I must have missed the original article.  Sorry!
  FN   Lugemwa

musamize <[EMAIL PROTECTED]> wrote:
Mr. Lugemwa,
This report was referenced by the article below:
World Bank may cut aid


By Paul Busharizi

A World Bank-commissioned study has recommended aid cuts to Uganda over the next three years, warning that recent political developments have jeopardised the country’s development agenda.

A team headed by Prof. Joel Barkan of the University of Iowa, Senior Consultant on Africa Governance for the World Bank, visited Uganda last year before preparing the report entitled “The Political Economy of Uganda - The Art of Managing a Donor-Financed Neo-Patrimonial State”.

“Extreme prudence is required,” the confidential report says, adding, “we regret that we cannot be more positive about the present political situation in Uganda, especially given the country’s admirable record through the late 1990s.”

The report recommends that, “The Bank should plan for the possibility of a “low case” lending program in Uganda during the period of the forthcoming Country Assistance Strateg y (CAS). Second, the Bank and other donors must rethink the appropriateness of continued budget support, and especially, the appropriateness of increasing budget support”.

“Low case” would mean reducing aid to a bare minimum, which in Uganda’s case would limit it to humanitarian issues.

The reports adds, “Since the Bank cannot weight in explicitly on Uganda’s political process, this is the only mechanism at its disposal to signal its concern. Conversely, the continued provision of high levels of budget support, especially when such support can be diverted into classified budgets and used for political purposes, indirectly involves the Bank in the political process”.

“To continue budgetary support at present levels risks embarrassment to the Bank, especially after it has been warned, not only by this report, but in what is common knowledge and discourse among leading members of the diplomatic community in Kampala,” the report says.

The report recomme nds a m ove back to closely-monitored project lending in the ongoing three-year aid programme up to 2008 although government has been urging donors to shift further to budget support, where the government decides how to allocate funds.

The 74-page report commissioned to establish the risk to World Bank lending programmes in Uganda agreed that the government had been able to establish a legitimate and effective government, restore the economy and involve the major tribes in a one political system.
However, it stated that “Progress has stalled and to some extent—particularly in the north—unraveled.

The Government has largely failed to integrate the country’s diverse peoples into a single political process that is viable over the long term…. Perhaps most significant, the political trend-lines, as a result of the President’s apparent determination to press for a third term, point downward.”

The study found that, “Museveni’s bid for a third term has split the Movement…rais ed the prospect for political violence…and significantly increased the impetus for corruption as the campaigns to change the constitution and reelect the President will require large sums of money.”

It goes on to warn that “with elections not due until March and June 2006, the next two years are likely to be years of increasing political conflict. Whether Uganda will be able to manage this heightened level of conflict is difficult to predict.”

The report concludes its findings by warning that the uncertainty surrounding the political transition, the war in the north and the growing corruption mean “Uganda is facing a period of rising political uncertainty.”

World Bank country representative Grace Yabroudy was unavailable to comment on the report.

The joint authors of the report with Barkan were Jack Titsworth, Africa Governance Consultant for the World Bank, Prof Njuguna Ng’ethe of the University of Nairobi and Saillie Kayunga, a pol itical science lectur er at Makerere University.

New Vision: Tuesday, 17th May, 2005

Lugemwa FN <[EMAIL PROTECTED]> wrote:

From: Jonathan Chadiha <[EMAIL PROTECTED]>
Date: Thu, 28 Jul 2005 09:04:44 -0700 (PDT)
Subject: [UNAANET] Have you guys seen this document? JC



Joel D. Barkan (Team Leader)
Professor of Political Science, University of Iowa
Senior Consultant on Governance, Africa Region, The
World Bank

Saillie Simba Kayunga
Senior Lecturer of Political Science
Makerere University

Njuguna Ng’ethe
Associate Professor of Political Science and
Former Director of the Institute for Development
University of Nairobi

Jack Titsworth
Governance Consultant, Africa Region, The World Bank
Dar es Salaam

*Final draft of
July 6, 2004

*A background paper commissioned by the World Bank in
fulfillment of Purchase
Order 7614742.

Executive Summary

This study examines Uganda’s political economy and
assesses the level of risk it poses for the World
Bank’s lending program in that country. As such, the
study is both a description and an assessment of the
broader context within which the World Bank country
team conducts its work, and the constraints this
presents to those responsible for the policy
framework, design and management of the Bank’s country
program. The country team is in the process of
developing the CAS for the period 2005 through 2008.
It is a strategy developed in consultation with other
major donors, and is intended to support the Uganda
government’s Poverty Eradication Action Plan or PEAP.
It is also a strategy that contemplates the continued
shift by the Bank and some other donors (e.g. DFID)
from project and program support to direct support of
the Uganda budget. Our terms of reference therefore
specified that we assess the implications of Uganda’s
evolving political economy for the implementation of
the PEAP, and for the approach of increasing budgetary
support. Our approach has been guided by these

While Uganda’s political economy forms the context of
the Bank’s work, it is important to understand the
historical and sociological basis of the country’s
political economy to appreciate how the present
situation evolved into what it is today, and where it
is likely to go over the duration of the CAS. We
therefore begin this discussion with a brief overview
of Ugandan society, including its ethnic composition
and uneven pattern of economic development. The
Ugandan state, and Ugandan society were the products
of British colonial rule. The result was a n agrarian
society with an unstable federal structure of
government at the time Uganda became independent in
1962. At the risk of oversimplification, the southern
half of the country, particularly the large area of
the former Kingdom of Buganda that surrounds Kampala,
was relatively prosperous economically, while the
North was not. This division was exacerbated by the
fact that the peoples of the North are culturally
different and speak different types of languages than
the peoples of the South. Not surprisingly, this
cultural and economic division gave rise to political
divisions between North and South that persist to this
day, and which shape contemporary politics.

The result was more than two decades of political
turmoil and civil war following Uganda’s independence
in 1962. During this period, the country was governed
by a series of regimes, both civilian and military
that were headed—with two short-term exceptions—by
leaders from the North. The two principal leaders,
Milton Obote (who headed the government from 1962 to
1971 and again from 1981 to 1986) and Idi Amin (1971
to 1979) reduced the country to a semi-failed state
with a subsistence economy. In the process an
estimated 300,000 to 600,000 Ugandans were killed, and
the country traumatized.

Uganda began a sustained period of economic and
political renewal with the coming to power of the
National Resistance Movement (NRM) in 1986. The
Movement government, headed by Yoweri Museveni faced
three immediate challenges upon assuming power:
First, the establishment of legitimate and effective
government (i.e. the reconstruction of the state
bureaucracy). Second, the restoration of the economy.
Third, the integration and reintegration of Uganda’s
principal ethnic groups into a single political
system. There would, in addition to these three
immediate challenges, late r be a fourth—the
establishment of a legitimate, enduring and stable
political process via which all groups, regardless of
region or ethnicity, would have a meaningful stake and
be able to contest for power in the new system.

During its first decade in power, the Movement
government largely met the first three of these
challenges except in the North where it was confronted
by a millenarian rebellion, the Lord’s Resistance Army
(LRA) that engulfed the Acholi-speaking areas of the
region. By 1988 the government had established a
sound working relationship with the Bank and the IMF,
as well as the rest of the donor community as a result
of its commitment to prudent macro-economic policies,
and the overall liberalization of the economy. Except
in selected regions, human rights abuses and the use
of violence to maintain power—two hallmarks of
previous regimes—had largely ceased. Political space
was opened up, although President M useveni and other
leaders of the Movement explicitly rejected the
proposition that Uganda should embrace multiparty
politics. Political parties were allowed to function
though on a highly circumscribed basis (i.e. they
could function as organizations, but were not
permitted to nominate candidates and campaign for
their election). Civil society organizations,
including advocacy organizations, were also allowed to
operate. A small, but free press emerged that was
often aggressive in monitoring government performance.
The government also transformed the National
Resistance Army that had brought the NRM to power into
a smaller force, the Uganda People’s Defence Force
(UPDF). Lastly the government began to reform the
public service.

The donor community responded to these developments by
treating Uganda as a celebrated “success story” on a
continent of few successes. Donor support grew to the
point that ODA now provides 52 perce nt of the annual
budget, an unusually high level compared to most other
aid recipients. The private sector, both domestic and
foreign also began to invest in Uganda. Between 1986
and 1996 the annual rate of growth averaged about 6.8
percent—a dramatic increase over the previous twenty
years. These achievements were crowned in 1995 and
1996 by the promulgation of a new constitution, and
fairly competitive elections for President and
Parliament. Although all candidates ran on an
individual basis, i.e. without party affiliation or
support, the 1996 elections were widely regarded as
“free and fair.” After ten years in power, Museveni
won his first elected term in office by a margin of
3:1 over his nearest opponent.

The promulgation of the 1995 constitution and the 1996
elections marked the “high watermark” of the Museveni
regime. The term “Museveni regime” is used purposely,
because a fundamental characteristic of Uganda’s
political system was, and remains, that President
Museveni is the Movement and the Movement is Museveni.
Political and administrative institutions established
for the purpose of achieving horizontal and vertical
accountability are weak except for the judiciary, and,
to a lesser extent, Parliament. Most fundamentally,
the Government of Uganda is a regime of personal or
“neo-patrimonial” rule—a political system dominated by
one individual who maintains his authority through a
combination of patronage and the selected use of
intimidation, and force. Once touted as one of the
“new leaders of Africa,” the President, over the last
eight years, has increasingly resembled the old.
During the same period, the Movement, which in theory
includes all Ugandans, has increasingly resembled the
single party systems that governed Africa from the
late 1960s to the early 1990s.

A principal feature of the old one party state, and
the Museveni regime is that it depends increasingly on
the distribution of patronage and prebends to operate
and survive. That is to say, it is a regime that
rests on a series of clientelist networks that link
the government to the rural areas, and which are
maintained through the distribution of offices and
income to its supporters. This in turn explains the
perceptions of rising corruption in Uganda, and the
apparent inability or unwillingness of the government
to bring corruption under control. Viewed from this
perspective, corruption is fundamentally a political
phenomenon (not merely a criminal phenomenon), a
mechanism for regime maintenance. Opportunities for
corruption ranging from petty rent-seeking to
multi-million dollar scams, are dispensed to loyal
followers of the regime. These include several close
associates and family members of the President
including his brother and son as detailed in the main
sec tion of the report. In the process,
accountability, transparency and the rule of law are
undermined along with, eventually, the effectiveness
of the public service including service delivery. The
government procurement process is also undermined, as
are its procedures for revenue collection.

A key political institution in Uganda is the national
army, the UPDF. The Movement government assumed power
through the military defeat of the prior government,
and the army has been an important power base for
President Museveni ever since. It is therefore not
surprising that the military has been at the center of
several of the biggest corruption scandals that have
come to public attention in recent years. These
include missing payrolls paid to non-existent
soldiers, popularly known as “ghost soldiers,” several
procurement scandals, and the looting and re-export of
gold and other minerals from the Congo—all of which
have been the subjec ts of government commissions of
inquiry that confirmed these allegations of
wrongdoing. In the process, the loyalty of the army,
particularly senior commanders, has been assured.
Nevertheless, over the past two years the President
has authorized the transformation and enlargement of
his personal security unit into the Presidential Guard
Brigade, a praetorian guard of an estimated 7,000 men.
Its primary purpose is to keep President Museveni and
his entourage in power, not national defense. During
this period, the government also conducted a Defence
Review for the purpose of justifying increased
military expenditures to meet its perceived military
threats and escape from a prior agreement with the
donor community to hold defense spending at 2 percent
of GDP. While the Review process has been supported
by the donor community, most notably by the United
Kingdom, it is increasingly clear that implementation
of the report’s recommen dations may have profound
political and economic implications as well as
military ones. On one level, increased military
spending is already beginning to crowd out
expenditures on poverty alleviation and public service
reform. At another, the enlargement, and likely
further enlargement of the defense budget—most of
which is classified—will continue the funding of
accounts whose audit results (to the extent that they
are audited at all) are not made public. Put
differently, the Defence Review will permit the
financing of opaquely administered accounts—in essence
“slush funds”—that can be tapped for political
purposes, in addition to military ones, as the needs
arise. Moreover, the creation of such accounts will
be indirectly, though unintentionally, donor financed.
To the extent that the Bank and other donors shift an
ever greater proportion of their lending portfolios
from project to budget support, the fact that money is
fung ible means that the donors risk financing the
increase of the military budget without any control
over how such monies are spent. The Bank may also
become indirectly involved in the political process
notwithstanding the fact that this is beyond its

Against this backdrop, this report considers three
interrelated issues that dominate Ugandan politics and
will continue to shape the political fortunes of the
country through the duration of the forthcoming CAS :
(1) “The Transition”, (2) the war in the North, (3)
continued and rising corruption that correlates with a
slowdown in the annual rate of economic growth.

President Museveni was elected to his first elected
term in 1996. He was reelected by a slightly smaller
margin in 2001 in an election that was very different
from its predecessor. In 2001, the President was
challenged by a former close associate in the
Movement, Dr. Kizza Besigye. The resulting campaign& lt; BR>in the run-up to the election revealed the extent to
which the regime would go to retain power. Besigye
and his staff were harassed and intimidated by local
authorities and the police. His campaign meetings
were often broken up by thugs. In marked contrast
with 1996, the 2001 elections were not regarded by
domestic and international observers as “free and
fair,” though it is likely that Museveni would have
won without resorting to such tactics. Besigye
himself was temporarily detained following the
elections and eventually fled the country.

Having won the 2001 election, President Museveni was
supposed to commence his second and last term.
Article 105(2) of Uganda’s constitution limits any one
individual to two elected presidential terms of five
years each, and many of Museveni’s closest supporters
in the Movement supported his reelection on the
grounds that his present term would be his last.
However, since Ma rch 2003 the President has made it
clear that he strongly supports the repeal of Article
105(2) so that he can stand for a third term, perhaps
more. The President is also prepared to support a
second amendment that he has previously rejected, one
that will change Uganda’s system of government from
the present Movement system to a multiparty political
system, i.e. a system that permits competition between
two or more parties and their candidates for elected
office. The complexities for repealing Article 105(2)
and changing the political system are discussed in the
main body of the report. In essence, the President is
offering to accept what has become the international
standard of multiparty politics in return for the
lifting of term limits. This is not, however, the
acceptance of the defining principle of democracy—the
genuine possibility of alternating governments via the
electoral process, but a strategy for remaining in
power a t an y cost.

Museveni’s bid for a third term has split the
Movement, and resulted in the departure of several key
ministers from his government. It has also raised the
prospect for political violence, as those opposed to
the third term confront the President and his loyal
followers. It has also significantly increased the
impetus for corruption as the campaigns to change the
constitution and reelect the President will require
large sums of money.* With elections not due until
March and June 2006, the next two years are likely to
be years of increasing political conflict. Whether
Uganda will be able to manage this heightened level of
conflict is difficult to predict.

The war in the North compounds the potential for
political instability. As discussed in the main body
of the report, the war between the government and the
Lord’s Resistance Army has intensified in recent years
with limited prospects for either a military victory
by the UPDF or a negotiated settlement. Twelve
districts have been affected and between 1.2 and 1.5
million people left homeless. The war has exacerbated
the historical political and economic division between
northern and southern Uganda. More than 60 percent of
the population in the North now live in poverty, and
there is little prospect for economic development or
poverty alleviation in the areas torn by the conflict.
The war, however, has facilitated corruption in the
army, i.e. several key commanders have profited from
the conflict.

Corruption is the third issue that dominates Ugandan
politics and is closely intertwined with the other
two. In addition to discussing why corruption is in
many ways driven by politics, we provide a detailed
discussion of why institutions charged with the
control of corruption are having a difficult time
fulfilling their mandate.

In summary, the achievements of the first decade of
the Museveni regime have been steadily eroded since
the 1996 elections and especially since the elections
of 2001. Moreover, the trend lines for further
erosion are clear: So long as President Museveni
presses on for a third term in office and fails to
bring peace to the North—whether through military
victory as he has long promised, or though a
negotiated settlement—the prospects for political
uncertainty, instability, and violence will remain
high. Indeed, they are likely to rise.

Given this situation, the prospects for the
successful implementation of the next phase of the
PEAP are certainly lower today than two years ago, and
are likely to decline further if current political
conditions persist. Although Uganda has maintained
and will probably continue to maintain its record of
prudent macro-economic policy, the non-macro political
requisites for development, i.e. the governance
requisites, are in decline. E conomic growth
continues to be high. GDP growth in 2002-2003 was 4.9
percent, but largely confined to the southern half of
the country. At the same time, evidence from the
2002-2003 household survey shows a reversal in the
trend of sustained poverty reduction enjoyed in the
previous decade. Indeed, the percentage of Ugandans
now living in poverty has risen from 35 to 38 percent.
Perhaps most important, the President and his
remaining associates have failed to meet the fourth
challenge, the establishment of an enduring set of
political institutions that embraces all Ugandans.

In light of these findings, the Bank’s country team
needs to consider the possibility of a “low case”
lending program in Uganda. It also needs to rethink
the way it approaches budget support, and especially
it needs to rethink the desirability of increasing
budget support. The risks of such a strategy are much
higher today than previously, and likely to increase.
It would therefore be prudent for the CAS to provide
for other options than this form of assistance between
now and 2008.

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