Reduced World Bank funding puts UGIFT plans under pressure

KAMPALA. The government has been urged to prioritise critical public service investments under a new 10-year local government financing programme after confirmed World Bank funding fell by nearly half compared with its predecessor.

The second Uganda Intergovernmental Fiscal Transfers Programme (UGIFT 2.0) has secured $270 million (about Shs960 billion) from the World Bank financing window, down from $500 million (about Shs1.78 trillion) provided under the original programme.

The funding gap is forcing officials to reconsider proposed investments and focus resources on the most urgent service delivery needs, including ensuring that public facilities are adequately staffed, maintained and funded to operate.

Mr Joseph Majanga, the Assistant Commissioner for Fiscal Decentralisation in the Ministry of Finance, Planning and Economic Development, said the government must align programme priorities with available resources to ensure effective and sustainable implementation.

“The financing gap underscores the need to prioritise interventions and concentrate resources on the most critical service delivery needs,” Mr Majanga said.

He was speaking on behalf of the Acting Director of Budget following a three-day technical design review workshop held at Mt Elgon Hotel in Mbale from October 14 to 16.

The workshop brought together officials from the Finance ministry, the World Bank and government ministries, departments and agencies to harmonise the programme design, identify priority reforms and investments, and refine financing arrangements.

Mr Majanga said the proposed contribution by the government remained tentative, pending endorsement by the ministry’s top management.

This leaves the programme’s overall financing arrangements subject to further discussions as officials work to develop an affordable investment plan within the confirmed funding envelope.

A key concern during the review was how to ensure that investments in public infrastructure translate into improved services rather than leaving local governments with facilities they cannot adequately operate or maintain.

Participants emphasised the need to complement infrastructure development with adequate staffing, operational funding and maintenance provisions to keep facilities functional and deliver lasting benefits.

The discussions also examined how proposed investments and reforms could be sequenced in line with the government’s medium-term fiscal framework while promoting value for money and financial sustainability.

UGIFT 2.0 is being designed as a 10-year programme under the World Bank’s Multiphase Programmatic Approach. It will be implemented in three phases, with the first lasting four years and the subsequent two phases running for three years each.

The phased approach is intended to allow the government to implement reforms, scale up priority investments and sustain improvements in public service delivery over the programme period.

The successor programme builds on UGIFT 1.0, with the stated aim of improving the adequacy, equity, efficiency and effectiveness of transfers from central government to local governments.

It is also expected to address persistent gaps in service delivery while strengthening accountability, institutional performance and coordination between central and local governments.

The reduced financing envelope, however, means officials must make difficult choices about which interventions receive priority during the initial phase.

The workshop’s outcomes will inform further technical consultations and the refinement of the programme’s Medium-Term Plan, including the selection of priority interventions and preliminary financing arrangements for the first phase.

The government is seeking to ensure that fiscal decentralisation translates into tangible improvements in the accessibility and quality of essential public services across the country, despite the lower confirmed World Bank financing.

The final programme design will determine how available resources are distributed among priority sectors and the extent to which additional government funding can help bridge the financing gap.