independent evaluation fy 2017/18...
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INDEPENDENT EVALUATION FY 2017/18 PROGRAMME-BASED BUDGETING
Evaluation REpoRt: SEptEmbER - octobER 2017
Connecting the dots in public expenditure and transformed citizens lives.An Evaluation of the Governed of Uganda Program Based Budgeting
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The Evaluation of the Governed of Uganda Program Based Budgeting was produced by the CSOs under their umbrella Civil Society Budget Advocacy Group (CSBAG) in close collaboration with the Ministry of Finance, Planning and Ecnomic Developemnt’s Diectorate fo Budget with support from Democratic Governance Facility,. The contents of this publication are the responsibility of CSBAG and not of our development partners.
© November 2017
Civil Society Budget Advocacy Group (CSBAG)
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Plot 11 Vubyabireng Close, Ntinda Nakawa Rd
Fixed Line: +256-755-202-154
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All rights reserved. No part of this publication may be reproduced, or reprinted in any form by any means without the prior permission of the copyright holder. CSBAG encourages its use and will be happy if excerpts are copied and used. When doing so, however please acknowledge CSBAG
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CONTENTSFOREwORD ....................................................................................................................................V
ABBREVIATIONS ................................................................................................................................... vi
EXECUTIVE SUMMARY ......................................................................................................................... ix
1: INTRODUCTION ....................................................................................................................................1
1.1 Background 1
1.2: Rationale for the Evaluation ............................................................................................................. 1
1.3: Methodology of the Evaluation ........................................................................................................2
2: PERCEPTIONS ON MIGRATION FROM OOB TO PBB ................................................................. 5
2.1: Conceptual Framework for PBB .....................................................................................................5
2.2: Lack of Shared Understanding of PBB ...........................................................................................5
2.3: Low Level of Preparedness for FY 2017/18 PBB ........................................................................... 7
2.4: Global Experience and Implication for the Second PBB Pilot .......................................................9
3: A REVIEw OF THE 2017/18 PROGRAMME-BASED BUDGET .................................................. 10
3.1: Programme-Based Budget Structure .......................................................................................... 10
3.2: Alignment of PBB Structure with Organizational Structure ....................................................... 12
3.3: Alignment of Programmes to NDP II Priorities ............................................................................ 14
3.4: Compliance with the PBB Steps in the 2017/18 Budget process ............................................... 16
3.5: Costing of Outcomes and Outputs ............................................................................................... 17
3.6: Quality and Relevance of Performance Information ................................................................... 18
4: Access and Use of Programme Budgeting System ..................................................................21
4.1: Overall Assessment ....................................................................................................................... 21
4.2: Current Status and Emerging Issues ............................................................................................ 21
4.2.1 Assessment by Functionality of the System ................................................................................ 21
4.2.2: Support the Work Flow and Decision-making.....................................................................22
4.2.3: Simplicity and Ease of Use ...................................................................................................23
4.2.4: System Performance and Reliability ...................................................................................24
4.2.5: Information Quality and Use ................................................................................................25
4.3: Recommendations .........................................................................................................................26
5: STRENGTHENING THE ENABLING ENVIRONMENT ................................................................28
5.1: Scope of Enabling Environment ....................................................................................................28
5.2: Credibility of the Annual Budget and MTEF .................................................................................28
5.3: Performance Enhancement Practices .........................................................................................33
5.4: Performance Monitoring and Reporting .......................................................................................34
5.5: Recommendations .........................................................................................................................36
6: PRIORITY ACTIONS FOR SECOND-YEAR IMPLEMENTATION AND BEYOND ...................... 37
7: REFERENCES ................................................................................................................................39
8: ANNEXES .................................................................................................................................. 41
Annex 8.1: List of Officials Interviewed ...................................................................................................... 41
Annex 8.2: Differences between the conceptual framework for OOB and PBB................................ 43
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liSt oF TABLESTable 3.1: Definition of Strategic Objectives within 2017/18 PBB Structure ............................................................ 11
Table 3.2: Select Key Planning and Budgeting Instruments by October 2017 .......................................................... 14
Table 3.3: Quality and Relevance of Performance Information (based on sampled programmes)… ..................... 18
Table 5. 1: A Comparative overview of performance agreement and annual budget performance contract ........ 32
Table 5.2: A Comparative Overview of Performance Agreement and Annual Budget Performance Contract
FY 2015/16 .................................................................................................................................................... 34
liSt oF FIGURESFigure 3. 1: The PBB framework ..................................................................................................................................10
Figure 3. 2: Alignment of PBB Structure and Organizational Structure: A Case of MAAIF ....................................12
Figure 3. 3: Misalignment of PBB Structure and Organizational Structure: A Case of UNRA………………… ..........13
Figure 3. 4: An Overview of Existing Performance Indicator Frameworks ..............................................................18
Figure 4. 1: Perception on access and use of PBS in selected MDAs ......................................................................20
Figure 4. 2: Respondents Views on Support to Key PBB Functions ........................................................................21
Figure 4. 3: Respondents views on support to decision making ............................................................................. 22
Figure 4. 4: Respondents views on simplicity and ease of use ................................................................................. 23
Figure 4. 5: Respondents views on system performance and reliability ................................................................. 24
Figure 4. 6: Respondents views on the information quality and use ........................................................................ 24
Figure 5. 1: Deviations between GoU Budget Estimates and Outturns over 2006/7-2016/17…………... .............. 28
Figure 5. 2: Deviations between GoU Expenditure Ceilings, Final Budget Estimates and Outturns……….. ........30
liSt oF BOXESBox 1. 1: Design of the Criteria for Sampling of MDAs ........................................................................................... 4
Box 2. 1: Conceptual Framework for PBB ............................................................................................................... 7
Box 2. 2: Preparation for Launch of the 1st PBB Pilot-for FY 2017/18 .................................................................. 8
Box 2. 3: Global Lessons for Low Capacity Countries on Adoption of PBB ......................................................... 9
Box3. 1: PBB Steps in the Annual Budget process..............................................................................................16
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abbREviationSAFE AFRITAC East
APA Annual Performance Agreement
APBC Annual Budget Performance Contract
BFP Budget Framework Paper
BMAU Budget Monitoring and Accountability Unit
BPED Budget Policy and Evaluation Department
CSBAG Civil Society Budget Advocacy Group
EFMP Economic and Financial Management Programme
FINMAP Financial Management Programme
GoU Government of Uganda
IFMS Integrated Financial Management System
IT Information Technology
KPIs Key Performance Indicators
LGs Local Governments
MAAIF Ministry of Agriculture, Animal Industry and Fisheries
MDA Ministries, Departments and Agencies
MFPED Ministry of Finance, Planning and Economic Development
MOES Ministry of Education and Sports
MOH Ministry of Health
MPS Ministry of Public Service
MPS Ministerial Policy Statement
MTEF Medium-Term Expenditure Framework
MTFF Medium-Term macro-Fiscal Framework
NBFP National Budget Framework Paper
NDP National Development Plan
NITAU National Information Technology Authority of Uganda
NPA National Planning Authority
NSIs National Standards Indicators
OBB Output-Based Budgeting
OBT Output Budgeting Tool
OOB Output-Oriented Budgeting
OPM Office of the Prime Minister
PBB Programme-Based Budgeting
PBO Parliamentary Budget Office
PBS Programme Budgeting System
PEFA Public Expenditure and Financial Accountability
PEMCOM Public Expenditure Management Committee
PI Performance Indicators
PFM Public Financial Management
PFMA Public Financial Management Act
PPDA Public Procurement and Disposal of Public Assets Authority
SST System Support Team
SwG Sector Working Group
UBOS Uganda Bureau of Statistics
UNRA Uganda National Roads Authority
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FoREwoRd
As part of the reforms, MFPED switched from the use of Output Based Budgeting (OBB) to Performance Based Budgeting (PBB) in FY 2016/17. This switch was launched among central government Ministries, Departments and Agencies (MDAs) in FY 2016/17 and later rolled out to local governments in FY 2017/18. The switch from OBB to PBB was majorly to provide a systematic mechanism of using performance information to; link spending to programmed outcomes and the Second National Development Plan (NDP II) priorities; influence budget execution or spending decisions; and, support monitoring and evaluation of budget performance on targeted NDPII outcomes.
In order to ensure a smooth transition from OBB to PBB, the MFPED undertook a training of all MDA heads and accounting officers to familiarize them with the programme and how it will be used. However, since its launch, a number of challenges have been unfolding as expressed by the users, regarding the technicality of the system.
The Civil Society Budget Advocacy Group (CSBAG) has had a positive relationship with MFPED, advising on the budgeting and planning processes. Based on this, CSBAG partnered with the Ministry to undertake an evaluation of PBB, based on its first year of roll-out. A sample was done in four MDAs; Ministry of Health, Ministry of Agriculture, Animal Industry and Fisheries, Uganda National Roads Authority and Ministry of Education and Sports. The results are hereby presented in this evaluation report.
I implore you all to appreciate government’s effort of switching from OBB to PBB to increase adherence to PFM norms and practices for development, but also appreciate that this is a lifelong process with endless lessons to learn. Let us embrace it and address the challenges as they unfold until PBB becomes a smooth operation for all MDAs at the national and local level.
Julius Mukunda
Executive Director
in an effort to achieve prudent public Financial management (pFm), the Government of uganda through the ministry of Finance, planning and Economic development (mFpEd) has had strategic reforms both in its policy and administrative operations to improve the planning and budgeting process for development. these reforms have ranged from the formulation and enactment of the public Finance management act, 2015 to the 2017 pFm reform strategy and simplification of reporting channels for accounting officers to the ministry.
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EXECUTIVE SummaRY
to prepare for the second pilot of pbb, mFpEd commissioned an independent Evaluation of the 2017/18 annual budget process and budget estimates to advise on measures required to foster smooth implementation of pbb within central Government. the Evaluation was funded and coordinated by the civil Society budget advocacy Group (cSbaG) in close collaboration with mFpEd. it was conducted in four sampled votes: uganda national Roads authority (unRa) and ministries of Education and Sports, agriculture, animal industry and Fisheries as well as Health. it adopted criteria to guide the assessment of the adoption of pbb and, in particular, identify the key prerequisites for successful implementation of the second pilot. the criteria focused on four main areas:
• Level of understanding and adoption of the PBB Approach;
• Access and Use of the Programme Budgeting System (PBS);
• Level of compliance of annual budget process and budget documentation with the acceptable PBB guidelines; and
• Status of prerequisites for successful implementation of PBB.
The first year of adoption of PBB in the four Votes registered satisfactory progress with specific achievements. There was a successful launch of the PBS supported by an adequate System Support Team in MFPED. Planners and budget focal point officers were trained to generate and publish PBB estimates and relevant documentation namely, Budget Framework Paper, Ministerial Policy Statements and Annual Budget Estimates for FY 2017/ 18. Notwithstanding, there were typical challenges, normally expected in a reform in its
infancy. The major challenges included, but were not limited to:
• Limited understanding of the scope and objective of reform with the appreciation skewed towards PBS (on-line computerized application);
• Low level of preparedness for the second pilot demonstrated by limited capacity within MFPED to spearhead the reform and inadequate capacity within the Votes to adopt the new budgeting approach;
• Limited access and use of PBS by Heads of Department who are supposed to be programme managers responsible for management and accounting for programme outcomes;
• Inadequate access to quality performance information and limited use of PI to influence prioritization and spending decisions;
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• An enabling environment – in form of budget credibility and a prudent results management culture -- is missing; which provided a weak foundation for successful implementation of the reform.
PBB is a fundamental change in the way public administration is planned, budgeted, managed and controlled; and hence would, by necessity, affect virtually all aspects of public financial management administration. Many countries have had a reform agenda of over 15 or so years before mastering the use of performance information in budgeting. Therefore, the introduction of programme budgeting has to be accepted as a long-term initiative that requires a well-structured and sequenced reform strategy, including putting in place the key prerequisites.
Moving forward, there is urgent need to put in the necessary preconditions to allow a smooth transition from the previous Output-Oriented Budgeting (OOB) to PBB. The preconditions include: (i) shared understanding of the reform including its objectives among policy makers and technocrats; (ii) capacity built within MFPED to spearhead the reform and MDAs to adopt PBB; (iii) enhanced budget credibility to support formulation and execution of reliable programme estimates; and (iv) an enhanced performance management culture within the public service to anchor the responsibility and accountability for PBB.
Global lessons caution that the challenges and risks associated with implementing programme-based budgeting can only be mitigated by adopting a progressive approach to PBB that could be undertaken as follows:
• The first phase should seek to strengthen the basic public finance management performance within Uganda focusing on development of quality performance information; enhancing the basic and credibility of budgeting; and institutional capacity building for PBB.
• The second phase should prioritize an enabling context with incentives for the introduction of the core PBB functions and enhancing results-oriented management within the public service.
• The third phase introduces the core PBB functions, such as direct link between resource allocation and results as well as appropriation by programmes over a medium term.
MFPED has to commit to enhance budget credibility and funding predictability required for sustained delivery of programme outcomes for the annual and medium-term horizon. MFPED is cognizant of the issues and should take requisite measures to increase the legitimacy of
expenditure allocations; ensure that once the allocations are decided upon, they can be executed effectively; and, demonstrate that the government is meeting its previously stated commitments; and if not, state reasons for any deviations.
The Programme Budgeting System (PBS) should not be perceived as a mere simple automation of budget preparation and execution. There are many challenges and risks involved that go far beyond mere technological risk of failure and functionality. In order to address the identified issues and potential challenges, MFPED would have to undertake three major interventions in a systematic manner. The first is to design and implement a clear change management and capacity building agenda. The second is to formulate and implement a structured and inclusive support programme to facilitate both introduction of major design changes and dealing with existing and potential issues. The third is to provide better management of system maintenance to ensure greater accountability for downtime periods and minimize the challenges for the end-users.
The deepening of the PBB reform will put considerable demand on the MFPED, Cabinet, oversight agencies and MDAs. As a priority, the evaluation recommends building capacity of: (i) Budget Directorate in MFPED to coordinate the reform which involves sensitization on the reform agenda, training and mentoring MDAs; (ii) oversight agencies including Ministry of Public Service, Offices of the Prime Minister and the Auditor General, and Parliament to enhance results-oriented management within public service; as well as performance accountability and oversight; and (iii) MDAs to rejuvenate the sector working groups required to generate reliable sector and programme outcomes; improve the costing methodologies for the construction of affordable multi-year expenditure estimates constrained with agreed fiscal and expenditure framework; and improve performance monitoring and reporting.
A successful PPB reform is dependent on availability and use of reliable, relevant and consistent performance information in the formulation of sector and programme outcomes and monitoring the progress towards the attainment of NDP II targets. Accordingly, concerted effort is required to harmonize the performance reporting frameworks, focusing on concepts and terminologies, baseline indicators and performance information. The evaluation team also underscores the need to promote an effective results-oriented management culture at central government level to anchor the responsibility and accountability for PBB.
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INTRODUCTION
1.1 Background
in the last two decades, uganda has been actively pursuing reforms to enhance the credibility of its annual and multi-year budgeting systems. in mid-1990s, the ministry of Finance, planning and Economic development (mFpEd) embarked on an ambitious public expenditure management programme reform agenda. the budget reform component aimed at introducing the following, among others: (i) a medium-term macro-fiscal framework (mtFF) in 1992/93 to promote macro-economic stability and fiscal discipline; (ii) medium-term expenditure framework (mtEF) in 1998/1999 to facilitate funding predictability aligned to national priorities and limited with agreed medium-term fiscal framework; (iii) a phased approach to adoption of output-based budgeting (oob) since early 2000s which was later supported by an output budgeting tool (obt) during the FY 2008/09 to FY 2016/17 period.
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However, the implementation of the OOB reform registered limited traction. The positive developments included: (i) concerted effort to identify and align priority outputs with national priorities; (ii) improved alignment of resource allocation for purpose of spending and expected outputs; (iii) transparency in the use of annual budget; and (iv) potential basis for budget performance monitoring, reporting and accountability. Notwithstanding the developments, the adoption of OOB/OBT did not deliver on its intended objectives as illustrated by the recent 2016 PEFA score and study on PFM system in Uganda. The major weaknesses included:
• PEFAscoreofa“D”onthecredibilityofthebudget;
• Weak linkbetweenexpectedoutputsandresourceallocations in most votes or sector;
• Overwhelming performance information whichwould not always influence the budgetary decisions;
• Lack of systematic monitoring of the impact ofpublic expenditure on targeted annual outputs; and
• Inabilitytosupportoversightandaccountabilityofpublic expenditure and its impact on public service delivery and development outcomes.
In FY 2017/18, GoU introduced a new reform: Programme-Based Budgeting (PBB) and produced the first set of programme-based budget estimates for central government in June 2017. The main thrust of the reform is to address the weaknesses in OOB and provide a systematic mechanism of using performance information to link spending to programme outcomes aligned with NDP11; influence budget execution or spending decisions; and, support monitoring and evaluation of budget performance.
1.2: Rationale for the EvaluationReflection on the first PBB pilot demonstrated a number of challenges which are, ideally, expected of any reform in its infancy. A snapshot analysis of the budget process and review of selected MDA Ministerial Policy Statements and Budgets for FY 2017/8 illustrated several weaknesses including inability to formulate reliable performance indicators and targets.
Accordingly, the Public Expenditure Management Committee (PEMCOM), chaired by MFPED, commissioned an independent study to examine the first pilot of PBB to identify the success stories and challenges or gaps that needed to be addressed to allow smooth implementation of PBB within Central Government, including the roll-out to Local Governments. The Independent Evaluation was funded and coordinated by Civil Society Budget Advocacy
Group (CSBAG) and executed by a team of three experts. The major tasks of the Independent Study included the following:
• determining critical preconditions required toensure a smooth transition from OBB to a credible PBB;
• assessing the functionality and configuration ofthe PBS and the extent to which it supported the formulation of an annual and medium-term budget for 2017/18 - 2019/20;
• advising on the budget reporting capabilitiesrequired to enhance monitoring and accountability of both financial and non-financial performance; and
• identifying areas of improvement in the budgetingprocess required to support a smooth and gradual implementation of PBB.
1.3: methodology of the EvaluationIn order to undertake the specific tasks, the evaluation team designed and submitted the scope of work in an Inception Report. The scope of work included the following:
• developmentofevaluationcriteriaforassessingtheextent to which the PBB was adopted in developing the FY 2017/18 budget;
• formulation of criteria of the sampling of foursectors or ministries that would be consulted during this exercise (Box 1.1);
• assessmentof theadoptionofPBB in fourCentralGovernment MDAs for FY 2017/18; and
• drafting an Evaluation Report to illustrateexperiences in adoption of the PBB focusing on the developing Ministerial Policy Statements and the FY 2017/18 Budget Estimates.
Design of the Criteria for the Evaluation of the PBB Adoption and Sampling of MDAs
The Evaluation Team defined the criteria to guide the assessment of the first pilot of the adoption of PBB as follows:
• Criterion 1: Understanding and Adoption of the PBB Approach to seek views and experiences of the Ministries in adopting the PBB; document the challenges encountered in the preparation of the FY 2017/18 Budget Estimates and Ministerial Policy Statements; and secure recommendations to support the gradual implementation of the PBB.
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• Criterion 2: Access and Use of the Programme Budgeting System to seek views and experience in the functionality and utilization of the PBS during preparation of the FY 2017/18 Budget Estimates and Budget documentation and secure recommendations for a smooth adoption of the Programme Budgeting System (PBS).
• Criterion 3: Checklist to help assess/review the extent to which performance information (PI), published in Government Budget documents, complied with the acceptable PBB standards. Specifically, the criterion helped to assess the following: (i) availability of performance information as required of PBB; and (ii) the usefulness of the PI in budget decision-making process.
• Criterion 4: Enabling environment and Oversight framework to seek views and experiences of the oversight bodies regarding the role of PBB within the existing performance management framework, state of readiness to foster PBB reform as well as solicit suggestions on the prerequisites for a successful implementation of PBB within the within the central government.
Consultations on 2017/18 PBB experience within the MinistriesThe consultancy team visited the four ministries categorized as spending agencies and administered the guidelines in criteria 1 and 2 to planning officers, budget focal point officers and heads of department, who would be mobilized either in one meeting and/or individually subject to their availability. The team also consulted relevant staff in the oversight agencies. The list of the officers consulted is attached as Annex 1. The consultations were conducted under a tight schedule (five days) and so the team was not able to administer
the questionnaires in a systematic manner as had been envisaged. Furthermore, many senior officials were not readily available because they had to attend local government budget consultations, held in the districts, which overlapped with the timing of the PBB consultations.
Report Writing and Validation of FindingsThe Evaluation Team undertook four main tasks: data and information gathering and analysis; presentation and dissemination of preliminary findings and recommendations; a validation meeting within MFPED; and, incorporation of comments from the validation meeting into the final draft Evaluation Report.
Outline of the ReportThis report is designed to assist the MFPED to appreciate the weaknesses exhibited during the first pilot of PBB and submit recommendations to support a smooth implementation of PBB. Therefore, the Report is laid out as follows.
• Chapter 2 captures the respondents’ views on the migration from OOB to PBB, focusing on the level of understanding of the PBB concept as well as level of preparedness to adopt the new reform.
• Chapter 3 examines the annual budget process and budget documents to assess the extent to which they complied with accepted PBB standards.
• Chapter 4 examines the access and use of PBS during the annual budget process and submits suggested improvements on areas to enhance its role in the budgetary decision-making process.
• Chapter 5 examines the status of critical preconditions for smooth implementation of PBB and advises on the required supportive public service reforms.
• Chapter 6 provides a prioritization and sequencing of action to support smooth implementation over the next three years.
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Box 1. 1: Design of the
Criteria for Sampling of MDAs
The sampling of the central government institutions was classified into two categories:
• oversight agencies with a significant role in providing strategic guidance for Government budgeting, planning, performance man-agement and accountability were subjected to criteria 4. the agen-cies included: office of the prime minister (opm), parliamentary budget office (pbo), office of the auditor General (oaG), national planning authority (npa), uganda bureau of Statistics (uboS) and the ministry of Finance, planning and Economic development (mFpEd).
Four spending institutions were subjected to Criteria 1 and 2 and sampled as follows:
• uganda national Roads authority (unRa) - as a high spending in-stitution in the priority area of infrastructure development.
• ministry of Health (moH)- has significant share of external funding of up to 15% of total
• ministry of agriculture, animal industry and Fisheries (maaiF) – as a low spending priority ministry with expenditures that would have a direct impact on the livelihood of the majority of the citizens within any fiscal year;
• ministry of Education and Sports (moES) - as a high spending pri-ority ministry, tasked with coordination of many programs that are executed by many agencies including local Governments (lGs).
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pERcEptionS on MIGRATION FROM OOB TO PBB
the chapter shares the respondents’ views on the ppb reform agenda and the state of readiness for the migration within the consulted spending and oversight agencies
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2.1: conceptual Framework for pbbIn fiscal year 2016/17, the GoU, through MFPED, embarked on the migration from OOB to programme budgeting to deal with problems inherent in implementing OOB which have been documented in the global experience. The challenges included the following:
• Budgetsfocusingonoutputstendtodivertattentionaway from the attainment of national policy objectives and outcomes, whereby measurement of societal impact of public expenditure will always be neglected.
• Generation of insurmountable information whichwould not only be incomprehensible but also would hardly influence spending decisions.
• Limited rigour in the definition, choice andmeasurement of policy outcomes.
• Inadequateperformancemeasurementsystemsthathardly provide feedback about the impact of public expenditure on desired national or sector-specific
outcomes.
By adopting PBB as stipulated in Box 2.1, Uganda is expected to provide a more systematic use of performance information to inform budgetary priorities and spending decisions between competing programmes based on programme classification of expenditure. Therefore, the migration to the programme budgeting system would introduce new practices and responsibilities within public expenditure management in Uganda. The new initiatives would include the following:
• More devolved budgetary responsibilities, transparency and accountability at the level of line ministries.
• MFPED would progressively grant more budgetary autonomy to line ministries while maintaining aggregate control over spending; enforce regulations toward improved expenditure control; and limit in-year budgetary adjustments to genuinely unforeseen items of expenditure.
• A firm mechanism for prioritization of expenditures constrained with a predictable MTEF to allow alignment of national and strategic planning and programme budgeting.
• Greater engagement of policy makers in the budget preparation process to promote adherence to annual budgetary appropriations; progressively diminish in-year extra-budgetary requests, and thereby create the much-needed additional fiscal space for planned but unfunded government priorities.
• Ministries would periodically report progress against their programme objectives and outcomes through a programme budget hierarchy.
2.2: lack of Shared understanding of pbbThe respondents were requested to share their views on the level of understanding of the new reform including whether they were able to demonstrate a difference between OOB and PBB and the state of preparedness to embark on the 2018/19 PBB process. The Evaluation Team deduced the following from the discussions:
• Difference between OBB and PBB was not well understood: The majority of respondents argued that in practice, PBB is not different from OOB which has always involved identification of outputs required to meet national and sectoral policy objectives and outcomes. Therefore, they contended that PBB was an upgrade of OOB with an additional segment for outcomes in the PBS. The respondents were not articulate on the conceptual difference as articulated in Annex 2 which attempts to highlight the major conceptual differences focusing on expected benefits of PBB as picked from the global experiences.
• Budget reform fatigue among the MDAs: Many respondents described PBB as yet another “ambush”fromMFPED.TheyarguedthatbeforetheOOB was fully understood by MDAs, a new reform – PBB - was introduced without a clear reform strategy or capacity-building agenda.
• Understanding of PBB seems to be skewed towards access and use of the Programme Budgeting System (PBS). In all the four Votes, the experience sharing of the first PPB pilot focused on the functionality of the PBS and not the comprehensive approach to PBB. The respondents argued that at the launch of the reform, MFPED focused on the understanding and use of PBS to facilitate the preparation of the 2017/18 Budget Estimates.
• The skewed tendency is a replica of the OOB reform that focused on the OBT and consequently, neglected the prerequisites for a successful budget reform. The Evaluation Team underscores the need to address this apparent shortcoming to promote the realization of the other potential benefits from PBB outlined in Annex 2
• Understanding of PBB is restricted to few staff in MDAs: Whilst the concept was introduced across all Central Government agencies, it is not yet popular or fully understood among the entire staff of the MDAs
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Box 2. 1: Conceptual Framework
for PBB
visited. The knowledge seems to be restricted to officers who are responsible for planning and budgeting, the same officials who attended the PBB training organized by MFPED in 2016. Heads of department were not targeted as key stakeholders during the training, and thus have limited knowledge about PBB.
what is Programme Based Budgeting?
Program based budgeting refers to a systematic use of performance information to inform decisions about budgetary priorities and spending plans based on the program classification of expenditure between competing programs and sectors.
A budgeting structure where resources are allocated by program or functional area and based on the nature of the objectives and activities performed by the program, and allows assessment of the results of programs in relation to objectives.
Principal elements of programme budgeting:
• Decisions about funding levels, including appropriation, are primarily guided by the program objectives for a given sector; and
• Performance information guides the funding decisions of competing programs within and across sectors.
Objectives of Programme Based Budgeting:
The main objective of PBB is to improve the effectiveness and efficiency of public expenditure by linking the funding of public sector organisations to the results they deliver. The specific objectives are:
• Alignment of spending with program objectives
• Provision of a stronger framework for technocrats and policy-makers to come to agreement on expenditure priorities and budgets.
• Provision of a framework for monitoring the results, and impact of public expenditure.
Programme budget structure. There are four levels:
a) Program structure: Vote – Programs – Sub-Programs – Projects
b) Objectives: Strategic Objective – Program Objective – Operational Objective
c) Performance Indicators: Outcome – Outputs – Efficiency
d) Expenditures: Summary Costs – Expense Summary and Line Item Expenses
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2.3: low level of preparedness for FY 2017/18 pbb Since fiscal year 2015/16, MFPED has undertaken several
activities to prepare for the launch of PBB. Box 2.2 spells
out the activities. However, the Evaluation established
that the preparations for the launch have not yet had a
significant impact on the respondents’ readiness to adopt
the reform. The interviewees, while appreciative of MFPED
initiatives, cited a number of constraints that limited
the MDAs’ ability to deliver quality PBB estimates and
underscored that they should be addressed to enhance
the level of preparedness for the next budget process for
FY 2018/19. The major constraints included the following:
• The training did not provide sufficient timing for acomprehensive explanation of the concept, including its objectives, deliverables and prerequisites. The respondents reported that training was delivered late in the budget process, and involved short presentations on the concept with a particular
bias towards the PBS. By the end of the training, participants had not acquired sufficient skills required to generate the 2017/18 PBB Estimates. This was further aggravated by inability to circulate draft PBB Reference Manuals to the staff in the MDAs.
• Headsof technical departmentmissed the trainingoffered by MFPED and hence are not capacitated to serve as effective managers for either programmes or sub-programmes, Worse still, the officials in planning units admitted that they neither had sufficient understanding of the concept nor did they have adequate resources to conduct in-house training for knowledge and skills transfer to other technical staff.
• ThementoringandtechnicalsupportbytheSystemSupport Unit in MFPED, though highly regarded, was not sufficient to deal with overwhelming demand from all Votes in a timely manner. Details are discussed in Chapter 4. Furthermore, MFPED, especially the Budget Directorate, also lacked sufficient exposure to PBB to help MDAs deal with the conceptual challenges.
The main undertakings included:
1. Establishment of institutional coordination arrangements to provide policy guidance
and technical oversight to the implementation of PBB. The arrangements included:
a. A high-level Steering Committee responsible for establishing the PBB
implementation plan and providing guidance and oversight to the PBB Sector
Working Group.
b. PBB Sector Working Group with representatives from key stakeholders from
MOPS, OPM, PPDA, NPA, PBO, NITAU and MFPED.
2. Development of program budgeting system as on-line web-based application/system
to support the budget-decision making process.
3. Production of a draft PBB Reference Manual and PBB User Operational Manuals.
4. A participatory process aimed at formulating and building consensus of the program
structure aligned with NDPII and performance indicators for affordable program
outcomes and sub-program outputs.
5. Capacity building of MDAs and other stakeholders with specific objectives, namely to:
a. enhance their understanding of the PBB Concept,
b. equip selected staff from MDAs with requisite skills and techniques to generate
the appropriate program structures and use the PBS to formulate program budget
estimates for FY 2017/18,
c. sensitised Parliament to use the budget performance information to inform the
budget debate and foster accountability, and
d. mentor and guide on how to link vote functions to Programs, program objectives,
outcomes, indicators and output indicators and ensure full alignment with NDPII.
Box 2. 2: Preparation
for Launch of the 1st PBB Pilot-for FY
2017/18
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2.4: Global Experience and implication for the Second pbb pilotBox 2.3 presents the global lessons on the adoption of
PBB and underscores the need to address emerging
perception and capacity-related issues early enough
in the reform process. On the basis of the lessons,
the Evaluation submitted recommendations to
enhance the preparedness for smooth migration. The
recommendations are elaborated below:
• Formulation of a PBB reform agenda detailing agreed upon objectives, principles and practices that should be aligned to accepted good practices and, more important, include measures to address the lessons learnt from OOB.
• Filmization and circulation of PBB Manual to help articulate the following: agreed concept and design
of the PBB reform; the interface with performance management initiatives; PBB’s contribution to enhanced accountability and oversight as well as institutional responsibilities in consolidation of PBB. The Manual should be treated as a living document - updated every year to accommodate any emerging good practices.
• Organization of sensitization seminars for the policy makers including: Cabinet and the Parliamentary Budget Committee to enhance their understanding of PBB as a key tool to enhance not only the credibility of the annual budget but also accountability and oversight of fiscal and budget performance.
• Assessment of the capacity-building needs of key institutions to guide the design of a training programme to address the gap in required knowledge, skills and techniques for PBB. Encourage and provide technical support for in-house training workshops for the MDAs to ensure that the managers of both programmes and sub-programmes have
adequate knowledge of their roles in PBB.
Recent studies from countries with 30 or so years of PBB exposure, underscore the need to:
i) ensure that all stakeholders to know why MFPED is reforming the process;
ii) promote recognition and addressing the capacity needs;
iii) foster a gradual and adaptive reform that allows dealing with emerging challenges over
time.
Moving to restructuring a public budgeting and management, Australia launched its far-
reaching reforms pursuant to a “diagnostic study ofmanagement.” The study provided
valuable insights into the perspectives and expectations of civil services and enabled the
government to base reform on strong evidence of pathologies in the existing system. The
diagnostic study also conveyed to managers the message that they would have a voice in
the new systems, and, made them active participants in the reform process.
The South Korean experiences underscores that PBB is the most appropriate tool to
support the broader reform agenda. Hence, program based budgeting should be seen as
primarily designed to act as a basis for supporting PFM reforms by enhancing performance
management and accountability, enabling a stronger linkage between the annual budget and
policy objectives, and improving transparency and accessibility of information. In addition,
PBB should be seen as an instrument for policy analysis and planning for the medium-
term; improving managerial performance; and allocation and management of costs and
expenditures.
Box 2. 3: Global
Lessons for Low Capacity Countries on Adoption of
PBB
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a REviEw oF tHE 2017/18 PROGRAMME-BASED BUDGET
this chapter reviews the extent to which the FY 2017/18 budget process and budget estimates conformed to acceptable pbb standards focusing on: (i) the design of pbb Structures in the votes; (ii) alignment of programme structure with organizational structure and ndp ii priorities; and (iii) compliance of the budget process with pbb steps stipulated in the pbb draft manual. Specifically, it examines the quality and relevance of performance information as well as functionality of Sector working Groups (SwGs) and presents recommendations designed to further strengthen the 2018/19 pbb.
3.
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3.1: programme-based budget Structure
The programme structure adopted by the GoU is generally consistent with best practice as shown in Figure 3.1. All the visited MDAs adopted the four-tier PBB structure which seems to be aligned with the NDP II structure at all levels (Figure 3.1). However, the evaluation of the final programme structures published in the Ministerial Policy Statement (MPS) and Budget Framework Paper (BFP) revealed several issues which need to be urgently addressed to consolidate the work done so far and advance the implementation of the second pilot of PBB.
Figure 3. 1: The PBB framework
Source: Directorate of Budget, MFPED
Specifically, the PBB structure was adopted with high variability in the quality of programmes, sub-programmes, performance measures and budget management practices from one Vote to the other. The structure seemed easier to apply in MoES and MAAIF than in UNRA and MoH. On the one hand, MoES, UNRA and MAAIF had more reliable medium-term strategic plans that helped the programme managers determine the programme outcomes and outputs. On the other hand, MoH and UNRA have robust planning and budgeting mechanisms supported by stronger skill sets – that guided the construction of strategic objectives, programme outcomes, as well as sub-programme outputs. Notwithstanding, the majority of respondents admitted that given the limited time accorded to the preparation of the 2017/18 pilot, they just mapped OOB structures to PBB as guided by the PBB manual.
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Clarity of Strategic Objective(s)Except for MAAIF, vote strategic objectives were generally well stated in the FY 2017/18 Ministerial Policy Statements (MPS) for MOH, MoES and UNRA (Table 3.1). The strategic objectives were largely extracted from sector-specific NDP II objectives and articulate the long-term mandate of the agency which is in conformity with the PBB Draft Reference Manual. In the case of MAAIF, its 8 strategic objectives are operational rather than strategic in nature and not fully aligned to the NDP II Agriculture Sector objectives. Neither do the objectives clearly articulate the long-term mandate of the Vote.
Table 3. 1: Definition of Strategic Objectives within 2017/18 PBB Structure
Vote Budget Structure: Strategic Objective
MAAIF
• initiatetheformulationandreviewofthepolicyandlegalframeworkforthesector;
• establishandimplementsystemsforserviceprovisioninthesector;
• strengthen and implement strategies, regulatory framework, standards, institutional structuresand infrastructure for quality assurance and increased quantities of agricultural products to access and sustain local, regional and export markets;
• designandimplementsustainablecapacitybuildingprogrammesforstakeholdersintheagricul-tural sector through training, re-tooling, infrastructure, provision of logistics and ICT;
• developstrategiesforsustainablefoodsecurity;
• develop appropriate agricultural technologies for improved agricultural production, productivityand value addition through research;
• developeffectivecollaborativemechanismswithaffiliatedinstitutions;
• takeleadandestablishasystemandinstitutionalframeworkforagriculturaldatacollection,analy-ses, storage and dissemination to stakeholders including UBOS.
MoES
• achieveequitableaccesstorelevantandqualityeducationandtraining;
• ensuredeliveryofrelevantandqualityeducationandtraining;and
• enhanceefficiencyandeffectivenessofEducationandSportsservicedeliveryatalllevels.
MOH
• provideinclusiveandqualityhealthcareservicesthroughpolicyformulationandprovidingstrate-gic direction, planning and coordination of health care provision in Uganda;
• addressthekeydeterminantsofhealththroughstrengtheningofinter-sectoralcollaborationsandpartnerships;
• enhancethehealthsectorcompetitivenessintheregionandglobally.
UNRA• improvemotorabilityandtheconditionoftheNationalRoadNetworkusingsustainableandcost-
effective means
Design of Programmes and Sub-Programmes
At the programme level, it appears that the programmes of the four votes were neither well defined nor structured because they proved to be just a replica of previous Vote Functions adopted under OOB but contained within a limit on the number programmes. There was no significant difference between the OOB structure and that of PBB in their budget documents. The respondents explainedthattheywereconducting“businessasusual”with respect to planning and budgeting but under a guise of programmes instead of Vote Functions. The changing of the Vote functions to programmes was in compliance with the guidelines stipulated by the draft PBB Manual.
All respondents in MAAIF recognized that the approach denied them a systematic opportunity to construct the appropriate programmes and outcomes aligned with sector outcomes and NDP II priorities.
On the contrary, during the discussion with MFPED, the Evaluation Team ascertained that MoH and other MDAs in the Justice Law and Order Sector (JLOS) had an opportunity to rationalize the programmes and their respective strategic objectives and respective outcomes. MFPED utilized the on-going strategic planning process to construct new programmes and build consensus on the realizable outcomes and outputs.
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An in-depth review of the 2017/18 MPS documentation for each of the four votes revealed the additional shortcomings in the design which included the following:
• Scanty information of programme and sub-programme outcomes and outputs including indicators for MAAIF;
• Missing operational objectives for a few programmes and sub-programmes in MoES, MoH and UNRA;
• In the case of MOES, it was difficult to align some departments or functions to programmes within the Ministry. For instance, “Teacher, Tutor,Instructor Education and Training (TIET) in MoES is not captured in any of their programmes or sub-programmes;
• Weak link between sector and programme outcomes and sub-programme outputs with cases of potential confusion between sub-programmes, departments and sub-agencies - given that sub-agencies are an entirely separate accounting entity.
3.2: alignment of pbb Structure with organizational StructureThe alignment of a budget structure with the administrative arrangements is critical in fostering better responsibility, accountability and reporting on programme budgets. The evaluation of the alignment within the four Votes revealed a varied configuration: MAAIF and MOH had a fair alignment while, on the contrary, the structures for UNRA and MOES had a misalignment. Figures 3.2 and 3.3 show the case of better alignment with MAAIF and misalignment for UNRA respectively. Discussing the status of the existing alignment and potential challenges with the respondents, the Evaluation Team noted their perceptions as follows:
• The UNRA respondents recognized the misalignment as an imposition from MFPED. However, they argued that it should not be perceived as a challenge. They stated that PBB should be used to mobilize and prioritize resources that should be easily managed by the existing administrative arrangements to deliver programme outcomes.
• The MOES respondents acknowledged that alignment was still blurred and requested a further review to promote better construction of programme budget structures, outcomes and respective sub-programme outputs.
• CropResources
• AnimalResources
• AnimalExtensionandSkillsDevelopment
• FisheriesResources
• AgricultureInfrastructure,mechanizationandWater for Production
• Policy,PlanningandSupportServices
• CropResources
• AnimalResources
• AnimalExtensionandSkillsDevelopment
• FisheriesResources
• Agriculture Infrastructure,MechanizationandWater for Production
• F&A,HR,InternalAuditandProcurement
Figure 3. 2: Alignment of PBB Structure and Organizational Structure: A Case of MAAIF
PBB Structure (Programmes)Organizational Structure (Directorates/Departments/Units)
Source: MAAIF (2017)
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Programme:
National Road Maintenance and Construction
Sub-programmes:
• NationalRoadsMaintenance
• NationalRoadsConstruction
• FinanceanAdministration
• NetworkPlanning&Engineering
• Roads&BridgesDevelopment
• RoadMaintenance
• RoadInfrastructureProtection
• Procurement
• LegalServices
• HumanResources
• CorporateServices
• InternalAudit
Figure 3. 2: Alignment of PBB Structure and Organizational Structure: A Case of MAAIF
PBB Structure (Programmes)Organizational Structure (Directorates/Departments/Units)
Source: MAAIF (2017)
Moving forward, the alignment of programme budget structures with the organizational structure needs to be strengthened. Some ministries may require organizational restructuring, which is a prerogative of Ministry of Public Service (MPS), and which may not be executed as quickly as expected. Hence, the alignment should be seen as a medium-to-long-term initiative. Therefore, ministries may need assistance to refine their internal management processes to allow clear responsibility and accountability for programme budgets. Accordingly, the Evaluation Team recommended that MFPED should provide a practical guide to help design responsibility and accountability arrangements in cases where the existing administrative arrangements cannot allow a clear link with programme structures.
3.3: alignment of programmes to ndp ii prioritiesThe GoU has set up an integrated planning framework with the current Second National Development Plan 2015/16 - 2019/20 (NDP II) as a starting point as detailed in Table 3.2. The current NDP II provides a results framework with indicators at five levels: overall national goals; strategic objectives; key result areas; sector results and annualized targets and outputs levels. The framework is expected to guide the construction of programme outcomes within the available resource envelope stipulated in the medium-term fiscal and expenditure framework. The introduction of PBB in fiscal year 2017/18 provides a base for strengthening the expenditure prioritization and ensuring better alignment of resource allocation to NDP II priorities.
However, the Evaluation Team could not undertake a systematic assessment of the impact of the first PBB pilot on the policy prioritization or the strategic allocation of resources and alignment with NDP II priorities. Instead, the Evaluation Team requested the respondents to identify the factors that would foster better alignment of programme outcomes with national goals and strategic objectives. The respondents underscored the need: (i) to harmonize the existing parallel planning frameworks for implementing NDP II; and (ii) build consensus on the programme outcomes and indicators over the medium term.
The planned Mid-term Review of NDP II provides a window for the review and development of reliable baseline indicators, as well as affordable and reliable sector and programme outcomes and associated outputs for the remaining period of the Plan.
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Table 3. 2 Select Key Planning and Budgeting Instruments by October 2017
Instrument Objective Details Planning Horizon
NDP II
2015/16- 2019/20
The national priorities for Uganda to become a mid-dle-income country by 2020 and to achieve sustain-able development goals.
5 years
2015/16- 2019/20
Medium-term Sector Plans
Guide the implementation of NDPII sector specific priorities under clear prioritization and resource al-location constrained within MTEF.
5 years
MoH- 2015/16-2019/20
MoES (draft under review)
MAAIF -2012/13-2016/17
MTEF Provides the multi-year fiscal targets and expendi-ture projects disaggregated by sector, votes and economic categories.
Five year rolling plan
2015/16 – 2021/22
Programme Budget Esti-mates
Details the annual estimates and medium-term proj-ects geared to deliver programme outcome and sub-programme outputs within specified timing.
2018/19- 2019/20
Source: MFPED
Alignment of the program budget with MTEF, Sector Plans and NDP II
Table 3.2 shows the key features of the existing planning instruments. The current planning framework is fragmented, and does not easily influence the expenditure prioritization, as well as preparation of the annual budget and medium-term expenditure projections. A review of the design and implementation of the existing planning frameworks revealed challenges that could deter the construction of reliable and quality sector policy and programme outcomes. These include the following:
• Varied planning and funding period of theframeworks: (i) MTEF is a rolling five-year framework without a clear target, (ii) PBB - a rolling three-year framework and (iii) NDP II with fixed period.
• As a consequence, the differing planning horizonshave generated varied performance information in terms of baseline indicators, desired outcomes and outputs targets, as well as funding predictability.
• Moreover, the credibility of a five-year MTEF waschallenged – to what extent does it provide reliable and predictable budgetary implications for attaining policy and programme outcomes for the outer years as explained in Chapter 5.
• Lack of effective monitoring and accounting forprogress in attainment of sector, institutional and NDP policy objectives, as discussed in Chapter 5, has continued to undermine the essence of the planning instruments.
• Imposeunnecessaryburdenonlimitedplanningandmanagement capacities within MFPED and MDAs.
The consultation meeting with MFPED prioritized the need to synchronize existing planning frameworks to harmonize the baseline indicators and performance targets, enhance the importance of performance information, and, promote budget transparency and accountability.
Mid-term Review of Second NDP is a Window for Better Alignment
The planned Mid-term Review of NDP II provides a window for the review and development of reliable baseline indicators, as well as affordable and reliable sector and programme outcomes and associated outputs for the remaining period of the Plan. The NPA should seize this opportunity to undertake strategic expenditure reviews for the key sectors and seek consensus on the high-level policy goals against which expenditure plans are structured in programme budgets, alongside a set of outcome and output indicators and targets. The main thrust of such reviews should be to ensure that expenditure plans are consistent with overall fiscal objectives; shift expenditure from low priority to high priority areas; enhance efficiency and effectiveness in the use of resources; and ultimately derive value for money in public expenditure. This can be a resource-intensive exercise, so it is important that a review process is targeted to priority and high-spending areas.
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3.4: compliance with the pbb Steps in the 2017/18 budget processThe adoption of the PBB steps varied among the Votes. The respondents admitted that they were not able to establish a new Programme Budget Implementation Team or undertake the FY 2017/18 budget process as guided by the PBB steps (Box 3.1). The experience is summarized in box 31.
(a) Establishment of a Programme Budget Implementation Team for the Vote;
(b) Definition of the Strategic Objective for the Vote;
(c) Designing of Main Programme Structure and Definition of Respective Programme Objectives;
(d) Appointment of a Programme Manager (or responsible person) for each Programme;
(e) Designing of Sub-Programmes and Definitions of their Operational Objectives;
(f) Identification of Activities (Recurrent Activities and Development Projects) under each Sub-Programme;
(g) Provision of Performance Indicators and Targets for each (Sub-Programme); and
(h) Budget Allocation (recurrent and development).
Box 3.1: PBB Steps
in the Annual Budget
process
Source: Draft Reference Manual for PBB, 2016
MoH and UNRA used their existing planning and budgeting mechanisms to coordinate the process as elaborated:
• The PBB process in MoH was coordinated by the sector budget working group and supervised by the senior management committees under the chair of the permanent secretary and minister as deemed appropriate. The working group constituted representatives of the ministry senior staff, development partners, CSOs and MFPED.
• With respect to UNRA, the production of PBB estimates was coordinated by the Directorate of Corporate Services, supervised by the senior management committee under the leadership of the Executive Director.
• In MoES and MAAIF, the revised annual budget process was coordinated by the planning units or budget focal persons in the respective departments.
• MoES respondents explained that the budget process virtually involved soliciting information on work plans (activities) and budgetary implication by the planning unit, which was later consolidated and entered into the PBS.
• As a consequence, the heads of department/ programme managers in MAAIF and MoES, were not given an opportunity to contribute to the
determination of the programme outcomes nor guide resource allocation in a coordinated manner. Furthermore, sector agencies missed the opportunity to conduct systematic construction of programme outcomes and their respective outcomes and outputs.
Role and Functionality of SWGs
SWGs are designed to provide effective coordination and consultative arrangements – bringing together all stakeholders - to undertake joint expenditure review, planning and prioritization, resource allocations as well as results-based monitoring and reporting. The respondents noted that sector working groups (SWGs) would be instrumental in executing the steps in Box 3.1, but were either absent or of limited influence in the budget processes in the visited MDAs. Discussing the functionality of the SWGs, the Evaluation Team noted the following challenges and weaknesses that need to be addressed:
• Fully functional SWGs exist in a few sectors like Education, Health, and Energy with significant share of external funding as assistance to their activities.
• Lack of sector-wide approach in the bilateral budget discussion between MFPED and sectors, and the role of SWGs in setting policy and programme outcomes
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and outputs for the respective votes. Votes submit their budget proposals including supplementary budget requests directly to MFPED without approval of SWGs.
• The role of SWGs has been restricted to appraisal and approval of development projects before onward submission to MFPED.
The recent OBM study examined the functionality of SWGs and published the underlying issues that included: lack of clear guidelines for their operations; weak leadership at both political and technical level; inadequate incentives; lack of shared understanding of the role and concept of SWGs; and resource-constrained planning units that are not able to support the required practices.
Moving forward, the Validation Meeting with MFPED underscored the need to rejuvenate the SWGs to provide a basis for effective implementation of PBB. The meeting prioritized the following undertakings:
• Formulation of clear guidelines, expected deliverables and operational procedures, including their roles in executing planning, budgeting and accountability mechanisms – undertaken by MFPED working closely with OPM.
• Provision of additional budgetary allocation to the planning units to enhance their capacity to coordinate the functions of the SWGs.
• Sensitization meetings to promote shared understanding of the functionality and ensure political buy-in and support.
3.5: costing of outcomes and outputs As already noted, the respondents were not able to construct and cost programmes and sub-programmes in a systematic manner. They reported that this problem was also inherent in OOB, which undermined not only construction of realistic sector results as well as vote outputs and but also budgetary implications for a medium-term framework. The budgetary or spending decisions for programmes and sub-programmes, to some extent, continues to be determined by accounting officers, in consultation with the planning units subject to the circulated expenditure ceiling. In order to promote better definition of affordable programme outcomes, MFPED should further strengthen the annual planning and budgeting process and provide better knowledge, skills and techniques for appraisal and costing of desired sector and policy outcomes.
3.6: Quality and Relevance of performance informationThe reliability of performance information and respective indicators are vital in the expenditure prioritization and allocation of resources for the programmes as well as monitoring the implementation of PBB. Therefore, the Evaluation Team examined a few sampled programme and sub-programme structures to assess the quality and relevance of performance information. The findings captured in Table 3.3 indicate that the 2017/18 Budget reflects satisfactory submission of performance information for the first pilot of PBB. The sub-programme outputs are well stated in MDAs that have sub-programmes (MoES, MoH and UNRA). However, there are issues with the performance specification, including weak specification of outputs (confusion with outcomes), lack of quantity indicators and outputs that are difficult to measure.
The planned Mid-term Review of NDP II provides a window for the review and development of reliable baseline indicators, as well as affordable and reliable sector and programme outcomes and associated outputs for the remaining period of the Plan.
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Table 3. 3: Quality and Relevance of Performance Information (based on sampled programmes)
Vote Assessment of the Quality and Relevance PI
MAAIFProgramme Outcome Generally, well stated
Sub-programme outputs Outputs are neither defined nor tracked. No baseline indictors to track progress.
MoESProgramme Outcome
Most outcomes stated as outputs.
There is no clarity and reliability of majority outcomes save for higher education, policy planning and support services.
Sub-programme outputs Unreliable costing for outputs. For example: Completed works at 3% of planned estimate.
MOHProgramme Outcome
Stated as activities (processes) or outputs.
Not reliable or useful in explaining the impact of respective programmes
Sub-programme outputs No expenditure against constructions done. No planned outputs against external funding.
UNRA
Programme Outcome Outcomes were well stated.
Sub-programme outputs
Alignment with resource allocations was blurred. Unplanned activities were undertaken. Meanwhile, additional outputs were achieved with expenditures lower than appropriated. On the other hand, in some cases, outputs less than planned were delivered but with more funding than had been envisaged.
Moving ahead, the performance specification by ministries in the formulation of the annual programme budget needs to be strengthened. This would require additional undertakings, in addition to the practical guide mentioned in previous section, to build capacity for the development of quality performance information. The reforms should involve the following:
• Establishment of a formal quality assurance (QA) procedure to enable validation of the performance specification of ministries during the preparation of the plans and budget documents and providing feedback to help improve the specification before documents are finalized.
• Gradually increase the attention to the link between the budget and a realistic forecast of service performance. The link between the appropriations and the quantity of services to be provided is one of the most powerful relationships that can be used in PBB to assess the appropriateness of funding levels. However, global lessons underscore that this link may not be achieved in the short run of the reform
and hence should be seen as a medium-to-long-term deliverable.
Formulation of National Standard Indicators (NSIs)
In order to improve the quality and relevance of PI, GoU constituted a taskforce to develop the national standard indicators - which should serve as uniform measures for planning, resource allocation, monitoring and reporting on the implementation of PBB aligned with NDP priorities. Draft NSIs for JLOS, Energy and Mineral Development, Health and Education sectors have been produced. Efforts are underway to validate NSIs for other sectors that should ease the construction of indicators during the annual budget process. The process should also help to harmonize the concepts and levels of performance indicators as stipulated in existing frameworks: Draft PBB Manual, Draft NSIs and NDP Results Framework summarized in Figure 3.4.
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accESS and uSE OF PROGRAMME BUDGETING SYSTEM
chapter Four provides an account of the respondents’ views on the access and functionality of the pbS during the preparation of 2017/18 budget Estimates. the evaluation focused on six elements: (i) an overall assessment of the strengths; (ii) functionality of the system; (iii) support to the work flow and budgetary decision-making; (iv) simplicity and ease of use; (v) system performance and reliability; and (vi) information quality and use. the respondents, who are the end-users of the system, were asked to rate the elements using a 5-point scale ranging from strongly agree to strongly disagree.
4.
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4.1: overall assessment The respondents’ feedback on the use of the PBS was generally positive as reflected in Figure 4.1 below which shows the average scores from the rating of the 4 Votes. The respondents viewed PBS as a big improvement on the Output Budgeting Tool (OBT). Most of the elements attained an overall average rating above 3 out of 5 (where a score of 3 is good and 4 is very good). All respondents were appreciative of a dedicated PBS support team at MFPED that endeavored to provide timely and quality assistance during the tight schedule of finalization of the budget estimates. However, slightly lower average scores were accorded to reliability, ease of use, security, performance, and integrity by the Ministry of Health because of challenges faced by hospitals spread countrywide in accessing the PBS.
Figure 4. 1: Perception on access and use of PBS in selected MDAs
4.2: current Status and Emerging issues
4.2.1 Assessment by Functionality of the System
The consulted end-users of the system were asked to rate the functionality - the extent to which PBS supported the key functions, namely: (i) preparation of the budget; (ii) strengthening the link between financial budgets with results; (iii) preparation of budget documents; and (iv) preparation of performance reports.
Figure 4.2 below shows that most of the respondents agreed that the system provides sufficient support to the key functions with a few exceptions explained below:
• Linking finance budgets and results asafunctionalityreceivedascoreof“3”fromMAAIF,MOHandMoES.Thevariations in the scores reflected a difference in understanding of the role of the system support. The team had to clarify that the system provides a clear illustration of the link but does not necessarily facilitate the alignment of resource allocation to results which had to be done outside the system. Accordingly, one respondent underscored the need to provide a mechanism to validate the link between outcomes and respective outputs.
• MoES awarded a lower score rate to production of budget documents. The evaluation ascertained that MoES, like several other votes, suffered several setbacks which include: (i) missing sections or texts in their MPS, (ii) ambiguous texts attributed to the character limitation within the narrative fields, and, (iii) misalignment of the PBS-generated procurement plan with Public Procurement and Disposable of Assets (PPDA) guidelines.
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4.2.2: Support the Work Flow and Decision-making
Figure 4. 2: Respondents Views on Support to Key PBB Functions
Key:
PB - Preparation of the budget
LFB - Strengthen the Link between financial budgets with results
PBD - Preparation of budget documents
PPR - Preparation of performance Reports
Figure 4.3 shows the scores for the support to the work flow and decision-making process against the following elements: (i) consistence between the system approval hierarchy and administrative approval structure; (ii) quality of system support to the several budget stages at MFPED and MDA levels; (iii) the extent to which it allows the generation of budget estimates within Ministries or programmes; and (iv) ability to control expenditure estimates within MTEF to prevent MDAs exceeding their budget ceilings.
With the exception of MoH, the respondents agreed that the PBS provided satisfactory support to the key decision-making points.However,therepresentativesoftheplanningunitinMoHratedit“3”neitheragreednordisagreedattributedthechallenges encountered in receipt, consolidation, appraisal and approval of estimates and performance information from all its spending entities which are mainly hospitals located countrywide and which could not access the PBS. MAAIF with many of its agencies scattered countrywide also had similar challenges.
Figure 4. 3: Respondents views on support to decision making
Key:
1: SAH - The system approval hierarchy is consistent with administrative structure
2: SBS - Support several budget stages at MFPED/ MDA levels; i.e. capable of progressing budget estimates from one stage to another
3: GBS - Allow the generation of budget ceilings within Ministries or programs based on the MTEF framework
4: CLC - Ability to set up control limits to prevent MDA exceeding MDA budget ceilings
4.2.3: Simplicity and Ease of Use
The respondents reported typical challenges in the use of the system, normally expected in a reform which is still in its infancy. Nonetheless, they commended the effort of the System Support Team (SST) in MFPED that provides substantial and relatively timely assistance -enabling them to finalize the budgeting process for fiscal year 2017/18. The elements with the lowest scores depicted in Figure 4.4 show the challenges that need to be addressed. These include the following:
• Limited appreciation of PBS among the programme and sub-programme managers imposes a heavy work load on the planning units which currently have the access to the PBS in most of the Votes;
• Limited capacity of the SST to provide timely support to all Votes during the peak period;
• Lack of an online help/guide to assist or ease the navigation issues without necessarily resorting to the SST.
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Figure 4. 4: Respondents views on simplicity and ease of use
Key:
CSC-Users are conversant with the all system components. Us-ers program manager, accounting officer, sub-program manag-ers, planning unit.
IN - The user interface and navigation is easy
TST - Technical support from MFPED is timely
TR - Technical response from MPFED is satisfactory
H - The online help/guide is good
ME - The system has inbuilt mechanism to minimize errors e.g. bursting ceiling are red flagged.
4.2.4: System Performance and Reliability
Figure 4.5 shows the respondents’ assessment of the performance and reliability of a system which is generally satisfactory but varied. MoES and UNRA score a good rating for accessibility and performance - measured by the time it takes for the system to return results of an operation. That notwithstanding, the discussion revealed a number of contrasting views:
• MoH felt that accessibility and performance were significant challenges during the preparation of the 2017/18 Budget attributed to frequent downtime and inability for the hospitals to always access the PBS at their duty stations. The team ascertained that the downtime was a common problem reported across all votes attributed to network failure or PBS service outage.
• Meanwhile, with the exception of UNRA, the three Votes indicated that there was a common sharing of credentials. The respondents contended that without this practice it would not be possible to complete the submissions, given the tight deadlines and the frequent changes in the MTEF. This is an undesirable situation which, if not well coordinated, would undermine the security and integrity of the system as well as segregation of duty controls.
Figure 4. 5: Respondents views on system performance and reliability
Key:
SA - The system is accessible whenever we need to use it
PSC - Password Sharing is common to enhance the efficiency of work
SPE - The system performance is efficient (perfor-mance is measured by the time it takes for the system to return result of an operation)
4.2.5: Information Quality and Use
With the exception of MoH, the respondents were extremely satisfied with the consistence between end products from MFPED and submission or input from MDAs as indicated in Figure 4.6. MAAIF explained that the final 2017/18 Budget reflected a few adjustments in the resource allocations or estimates which had solely been effected by MFPED. It was too early to examine the use of the periodic budget performance reports denigrated from the system. This notwithstanding, MoH shared a copy of a recent quarterly report that had been submitted to their senior management meeting – proving the reliability and effective usage of the reports.
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Figure 4. 6: Respondents views on the information quality and use
KEY
IU - Internal usage of the reports other than for budget submission
OC - Final output of the system at MFPED is consistent with entries by your MDA
4.3: RecommendationsThe Evaluation reveals that while the first pilot of the PBS seems positive, there is need to focus on the challenges witnessed in the early phases of the adoption. PBS should not be perceived as a mere automation of budget preparation and execution. There are many risks involved that go far beyond mere technological risk of failure and efficient functionality. In order to address the identified and potential issues, the Evaluation Team makes the following recommendations:
• Design and implement a clear change management agenda, including a capacity-building strategy aimed atachieving the following:
o enhanced understanding and commitment among policy makers and technocrats of the PBS and their respective individual responsibilities to ensure proper functionality during the budget cycle;
o targeting technical staff outside planning units should be prioritized to promote institutional and NOT individual capacity within Votes without compromising security of the system.
• Formulateand implementastructuredand inclusivesupportprogrammetofacilitateboth introductionofmajordesign changes and dealing with existing and potential issues. The design should ensure involvement of the major users of the outputs, for instance PBO for MPS. The elements could include, but not be limited to:
o Technical efficiency-related areas, namely: reduction of excessive scrolling at item level allocation, easier rejection workflow, and enabling printouts for sub-programmes;
o Installation of online guidance and support covering tool tips, context help, and other features;
o Joint reviews and updates of the scope and content of the reports with the producers and end-users of the reports;
o Consider inclusion of drop-downs that allow better alignment of agreed indicators for outcomes and outputs as a medium-to-long-term initiative;
o Mechanisms to ease consolidation of inputs at sectoral level, especially for BFP.
o Review the extent of accessing users’ rights to various votes that constitute a sector.
• Bettermanagementofthechangecontrolprocesstoensuregreateraccountabilityfordowntimeduetoremedialwork. This should involve the following: (i) timely communication of planned and unplanned downtime; (ii) proper scheduling of remedial services; and (iii) expediting the development of offline templates.
33
StREnGtHEninG THE ENABLING ENVIRONMENT
this chapter examines the prerequisites - in form of parallel supportive reforms and incentives - and submits areas of improvement to anchor a smooth migration from oob to pbb and ensure sustained delivery of desired objectives.
5.
34
5.1: Scope of Enabling EnvironmentThe respondents emphasized the need to provide for a conducive environment and incentives to motivate the central government Votes to pursue yet another budget reform with clear objectives and benefits within the public financial management. The Evaluation Team categorized the prerequisites into two:
• Enhancing Budget Credibility to i) improve the reliability of both the annual budget and MTEF, and (ii) ability to enforce the execution of the budget as appropriated. This would ensure that annual budgets do not suffer massive uncertainty about the funding during the budget year and outer-years;
• Improving institutional and individual performance management focusing on (i) performance management practices; and (ii) performance monitoring and reporting. Enhanced results-oriented management within the public service is required to anchor accountability for impact of public expenditure on service delivery and, ultimately, NDP II priorities.
The Evaluation Team documented the weaknesses in the prerequisites and suggested areas of improvement as discussed in the subsequent sections.
5.2: credibility of the annual budget and mtEFThe respondents shared budget credibility issues that have had adverse implications on the attainment of the desired OBB objectives. They cautioned that these issues, if not addressed, would also undermine PBB reform. The credibility issues are substantiated by the recent 2016 draft PEFA Report and IMF Fiscal Transparency Evaluation Report and summarized below:
• Persistent deviations in the annual budget have created uncertainty within MDAs and weakened the credibility of previous output orientation of budgeting. All votes under study, with the exception of UNRA, have had persistent under-performance over the last decade (see Figure 5.1 below). This has served as a disincentive to the preparation of robust outcomes and outputs as well as reliable budget estimates.
The planned Mid-term Review of NDP II provides a window for the review and development of reliable baseline indicators, as well as affordable and reliable sector and programme outcomes and associated outputs for the remaining period of the Plan.
35
Figure 5. 1: Deviations between GoU Budget Estimates and Outturns over 2006/7-2016/17
Figure 5. 1: Deviations between GoU Budget Estimates and Outturns over 2006/7-2016/17
010 Ministry of Agriculture, Animal Industry and Fisheries
013 Ministry of Education and Sports
014 Ministry of Health
Uganda National Roads Authority
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• Frequent reallocations that undermine the reliability of vote and programme appropriations. Over the last ten years, the PEFA scores for composition of the budget outturn have stagnated at “D”.Thescoresdeclinedfrom“C”in2008,to“D”inboth 2012 and 2016. The underlying issues have to be identified and addressed to promote predictability of funding so as to deliver sub-programme outputs required to achieve the programme outcomes.
• Funding predictability over the annual and multi-year period is thus a significant challenge. In the previous three years, the annual budget process has not provided reliable multi-year expenditure projections to allow consistence in prioritization and predictability in funding over the medium-term period. Figure 5.2 demonstrates that expenditure projections are subject to many revisions during the annual budget cycle, which frustrates the decision-making process and setting of quality programme outcomes and outputs. Each budget publication marks a major stage of the annual process-(i) MTEF of previous process; (ii) BFP in January; (ii) MPS in April; and (iv) Budget Estimates in June.
• Figures 5.2: a(i), a(ii), a(iii) and a(iv)-show the variations in the total GoU estimates for each Vote through each stage of the budget process during period FY 2014/15 to 2017/18. There were frequent variations in MOH and MOES throughout the period and a significant variation in all Votes during FY 2016/17.
• Figures 5.2: b(i), b(ii), b(iii) and b(iv) -show the variations in the total GoU estimates for the broad economic categories for each Vote through each
stage of the 2016/17 budget process. There were frequent adjustments in the domestic expenditure projections in all votes. However, MoH and MoES also suffered a relatively high variability in non-wage expenditure ceilings.
• Other budget credibility related issues: Although funds are supposed to be released at the beginning of the quarter, funds for the first quarter are normally late - for example, the 2017/18 release was effected in late August. When actual revenue shortfalls have become apparent, discretionary domestic expenditures have always suffered the cut. This affects procurement schedules and timely project implementation with adverse implication on budget absorption by the end of the financial year. However, the Evaluation noted that the MFPED is cognizant of the problem and is committed to addressing the underlying issues.
Furthermore, the respondents noted that existing expenditure controls on virements under section 22 of the PFM Act, 2015 may constrain the flexibility of the programme or sub-programme manager to effectively manage the programme budget. The provision requires authority of virement sought from the Minister. Moreover, such virements are limited to only 10 per cent of the money allocated for an item or an activity. These controls, if not effectively executed, could disempower accounting officers to exercise control of the inputs required to achieve the desired programme outputs and ultimately outcomes.
37
Figure 5. 2: Deviations between GoU Expenditure Ceilings, Final Budget Estimates and Outturns
Figure 5. 2: Deviations between GoU Expenditure Ceilings, Final Budget Estimates and Outturns
0
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b (i) MoES: Variations in total GoU exp projections over annual budget process FY 2014/15 – 2017/18 in Bn UGX
a (i) MAAIF: Variation in total GoU exp. Projections over annual budget proccess FY 2014/15 – 2017/18 in Bn UGX
b (ii) MoES: Variations in GoU estimates over budget process FY 2016/17 in Bn UGX
a (ii) MAAIF: Variations in GoU estimates over budget process FY 2016/17 in Bn UGX
38
c (i) MoH: Variations in total GoU exp projections over annual budget process FY 2014/15 –
2017/18
c (ii) MoH: Variations in GoU estimates over budget process FY 2016/17 in Bn UGX
d (i) UNRA: Variations in Total GoU Exp. Projections over Annual Budget Process FY 14/15 -
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39
5.3: performance Enhancement practicesA successful introduction of programme-based budgeting will, ideally and over time, require that the programme managers are held accountable for financial and non-financial performance. Since the late 1990s, the Government of Uganda has introduced a performance management framework aimed at enhancing Results-Oriented Management (ROM) within the public service. The main thrust is to empower accounting officers and heads of department to make resource decisions (within limits) to achieve specified results and ensure delivery of high quality services and, ultimately, build public confidence and trust. The framework has adopted two main instruments: Annual Performance Agreement (APA) and Annual Budget Performance Contracts (ABPC), which should provide a conducive environment for enhanced responsibility and accountability for the programme budgets. The main features of the instruments are summarized in Table 5.1 below.
Table 5. 1: A Comparative overview of performance agreement and annual budget performance contract
Element Annual Performance Agreement (APA)
Annual Budget Performance Contract (ABPC)
Legal/Policy Backing Public Service Act 2008, Client Charters, New Performance Ap-praisal system
Public Financial Management Act of 2015, Part VI Accounting and Audit, Section 45 (3)
Responsible Institution & Supervisor
Ministry of Public Service
Permanent Secretary, Immediate Supervisor, COA, TC respectively.
MFPED
Secretary/Treasury
Target Directors, Heads of Departments, Deputy Chief Administrators Officers (DCOA), Deputy Town Clerks(DTC)
Accounting Officers
Objective Provision of full transparency, ac-countability and demonstration of commitment to the achievements of NDP goals
Performance in two areas:
• Area #1: Budgeting, Financial Management and Accountability.
• Area #2: Achieving Results of 5 priority programmes and projects
• Compliance and assessment tools will be distributed by MFPED within 3 months of FY.
Performance Targets and Indicators
Strategic Outputs/Targets based on MPS & LGBFP:
• 4 key outputs
• 2 targets per output
• Means of verification
• Cross-cuttingInitiatives&In-novation (one major initiative)
Performance Area #2:
• Alignment of plans with Policy
• Achievement of planned results
• Timely&predictableimplementation
• Procurement&projectmanagement
• Monitoring&follow-up
Financial Outputs/Targets
• No specific # for outputs and targets
• Means of verification
Human Resource Management Outputs/Targets (by MoPS)
Performance Area #1:• Adherence to Budget Requirement• Complete&timelysubmissionbudgetdocu-
ment.• Open and Transparent procurement• Prompt processing of payments• Implementing budget as planned• Complete&timelysubmissionofreports• Transparency, monitoring and follow-up• Internal and External Audit follow-up
40
However, the enforcement of the performance agreements proved difficult and thus was unable to provide an effective anchor to OBB. The discussion on the weak enforcement of the instruments highlighted critical challenges indicated below:
• On one hand, while the APA was administered among the senior managers, has not yet delivered the desired performance enhancement, accountability, and improvement in service delivery. The recent 2015 National Service Delivery Survey Report (NSDSR, 2015) highlighted several weaknesses that include: ineffective implementation of a number of public service reforms; corruption; poor work environment, low motivation and remuneration; and low adoption of ICT.
• On the other hand, the Budget Performance Contracts, albeit being issued on an annual basis since 2006, have not been enforced. The mechanism for enforcing the legal requirement is under construction.
• Moreover, the instruments are inconsistent albeit being based on budget performance. Their targets are ambiguous, and terminologies are not well defined, both of which undermine reporting on and accounting for performance.
Moving forward, the respondents stressed the need to enhance political commitment and responsibility for results-oriented management, harmonize the instruments and put in place the requisite mechanisms for their enforcement.
5.4: performance monitoring and ReportingThe biggest challenge faced by many countries implementing PBB is the inability to use existing performance information to inform budgetary decision-making. The experience is not unique – the four-year OOB reform demonstrated that the quality of performance information had always remained generally poor and, in many cases, not systematically monitored, and thus had limited influence on spending decisions.
The Evaluation identified the major annual performance monitoring and reporting mechanisms which included: (i) Annual Budget Performance Report by MFPED; (ii) Government Annual Performance Report by OPM; (iii) Budget Monitoring and Accountability by MFPED; and (iv) Annual National Development Report. The main features of performance reports published for 2015/16 by the respective agencies are captured in Table 5.2. The discussion with the coordinators of the reporting arrangements highlighted a few challenges which have persistently limited the relevance of performance information in the formulation of realistic sector and programme outcomes and spending decisions. The challenges are summarized below:
• Differences in the reporting framework tend to generate inconsistencies in the implementation progress of NDP II rendering the some reports redundant. A typical example is the interface between the Certificate of Compliance (COC), and Annual National Development Report both produced by NPA; The performance concepts are neither well-defined nor harmonized between different reporting mechanisms, resulting into varied baseline data and performance indicators; Generation of too much performance information which may not always provide useful and reliable information to planning and budgeting purposes.
41
Table 5. 2: A Comparative Overview of Performance Agreement and Annual Budget Performance Contract FY 2015/16
Elements GAPR
(2015/16)
ABFR
Semi - Annual 2015/16
BMAU
Semi - Annual 2015/16
NDR 2015/16 NPA - COC
Lead Institution
OPM MFPED MFPED NPA NPA
Reporting Period
2015/16 but with varied baselines.
Half 2016/17 Half of 2016 2015/16 2015/16
Objective
(i) Comprehensive assessment of Government’s performance &theresultsofpublic spending of the Financial Year 2015/16.
(i)Performance of Sectors, Ministries, Departments and Agencies (MDAs) and Local Governments against outcome and output targets&NDPII outcomes and outputs - basis for accountability
(iii)performance of externally funded projects in fulfilment of the directive of Cabinet.
(i)An analysis of Budget Execution for the half year.
(ii)Illustrates performance ofresources&expenditures. For six months of 2015/16.
(iii) Provides an overview of Sector and Vote level physical achievements across Government based on OOB.
(i)Reviews selected key Vote functions and programmes within the sectors, based on approved plans and significance of budget allocations to the Votes.
(ii) Attention is on large expenditure programme with preference given to development expenditure, &wheresomerecurrent costs are tracked.
(i)Assessment also highlights the performance of the economy against set macroeconomic framework indicator targets.
(ii) Assesses the progress made against the NDP Results Framework, including the NDP Goal/Theme level indicators, Objectives level indicators.
(ii) Assesses the performance against the NDP Sector/Thematic Objectives and key strategies and interventions.
Assessment the annual budget (AB) against NDP II priorities at 4 levels: macroeconomic, national; Sector/MDA and LG.
(i) assesses whether the AB macroeconomic targets are geared towards attaining NDPII medium-term macroeconomic targets and outcomes.
(ii) National level: assesses whether the AB strategic direction is consistent with the NDPII strategic direction.
(iii) sector/MDA level assesses whether the AB strategic direction is translated into sector/MDA specific interventions to deliver the NDPII.
(iv)LG level: assesses whether the LG interventions are focused towards delivering the NDPII targets and outcomes
42
A successful PPB reform will be hinged on the existence of reliable, relevant and consistent performance information to inform the formulation of sector and programme outcomes and monitor the progress towards the attainment of targets. Accordingly, concerted effort is required to harmonize the reporting framework and promote consistent and quality performance information among the several reporting mechanisms.
5.5: RecommendationsThe Validation Meeting, under the chairmanship of MFPED, acknowledged the weak status of the enabling environment, its potential adversarial impact on the quality of PBB estimates and thus committed to undertake the following:
Budget Credibility:
• Promote consistence in prioritization to provide a firm base for costing the sector objectives and programme outcomes over a planning period and set reliable multi-year expenditure projection, including annual estimates;
• Ensure timely release of funds by the accounting officers to programme managers who are responsible for executing the programmes and accounting for the outcomes and results;
• Increase the legitimacy and credibility of budget appropriations with the assurance that once the appropriations are decided upon, they can be executed effectively with minimum deviations.
• Performance Management Practices: MFPED and MoPS should jointly review and harmonize the instruments -APA and SBPC - and put in place the requisite mechanisms for their enforcement.
Performance Monitoring and Evaluation:
• The existing multi-institutional arrangement (NPA, MFPED OPM and UBOS) on NSI should review the performance indicators to advise on baseline data, where possible, and on measures to rationalize, including improving the quality and relevance of the reporting framework from the various agencies.
43
pRioRitY actionS FoR SECOND-YEAR IMPLEMENTATION AND BEYOND
6.
44
• The introduction of programme budgeting is an
ambitious and long-term initiative that requires a
well-structured and sequenced reform strategy.
PBB is a fundamental change in the way the public
administration is planned, budgeted, managed
and controlled and hence would, by necessity,
affect virtually all aspects of the public financial
management administration. In particular, it implies
a substantial reform to most aspects of PFM public,
including: budget classification, scope and use of
performance information; credibility of decision-
making processes; accountability structures for
results; as well as external fiscal oversight by the
legislature and auditor general.
• Moving forward, there is urgent need to put in the
necessary preconditions to allow a smooth transition
from the previous Output-Oriented Budgeting
(OOB) to PBB. The preconditions include: (i) shared
understanding of the reform including its objectives
among policy makers and technocrats; (ii) capacity
built within MFPED to spearhead the reform and
MDAs to adopt PBB; (iii) enhanced budget credibility
and predictability to support formulation and
execution of reliable programme estimates; (iv) an
enhanced performance management culture to
anchor the responsibility and accountability for PBB.
• Accordingly, successful programme-based
budgeting requires a minimum threshold of public
finance management performance and economic
governance. The risks associated with implementing
programme-based budgeting are mitigated by
adopting progressive approach to PBB (sequenced
approach to reform). The first phase seeks to
strengthen the basic public finance management
performance within Uganda - including enhancing
budget credibility and institutional capacity building
for PBB. The second phase seeks to create an
enabling context for the implementation of the core
PBB functions and should prioritize the promotion
of results-oriented management within the public
service. The third phase introduces the core
Programme-Based Budgeting (PBB) functions, the
sequencing of which is guided by PFM functional
linkages.
Putting in place the basics for credible budgeting
• MFPED should prioritize strengthening PFM to
enhance credibility of existing mechanisms namely:
multi-year fiscal and expenditure planning; medium-
term strategic planning and generation of quality
performance information. To provide a foundation
for the early adoption of PBB, MFPED should embark
on the following undertakings:
- Consolidation of the on-going key PFM Reforms;
- Credibility of medium-term fiscal and expenditure framework;
- Understanding and capacity for adoption of the early stages of PPB – improving the quality and presentation of performance information required to influence budgetary or spending decisions.
Institutional Coordination and Capacity Building of key Agencies
• The deepening of the on-going reform will put
considerable demands on the MFPED, Cabinet,
Oversight agencies and MDAs. As a priority, the
Evaluation recommends building capacity of: (i)
Budget Directorate in MFPED, to coordinate the
reform, which involves training and mentoring MDAs;
(ii) Oversight agencies including OAG, Parliament to
enhance performance accountability and oversight;
and (iii) MDAs to generate reliable performance
information aligned with NDP priorities and reliable
multi-year expenditure projections contained
with agreed medium-term fiscal and expenditure
framework.
Sequenced Adoption of PBB
• Phase One (October 2017 - June 2018 –
Development of Reform Strategy. The
Government should undertake an in-depth analysis
of the state of preparedness within MFPED and
other MDAs before the Second Pilot. A PBB Reform
Agenda and Implementation Strategy should then
be developed. The following activities could also be
undertaken to further enhance the understanding of
PBB:
45
o Finalization and Circulation of the PBB manual;
o Undertake a capacity building needs in both MOFPED and spending agencies to guide the formulation and delivery of relevant training programmes;
o Review and harmonization of common performance concepts in all planning, budgeting, monitoring and reporting frameworks;
o Undertake expenditure reviews and develop costing methodologies for selected high-spending sectors to guide the formulation of performance outcomes and targets for the remaining period of the NDP II.
• Phase Two (July – December 2018) – Should include an assessment of the Second PBB pilot to determine the
implementation progress; identify emerging and potential challenges; and help formulate remedial measures.
The specific tasks could include:
o Review functionality of PBS and advise on areas of improvement to further enhance system support of the PBB-related process;
o Review the PBB manual to incorporate best practices and measures to deal with emerging issues;
o Review the institutional capacity-building strategy to deal with sector-specific needs, including developing costing methodologies for additional sectors;
o Continued execution of expenditure reviews for additional sectors to guide on sector and programme outcomes and outputs as well as strategic allocation of resources;
o Continued support to in-house training on the adoption of PBB structures in MDAs.
• Phase Three (2019-2020) – Third Pilot. The Ministry of Finance should review progress on the establishment of the“basics”includinganenablingenvironmentandadviseonthenextphaseofthereform,especiallytheintroductionof core reforms of PBB.
46
7: REFERENCES• Khasian, K., Ramtoola, T., MAkau, P., Mimica, E., and
Britos, F. (2016). East AFRITAC, IMF, Republic of
Uganda, Ministry of Finance, Planning and Economic
Development, Aide Memoire, National
Training Workshop on Strengthening Medium Term
Budget Frameworks
• Ramtoolah, T (2016). East AFRITAC, IMF,
Republic of Uganda, Ministry of Finance, planning
and Economic Development Facilitating the
Implementation of Program-Based Budgeting.
• Munyambonera, E., and Lwanga, M.M (2015). A
Review of Uganda’s Public Finance Management
Reforms (2012 To 2014): Are the Reforms
Yielding the Expected Outcomes? April 2015.
Economic Policy Research Centre-Uganda
• Gelardina, P., Ministry of Finance, Albania and
Konstantin Krityan, Ministry of Finance Armenia,
Twenty-One Countries Meet in Albania to Discuss
Program Budgeting Reforms.
• Ministry of Finance, Planning and Economic
Development (2017). Draft Programme -
Based Budgeting (PBB) Reference Manual, FY
2016/17
• Ministry of Finance, Planning and Economic
Development (2017). Draft Programme-Based
Budgeting (PBB) Reference Manual, FY
2016/17
• Ministry of Finance, Planning and Economic
Development (2010). Guidance Note on the use of
the Output Budgeting Tool, the Preparation of the
Sector Budget Framework Paper and
Ministerial Policy Statement, May 2010.
• Ministry of Finance, Planning and Economic
Development (2016). Guidelines for Budget
Preparation and Reporting for Central
Government using Programme Budgeting System
(PBS), Version 1.0, November 2016
• Ministry of Finance, Planning and Economic
Development (2016). PBS Training of Trainers
Workshop Presentation, Central
Government, Introduction and overview, April 2016
• Parliament of the Republic of Uganda (May 2017).
Report of the Budget Committee on the Annual
Budget Estimates for the FY 2017/18.
• The Republic of Uganda (March 2015). Second
National Development Plan 2015/16-2019/20
(NDPII)
• Ministry of Finance, Planning and Economic
Development (September 2017). Annual Budget
Performance Report FY 2016/17.
• National Planning Authority (April 2017). Certificate
of Compliance for the Annual Budget for FY 2016/17
Assessment.
• The Republic of Uganda (2011). Guidelines for
Performance Agreements for Directors, Heads of
Department, Deputy Chief Administrative Officers
and Deputy Town Clerks, April 2011.
• Ministry of Education and Sports- The Republic of
Uganda (May 2017). Ministerial Policy State FY
2017/18.
• Ministry of Agriculture, Animal Industry and
Fisheries (May 2017), Ministerial Policy Statement
FY 2017/18, The Republic of Uganda
• Ministry of Works and Transport (May 2017).
Ministerial Policy Statement FY 2017/18. The
Republic of Uganda
• Ministry of Health, (May 2017), Ministerial Policy
Statement FY 2017/18, The Republic of Uganda
• Ministry of Finance, Planning and Economic
Development (2014). Uganda PFM
Reform Strategy (July 2014- June 2018).
The Republic of Uganda
• The Republic of Uganda (2014), National
Development Report (NDR) Financial Year 2013/14
• Office of the Prime Minister (September 2016).
Government Annual Performance Report, Volume,
FY 2015/16, The Republic of Uganda
• The Republic of Uganda (2015). Public Finance and
Management Act (amended) 2015
• Uganda Bureau of Statistics (April 2016). the
National Standard Indicator Framework, Interim
Version 1.
• Ministry of Finance Planning and Economic
Development (September 2017). Uganda Public
Expenditure and Financial Accountability Report.
The Republic of Uganda
47
8: ANNEXES Annex 8.1: List of Officials Interviewed
No Name Title
1 Kayemba Kato Assistant Auditor General 2 Kateragga stephen Director 3 Bamulumbye Martin Assistant Director Audit (CGI)4 Muyimbwa John Henry Director Audit A(LG)Ministry of Agriculture Animal Fisheries /NARO/NAGRC&DB
1 Akankwasa Alfred Principal Fisheries Inspector2 Kutunga David SAT3 Mayanja fred AC/P4 Segoyo Abbey NAGRC&DB5. Kagoro Jane Principal Finance Officer
Ministry of Education and Sports1 Dr. Egua Jane Commissioner Teacher, Instructor Education and Training2 Matyama Fred Commissioner Education Policy and Planning3 Dr. Nkaada Daniel Director. Pre-Primary and Primary Education4 Namisi Derrick5 Nakajubi Jane
Ministry of Finance, Planning and Economic Development
1 Kasimbazi Betty Under Secretary2 Ssemugooma Godfrey Ag. Director Financial Management services3 Kakama Godwin Commissioner BPED4 Mbulamuko Laban Ag. Assistant Commissioner ISSD 5 Byaruhanga Charles Advisor Budget 6 Zigiti Zeridah Ag. Assistant Commissioner ISSD 7 Ndolerire William AC/SS8 Enyimu Joseph Commissioner ED$RD9 Nyombi Tom Economist10 Tibenkanda James H/PU
11 Dhatemwa Godfrey Commissioner Debt Policy and Issuance
12 Kabaale Muhammed Principal Economist - PAD13 Tito Okello Economist -DB14 Timothy Nambogoa Economist -DB15 Segamwenge Goeffrey Economist -DB16 Agasha Nimrod Economist -DB17 Mugizi Ian K Economist -DB18 Tereza Namwach Senior Economist -DB19 Kagaba Patrick Head of Procumbent -FINMAP20 Mugabi Emmanuel SeniorM&EOfficer-FINMAP21 Ayebare Esther AG. Senior Economist22 Baguma Asuman IT Support Officer23 Kajungu tom IT Support Officer24 Katungi stuart Systems Developer25 Karoro Henry Senior Economist26 Kemigisha Florence IT Support Officer
48
27 Macklean Kweiga Economist28 Nakalema Christine IT Support Officer29 Allen Terry PBB Advisor (USAID)30 Shashidhar Shivarudrappa PBS Project ManagerMinistry of Health1 Kabagambe Richard AC/B/F2 Kauta John Technical Advisor3 Swaleh Sebina EconomistMinistry of Public Service1 Aryatuha DorahNational Planning Authority1 Dhikusooka Gyaviira SM&EO/C2 Dhizaala S Moses H/M&E3 Mayanja Nassaka Catherine SP-Accountability&Legislature Office of the Prime Minister 1 Byamugisho Albert Advisor/MOE2 Lubanga Timothy AGC/M&E3 Ngume Rashid EconomistParliamentary Budget Office1 Kintu Godfrey Principal Economist2 Lubowa William Principal EconomistUganda Bureau Of Statistics1 Madaya Norah DSCS2 Mugoya Paul FM3 Musana Imelda DED/STAT Production4 Waibi Moses Senior AccountantUganda National Roads Authority1 Ruhangayebare Dominic AG Head Corporate Strategy2 Kakonge Joseph M&EOfficer3 Opio Emmanuel Finance Officer4 Ouma Arthur Manager Finance
49
annEx 8.2: DIFFERENCES BETwEEN THE CONCEPTUAL FRAMEwORK FOR OOB AND PBBPrinciples & Elements Output Oriented Budgeting Program Based budgeting
Definition
A process that requires agencies to focus on the relationship between their outputs, resource allocations (appropriations) and the outcomes desired by government1.
MDA managers must clearly specify the nature and quantity of agency outputs, cost their outputs, and articulate the connection between the outputs delivered and government’s desired outcomes.
A systematic use of performance information to inform decisions about budgetary priorities and spending plans based on the program classification of expenditure between competing programs and sectors.
Decisions about budgetary priorities, and spending plans based on the program objectives and outcomes.
Key Benefits
Popular because of perceived impact on the following:
(i)More intelligent analysis of the outcomes to which outputs are supposed to contribute.
(ii) Easier to cost outputs; specify performance standards required in the delivery of the outputs and services; and to compare the cost-effectiveness of alterative providers.
(iii) Appropriation and budgeting by outputs rather than by aims, objectives or programs, enables a more transparent targeting of expenditure.
Improve the effectiveness and efficiency of public expenditure prioritisation by linking the funding of public sector organisations to the results they are expected to deliver.
Enables GoU to evaluate whether funding is spent wisely on a programme that is meeting its goals (such as middle-income status) or if the money should be spent on another program.
Unit of Control (spending decisions)
Output Outcome
Budget Structure
Vote Functions: are groups of related services and capital investments in a Vote, delivered by a program or project
Program: Collection of related activities working toward a common purpose within the line ministry including program objectives and outcomes.
Outcome: measures the impact a specific programme is intended to have on the society, or benefits.
Projects and programmes: are administrative units within a Vote Function responsible for delivering services, overseeing transfers of services and undertaking capital investments
Sub-program: A group of projects / activities under the same operational or development priority policy objective and related outputs.
Outputs: Outputs are achieved through activities, facilitated with inputs and measured by performance indicators.
Output: Good or services or products that are associated with a sub-program.
Inputs are the resources necessary to carry out activities/purchases and identified against line items.
Performance Indicators or Measures what is being produced (i.e. outputs or services delivered); measures the impact and/or achievements of a program; and assesses value for money for the resources allocated to programmes.
(Footnotes)
1 A practical definition provided by Onanong Vatjanapukka in An Analysis of Output Based Budgeting (OBB) in the Victorian Government, Australia. A thesis submitted in fulfilment of the requirements for the degree of Doctor of Philosophy Victoria Graduate School of Business, Faculty of Business and Law Victoria University, Melbourne 2005.
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