year 1 – 5 Implementation Beneficiaries, Districts, MoWT & PFT Year 1-5 Audit Reports Annually by PFT Year 2 Impact study Beneficiaries, sector goals to be monitored by NAADS Year 3 Impact study Beneficiaries, sector goals to be monitored by NAADS & MoWT Year 3 Mid-Term Review Bank and PFT to monitor Year 4 Impact study Beneficiaries, sector goals to be monitored by NAADS & MoWT Year 5 Impact study Beneficiaries, sector goals to be monitored by NAADS, MoWT Year 5 Project Completion Report PFT and District to monitor

4.3 Governance The main governance issues or risks relate to contracting and bidding procedures especially for construction of markets, agro-processing facilities and feeder/community roads. Moreover, there is risk on the quality of construction materials used by contractors. To avert irregularities in the bidding and contracting procedures, the standard Bank bidding/contracting procedures and guidelines will be used. Additionally, the Government has a well systemized procurement procedure, which has been successfully applied under other on-going Bank projects, including AAMP and CAIIP-1. To ensure adherence to the requisite quality of construction materials, the contractors will be supervised by the respective District Roads Engineers in collaboration with the Project Facilitation Team (PFT). Building/construction materials will be certified by these agencies prior to undertaking any construction at site. Furthermore, provision has been made under the project for an annual audit to be carried out covering all aspects of project implementation including procurement issues. In order to enhance the capacity of staff to combine their routine work and additional work from the project, a logical division of labour will be instituted between project and district staff blended with joint meetings and inspections. Capacities of district staff will also be strengthened through tailor made training programmes under the project.

12

4.4 Sustainability The Government has high regard to the rehabilitation of rural infrastructure, particularly rural roads for which additional budgetary resources have been allocated in recent years. The rehabilitated rural roads will be maintained through a combination of regular budgetary allocations from the Central Government (conditional grants for roads maintenance) and through districts’ own resources for road maintenance. Community access roads will be maintained by the communities in respective localities, modalities of which will be set up by the Sub-counties. Additional revenue will accrue to the Districts and Sub-Counties from leasing of markets and agro-processing facilities. Thus they would be able to maintain the facilities in a sustained manner. Generally, activities initiated by the project will be sustained through adherence to the following mechanisms/approaches: (i) government’s strong commitment to the process of decentralisation and institutional reform; (ii) private sector participation in line with Government’s policies, especially in promoting agro-processing and rural energy; and (iii) by building synergy and effective linkages with agricultural production related projects. 4.5 Risk Management The project faces two main risks: 1) that the communities may not sufficiently maintain the infrastructural facilities provided. This will be minimized by ensuring that the provision of infrastructure is demand-driven and that the communities are fully sensitized and mobilized for prioritization, selection and maintenance; 2) that the District and Sub-county staff may not be sufficiently motivated to provide the necessary technical support to the communities. This will be minimized by ensuring that facilities, including adequate operating funds and necessary logistics support are provided to motivate work ethic amongst staff. The Project will also sustain the incentive mechanism already in-built under the AAMP 4.6 Knowledge Building The project is expected to generate considerable knowledge attributes that will add value to the overall design and management of similar projects in future. Knowledge will be derived from the adopted design, in terms of adaptive maintenance procedures, integrated market/agro-processing units; and their management arrangements. Moreover, the systematic monitoring modalities will inform project management, beneficiaries, the Government and other stakeholders the status of project implementation and address constraints in a consistent and timely manner. To facilitate follow-up on emerging knowledge attributes, the project by design has various studies including a baseline and an impact study at the end of the project, that will inform the Government and the beneficiaries pertinent knowledge issues that can be put into practical use for better result-oriented achievements. Other knowledge tracking processes include regular supervisions, Mid-Term Review and Project Completion Report. Knowledge attributes would be systematically elaborated during stakeholders’ workshops and documented for wide dissemination to respective project stakeholders and other regions of the country through various means, including Government publications and Audio-Visuals Aids (posters, leaflets, flyers, etc).

13

V – LEGAL INSTRUMENTS AND AUTHORITY

5.1 Legal instrument ADF Loan to the Government of the Republic of Uganda.

5.2 Conditions Associated with Bank’s Intervention • Conditions Precedent to Entry into Force: Shall be subject to the fulfilment by the

Borrower of the provisions of Section 5.01 of the General Conditions of the Fund. • Conditions Precedent to First Disbursement: (i) Provided evidence of having opened

one foreign currency special account (SA) and local currency account (LCA) in the Bank of Uganda for the deposit of the proceeds of the loan and for transfer of funds from the special account respectively, and (ii) Provide Letter of Comfort stating that the land where the market infrastructure is to be constructed shall belong to the Government or the Community.

• Other Conditions: Recruited, within six (6) months of the first disbursement, two (2)

additional staff to the PFT, (i) one Agro-processing Specialist and (ii) one Monitoring and Evaluation Specialist, all of whose qualifications and experience will be acceptable to the Fund.

5.3 Compliance with Bank Policies (X) This project complies with all applicable Bank policies. ( ) The following exceptions to Bank policies are recommended for approval. The project

complies with all other applicable Bank policies Non-standard conditions (if applicable): N/A

VI – RECOMMENDATION Management recommends that the Board of Directors approve the proposed loan of UA 45 million to the Government of Uganda for the purposes and subject to the conditions stipulated in this report.

14

Appendix 1

Year Uganda AfricaDevelo-

pingCountries

Develo-ped

CountriesBasic Indicators Area ( '000 Km²) 241 30 307 80 976 54 658Total Population (millions) 2007 30.9 963.7 5 448.2 1 223.0Urban Population (% of Total) 2007 12.9 39.8 43.5 74.2Population Density (per Km²) 2007 128.1 31.8 65.7 23.0GNI per Capita (US $) 2006 300 1 071 2 000 36 487Labor Force Participation - Total (%) 2005 45.6 42.3 45.6 54.6Labor Force Participation - Female (%) 2005 47.6 41.1 39.7 44.9Gender -Related Development Index Value 2005 0.501 0.486 0.694 0.911Human Develop. Index (Rank among 174 countries) 2005 154 n.a. n.a. n.a.Popul. Living Below $ 1 a Day (% of Population) 2000 35.0 34.3 … …

Demographic IndicatorsPopulation Growth Rate - Total (%) 2007 3.2 2.3 1.4 0.3Population Growth Rate - Urban (%) 2007 4.6 3.5 2.6 0.5Population < 15 years (%) 2007 49.1 41.0 30.2 16.7Population >= 65 years (%) 2007 2.4 3.5 5.6 16.4Dependency Ratio (%) 2007 106.4 80.1 56.0 47.7Sex Ratio (per 100 female) 2007 100.1 99.3 103.2 94.3Female Population 15-49 years (% of total population) 2007 21.5 24.2 24.5 31.4Life Expectancy at Birth - Total (years) 2007 51.5 54.2 65.4 76.5Life Expectancy at Birth - Female (years) 2007 52.2 55.3 67.2 80.2Crude Birth Rate (per 1,000) 2007 46.6 36.1 22.4 11.1Crude Death Rate (per 1,000) 2007 13.4 13.2 8.3 10.4Infant Mortality Rate (per 1,000) 2007 76.9 85.3 57.3 7.4Child Mortality Rate (per 1,000) 2007 127.4 130.2 80.8 8.9Total Fertility Rate (per woman) 2007 6.5 4.7 2.8 1.6Maternal Mortality Rate (per 100,000) 2006 435.0 723.6 450 8Women Using Contraception (%) 2006 23.7 29.8 61.0 75.0

Health & Nutrition IndicatorsPhysicians (per 100,000 people) 2004 7.9 39.6 78.0 287.0Nurses (per 100,000 people) 2004 57.9 120.4 98.0 782.0Births attended by Trained Health Personnel (%) 2006 42.1 50.4 59.0 99.0Access to Safe Water (% of Population) 2006 67.1 62.3 80.0 100.0Access to Health Services (% of Population)* 2004 49.0 61.7 80.0 100.0Access to Sanitation (% of Population) 2006 10.7 45.8 50.0 100.0Percent. of Adults (aged 15-49) Living with HIV/AIDS 2005 6.7 4.7 1.3 0.3Incidence of Tuberculosis (per 100,000) 2005 368.8 300.7 275.0 18.0Child Immunization Against Tuberculosis (%) 2006 91.0 83.7 85.0 93.0Child Immunization Against Measles (%) 2006 89.0 75.4 78.0 93.2Underweight Children (% of children under 5 years) 2006 15.9 28.6 27.0 0.1Daily Calorie Supply per Capita 2004 2 348 2 436 2 675 3 285Public Expenditure on Health (as % of GDP) 2004 2.5 2.4 1.8 6.3

Education Indicators Gross Enrolment Ratio (%) Primary School - Total 2006 117.3 96.4 91.0 102.3 Primary School - Female 2006 114.6 92.1 105.0 102.0 Secondary School - Total 2006 22.3 44.5 88.0 99.5 Secondary School - Female 2006 19.9 41.8 45.8 100.8Primary School Female Teaching Staff (% of Total) 2005 38.7 47.5 51.0 82.0Adult Illiteracy Rate - Total (%) 2007 26.8 33.3 26.6 1.2Adult Illiteracy Rate - Male (%) 2007 18.3 25.6 19.0 0.8Adult Illiteracy Rate - Female (%) 2007 35.2 40.8 34.2 1.6Percentage of GDP Spent on Education 2004 5.1 4.7 3.9 5.9

Environmental Indicators Land Use (Arable Land as % of Total Land Area) 2005-07 25.3 6.0 9.9 11.6Annual Rate of Deforestation (%) 2000-07 2.0 0.7 0.4 -0.2Annual Rate of Reforestation (%) 2000-07 … 10.9 … …Per Capita CO2 Emissions (metric tons) 2005-07 0.1 1.0 1.9 12.3

Sources : ADB Statistics Department Databases; World Bank: World Development Indicators; last update :UNAIDS; UNSD; WHO, UNICEF, WRI, UNDP; Country Reports

Note : n.a. : Not Applicable ; … : Data Not Available;

COMPARATIVE SOCIO-ECONOMIC INDICATORSUganda

April 2008

Infant Mortality Rate ( Per 1000 )

65

70

75

80

85

90

95

2002 2003 2004 2005 2006 2007 Uganda Africa

GNI per capita US $

0200400600800

10001200

2001 2002 2003 2004 2005 2006 Uganda Africa

Population Growth Rate (%)

0.00.51.01.52.02.53.03.5

2002 2003 2004 2005 2006 2007 Uganda Africa

Life Expectancy at Birth (years)

111213141516171

2002 2003 2004 2005 2006 2007

Uganda Africa

15Appendix II. Table of ADB’s portfolio in Uganda

List of active projects (loans and grants) by Sector

ADB ADF Loan

ADF Grant NTF ADB ADF ADF

Grant NTF

1 Northwest Smallholder Agricultural Development Project 15/12/99 20/11/00 18/05/01 nil 17.60 nil nil nil nil nil 17.60 15.36 87.3% 31/12/08 effective

2 Area-based Agricultural Modernization Programme 13/09/00 30/05/01 14/11/03 nil 9.67 nil nil nil nil nil nil 9.67 6.79 70.2% 30/06/08 effective

3 Fisheries Development Project 12/06/02 14/11/02 9/05/03 nil 22.00 nil nil nil nil nil nil 22.00 6.99 31.8% 31/01/10 effective

4 National Livestock Productivity Improvement Project 04/12/02 02/06/03 12/04/04 nil 23.74 2.80 nil nil nil nil nil 26.54 11.95 45.0% 31/12/09 effective

5 Farm Income Enhancement& Forestry Conservation project 29/09/04 18/01/05 17/05/06 nil 31.57 9.85 41.42 5.02 12.1% 31/12/10 effective

6 Community Agricultural Infrustructure Improvement Programme- Project 1 31/01/07 17/05/2007 21/09/07 nil 30.00 nil nil nil nil nil nil 30.00 0.60 2.0% 31/12/13 effective

147.23 46.71 31.7%

7 Road Sector Support Project 1 (Kabale Kisoro Bunagana Rd) 27/04/05 19/05/05 15/09/05 nil 27.01 1.49 nil nil nil nil nil 28.50 16.26 57.1% 31/12/10 effective

8 Road Sector Support Project 2 (Fort portal Bundibugyo Rd) 17/2/07 non non nil 56.65 1.35 nil nil nil nil nil 58.00 nil 0.0% n/a not effective

9 Road Sector Support Project supplementary Loan 20/12/2006 22/01/2007 18/02/2008 nil 32.99 nil nil nil nil nil nil 32.99 nil 0.0% 31/12/10 effective

119.49 16.26 13.6%

10 Small Towns Water Supply & Sanitation Project 24/11/04 18/01/05 13/06/05 12.26 6.15 18.41 15.20 82.6% 31/12/08 effective

11 Rural Water Supply & Sanitation Programme 19/12/05 23/01/06 9/05/06 40.00 40.00 27.34 68.4% 31/12/10 effective

58.41 42.54 72.8%

12 Rural Microfinance Support Project 24/11/99 29/05/00 23/02/01 nil 13.10 1.84 nil nil nil nil nil 14.94 14.87 99.5% 30/04/08 effective

13 Support to the Health Sector Strategic Plan II 08/11/2006 22/01/2007 04/06/07 nil 20.00 nil nil nil nil nil nil 20.00 0.42 2.0% 31/12/12 effective

14 Support to ESIP (Education II) 21/12/00 30/05/01 18/06/01 nil 20.00 2.38 nil nil nil nil nil 22.38 22.05 98.5% 30/04/07 effective

15 Support to Post Primary Education and Training Project (Education III) 19/12/05 23/01/06 25/04/06 20.00 20.00 5.23 26.2% 31/12/11 effective

77.32 42.15 54.5%

Approved Amount UA million Amount Cancelled (UA million)

Serial No. Project Description Status (completed, on-going, etc)

Net Commitments (UA million)

Amount Disbursed

(UA million)

Disbursed (%)

Deadline for Last Disbursement

A. AGRICULTURE

Approval Date Signature Date EffectivenessDate

Agriculture - Sub Total

B. TRANSPORT

Transport - Sub Total

1.00

Water and Sanitation - Sub total

D. SOCIAL

Social - Sub Total

16

Appendix II. Table of ADB’s portfolio in Uganda List of active projects (loans and grants) by Sector

16 Institutional Support Project for Good Governance 17/11/04 18/01/05 14/03/05 9.00 9.00 4.93 54.8% 31/12/08 effective

9.00 4.93 54.8%

17 Mineral Resources Management & Capacity Building Project 29/09/04 18/01/05 18/01/05 5.35 5.35 2.11 39.4% 31/12/10 effective

5.35 2.11 39.4%

18 Bujagali Transmission Interconnection Project 26/06/07 26/10/07 non 19.21 nil nil nil nil nil nil 19.21 2.61 13.6% n/a not effective

436.01 154.70 35.5%

19 Lakes Edward and Albert Fisheries Pilot Project 22/10/03 04/03/04 04/03/04 1.65 1.65 1.25 75.8% 30.06.2008 effective

20 Creation of Sustainable Tsetse and Trypanosomiasis Free Areas 08/12/04 19/05/05 30/12/05 6.55 0.24 6.79 0.33 4.9% 31/12/11 effective

8.44 1.58 0.19

21 Bujagali Hydro Power Project 29/06/07 non 21/12/2007 72.17 nill nil nil nil nil nil nil 72.17 nil nil n/a effective

22 Sheraton Kampala Hotel 18/09/02 20/11/2002 06/05/03 6.02 6.02 6.02 100.00 31/12/03 fully disbursed

78.19 6.02 7.70

522.64 162.30 31.05

E. MULTI SECTOR

GRAND TOTAL INCLUDING MULTI NATIONAL AND PRIVATE SECTOR PROJECTS

H. PRIVATE SECTOR OPERATION

F. MULTI NATIONAL PROJECT

Multi Sector - Sub total

F. INDUSTRY

Industry - Sub total

GRAND TOTAL FOR PUBLIC SECTOR OPERATIONS

Multi National Projects- Subtotal

Private Sector Operation - subtotal

G. ENERGY

17

Appendix III: Key related projects financed by the Bank and other development partners in Uganda PROJECT NAME COVERAGE SOURCE%

FUNDS AMOUNT (millions)

STARTING ENDING PLANNED OUTPUTS

A. DISTRICT ROADS 1.District Roads Regravelling Project (Northern Roads Corridor) (STABEX)

District of Toronto, Bigiri, Jinja, Mukono, Wakiso, Mpigi, Masaka

EU EUR11.4 July 2003 Dec 2007 1315km Rehabilitation;3000km Maintenance

2. DANIDA RSPS-2 District Roads Component.

15 Districts Of North and North Eastern Uganda

DANIDA DKK 120 June 2003 Dec 2007 700km Rehabilitated; 3000kmMaintenance

3. Area Based Agricultural Modernization Programme (AAMP)

13 Districts of Western and Southern Western Uganda

ADB US$ 13.6 June 2004 June 2008 1100km Rehabilitated

4. Northwest Smallholder Agricultural Development Project (NSADP)

Adjumani, Moyo,Yumbe, Nebbi, Arua, Koboko and Maracha and Terego Districts

ADB UA 17.6 2000 Dec 2008 205km Constructed

5. District Roads Maintenance (PAF) All Districts GOU UGX 18,000 1999 Continuous Routine Maintenance of 1800km 6. Roads All Uganda EU EUR15 2008 2011 7. Community Agricultural Infrastructure Improvement Project1 (CAIIP-1)

26 District In Central and Eastern Uganda ADB UA30 July 2007 2012 Rehabilitation of 390km and Maintenance of 587km of District roads

B. COMMUNITY ACCESS ROADS 1. DANIDA RSP2 Community Access Roads Component

Mbale, Sironko, Kapchorwa, and Lira, Kumi, Soroti

DANIDA US$4.0 2003 Dec 2007 400km Rehabilitated

2. Area Based Modernization Programme (AAMP)

13 Districts of western and South Western Uganda

IFAD US$2.3 June 2004 December 2010

1438km Routine Manual Maintenance / Rehabilitation

3. Northwest Smallholder Agricultural Development Project (NSADP)

Adjumani, Moyo,Yumbe, Nebbi, Arua, Koboko and Maracha and Terego Districts

ADB UA 17.6 2000 Dec 2008 1600km Routine Manual Maintenance / Rehabilitation

4. Northern Uganda Social Action Fund(NUSAF)

Northern and North Eastern Uganda IDA US$2.3 2004 2008 410km

5. Local Government Development Programme (LGDP)

In Most Districts of the Country IDA US$1.4 2000 Continuing 250km Rehabilitated so far.

6. Community Agricultural Infrastructure Improvement Project1 (CAIIP-1)

26 District In Central and Eastern Uganda ADB UA30 July 2007 2012 Rehabilitation of 3510Km and Maintenance of 5267km of Community Access Roads (CAR)

C. MARKETS 1. North West Agricultural Sector Development Programme(NWASDP)

North West Uganda ADB Part of B.3 above

May 2001 2008 22 Markets; 200km access road Rehabilitation;340km of Maintenance

2. District Development Support Programme 5 Districts in Western Uganda IFAD US20.6 Dec. 2001 Dec. 2006 Agricultural extension services and physical infrastructure

3. Community Agricultural Infrastructure Improvement Project1 (CAIIP-1)

26 District In Central and Eastern Uganda ADB UA30 July 2007 2012 Construction of 78 functional markets in 78 sub-counties within 26 districts.

D. ENERGY 1. Energy for Rural Transformation Project (ERT)

All Uganda WB US$123 2007 2008 Facilitates investments in commercially oriented rural electrification projects

2. Energy All Uganda EU EUR10 2008 2011

18

Appendix IV. Map of the Project Area

Community Agricultural Infrastructure Improvement Programme (CAIIP)

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Apa c

Hoim a

Masi ndi

Bug ir i

Pade r

Lira

MorotoAm uru

Kitg um

Muk ono

Legend

CAIIP-1 Districts: CAIIP-2 Districts

This map has been drawn by the African Development Bank Group exclusively for the use of the readers of the report to which it is attached. The names used and the borders shown do not imply on the part of the Bank and its members any judgement concerning the legal status of a territory nor any approval or acceptance of these borders.

N

EW

S

Not to Scale

19

Appendix IV (a). Number of Districts and Sub-counties to be covered under CAIIP-II (Northern and Eastern Districts)

District Total No. of Sub-counties in the District

No. of sub-counties at 35% coverage

AMOLATAR 4 3 AMURIA 9 3 BUKEDEA 5 3 DOKOLO 5 3 JINJA 11 4 GULU 14 5 KABERAMAIDO 9 3 KATAKWI 9 3 AMURU 8 3 KITGUM 19 7 KUMI 11 4 LIRA 19 7 PADER 18 6 SOROTI 17 6 WAKISO 17 6 TOTAL 175 65

20

Appendix IV (b). Districts and Additional Sub-counties in CAIIP-I Districts to be covered under CAIIP-II (Central and Eastern Districts)

District Total No. of Sub-counties in the District

Initial No. of CAIIP-1 Sub-counties

Additional Sub-counties at 35% Coverage

Total

BUDAKA 6 3 0 3BUDUDA 7 3 0 3BUKWA 5 3 0 3BUTALEJA 7 3 0 3IGANGA 19 3 3 6KALIRO 5 3 0 3KAMULI 18 3 2 5KAPCHORWA 12 3 1 4KAYUNGA 9 3 0 3KIBAALE 19 3 3 6KIBOGA 13 3 1 4LYANTONDE 6 3 0 3MANAFWA 10 3 0 3MASAKA 23 3 3 6MBALE 14 3 1 4MITYANA 9 3 0 3MPIGI 17 3 2 5MUBENDE 11 3 0 3MUKONO 28 3 5 8NAKASONGOLA 9 3 0 3NAMUTUMBA 6 3 0 3PALLISA 21 3 3 6RAKAI 20 3 3 6SIRONKO 19 3 3 6SSEMBABULE 7 3 0 3TORORO 17 3 2 5TOTAL 337 78 32 110