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Published on: 29/07/2015

The proportion of the national budget allocated to the sector declined from 5.6% in 2008 to 2.8% in 2013. While the allocation in absolute terms increased from UGX193 billion (US$64 million) to UGX308 billion (US$103 million), there is increasing concern among sector stakeholders that the increment is not in sync with the population growth estimated at 3% per annum. One of the most affected areas is the recurrent costs of operation and maintenance for rural water supply facilities.

In view of these trends, IRC Uganda in 2014 conducted a budget tracking study in Kabarole and Lira districts, to get a better understanding of how these macro financial trends work out at decentralized level. The study specifically sought to understand the financial flows, the district budget and expenditure on different activities related to rural water supply. 

It was noted that often times, there are variances between the amount budgeted, the amount allocated; amount actually disbursed to the district and the actual amount spent. The key factors influencing the trends were identified as:

  1. Delays in processing disbursements, which affects expenditure
  2. Creation of new districts (administrative units) which affects district population figures and ultimately the expenditure patterns
  3. Follow up efforts by the Technical Support Units (TSUs) to fast track the district procurement processes
  4. Staffing capacity of district water offices, which affects the absorption capacity

Overall, the study found that while there is a clear process and guidelines for planning and budgeting for water supply activities, with an explicit formula for allocation of resources, there is no strict adherence to the guidelines. There is an imbalance in allocation of budgets and expenditure on key aspects of water service supply. Investment in new water supply systems takes up to 90% of the grant while the recurrent costs share only 10% or less. This relatively low allocation of financial resources towards recurrent costs works against the delivery of adequate service levels. Capital expenditure on fixed assets is important but to ensure sustainability, it has to go in tandem with Operating and Minor Maintenance Expenditure (OpEx), as well as Capital Maintenance Expenditure (CapManEx).

The costs of a comprehensive water supply service consists of several components including:

  1. Costs related to initial development (both infrastructure development and software activities such as setting up a service provider and training)
  2. All the recurrent costs associated with providing services at a defined level to defined user population over time
  3. Costs of operation and maintenance 
  4. Expenditure on direct support activities like monitoring, field visits, refresher trainings etc.

As a key recommendation, the Ministry of Water and Environment should consider changing the District Water and Sanitation Conditional Grants (DWSCG) guidelines into policy directives that district local governments must adhere to when implementing water supply activities. The directives should also be clear on penalties for non-compliance.

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