Uganda Human Capital Development and Growth Review July 2025 © 2025 International Bank for Reconstruction and Development/International Development Association The World Bank Group 1818 H Street NW Washington DC 20433 Telephone: 202-473-1000 Internet: www.worldbank.org This work is a product of the staff of The World Bank with external contributions. The findings, interpretations, and conclusions expressed in this work do not necessarily reflect the views of The World Bank, its Board of Executive Directors, or the governments they represent. The World Bank does not guarantee the accuracy of the data included in this work. The boundaries, colors, denominations, and other information shown on any map in this work do not imply any judgment on the part of The World Bank concerning the legal status of any territory or the endorsement or acceptance of such boundaries. Citation World Bank, Ministry of Education and Sports, and Ministry of Finance, Planning and Economic Development. 2025. 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Ltd i TABLE OF CONTENTS Table of Contents Lists of Boxes, Tables, and Figures .....................................................................................................................................................................................................iv List of Acronyms............................................................................................................................................................................................................................................vii Foreword.....................................................................................................................................................................................................................viii Acknowledgements..............................................................................................................................................................................................................ix Executive Summary....................................................................................................................................................................................................................................xi Human Capital Development: Overall Progress and Challenges...............................................................................................................................xii Progress and Challenges Across the Specific Human Capital Sub Programs...................................................................................................xiii Game Changers...........................................................................................................................................................................................................................................xvi 1. The State and Potential Trajectory of Uganda’s Human Capital....................................................................................1 The demographic dividend is a historic opportunity for accelerating socio-economic transformation in Uganda...........................................................................................................................................................................................................1 Two scenarios for human capital in Uganda: Business-as-usual or Vision 2040 acceleration.....................................................5 Program-based budgeting, decentralization, regional integration, and refugee integration can support human capital development...............................................................................................................................................................................8 A Human Capital Approach to Development: Lessons from International Experience................................................................11 Human capital investment strengthens resilience and social cohesion............................................................................................13 Overview of this report..........................................................................................................................................................................................................15 2. Education for Economic Growth: A catalyst for human capital and innovation....................................................16 Education is critical for developing human capital and achieving Vision 2040.................................................................................16 Challenges in education quality, retention, and skills development hinder progress toward national education goals.........................................................................................................................................................................................................17 Despite some progress, equity gaps persist at all levels of the education system......................................................................18 Uganda’s public expenditures on education are low and inefficient, which is constraining human capital growth..........................................................................................................................................................25 Substantial education investments are needed to reap the demographic dividend.........................................................................26 Strengthening teacher effectiveness and education system management will improve outcomes.....................................27 Recommendations..................................................................................................................................................................................................29 3. Health for Better Human Capital and Growth: Investing in health and nutrition is key to accelerating human capital development and economic growth..........................................................................................................31 Despite making significant progress in health and nutrition outcomes, Uganda still experiences a high burden of disease.........................................................................................................................................................................................................32 Access to and the coverage of health and nutrition interventions have markedly increased, and their quality has improved, but major gaps and inequalities remain.................................................................................................35 Investing in health should unlock critical constraints and leverage opportunities for ccelerating human capital development..................................................................................................................................................................38 ii UGANDA HUMAN CAPITAL DEVELOPMENT AND GROWTH REVIEW 4. Water and the Environment Impact Human Capital........................................................................................................53 Water supply, sanitation, and hygiene (WASH) services contribute to human health and are therefore key to human capital development....................................................................................................................................53 Despite progress, gaps in access to safe and adequate WASH services remain...............................................................................54 The governance framework for provision of WASH services lacks coordination and sector financing remains inadequate............................................................................................................................................................................................56 Recommendations....................................................................................................................................................................................58 Having a healthy environment helps to increase household incomes and improves the health and well-being of all Ugandans.........................................................................................................................................................................59 Despite vulnerability to public health emergencies and climate shocks, preparedness is not adequate...........................60 Pollution is a big challenge with severe impacts on health and human capital..............................................................................62 Recommendations....................................................................................................................................................................................................65 5. Investing in Social Protection to Build and Safeguard the Human Capital of the Poor.......................................66 Low investment in human capital means poverty and inequality remain high....................................................................................66 Global initiatives and evidence highlight the critical role played by social protection in building human capital...............................................................................................................................................................................68 Social protection in Uganda needs to be significantly improved before it can effectively foster human capital....................................................................................................................................................................................................................71 6. Maximizing Human Capital Utilization in the Labor Market...........................................................................................80 Uganda’s human capital is significantly underutilized.....................................................................................................................................80 Uganda’s abundant and youthful labor force is a challenge for maximizing human capital utilization.................84 Uganda’s human capital is absorbed mostly by low productivity activities..................................................................................................88 Structural transformation is slow, with limited productivity growth..................................................................................................91 Low levels of human capital limit firm creation and growth..................................................................................................................94 Policy recommendations for increasing the utilization of human capital..................................................................................................96 Recommendations....................................................................................................................................................................................................101 7. Conclusion: Four Game Changers for Uganda’s Human Capital Development....................................................104 Game Changer #1. Prioritize the implementation of accelerator interventions......................................................................104 Game Changer #2. Gradually increase expenditures on human capital to ensure equitable access to quality services.................................................................................................................................................................107 Game Changer #3 Increase the efficiency of the human capital program through data, incentives, community mobilization, and enforcement of regulations and standards............111 Game Changer #4 Improve the enabling environment for cross-sectoral and intergovernmental collaboration...................................................................................................................................116 Appendix A. Human Capital Index Methodology............................................................................................................................118 Appendix B. List of Current and Recent World Bank-Financed Human Capital Projects...................................................119 iii TABLE OF CONTENTS Endnotes.......................................................................................................................................................................................121 Notes to Chapter 1......................................................................................................................................................................................................................................121 Notes to Chapter 2......................................................................................................................................................................................................................................122 Notes to Chapter 3......................................................................................................................................................................................................................................124 Notes to Chapter 4......................................................................................................................................................................................................................................128 Notes to Chapter 5......................................................................................................................................................................................................................................130 Notes to Chapter 6.......................................................................................................................................................................................................................................131 iv UGANDA HUMAN CAPITAL DEVELOPMENT AND GROWTH REVIEW Lists of Boxes, Tables, and Figures List of Boxes BOX 1.1. TAKING STOCK OF UGANDA’S GAINS IN HUMAN CAPITAL DEVELOPMENT BOX 2.1. LIFECYCLE IN FOCUS: PRENATAL AND EARLY CHILDHOOD DEVELOPMENT BOX 2.2. LEARNING FROM PEER COUNTRY EXPERIENCES BOX 3.1. LIFECYCLE IN FOCUS: HEALTH AND WELL-BEING OF ADOLESCENTS AND YOUNG PEOPLE BOX 4.1. WASH SERVICES IN UGANDA’S SCHOOLS AND HEALTH FACILITIES BOX 6.1. DATA USED IN THIS REPORT BOX 6.2. INTERNATIONAL MIGRATION AS A CATALYST FOR HUMAN CAPITAL INVESTMENT AND UTILIZATION BOX 6.3. HEALTHY AGING AND PRODUCTIVE LONGEVITY IN UGANDA: PROGRESS, GAPS AND OPPORTUNITIES BOX 7.1. HUMAN CAPITAL SPENDING: HOW MUCH IS ENOUGH? BOX 7.2. EFFECTIVE HUMAN RESOURCE MANAGEMENT List of Tables Table 1.1. Trends in human capital outcomes (2010-2040) for business-as-usual and accelerated scenarios Table 2.1. Implementation status of interventions reviewed by the global evidence in education advisory panel Table 2.2. Coverage, equity, and quality of key interventions in the life cycle Table 2.3. “Smart buys” in uganda Table 2.4. Sources of inefficiency in education system Table 2.5. Recommendations for education: short-term and long-term Table 3.1. Trends in overall health and nutrition outcomes (1989/90 – 2023/24) Table 3.2. Trends in administrative units in uganda (2002 - 2023) Table 4.1. Urban and rural water supply coverage compared with program implementation action plan targets, 2019/20 to 2022/23 (and target for 2024) Table 4.2. Wash in health facilities, schools, and prisons Table 4.3. Recommendations for wash: short- term and long-term Table 4.4. Recommendations for improving the environment: short-term and long-term Table 5.1. Uganda’s national social protection strategy for 2023-28: proposed strategic interventions by lifecycle stage and cross-cutting interventions Table 5.2. Programs in the social protection sector: objectives and coverage Table 5.3. Recommendations for social protection: short-term and long-term Table 7.1. Proposed initial accelerator interventions and associated alignments and bottlenecks v TABLE OF CONTENTS List of Figures Figure 1.1. Uganda’s population pyramid, 2024 Figure 1.2. Uganda population projection by age group, 2023-2050 Figure 1.3. Human capital entry points across the lifecycle Figure 1.4. Relationship between human capital index and GDP Figure 1.5. Trends and projections for the human capital index in uganda (2000-2040) Figure 1.6. Pillars of the Parish Development Model Figure 1.7. GDP growth and selected human capital indicators in South Korea, 1971-1985 Figure 2.1. Uganda lorenz curve of education expenditure, 2019/20 Figure 2.2. Learning poverty in primary education and poverty levels by subregion Figure 3.1. Trends in contribution of major types of diseases to adjusted life years lost in Uganda, 2000 – 2019 Figure 3.2 Trends in the proportion of leading causes of mortality in health facilities in Uganda, 2012 – 2023 Figure 3.3. Key nutrition outcomes since 2001 and projected trends to 2040 Figure 3.4. Trends in universal health coverage (UHC) index, 2000–2021 for Uganda and comparator countries (By type of health service) Figure 3.5. Access to basic amenities in health facilities, 2023 Figure 3.6. Adequacy, sources, and efficiency of health financing in Uganda Figure 3.7. Adequacy, sources, and efficiency of health financing in Uganda Figure 3.8. Status of public and private not-for-profit human resources for health in Uganda against current and future requirements Figure 3.9. Availability of a basket of 41 commodities in health facilities and central storage warehouses, FY 2019/20 - FY 2022/23 Figure 3.10. Average local government health sector performance scores, 2022 (percent) Figure a BOX 3.1: Levels and trends in teenage age at first sex, pregnancy, and birth rate Figure 4.1. Water sector budget performance (UGX billion), 2020 – 2024 Figure 4.2. Extreme heat days by district, 2015–2020 average Figure 4.3. Extreme heat days by district, predicted for 2040 Figure 4.4. Number of antibiotics for which resistance is shown in three types of bacteria Figure 5.1. Real GDP growth in Uganda by quarterly sector contributions (percent year on year), FY 2020 and FY 2021 Figure 5.2. Correlation between poverty rate in 2016/17 and Human Capital Index (HCI) circa 2016/17 by subregions Figure 5.3. The three goals of social protection and instruments for achieving them across the lifecycle Figure 5.4. Organizational chart for social protection coordination Figure 5.5. Beneficiary incidence of two main safety net programs Figure 5.6. Successive phases of Northern Uganda Social Action Fund (NUSAF) Figure 6.1. Distribution of subsistence and work-for-pay individuals, by age, education, rural/urban location, and region Figure 6.2. Unemployment and underemployment over time, by gender, location, age, education, and sector Figure 6.3. Population shares of urban vs. rural areas, 2015, 2022, and 2030 (projected) Figure 6.4. Population growth, 2015-2022 and 2015-2030 (projected) Figure 6.5. Trends in the labor force participation, neet, and unemployment rates of youths aged 18–30 Figure 6.6. School-to-work transition, 2019 Figure 6.7. Sector of employment by age, 2019 Figure 6.8. Sector of employment by age and gender, 2019 vi UGANDA HUMAN CAPITAL DEVELOPMENT AND GROWTH REVIEW Figure 6.9. Sector of employment by education, 2019 Figure 6.10. Broad sectoral productivity, 2011, 2015, 2019 Figure 6.11. Sectoral productivity, 2015, 2019 Figure 6.12. Distribution of workers’ education level by occupation skill level, 2019 Figure 6.13. Distribution of workers’ job sector by occupation skill level, 2019 Figure 6.14. Employment by sector, 2009–2025 Figure 6.15. Sectoral productivity, 2018 Figure 6.16. Decomposition of growth in per capita value added, 2000–2018 Figure 6.17. Productivity change decomposition, 2000–2018 Figure 6.18. Decomposition of growth in per capita value added, by country, 2000–2018 Figure 6.19. Contribution of change in productivity, by country and major sector, 2000–2018 Figure 6.20. Productivity per worker by household enterprise characteristics, 2016 vii UGANDA HUMAN CAPITAL DEVELOPMENT AND GROWTH REVIEW List of Acronyms BRMS Basic Requirements and Minimum NSPS National Social Protection Strategy Standards NUSAF Northern Uganda Social Action Fund CCT Conditional Cash Transfers PDM Parish Development Model DHS Demographic and Health Survey PHP Private Health Providers DRF Disaster Risk Financing PIAP Program Implementation Action Plan ECD Early Childhood Development RBF Results-based Financing EGR Early Grade Reading ROI Return on Investment EMIS Education Management Information SAGE Social Assistance Grants for Empowerment System UBOS Uganda Bureau of Statistics GBV Gender-based Violence UGIFT Uganda Intergovernmental Fiscal Transfers GDP Gross Domestic Product Program GER Gross Enrollment Ratio UHI Uganda Heart Institute GoU Government of Uganda ULEARN Uganda Learning Acceleration Program HC Health Center UNEB Uganda National Examinations Board HCD Human Capital Development UPE niversal Primary Education HCI Human Capital Index USE Universal Secondary Education HPV Human Papillomavirus ICT Information and Communication Technology LAYS Learning Adjusted Years of Schooling LFP Labor Force Participation MIS Management Information Systems MoES Ministry of Education and Sports MoFPED Ministry of Finance, Planning and Economic Development MoGLSD Ministry of Gender, Labour and Social Development MoH Ministry of Health MoLG Ministry of Local Government MoU Memorandum of Understanding MoWE Ministry of Water and Environment NCDC National Curriculum Development Center NAPE National Assessment of Progress in Education NCD Non-communicable Disease NDP National Development Plan NEET Not in Employment, Education, or Training NMS National Medical Stores NPA National Planning Authority NPC National Population Council viii UGANDA HUMAN CAPITAL DEVELOPMENT AND GROWTH REVIEW Foreword The Uganda Human Capital Development and Growth Review (UHCDGR) serves two purposes. It provides a comprehensive analysis of the state of human capital in Uganda and proposes strategic actions to accelerate progress toward the country’s ambitious development goals, as articulated in Vision 2040, the fourth National Development Plan, and the Tenfold Growth Strategy. Human capital is a key driver of a country’s productivity, laying the foundations for the achievement of a country’s long term development outcomes. The relationship between human capital, productivity, and economic growth is evident. For instance, on average, an additional year of schooling for a child can increase their earnings as an adult by nearly 10 percent —over 11 percent for women — contributing to a 2.5 percent point increase in GDP per capita. A country’s investment in human capital determines whether it will benefit from a demographic dividend or face a demographic disaster. With appropriate educational, health, and social protection inputs, human capital accumulation over the lifecycle can yield lasting benefits for individuals and society at large. Despite significant strides in recent decades, Uganda’s human capital remains low. The country’s Human Capital Index (HCI), which assesses the future workforce’s productivity based on education and health achievements, currently stands at only 39 percent, indicating substantial untapped human potential. This score is lower than most comparable countries and leads to significant economic losses. The Government of Uganda recognizes the need to invest more in comprehensive and efficient human capital development to harness the potential of its people and drive inclusive economic growth. Uganda stands at a pivotal juncture. With a young, rapidly expanding population and abundant natural and physical capital, the country has a unique opportunity to drive transformative economic growth. To capitalize on this opportunity, the Government of Uganda will prioritize making strategic investments in its human capital ensuring equitable access to quality education, skills development, healthcare, water and sanitation, social protection, and jobs. The choices made today will determine whether Uganda harnesses its demographic advantage or risks falling behind. Hon. Janet Kataaha Museveni, Hon. Matia Kasaija, Dr. Qimiao Fan, Minister of Education and Sports Minister of Finance, Planning and Division Director, World Bank and Chairperson, Human Capital Economic Development (Uganda, Kenya, Rwanda, Somalia) Development Program ix UGANDA HUMAN CAPITAL DEVELOPMENT AND GROWTH REVIEW Acknowledgements This publication was collaboratively prepared by the World Bank and the Government of Uganda, through the Human Capital Development Program and the Ministry of Finance Planning and Economic Development (MoFPED). The core team was co-led by Dr. Jane Egau (Under Secretary, Ministry of Education and Sports - MoES), Robert Bellarmine Okudi (Commissioner, MoES), and Joseph Enyimu (Commissioner, MoFPED). We appreciate Hon. Janet Museveni, Minister of Education and Sports for the leadership of the Human Capital Program and the review, together with Hon. Dr. Jane Ruth Aceng (Minister of Health), Hon. Betty Amongi Akena (Minister of Gender, Labor and Social Development), Hon. Sam Cheptoris (Minister of Water and Environment), and Hon. Dr. Joyce Moriku (Minister of State for Education and Sports). We also acknowledge Hon. Matia Kasaija, Minister of Finance, Planning and Economic Development for his steadfast support to human capital development. We further extend our gratitude to the Permanent Secretaries under the Human Capital Program and guidance to the review: Kedrace Turyagyeda and Ketty Lamaro (MoES), Diana Atwine (Ministry of Health), Alfred Okot Okidi (Ministry of Water and Environment), and Aggrey David Kibenge (Ministry of Gender, Labour and Social Development). We also acknowledge the guidance from Ramathan Ggoobi (Permanent Secretary and Secretary to Treasury, MoFPED) and Joseph Muvawala (Executive Director, National Planning Authority). We thank contributing members from the Government team, partners, civil society, and the private sector: Ministry of Education and Sports: Jane Egau, Robert Bellarmine Okudi, Grace Baguma, Patrick Apecu, Eliot Arinaitwe, Sakshi Hallan, Grace Nankabirwa, Nsereko Mike. Ministry of Health: Charles Olaro, Sarah Byakika, Driwale Alfred, Annet Mukagakwaya Musinguzi, Peter Wambi, Patrick Bangahare, Mubanza Isaac, Jesca Nsungwa, Martin Lukwago. Ministry of Gender Labor and Social Development: Alex Asiimwe, Beatrice Ayikoru, Isaiah Masiga, Nanjobe Umirah, Enoch Z. Mutambi, Paul Onapa, Beatrice Okillan, Isaiah Masiga, Raymond Wasukira, Bernard Mwambala. Ministry of Water and Environment: Olweny Lamu, David Bateganya, George Aporu. Ministry of Finance: Joseph Enyimu, Richard Jabo, Sheila Nuwamanya, Doreen Ashaba, Azizah Nabitalo, Martha Byabagye Musimenta, Geofrey Segamwenge, Nimrod Agasha, Ishimwe Collins. Ministry of Agriculture Animal Industry and Fisheries: Catherine C Mwale. National Planning Authority: Hamis Mugendawala, Samuel Kasule, Joyce Abaliwaho. Uganda Bureau of Statistics: Helen Namirembe Nviiri, Noor Namiyanga, Prize Asiimwe. National Population Council: Kwebiha Joshua, Henry Ziriddamu Lubega, Olemo James Peter. Office of Prime Minister: Kamara Loyce, Marvin Ssenkungu, Namayanja B, Sophia Agaba, Kawunde Isa. Office of the President: Abubaker Muhammed Moki. Ministry of Local Government: Peres Kunya, Kasozi Kizito, Rosemary Bacurire, Richard Okuku, Immaculate Nsangi, Rebecca Ssabaganzi, Stephen Mulindwa, Umiah Nanjobe. x UGANDA HUMAN CAPITAL DEVELOPMENT AND GROWTH REVIEW Academia: Elizabeth Kiracho, Stephen Ojiambo Wandera, and Ronald Kananura. Development Partners: Garoma Akena, Sylvia Ichumar, Isla Gilmore, Chemistry Twanda, Christabel Abewe. Civil Society: Mary G. Nakabugo, Peter Eceru, Dimoower Joe. From the World Bank, the work was led by Shawn Powers, Rogers Ayiko, Anne Bakilana, Moses Osiru, Lillian Muhebwa, Fatima Naqvi, Federica Ricaldi, Christabel Sefa and received major contributions from Ellinore Carroll, Yoonyoung Cho, Collins Chansa, Julia Mensah, Alexander Danilenko, Alastair Haynes, Anita Isige, Somya Bajaj, Pedro Cerdan-Infantes, Elizabeth Ekirapa Kiracho, Rornald Kananura, Lukwago Daniel, Elizabeth Ekochu, Brendan Michael Hayes, Grace Murindwa, Edith Bateganya, Maletela Tuoane, Evelina Dahlgren, Catherine Ajiku Obitre Gama, Aaron Kabirizi, Annelle Bellony and Abdo Yazbeck, and Damalie Evalyne Nyanja. The report benefited from the contributions of peer reviewers Pablo Ariel Acosta, Amina Denboba, Wendy Cunningham, and Pia Schneider. We thank the editors Marc De Francis and Fiona Mackintosh, and designer Brenda Nantongo. Finally, we appreciate the guidance of Meskerem Mulatu, Francisca Ayodeji Akala, Suleiman Namara, Muna Meky, Paolo Belli, Francis Ghesquiere, Mukami Kariuki, Keith Hansen and Qimiao Fan. xi UGANDA HUMAN CAPITAL DEVELOPMENT AND GROWTH REVIEW Executive Summary The Government of Uganda has rolled out ambitious plans for the country’s socio-economic transformation, the success of which will greatly depend on the quality of human capital. Vision 2040, published in 2013, envisions Uganda becoming a modern and prosperous middle-income country with a per capita income reaching US$9,500 by 2040, up from $730 in 2013. This ambition is reinforced in the Ten-Fold Growth Strategy (2024), which seeks to raise Uganda’s GDP ten-fold from US$50 billion in 2024 to US$500 billion by 2040. Achieving this target would necessitate doubling GDP roughly every five years, with per capita income reaching approximately US$7,000 by 2040, up from US$1,046 in 2024. The Human Capital Index (HCI) measures the potential productivity of the next generation, considering factors like health and education. Uganda’s current HCI score is 0.39, meaning that Uganda is currently failing to harness 61 percent of its human capital potential for socio-economic development. Furthermore, human capital is significantly underutilized in the labor market. It is imperative to increase human capital investments and utilization through the five-year National Development Plans (NDPs), which aim to achieve growth aspirations, as it will optimize investments and returns in natural, physical, and other forms of capital. Uganda is on the verge of a one-time opportunity to benefit from a demographic dividend; however, it will not happen without the right investments. During periods of demographic transition, countries experience a brief phase when the working-age population (ages 15 to 64) significantly exceeds the dependent population (children and the elderly) following reductions in mortality and fertility rates. A high ratio of the working population to dependants can boost economic growth and result in a demographic dividend, provided the economy generates sufficient employment opportunities, and workers achieve improved earnings, and save more while investing in their households. Uganda’s population of 46 million is one of the youngest in the world with over half under 18 years of age. By 2060, it is expected to more than double to 104 million, of which 70 percent will be of working age. Reaping demographic benefits from this population will require intentional increases in investments in education, health and nutrition, and jobs. The Uganda Human Capital Development and Growth Review (UHCDGR) adopted a lifecycle approach to analyze the state of human capital in Uganda the factors affecting its progress. In doing so, it reflects the approach taken in NDP IV, which is focused on meeting the changing needs of individuals throughout their lives—from the womb to old age and at every stage of life in between. First, the UHCDGR presents a comprehensive analysis of the current state of human capital development in Uganda, including its achievements to date, the challenges that it faces, and the potential that exists for investing in its people. Chapters 2 to 6 discuss each of the human capital sectors in turn—education, health, water and sanitation, social protection, and jobs—all of which interrelate across the lifecycle. Based on this analysis, Chapter 7 recommends four cross-sectoral “game changers” that have the potential to accelerate the pace of human capital development and thus enable Uganda to reap the benefits of its demographic transition and achieve its development goals. xii UGANDA HUMAN CAPITAL DEVELOPMENT AND GROWTH REVIEW Human Capital Development: Overall Progress and Challenges Uganda has made significant strides in human capital development in recent years but much more progress is required to achieve the country’s growth aspirations. For example, primary school enrollment increased from 2.6 million in 1995 to 8.7 million by 2017, but major challenges exist in terms of the quality of education, as measured by Learning Adjusted Years of Schooling (LAYS). While Ugandans can expect 6.8 years of schooling on average, they only gain 4.3 LAYS during that time, showing that learning outcomes are poor. Major strides in life expectancy took place in the last three decades; it increased from 46.3 years in 1990 to 68.5 years in 2024. There have also been marked reductions in maternal mortality, under five mortality, and prevalence of communicable diseases, but there is increasing burden of non-communicable diseases and public health emergencies. Progress has also been made in social protection, with the implementation of a senior citizens grant program and a national strategy which aims to address the needs of vulnerable populations, including the elderly. However, despite these efforts, social protection coverage remains limited. Uganda is currently off-track to meet its development goals because of underinvesting in human capital, despite it being the second-most funded program under the national budget. Further, budget allocations to the social sectors are both insufficient and inefficient, relying heavily on out-of-pocket and external financing. Programming and budgeting continue to be siloed, despite the adoption of program-based planning and budgeting. To realize its economic growth aspirations, Uganda must recognize the critical link between human capital and economic development. Between 2010 and 2022, Uganda experienced modest progress in its HCI, with an increase from 0.34 in 2010 to 0.39 in 2022 (projections show HCI may have reached 0.40 as of 2025). At this current rate of progress, under a business-as-usual scenario, projections suggest that the HCI could reach approximately 0.45 by 2040 (Figure A). An analysis of countries that have successfully achieved HCI levels aligned with Uganda’s 2040 economic growth vision, however, indicates that an HCI of 0.56 could be expected by 2040, with the right investments. This latter target reflects a workforce that would be significantly healthier and better equipped to drive and sustain high levels of economic growth. Considering these findings, there is a need to prioritize and invest in high-impact strategies that enhance human capital. Figure A. Historic and Projected Trends in the Human Capital Index in Uganda (2000–2040) Source: Modelling based on data from the World Bank’s World Development Indicators, Human Capital Index data base, Demographic and Health Surveys, and various Education Sector Performance Reports. xiii UGANDA HUMAN CAPITAL DEVELOPMENT AND GROWTH REVIEW Progress and Challenges Across the Specific Human Capital Sub Programs EDUCATION Uganda has a history of progressive and inclusive education policies, being the among the first African countries to adopt free primary education through its Universal Primary Education Policy in 1997, which dramatically increased enrollment. However, the basic education system still faces three interlinked challenges of low foundational skills acquisition, high repetition rates and high dropout rates. Public spending on education is low, representing just 2.7 percent of Uganda’s GDP in 2021, well below the 4.2 percent average for its East African peers. The gap is most pronounced at the primary level, where Uganda’s per-student expenditure is only one-third of the regional average, shifting the burden onto households and exacerbating equity issues. While Uganda’s education spending has grown modestly (in inflation-adjusted terms) in the past decade, this increase has mainly benefited higher education (43 percent of the additional resources) and central expenditures (24 percent). This expenditure is also inefficient. Uganda’s LAYS are 11 percent lower than the average for countries at similar levels of development and expenditures. Some possible reasons for this inefficiency are a culture of teacher absenteeism and the existence of “ghost” teachers, inadequate teacher incentives, overcrowded classrooms, incomplete data systems and low budgets for school-level inspections. Educational quality is suffering as a result. A World Bank survey in 2018 found that most primary school teachers in Uganda were incapable of delivering effective lessons based on the curriculum. Teacher tests have shown that most teachers do not meet the expected proficiency level in numeracy, and about half do not meet the proficiency level in oral vocabulary. Even though approximately 62 percent of government education spending goes into wages, teachers’ salaries are much lower than those of other similarly educated workers. For example, the salaries paid to teachers with a university degree are 37 to 42 percent lower than the national average for other professionals. Because local governments and schools receive limited funding from the central government, households are having to pay high out-of-pocket costs in fees, even in government-aided schools. For every UGX 1,000 that the government invests in education, households spend UGX 1,450, and even this is insufficient to bridge the funding gap. As a result, Ugandan children and youths are at high risk of being excluded from education because their families cannot afford to pay out-of- pocket fees. HEALTH Despite years of commendable progress in health and nutrition, Uganda still suffers a high burden of disease, which threatens human capital development and economic growth. Areas of marked progress include, maternal mortality, under five mortality, life expectancy at birth, and control of infectious diseases, notably HIV/AIDS and malaria. However, progress has been slower for neonatal mortality, teenage pregnancy, fertility, adult mortality, and under five stunting. Uganda is experiencing a rising burden of non-noncommunicable diseases and frequency of public health emergencies. The improvement in health outcomes is partly attributable to increased access to quality essential health services. For example, Uganda’s Universal Health Coverage Index (UHCI), a metric used to measure how well a country is providing essential xiv UGANDA HUMAN CAPITAL DEVELOPMENT AND GROWTH REVIEW health services to its entire population out of a maximum score of 100, improved from 22 percent to 49 percent between 2000 and 2021. Access to essential health services has increased, with the percentage of people living within 5 kilometers of a health facility, whether public or private, having increased from 83 percent in 2012/13 to 91 percent in 2019/20. While access to health services has markedly improved across several domains, there is room to improve the functionality and productivity of service delivery platforms including health facilities (both primary healthcare and referral facilities), community health, school health, workplaces, and digital platforms. Poor quality of services is driven by a range of issues such as (1) inadequate inputs like competent and motivated personnel, essential medicines, and functional equipment; (2) long waiting times; (3) low access to water, sanitation, and waste management facilities; (4) personnel that is unresponsive toward clients; (5) the need to travel long distances to access health facilities; (6) the high cost of services; (7) the limited range of services provided; and (8) organizational, managerial, and governance weaknesses at the health facility level. Uganda has comparably low levels of investment in health and broader human capital development. The country currently allocates a much lower share of its GDP to health (around 1 percent) compared to peer countries like Burundi, Kenya, Malawi, and Rwanda, which allocate 2 percent or more. The health financing system depends largely on external sources and household contributions, accounting for 83 percent of funding. These sources are uncertain, fragmented, and unsustainable, with out-of-pocket spending being retrogressive, disproportionately affecting lower-income individuals. Financial hardship in accessing care affects about 11 percent of the households in Uganda. The low level of financing cascades into inadequacies in other inputs. For example, only 34 percent of health sector vacancies (public sector) have been filled, about half of the quantified essential medicines requirements are budgeted for, and health facilities’ readiness for service provision is low. WATER AND SANITATION Access to clean water supply, functional toilets, and handwashing stations is a vital element in the delivery of quality services in the social sectors. However, trends indicate that the spread of access to safe water in Uganda has stagnated over the last five years, largely due to the country’s high population growth rate, limited fiscal space, and inadequate financing for the sector. The 2024 census showed that 12 million people have no access to basic water supply, and 38 million have no access to safely managed sanitation. There are wide disparities in access to water within both rural and urban districts. Only 56.8 percent of public health facilities and 32.5 percent of schools have access to water services. The situation regarding sanitation is worse. In the capital of Kampala, fewer than 17 percent of health care facilities are connected to a sewer, and an even lower percentage of schools can access a public sewer. Many institutions rely on alternative water sources, mainly rainwater harvesting. However, no monitoring is carried out to measure the quality of harvested rainwater systems, and a recent survey found that nearly 97 percent of the samples from rainwater harvest tanks were contaminated with E. coli. The regulatory framework for the provision of water and sanitation services assigns different duties and responsibilities to various government entities without adequate coordination. Reporting on water, sanitation, and hygiene (WASH) is done by the different sectoral line ministries through their management information systems (MIS). This fragmentation is inefficient. Financing for the water sector has increased over the years, but it has been estimated that the sector’s annual financing needs are around UGX 6.8 trillion, which is more than five times higher than the budget. xv UGANDA HUMAN CAPITAL DEVELOPMENT AND GROWTH REVIEW SOCIAL PROTECTION Uganda now has a comprehensive social protection strategy organized along the life cycle and embedded within NDP IV, reflecting the Government’s commitment to expanding access. A single registry to track beneficiaries has been established, and donor-funded pilots of safety nets programs have shown promising results. Despite efforts, government-funded programming remains limited, and the coverage of social safety nets programs is very low. The main national program, the Senior Citizens Grant, provides cash transfers to people aged 80 and above. The Northern Uganda Social Action Fund IV (NUSAF IV) supports livelihoods, resilience, and the roll-out of a social registry. Yet in 2020/21, only 3 percent of the population benefited from safety nets, despite high poverty rates, vulnerability, and inequality. Financing is a major constraint. In FY 2017/18, public spending on the two largest safety net programs—the Senior Citizens Grant and NUSAF III—was just 0.14 percent of GDP. This is far below Kenya and Rwanda, which spent 0.4 and 0.3 percent of GDP, respectively. Key delivery systems are also missing. Uganda lacks a dynamic social registry, a modern payment platform, and an adaptive system with financial reserves to respond to shocks. These gaps limit the ability to scale programs and reduce the potential of social protection to support long-term human capital development and resilience. JOBS Uganda’s population has grown by more than 3 percent annually since 2000. While there is potential for Uganda to realize demographic dividends, more than half of the country’s accumulated human capital is not being utilized in the labor market, with underemployment rates having increased four-fold between 2011 and 2019. A lack of skills continues to exclude many Ugandans (particularly youth) from productive employment. More than half of all young people between ages 18 and 30 (5.25 million) are NEET (not in employment, education, or training), and many others are in low-value-added activities, particularly in agriculture. Uganda’s value-added per worker is among the lowest in Sub-Saharan Africa. The school-to-work transition for young Ugandans is challenging, as the labor market is characterized by persistent informality and low productivity. A key issue in the labor market is a skills mismatch between labor demand and supply. Around one-quarter of individuals in high-skilled occupations have only a primary education - this is particularly true in the services sector. At the same time, about 10 percent of workers in low-skilled jobs hold higher education credentials. This suggests a mismatch of skills in the labor market and a need for labor market intermediation and matching services. On the demand-side, over 90 percent of firms in Uganda are micro and informal, consisting mostly of self-employed household enterprises. While 28 percent of adults own or co-own a new business, Uganda also has some of the highest business discontinuation rates in the world. Factors contributing to this include high tax rates, corruption, and low human capital among both owners and their workers. Based on these challenges, Uganda could benefit from a more comprehensive set of active labor market policies that would address key bottlenecks for the job creation, as well as boost productivity and employment. xvi UGANDA HUMAN CAPITAL DEVELOPMENT AND GROWTH REVIEW Game Changers Given these challenges, how can Uganda accelerate human capital development, growth, and reap the benefits of its demographic dividend using the lifecycle approach to human capital accumulation? This report has synthesized four “game changers” or key cross-cutting actions with the potential to turbo-charge Uganda’s human capital development, in addition to sector-specific findings. These recommendations are aligned with the Government of Uganda’s strategies and policies. They also build on comprehensive global evidence of the successful implementation of these actions, such as the effective targeting of basic services to the poorest, the implementation of data systems and the generation of evidence, and the use of performance-based financing in selected sectors. Game Prioritize the Implementation of Accelerator Interventions Changer Over the years, many interventions have been implemented in Uganda with the aim of building #1 human capital. However, evidence has shown that many of these have failed to be implemented successfully or to their full extent. This suggests a need to focus on those interventions that have the greatest potential to rapidly accelerate progress toward achieving Uganda’s human capital development goals. The NDP IV Strategic Direction report has emphasized the need to prioritize and sequence interventions and to ensure that the financing for each intervention is accompanied by the necessary implementation capacity and accountability for results. Selecting a subset of accelerator interventions does not mean abandoning other efforts, but rather focusing collective attention and resources—led by the Government of Uganda and supported by the private sector and civil society— on those with the highest short-term impact and likelihood of successful implementation. • Make a clear commitment to a set of accelerator interventions and invest in them intensively. • Strengthen processes for ensuring that research is designed appropriately for the context and for using this evidence to inform the design of policies and programs. • Regularly review the performance of accelerator interventions and adapt the mix of measures in accordance with evidence of their effectiveness and make the service delivery structures learning platforms. Game Gradually Increase Expenditures on Human Capital to Ensure Equitable Access to Quality Services Changer #2 By all comparisons, Uganda significantly underinvests in human capital by approximately one- third to one-half of most benchmarks. Factoring in population growth and the costs of improving quality service delivery, Uganda’s overall human capital spending should be increased over time to approximately double its current share of the national economy by 2040. • Safeguard human capital expenditure from budget cuts and prioritize basic social services and social protection investments. • Pilot and scale up innovative and coordinated financing mechanisms, such as human capital-sensitive taxation, results-based financing, private capital mobilization for utilities, public- private partnerships (PPPs), and climate financing. • Invest in a functional shock-responsive social protection system and in effective, scalable, and active labor market programs. xvii GAME CHANGERS Game Increase the Efficiency of the Human Capital Program through data, incentives, community mobilization, and enforcement of regulations and Changer #3 standards Even at its current low levels of spending on human capital, Uganda could be achieving better human capital outcomes by enhancing efficiency. This game changer has four elements, all aimed at tackling and overcoming inefficiency: • Implement and strengthen integrated digital data systems across the whole human capital program. These should include upgrading the Education Management Information System (EMIS), the Teacher Effectiveness and Learner Achievement (TELA) system, a district health information system (DHIS-2), an integrated human resources information system, an electronic logistics management information system, a water and environment management information system, and developing a national social registry of beneficiaries. • Offer performance incentives to local governments and service providers and strengthen performance management. Scale up proven practices and policies by extending the application of performance-based financing based on best practices for local governments in the education, health, water, social protection and labor sectors. Improve performance management through performance contracting for key personnel, service delivery units and institutions; strengthen performance planning and reviews; and align rewards and sanctions to performance. • Mobilize communities to improve human capital outcomes. Mobilize citizens and communities to monitor the quality of services. Empowering communities through information, capacity and ongoing support has been proven to improve health outcomes, including infant weight-for-age and under-five mortality rates, as well as increasing the production of micronutrient-rich crops. Community institutions can help select beneficiaries and prioritize interventions based on local needs. • Enforce existing regulations, rules, and standards. Enforce standards and regulations, including by updating incentive mechanisms across all sectors and at both the national and subnational levels. Use good performance management practices within and across human capital programs and require that at least 50 percent of pre- and in-service training in the human capital sectors, such as for critical workers like teachers and nurses, include hands-on practice. Game Improve the Enabling Environment for Cross-Sectoral and Intergovernmental Collaboration Changer #4 Uganda has shifted toward program-based (or cross-sectoral) budgeting and governance to strengthen the links between the budget and national development objectives, with human capital development as one of its core programs. It has also adopted a decentralization policy under which policy, political, fiscal, and administrative functions are delegated to local governments who execute those functions and deliver basic services. However, at the central government level, structures for multisectoral collaboration exist but are still nascent, and local governments are not yet routinely using the program-based approach. Government bodies report that there is inadequate coordination on service delivery at the local level, such as ensuring that schools and health facilities are located in the vicinity of professional water and energy suppliers instead of having to resort to taking the lower-quality and less cost-effective self-supply approach. xviii UGANDA HUMAN CAPITAL DEVELOPMENT AND GROWTH REVIEW • Strengthen human capital coordination structures at all levels of the system, from national to district levels. • Establish integrated human capital performance management systems, encompassing performance measurement, evidence generation, monitoring and evaluation frameworks, performance standards setting, and regular performance reviews across all sectors. • Develop cross-sectoral projects under NDP IV, prioritizing areas requiring integrated approaches. • Strengthen cross-sectoral investment in sanitation by reactivating, restructuring, and implementing the Memorandum of Understanding (MoU) on sanitation between the ministries of water and environment, health, and education. • Ensure adequate and equitable fiscal transfers to local governments. • Mobilize communities in human capital development by leveraging the Parish Development Model structures, existing social structures, and information and communication technology and systems. By strategically investing in human capital, Uganda can unlock a demographic dividend that fuels sustained economic growth and accelerates its ambitious development agenda. These four “game changer” recommendations, if effectively implemented, will equip Uganda’s workforce with the skills, health, and opportunities needed to drive productivity and innovation. The path forward is clear: with decisive action and sustained commitment, Uganda can harness its greatest asset—its people—to transform its economic development aspirations into reality. 1 1 THE STATE AND POTENTIAL TRAJECTORY OF UGANDA’S HUMAN CAPITAL 1. The State and Potential Trajectory of Uganda’s Human Capital The demographic dividend is a historic opportunity for accelerating socio-economic transformation in Uganda Human capital, which consists of the knowledge, shocks, pervasive poverty and exposure to multiple global skills, and health that people accumulate throughout crises are threats to its stability. As Uganda moves toward their lives, enables them to realize their potential as implementing its fourth NDP (NDP IV) and works toward productive members of society. When countries develop the achievement of its Vision 2040 targets, it is drawing on the human capital of their people, they make it possible lessons learned from peer countries over recent decades, to end extreme poverty, promote shared prosperity, showing that investing in people early, strategically, and and build inclusive societies. The concept of human a adequately is essential to accelerating economic growth capital integrates modern insights into the drivers of and development. socioeconomic development like improved outcomes in education, health, nutrition, population, social protection With its youthful and growing population, Uganda is on and jobs, and water and the environment. Recognizing b the verge of having a one-time opportunity to capture a human capital as “capital” reflects the global consensus demographic dividend, but this benefit is not guaranteed that investing in people through the social sectors not only to accrue to Uganda without substantial investments helps them to live better lives but also drives countries’ in human capital. In global terms, the “demographic economic and social development. dividend” is a period of high potential economic growth that emerges while countries are transitioning from high Human capital is critical for the next stage of Uganda’s to low fertility rates. As improving economic, health, and development. Uganda has signaled its commitment to social conditions bring down both mortality and fertility human capital as a key driver of progress in its Vision rates, countries pass through a brief window when the 2040: A Transformed Ugandan Society from a Peasant to size of the working-age population (those aged 15 to 64 a Modern and Prosperous Country within 30 Years, as well years old) far exceeds that of the dependent population as in its series of National Development Plans (NDPs). (children and elders). Uganda today is in the “pre-dividend Recent economic, social, and structural shifts in Uganda phase” of its demographic transition, having one of the have underscored the need to accelerate economic growth youngest populations in the world. In 2024, an estimated and reduce poverty and inequality. Although Uganda’s 42 percent of the population were within the 0 to 14 age economy has remained resilient to recent economic category (Figure 1.1). These children of today are the future a Further details on the World Bank’s human capital project are available at https://www.worldbank.org/en/publication/human- capital/brief/about-hcp#:~:text=Human%20capital%20consists%20of%20the,societies%20by%20developing%20human%20capital b See, for example, the seminal work on human capital theory by Becker. Becker, G.S. (1964). Human Capital: A Theoretical and Empirical Analysis, with Special Reference to Education. University of Chicago Press, Chicago. 2 1 UGANDA HUMAN CAPITAL DEVELOPMENT AND GROWTH REVIEW labor force, who will be the drivers of productivity and human capital development, especially among the youth. innovation and, consequently, the engine for economic The country’s population, currently estimated at 46 million, growth during Uganda’s upcoming dividend period. is projected to more than double by 2060 to 104 million, However, reaping a demographic dividend is not automatic at which point it is projected that 70 percent will be of and will not transpire unless Uganda first invests heavily in working age (Figure 1.2).1 Figure 1.1. Uganda’s Population Pyramid, 2024 Figure 1.2. Uganda Population Projection by age group, 2023-2050 Source: World Bank calculations, based on Uganda Bureau of Statistics, Source: World Bank, based on Uganda Bureau of Statistics, National Main Census Report (2024). mid-year Population Projections by Single Age (2015–2050) (2022). Data available at https://www.ubos.org/explore-statistics/20/ Uganda is currently underinvesting in the human capital average (0.40), but far behind Kenya (0.55) and Mauritius and future productivity of its citizens. The World Bank’s (0.62). It will also be necessary to expand employment Human Capital Index (HCI) measures the potential opportunities to ensure that the economy can absorb productivity of the next generation, considering factors the human capital being created. Uganda’s Utilization- like health and education. The score, ranging from 0 to 1, Adjusted Human Capital Index which accounts for both indicates the fraction of potential human capital a child born the accumulation and actual use of human capital in the today can hope to acquire by age 18, given the current health labor market, shows that building human capital alone is and education conditions in the country where he or she not enough if it remains underutilized. grows up (see Annex A for details of the HCI methodology). The global HCI score is 0.56, meaning that globally, a child Although Uganda has made substantial infrastructure born in 2020 can on average expect to reach 56 percent of investments over the past two decades, returns have their potential productivity. In comparison, Uganda’s HCI 2 been limited. Investing in infrastructure is known to unlock of 0.39 means a child born today in Uganda will only be economic growth potential with a return on investment 39 percent as productive when she grows up as she could (ROI) ratio of up to 6 to 1, although according to the World be with a complete education and full health.3 This puts Bank’s 2016 Uganda Economic Update every dollar spent Uganda in the lowest quartile of the global HCI distribution, on public capital stock generates only 0.8 dollars’ worth of ahead of South Sudan (0.30) and Rwanda (0.38) and on par economic activity.4 The reasons behind Uganda’s low ROI with Tanzania (0.39), near the Sub-Saharan African (SSA) include weaknesses in public investment management 3 1 THE STATE AND POTENTIAL TRAJECTORY OF UGANDA’S HUMAN CAPITAL characterized by low execution and absorptive capacity, individual’s life, prenatal and early childhood development weak design and preparation of projects, and inadequate (ECD) interventions enhance children’s health and supervision of investments. In addition, low human capital 5 psychosocial and cognitive development. Childhood and could explain the inability of the population to capitalize early adulthood interventions increase school enrollment on investments in infrastructure, thus limiting the ROI on and completion rates and ensure the development of physical capital. the socioemotional, technical, and digital skills that enhance job readiness. In adulthood, social protection Uganda’s projected population growth will require and jobs interventions foster productivity, improve job- the adoption of an integrated lifecycle approach to skill matches, reduce unemployment rates, and encourage human capital development to provide Ugandans with entrepreneurship. As individuals enter old age, pensions a continuum of opportunity, care, and support. This safeguard income, and lifelong learning mitigates the approach is reflected in NDP IV. Taking a lifecycle approach risk of cognitive decline. Health and social protection is critical because interventions at all stages of the lifecycle interventions provide consistent support throughout the have compounding effects on education, health, nutrition, lifecycle, curbing morbidity and mortality and cushioning and employment outcomes (Figure 1.3). At the onset of an the population against shocks. Figure 1.3. Human Capital Entry Points Across the Lifecycle • Essential maternal and newborn care through • Learners are prepared to learn • Workers have access • Lifelong learning opportunities well-resourced primary health care and • Teachers at all levels are effective to quality jobs and • Social safety net programs are referral system. and valued entrepreneurship programs, accesible to poor households • High quality of service and medications for • Classrooms are a learning space training and life skills • Access to pensions common childhood illnesses • Schools are safe and inclusive programs • Options for specialized health • Expanded immunization coverage • Education systems are well • Women and girls have access care • Promotion of exclusive breastfeeding managed to reproductive, maternal, • Improved access to improve sources of water • Girls have equal agency, access, and child health services, and sanitation and opportunities to build, protect childcare, and nutrition • Children receive early stimulation and learning and deploy human capital opportunities Healthy, safe & educated Aging with dignity Early & lifelong advantage Skilled, empowered, productive and resilient The achievement of Vision 2040 will depend on the promotion, prevention, and the treatment of communicable adoption of key policies in the social sectors to address and noncommunicable diseases (NCDs), maternal, demographic challenges. In education, policies should child, and adolescent health complications, as well as in aim to expand access at the pre-primary, primary, and rehabilitation and palliative care. Service delivery, health secondary levels, improve learning outcomes, enhance financing, technology, and the health workforce are the systemwide efficiency, and build lifelong learning. In key areas underpinning the achievement of Vision 2040. countries undergoing demographic transition, education, Scaling up access to water, sanitation, energy services, especially of girls and women, is a key contributor to the decent jobs, and social protection across the life cycle is decline in fertility, with spillovers for the demographic key to improving human capital and wellbeing. dividend. In health, investments are needed in health 6 4 1 UGANDA HUMAN CAPITAL DEVELOPMENT AND GROWTH REVIEW BOX 1.1. TAKING STOCK OF UGANDA’S GAINS IN HUMAN CAPITAL DEVELOPMENT Uganda has a history of forward-thinking and inclusive policies in education. Uganda was an early adopter in Africa of free primary education with its universal primary education (UPE) policy in 1997. Primary enrollment increased from 2.6 million in 1995 to 8.7 million by 2017. To expand equitable access to secondary education, in 2007, the Government of Uganda also introduced universal secondary education through its Universal Post Primary Education and Training Program. Uganda has made notable progress in improving key health and nutrition outcomes over the past three decades fueled by progressive health policies that focus on equity and health promotion. Although Uganda is still grappling with a high burden of disease, there has been a marked reduction in communicable diseases and maternal, child, and nutrition complications in recent decades. Life expectancy increased by 48 percent between 1990 and 2024, partly due to the marked reduction in the prevalence of infectious diseases, especially HIV, which declined from 22 percent to 5.8 percent, though rates among commercial sex workers remained high (31 percent). Under-five mortality declined by 71 percent. Between 2000 and 2020, Uganda’s score on the UHC Index, a measure of progress towards universal health coverage, increased by 118 percent (from 22 percent to 48 percent), a larger increase than the Sub-Saharan Africa average of 95 percent. 5 1 THE STATE AND POTENTIAL TRAJECTORY OF UGANDA’S HUMAN CAPITAL Two scenarios for human capital in Uganda: Business-as-usual or Vision 2040 acceleration The Government of Uganda has established an ambitious There is a strong relationship between economic tenfold growth target. Its Tenfold Growth Strategy calls growth and human capital. Figure 1.4 illustrates the for Uganda’s GDP to double every five years during the strong correlation (R2 of 0.78) that exists globally between remaining three NDPs under Vision 2040. The strategy to countries’ HCI scores and their GDP. Approximately 78 achieve tenfold growth involves a doubling of savings to percent of HCI variability can be explained by variations achieve a 40 percent investment rate, a significant increase in GDP, implying that as HCI increases, GDP tends to in annual foreign direct investment inflows, a rapid increase increase as well, which underscores the need to integrate in value-added exports, and accumulation of human, human capital into growth modelling. The authors used physical, and natural capital.7 International experience a model to forecast the trajectory of future HCI and suggests that ten-fold growth is achievable within the GDP growth in Uganda based on the country’s historical timeline envisioned in the plan with the right mixture of data.c Figure 1.5 shows that, under the business-as-usual reforms and investments, including human capital. Some scenario, Uganda’s HCI will be 0.45 by 2040. This is far less countries, notably East Asian “tigers” such as South Korea than the 0.56 expected under the accelerated investments and Singapore, moved from low- to middle-income status and progress in human capital in line with the economic in a generation (discussed in more detail later in this growth aspirations for Vision 2040.d chapter). Figure 1.4. Relationship Between Human Capital Index and GDP Source: World Bank calculations, using data from the World Development Indicators database. c An AutoRegressive Integrated Moving Average (ARIMA) model was used. First, the data were examined to identify the appropriate ARIMA model parameters by assessing the autocorrelation and partial autocorrelation plots. In addition to the ARIMA forecasts, a benchmarking approach was applied using countries that had already attained a per capita GDP of US$6,000 to US$10,500 as of 2020 (excluding small states/islands but including Argentina, Brazil, Botswana, China, Dominican Republic, Gabon, Mexico, Mauritius, Malaysia, Peru, Thailand, and Turkey in the acceleration scenario). d GDP per capita of US$9,500 under Vision 2040 and US$7,000 under the10-fold growth strategy 6 1 UGANDA HUMAN CAPITAL DEVELOPMENT AND GROWTH REVIEW Figure 1.5. Trends and projections for the human capital index in Uganda (2000-2040) Source: World Bank, based on data from UBOS and WDIs. The model was also employed to forecast trends for several key human capital indicators. These indicators were: the probability of survival to the age of 5, the fraction of children under five who are not stunted, the fraction of 15-year-olds who survive to the age of 60, expected years of schooling, and harmonized test scores. The analysis also considered the country’s overall HCI, which integrates the indicators into a composite measure reflecting the potential productivity of individuals born today and provides an aspirational pathway to doubling the productivity of Uganda’s future workforce through broad-based improvements in education and health. As detailed in a supplemental policy note “The Tenfold Growth: Human Capital’s Contribution to Uganda’s Economic Transformation”, these improvements in the quality of human capital through these indicators could be a force multiplier for the expected increase in the quantity of human capital (through a forecast 67 percent increase in the working-age population) complemented by improvements in the utilization of human capital (through the creation of better jobs). Table 1.1 illustrates the improvements that will be required in human capital outcomes such as learning, health, and nutrition to achieve Uganda’s growth aspirations, compared to the business- as-usual trends. 7 1 THE STATE AND POTENTIAL TRAJECTORY OF UGANDA’S HUMAN CAPITAL Table 1.1. Trends in Human Capital Outcomes (2010-2040) for Business-as-usual and Accelerated Scenarios Example Interventions Indicator 2010 2015 2020/a Scenarios 2025 2030 2035 2040 (discussed in more detail in chapters 2–6) Probability 91 93.6 94.8 Business as Usual 95.7 96.7 97.4 97.9 • Increased access to water of survival and sanitation services Vision 2040 95.6 96.3 97.5 98.2 to age 5 (%) • Early childhood development Acceleration interventions • Nutrition-sensitive social protection interventions • Strengthened primary healthcare, health promotion, and disease prevention Percentage 65.4 71.1 75.6 Business as Usual 75.6 78.2 80.5 82.7 • Increased access to nutrient of children dense foods and good Vision 2040 78.3 82.3 88.9 93.3 < 5 not nutrition practices Acceleration stunted (%) • Increased access to safe water and sanitation services • Hygiene promotion, e.g. community-led total sanitation • Nutrition-sensitive social protection interventions Fraction of 0.61 0.68 0.68 Business as Usual 0.73 0.76 0.79 0.81 • Strengthened primary 15- year- healthcare, health promotion, Vision 2040 0.73 0.77 0.80 0.83 olds who and disease prevention Acceleration survive to • Scaled-up secondary and age 60 tertiary care in a manner that doesn’t take resources away from primary healthcare. • Shock-responsive social protection systems and programs to address poverty and vulnerability Expected 6.6 6.7 7.14 Business as Usual 7.14 7.44 7.71 7.84 • Elimination of all out-of- years of pocket costs for primary and Vision 2040 8.0 8.4 9.0 11.4 school secondary school Acceleration • Expansion of primary and secondary school • Livelihood support and safety nets linked to children going to school Harmonized 381.59 391.32 397.16 Business as Usual 404.7 411.5 418.3 425.1 • Quality implementation of test score Early Grade Reading (EGR) Vision 2040 406.3 414.3 422.4 434.4 (max 625) and Mathematics (EGM) Acceleration • Remedial learning • Expanded access to quality pre-primary Human 0.34 0.37 0.39* Business as Usual 0.40 0.42 0.43 0.45 Capital Vision 2040 0.41 0.44 0.47 0.56 Index Acceleration Source: World Bank. Notes: 2020 data also include, where possible, new data collected through the 2022 Uganda Demographic and Health Survey. *The difference between 0.39 and the World Bank’s 2020 HC estimates is due to the differences in the data used. For instance, the Expected Years of School and Harmonized Test Scores used to estimate 2020 HCI were for 2013. In this report, we carried out interpolations for Expected Years of School and Harmonized Test Scores to generate missing-years estimates, which were then used with other metrics to generate the HCI. 8 1 UGANDA HUMAN CAPITAL DEVELOPMENT AND GROWTH REVIEW Program-based budgeting, decentralization, regional integration, and refugee integration can support human capital development Uganda began shifting toward program-based of the gradual recentralization of their local government budgeting in 2013, with human capital development as functions; (5) an inability to demand accountability from one of its core programs. The program-based approach leaders; and (6) corruption, nepotism, and elite capture. was intended to strengthen the links between the budget The Intergovernmental Fiscal Transfers Reform Program, and national development objectives by fostering a focus a government initiative aimed at enhancing the adequacy, on outputs instead of inputs and by using performance equity, and efficiency of fiscal transfers from the central data to improve decision-making. As part of the NDP government to local governments has helped to improve IV development process, the government is expected fiscal decentralization, although much more needs to be to produce cross-sectoral Program Implementation done. Action Plans (PIAPs), the implementation of which will be supported by the program-based budgeting system. The introduction of the Parish Development Model The Human Capital Development Program is led by the (PDM) provides an opportunity to accelerate progress in Ministry of Education and Sports (MoES) and includes the human capital interventions at the local level. The PDM ministries of Health (MoH), of Gender, Labor, and Social was adopted under the third National Development Plan Development (MoGLSD), and of Water and the Environment (NDP III). Under the model, services would be delivered (MoWE). According to the indicative planning figures for directly at the parish level, the lowest administrative NDP IV, the Human Capital Development Program is likely unit, through multi-sectoral interventions focused on to continue being the government’s largest program, with generating employment opportunities. The parish is a total of 63.8 trillion UGX forecast over five years out of considered the central hub for planning, budgeting, and a government budget of 243.6 trillion UGX. The process service delivery under the PDM, which emphasizes the has faced coordination challenges, but the establishment importance of community participation in the planning in 2024 of a Human Capital Secretariat at the MoES is and implementation of parish-level development projects. expected to lead to the cohesive implementation of the PDM consists of seven pillars (Figure 1.6). While Pillar 4, HCD program. Social Services, relates directly to the delivery of human capital services, all of the pillars have the potential to In addition to program-based budgeting, Uganda has contribute to human capital formation. adopted a decentralization policy aimed at improving service delivery, guided by the Local Government Act of 1997. Under the decentralization policy, political, fiscal, and administrative functions are delegated to local governments who execute those functions and deliver basic services including primary healthcare and education, water supply, agricultural advisory services, and the management of natural resources.8 In principle, decentralization can enhance the participation of local communities in the decisions that affect them.9 However, in Uganda, local governments are grappling with several challenges, including: (1) inadequate financial resources; (2) an over- reliance on central government grants paired with weak capacity to raise local revenue; (3) an inability to attract and retain sufficient trained and experienced staff; (4) fears 9 1 THE STATE AND POTENTIAL TRAJECTORY OF UGANDA’S HUMAN CAPITAL Figure 1.6. Pillars of the Parish Development Model Production, Governance Storage, and Processing, and Administration Marketing THE PARISH DEVELOPMENT MODEL Parish based Infrastructure Management and Economic Information Services System Mindset change and cross cutting Financial issues (Gender, Inclusion environment, Social Disability) Services Regional integration is critical to the attainment of Regional cooperation is essential for helping Uganda Uganda’s economic development goals. Uganda is a to develop its human capital. For example, in the field champion of regional cooperation in the East African of high-level skills and innovation, it can bring together Community (EAC) and is an active member of the Common scientists to build scientific and other capacities to resolve Market for Eastern and Southern Africa (COMESA). regional issues that cannot be effectively addressed by Uganda also participates in the COMESA-EAC-Southern any single country, build mutually beneficial partnerships, African Development Community (SADC) Tripartite, which and share the financial burden of setting up advanced brings together 26 countries to advance trade. Regional scientific facilities staffed by qualified researchers. Also, it integration is necessary to overcome development can strengthen Uganda’s capacity to handle cross-border bottlenecks, harness comparative advantages, achieve health challenges through regionally coordinated pandemic economies of scale in small and fragmented markets, preparedness and surveillance and coordination with the promote trade and economic diversification across African Centers of Disease Control. To foster this kind of countries, and deliver regional public goods. To achieve regional collaboration, the government will implement strong economic growth, reduce poverty, and stem the instruction in Kiswahili beginning in primary education, brain drain of young people pursuing higher education to reduce language barriers to economic activity between and employment outside the region, Uganda needs to Uganda and its neighbors. work with its neighbors to promote increased productivity, economic diversification, and structural reforms. 10 1 UGANDA HUMAN CAPITAL DEVELOPMENT AND GROWTH REVIEW BOX 1.2. DAR ES SALAAM DECLARATION FROM THE 2023 AFRICA HEADS OF STATE HUMAN CAPITAL SUMMIT To supercharge its human capital agenda, Uganda joined 42 other African countries in ratifying the Dar es Salaam Declaration on July 26, 2023. Through this Declaration, Uganda and the other African countries jointly made financial and policy commitments to prioritize investing in people, with a focus on reaping the demographic dividend. They pledged to achieve the following goals by 2030: 1. Prioritize education and skills development to increase accessibility, affordability and ensuring quality education as well as reducing learning poverty by at least a quarter and improving literacy rates to reach 75 percent by 2030. 2. Enhance health and well-being to achieve 90 percent immunization coverage, reduce maternal mortality to 70 per 100,000 live births and under 5 child mortality to 25 per 1000 live births and stunting by 40 percent. 3. Empower women and girls by increasing access to secondary and tertiary education for at least 20 million additional adolescent girls; ensure that 40 percent of girls (by age 15) receive the recommended dose of human papillomavirus (HPV) vaccine (by 2025); and reduce teenage pregnancies by half by 2030. 4. Provide training on digital skills for jobs to an additional 19 million people across the continent and achieve a gross enrollment ratio (GER) of 20 percent in tertiary education. 5. Ensure social protection and inclusion so that all countries have an operational social registry. 6. Mobilize resources and partnerships to increase countries’ spending of their domestic resources toward human capital outcomes by 3 percent. The heads of state further called upon development partners to increase their funding and technical support for human capital development programs by 5 percent. Source: World Bank. 2023. Dar es Salaam Declaration on Africa Heads of State Human Capital Summit, 26th July, 2023. Investing in People for Building a High-productivity, Inclusive, Resilient Economy. Uganda hosts the second largest number of refugees in the world, which presents the country with both challenges and opportunities. The number of refugees in Uganda has increased from approximately 12,500 in 2012 to 1.7 million in 2024.10 In 2022, most of the refugees and asylum seekers (65 percent) came from South Sudan, followed by Democratic Republic of the Congo (DRC) (31 percent), Somalia (3 percent), and Burundi (3 percent). About 57 percent of the refugees are children under 18 years old, 29 percent are young people, and the rest (22 percent) are 36 and older. Most refugees and asylum seekers (92 percent) live in settlements or refugee-hosting districts, mostly in the West Nile and Southwestern regions, which are among the poorest and least developed areas of Uganda. With one of the most progressive refugee policies in the world, Uganda seeks to integrate refugees into its society, allowing them to access education, economic resources, including arable land, formal employment opportunities, and enterprise development assistance. 11 1 THE STATE AND POTENTIAL TRAJECTORY OF UGANDA’S HUMAN CAPITAL A Human Capital Approach to Development: Lessons from International Experience Over the last 60 years, thinking has shifted around the role in physical infrastructure; (2) appropriate and facilitating that education and health outcomes play in the economic economic policies that attract and expand capital; and (3) and social development of nations. Human capital used appropriate investments in human capital that recognize to be considered a product of economic development. In the central importance of people to development. other words, infrastructure investments would improve the economy, which then would allow for increased spending The key role played by human capital investments in on social sectors. However, after the success of the East fueling economic growth can be seen in the experience Asian “tiger” countries between the 1960s and the 1990s, it of countries with rapid development journeys. Figure 1.7 became clear that positive education and health outcomes demonstrates that economic growth in South Korea began were drivers of development. An analysis of data from to accelerate in the late 1970s after social investments had these tiger countries showed that between one-third and already begun to result in substantially improved health one-half of the GDP growth in these countries could be outcomes and increased educational attainment. Strikingly, directly accounted for by investments in human capital. Uganda and its peer countries in Africa had the same per Thus, the development community recognizes that while capita GDP as South Korea in the 1960s, but six decades economic policies and infrastructure investments matter, later, their growth paths have diverged significantly. In balancing them with human capital investment maximizes another example, Singapore started investing in education returns to all investments and boosts economic growth. If and health early, smartly, and adequately. Their policies economic growth and social development were a three- to build and sustain human capital development were a legged stool, for the stool to remain balanced countries key explanatory factor in their GDP per capita being much would need: (1) appropriate and sustainable investments higher than that of SSA countries. Figure 1.7. GDP Growth and Selected Human Capital Indicators in South Korea, 1971-1985 Source: World Bank, 2024; World Bank Open Data (https://data.worldbank.org/) 12 1 UGANDA HUMAN CAPITAL DEVELOPMENT AND GROWTH REVIEW Countries that transitioned from low-income to middle- However, investing throughout the lifecycle is key. For income status focused their growth strategies and example, investments in early childhood development development models on human capital accumulation. have been identified as one of the most cost-effective While income levels alone do not explain growth, countries strategies for promoting economic growth12 as well as such as South Korea and Singapore moved from low- being essential for the development of a child’s emotional, income status in the 1960s to middle-income status by social, and overall well-being.13 A long-running study in the early 2000s. They made this transition by investing in Jamaica illustrates the lasting impact of investing early in human capital and innovation, building social safety nets, the lifecycle. During the 1980s, a group of children under ensuring good governance, fostering competition and labor the age of 2 years from low-income neighborhoods mobility, utilizing technology, and increasing production were randomly assigned to a group who would receive efficiency. This led to a rapid shift from an agricultural nutrition and stimulation interventions (through weekly to an industrial economy, with financial development, play sessions facilitated by community health aides) or to sustainable infrastructure, and integration into the global a control group. As adults, the children who were assigned economy. In short, they invested synergistically in the three to the intervention group earned wages that were 43 forms of capital – natural, physical, and human capital. percent higher than those in the control group, they had Wealthier countries obtain the largest share of their capital completed three-quarters of a year more schooling on from human capital, and current estimates suggest that average, and their graduation rates from higher education human capital explains a third of the differences between were 26 percentage points higher. As teenagers, they also countries’ incomes. In Uganda, 73 percent of capital is had higher IQ scores, were more conscientious, engaged lodged in human capital, which is one of the highest rates in less substance abuse, and overall demonstrated better in the world, even higher than in most of the high-income executive functioning.14 This study is a striking example of countries. This suggests that there is an extraordinary the importance of investing in people starting early in the amount to be gained by developing human capital to lifecycle. its full potential. Given Uganda’s low HCI score of 0.39, doing so will require greater efforts, accelerating the pace of investment and investing smartly, while monitoring, evaluating, and adjusting programs as needed. The relationship between human capital, productivity, and economic growth is clear. For example, on average, if a child stays one additional year in school, they will increase their earnings as an adult by 9.7 percent (for women the increase is 11.4 percent).11 Overall, this translates into an increase in GDP per capita of 2.5 percent. By contrast, children whose growth is stunted will earn about 22 percent less annually than their peers later life. With the right educational, health, and social protection inputs, human capital accumulation over the lifecycle can provide positive externalities over time and across individuals. Human capital plays a major and compelling role in promoting the productivity of a country, creating the foundations for the achievement of macro-economic outcomes. 13 1 THE STATE AND POTENTIAL TRAJECTORY OF UGANDA’S HUMAN CAPITAL People-powered economic development: Learning from the Asian Tigers From the East Asian experience, it is possible to identify which human capital investments are most effective in accelerating economic growth. Three drivers stand out: D rivers of fertility decline: The most critical step in achieving a demographic D rivers of education investment: When families have fewer D rivers of employment growth: If the healthy cohort of educated dividend is the ability to children, both households and skilled children quickly decrease fertility rates, and and countries can now and mothers is put in an economic this has been done by investing increase the amount that they invest environment where well-paying jobs in healthcare. As infant and child in educating their (now) healthier are available, the economy benefits. mortality rates decline, families children. Also, as women have Also, families with fewer children, chose to have fewer children, fewer children, they have the time better educated mothers, and young which creates a cohort effect that and flexibility to increase their own workers employed by the labor eventually drives growth. educational attainment and to enter market can maximize their savings, the labor market. which can then be invested into the economy. However great the potential for reaping the benefits of the demographic dividend, this is neither guaranteed nor automatic. Failing to invest appropriately in human capital could have the exact opposite effect. For example, high fertility rates may result in less healthy mothers and children, fewer resources to spend on education per capita, a larger dependency ratio, more inequalities, and more pressure on social systems. There is even growing evidence that the failure to invest can lead to higher inequalities resulting in greater social and political instability. Thus, whether or not a country invests in human capital determines whether it will reap a demographic dividend or will face a demographic disaster. Human capital investment strengthens resilience and social cohesion An essential objective for any country aiming to boost systems to respond to both immediate shocks and long- economic growth is to build and maintain systems term challenges such as poverty and inequality. that enhance resilience against various shocks. These shocks can stem from pandemics, economic downturns, Resilient systems are critical for a country’s functioning commodity price fluctuations, political instability, conflict, and are important measures of its development. Human or climate change. Regardless of their nature, shocks test capital plays a central role in system resilience. A crucial all government systems. As demonstrated by the COVID-19 step in building resilient systems is making appropriate pandemic, countries with robust systems for delivering investments in human capital and human capital systems. basic services, including health and education, coped This includes investing in safety net systems, targeted better than those with weaker systems. Resilient systems assistance, social work and services programs, robust enable countries to tackle challenges without losing education systems, and effective public health systems. progress on human capital accumulation. As countries Shocks put households at economic risk, necessitating a develop and grow economically, they can strengthen governmental response with systems that can withstand 14 1 UGANDA HUMAN CAPITAL DEVELOPMENT AND GROWTH REVIEW the initial shock and help stabilize the economy. When Social cohesion is particularly important in countries like a country has resilient systems in place, it can prepare Uganda that host large numbers of refugees and grant for shocks and immediately implement an appropriate them mobility and full participation in economic life. response. These resilient systems enable not only There is the risk that refugees might be resented by the responses to short-term shocks but also address long-term local population and considered a drain on the economy challenges related to poverty and inequality. A well-trained and on social services. This means that it is important to and healthy labor force, which results from investments in provide equal access to services for both refugees and human capital, is essential for running systems efficiently nationals and to adopt policies that ensure that refugees and effectively, targeting resources and services to those in can be an economic benefit to the country by being need, and providing a platform for fast, targeted responses. “productive workers who contribute to the tax base, start businesses, and foster connections with diverse markets.”15 Another way in which investments in human capital can add value is to strengthen social cohesion. This function is also especially important in Africa given the number of countries dealing with fragility, conflict, or post-conflict conditions. Social cohesion is also negatively impacted by longstanding socioeconomic inequalities and high poverty rates. Even in the absence of these challenges, building and strengthening social cohesion is critical for the legitimacy of governments. For human capital investments to accelerate and strengthen social cohesion, interventions can and should: (1) respond to historic grievances; (2) redress persistent exclusion; and (3) reduce inequalities between those belonging to different income groups, ethnicities, and religions, and speaking different languages. Successfully providing a range of quality social services that address the needs of the population is an important step in building trust in the government. The Government of Uganda launched the Parish Development Model (PDM) to improve the quality of life of households in the subsistence economy. Using a bottom-up approach, the PDM includes mechanisms for identifying community needs and for planning, budgeting, and delivering core services. 15 1 THE STATE AND POTENTIAL TRAJECTORY OF UGANDA’S HUMAN CAPITAL Overview of this report This Uganda Human Capital Development and Growth Review seeks to: (1) analyze the trends, patterns, and relationships between human capital development and economic growth; (2) assess the coverage, quality, and equity of human capital interventions across the lifecycle and the delivery platforms for these services; (3) explore the underlying constraints to and opportunities for improving human capital outcomes; and (4) propose evidence-based recommendations for accelerating progress in human capital outcomes and their effect on economic growth. This review is a collaborative effort between the Government of Uganda and the World Bank, with contributions from other human capital actors in Ugandan society. Honorable Janet K. Museveni, the First Lady of Uganda, Minister of Education and Sports, and Chair of the Government of Uganda’s Human Capital Program, formally launched the process at a public event on December 7, 2022. A joint government-World Bank team met in a series of retreats in 2023 and 2024 to discuss and refine the analysis and recommendations in the review. This group was co-chaired by the MoFPED and the MoES and included ministries, departments, and agencies involved in the Human Capital Program as well as staff from the National Planning Authority (NPA) and the World Bank. Prior to being finalized, the review benefited from consultations with local governments through the Uganda Local Government Association (ULGA), the private sector, civil society organizations, and development partners through sector groups. The report was validated with all key stakeholders on November 25, 2024. The review is organized as a series of sector-specific chapters that include cross-sectoral overviews of human capital at different stages of the lifecycle. The sector-specific chapters focus on education, health and nutrition, water and the environment, social protection, and jobs. The lifecycle analysis focuses on early childhood development, adolescent well-being, adult integration into labor markets and entrepreneurship, and aging. A concluding chapter discusses four suggested “game changers” for Uganda’s human capital development and growth derived from the analysis and recommendations in the previous chapters. 16 2 UGANDA HUMAN CAPITAL DEVELOPMENT AND GROWTH REVIEW 2. Education for Economic Growth: A catalyst for human capital and innovation Education is critical for developing human capital and achieving Vision 2040 Education is integral to building human capital, and positively associated with political participation, electoral improving education outcomes is essential to achieving participation, and civic engagement.18 Finally, evidence the goals of Vision 2040. Extensive international evidence points to a negative correlation between education and has shown that education investments build human crime.19 capital for the individual and the economy, contributing to increased earnings, labor productivity, and economic While both access to education and learning outcomes growth. Uganda’s long term development framework, influence growth, it is learning that plays the more Vision 2040, recognizes the centrality of education to decisive role. With its focus on both average years of its aspirations for economic transformation. When first schooling and learning-adjusted years of schooling (LAYS), published, the framework aimed for an increase in the NDP III recognizes that ensuring children attend school is adult literacy rate from 73 percent (in 2010) to 95 percent not a guarantee that they will learn. Cross-country data (in 2040), but a decade after that commitment was made have shown that both increasing access to school and the rate remains unchanged. Urgent action is needed improving basic literacy and numeracy skills can boost a to ensure that all children leave Uganda’s schools with country’s future GDP growth. However, increasing learning literacy, numeracy, and other basic skills. Vision 2040 also yields higher returns than increasing access, and the emphasizes keeping girls in school and reducing barriers greatest benefits come from universal access combined to their participation. with universal basic skills, with the lowest-income countries gaining the most.20 Accordingly, the Uganda Partnership Human capital generation through education enhances Compact 2022, a shared agreement between the household welfare, health, and well-being and has Government of Uganda and its partners on a coordinated positive spillover effects to other sectors of the economy. approach to transforming the education system, identifies Educating women and girls plays a key role in reducing establishing a quality foundation for learning as the highest fertility, which in turn lowers the child dependency ratio.16 priority reform for Uganda’s system.21 The decline in dependency increases the per capita financing available for education and human capital Education drives growth through innovation and the development at both the household and government adoption of technology. It increases the capacity of the levels. Girls who marry, have children early, or drop out of population to create modern technologies, products, and school are likelier to have poorer health, larger families, processes, which in turn promotes growth.22 Higher human and lower-paying, lower-productivity jobs as adults than capital levels also help to disseminate knowledge, thus those who stay in school. 17 Furthermore, education is enabling the adoption of advanced technologies.23 A well- 17 2 EDUCATION FOR ECONOMIC GROWTH: A CATALYST FOR HUMAN CAPITAL AND INNOVATION educated labor force is better equipped to develop and on the availability of a skilled local workforce, alongside use new and more productive technologies, which further other investment climate factors, particularly export- boosts growth. However, investments in higher education 24 led industries with high value-added, and technology- must be complemented by efforts to create jobs, as 21st- intensive activities.”25 century firms decide where to locate or expand depending Challenges in education quality, retention, and skills development hinder progress toward national education goals Uganda has a strong history of progressive and inclusive from the center, are responsible for most service delivery, education policies. It was among the first African nations to including the recruitment, payment, and performance adopt free primary education through its Universal Primary management of teachers, school operating costs, most Education (UPE) policy in 1997, which boosted enrollment school inspections, and instructional coaching of teachers. from 2.6 million in 1995 to 8.7 million by 2017. While UPE At the secondary level, while 95 percent of the national did not fully eliminate school fees or other household budget is executed locally, the central ministry retains education costs in practice, it improved educational control over teacher recruitment and management and attainment, children’s health, employment outcomes and school inspections.28 increased wealth. 26 To consolidate the gains from UPE and in a bid to achieve universal secondary education, Some education-related indicators in NDP III are not the government launched the Universal Post-Primary on track to being achieved, and there is a lack of data Education and Training Program in 2007. The language of on others. Table 2.1 summarizes the status of NDP III instruction policy in Uganda focuses on teaching children indicators. Obtaining timely data in the education sector in their local languages during the first three years of has been a challenge given the poorly functioning EMIS. primary school (P1 to P3), which has been shown to yield However, the strengthening of the EMIS is an ongoing greater learning, access, equity, cost-effectiveness, and initiative of the MoES, with some recent progress. inclusion.27 Additionally, Uganda provides refugees with free education and training and has inclusive policies targeted to disadvantaged groups, including students with disabilities and adolescent girls who are pregnant or mothers. Uganda’s education system is partially decentralized, with delineated and complementary mandates for the central MoES and for local governments. The MoES and allied autonomous institutions like the National Curriculum Development Center (NCDC) and the Uganda National Examinations Board (UNEB) set quality standards for school infrastructure, curriculum development, instructional materials, pre-service teacher training, national assessments, the Education Management Information System (EMIS), and school inspections. At the primary level, local governments, supported by grants 18 2 UGANDA HUMAN CAPITAL DEVELOPMENT AND GROWTH REVIEW Table 2.1. Status of NDP III Indicators in the Education Sector Indicator Baseline Target Status Increased average years of schooling 6.1 years 11 years * 6.8 years Increased learning-adjusted years of schooling 4.5 years 7 years * 4.3 years Increased ratio of science and technology graduates to arts graduates 2:5 3:5 No data Increased percent of employers satisfied with the training provided by the 40 percent 65 percent No data TVET institutions Source: National Planning Authority, Mid Term Review (MTR) of the Third National Development Plan (NDP III): Monitoring and Evaluation Framework Thematic Report (2023). Note: *Target is off track (unlikely to be achieved on current trajectory) Uganda’s basic education system faces three interlinked found about one-third of P1 students to be over-age and challenges: low foundational skills, high repetition 16 percent to be under-age. High over-age and under-age rates, and high dropout rates. The UNEB’s 2023 National enrollment leads to crowded classrooms, strains learning Assessment of Progress in Education (NAPE) Report found resources in the early grades, and contributes to grade that 57 percent of primary 6 students had below minimum repetition. In 2019/20, about 18 percent of P1 students proficiency levels in English literacy and 42 percent had were repeaters, mostly in government schools (26 percent below minimum numeracy levels. These figures are likely versus 7 percent in private schools).30 Only 60 percent of to understate the skills gap due to the high early dropout children who start primary education in Uganda remain rate. 29 Uganda’s COVID-19-era school closures, which at in school at the end of P7, mostly for reasons of cost.31 22 months were among the longest in the world for most High-stakes examination culture, including the Primary students, largely erased any literacy gains achieved since Leavers Examination (PLE) contributes to the problem 2016 when early grade reading (EGR) programs were of low completion of primary school, by preventing low- introduced. Challenges begin early in the system: the e performing students from progressing to secondary school. 2019/20 Uganda National Household Survey (UNHS) Despite some progress, equity gaps persist at all levels of the education system Uganda has made notable progress toward achieving and who are assigned to improvised pre-primary classes universal primary enrollment although student retention (P1A). Secondary enrollment has stagnated due to rapid is still a challenge. The fact that Uganda’s gross attendance population growth. Higher education is only available to a ratio exceeds 100 percent indicates that there is high over- small percentage of the population, although access has age or under-age enrollment, which is inefficient. Pre- f expanded as new universities have opened in underserved primary enrollment is slightly below the average for Sub- subregions. Table 2.2 summarizes data on the coverage, Saharan Africa, but this rate may include children attending equity, and quality of Uganda’s education services government primary schools who are of pre-primary age throughout the lifecycle. e EGR is a structured approach to literacy instruction that includes a package of lesson plans, learning materials, and ongoing teacher support. A 2022 Early Grade Reading Assessment in six local languages found that the COVID pandemic had largely erased literacy gains from EGR programs f The gross enrollment rate (GER) is calculated as the overall enrollment at a level of education divided by the population that is the official age for that level of education. Systems with near universal access to primary education combined with over- or under-age enrollment tend to have gross enrollment rates over 100 percent. 19 2 EDUCATION FOR ECONOMIC GROWTH: A CATALYST FOR HUMAN CAPITAL AND INNOVATION Table 2.2. Coverage, Equity, and Quality of Key Interventions in the Life Cycle Level of Education Coverage Equity Quality Pre-primary GAR: 40% Top quintile is 235% more likely to Quality measurement tools have been attend than bottom quintile adapted for Ugandan context but not Below average of regional systematically applied peers Officially, no government expenditures for direct provision 79% private Primary GAR: 101% Top quintile is 22% more likely to 53:1 average student: teacher ratio, attend than bottom quintile but wide variability Above average of regional peers Government expenditures and 10:1 student:textbook ratio subsidies are progressive 37% private 23.7% literacy and 50.2% numeracy proficiency in P6 (NAPE 2023) Secondary GAR: 32% Top quintile is 600% more likely to 21:1 average student: teacher ratio but attend lower secondary than bottom wide variability Below average of regional quintile peers Government expenditures and 57% private subsidies are regressive TVET Enrollment rates are not Government expenditures and Limited information on quality comparable, but likely subsidies are progressive insufficient coverage to meet skills needs 80% private Higher education GAR: 5% Top quintile is 1,400% more likely Limited information on quality to attend than second quintile – Similar to regional peers attendance for bottom quintile essentially zero 55% private Government expenditures and subsidies are regressive Source: World Bank 2023. Uganda Public Expenditure Review and UBOS. 2024. Census. Main Report. Note: The regional peer countries are Kenya, Tanzania, Rwanda, and Ethiopia. GAR = Gross attendance ratio, which equals the total number of children attending primary school divided by the official primary school age population and the total number of children attending secondary school divided by the official secondary school age population. NAPE = National Assessment of Progress in Education. STR = student-teacher ratio. Ugandan students are much more likely than their Schools), aimed at engaging with high-quality private regional peers to attend private institutions. During the schools to benchmark their good practices and to support 2019/20 school year, only 62 percent of primary students their government counterpart schools.33 attended government-aided institutions, well below the 92 percent average for Uganda’s peers in the region (Ethiopia, The main educational equity gaps in Uganda are between Kenya, Rwanda, and Tanzania).32 For secondary education, higher-income and lower-income households, between only 43 percent of students attended government rural and urban areas, and between refugee-hosting schools, a rate that was half the regional average of areas and the rest of the country. Table 2.2 summarizes 85 percent. It is difficult to make direct comparisons the likelihood of being enrolled in school for those in the between the performance of Uganda’s public and private top quintile of household income relative to those in the schools because of differences in resource levels and in lowest quintile for each level of education. At every level, the characteristics of the students’ households. There children from better-off households are more likely to have been some promising initiatives, such as MoES’s be enrolled in school, and the disparities grow larger at engagement with PEAS (Promoting Equality in African more advanced levels of education. The World Bank’s 20 2 UGANDA HUMAN CAPITAL DEVELOPMENT AND GROWTH REVIEW 2023 Public Expenditure Review for Uganda found that move through the system, reaching 41 percentage points in government expenditures on primary education and TVET literacy in P6. Nonetheless, significant numbers of learners are progressive (pro-poor) as they benefit lower-income from poor urban households are not acquiring basic skills, students disproportionally, but their expenditures on other so the needs of these children should not be neglected levels of education are regressive (more resources go to even as efforts are made to improve rural schools. Finally, higher-income households), with higher education being according to the second Education Response Plan for the most regressive (Figure 2.1). There are also substantial Refugees and Host Communities in Uganda (ERP II), the equity gaps in learning. The 2023 NAPE found that literacy secondary gross enrollment rate in Uganda’s refugee- proficiency rates were 37 percentage points higher in urban hosting districts is only 12.1 percent for refugees and 10 areas than in rural areas in Primary 3. This was an increase percent for nationals, and only 0.4 percent of refugees in from a 21 percent gap in 2018. The gap widens as children 34 these districts are enrolled in TVET.35 Figure 2.1. Uganda Lorenz Curve of Education Expenditure, 2019/20. Source: World Bank calculations based on Uganda National Panel Survey 2019/20. Note: Students benefiting from public investment either attend a public school or receive subsidies/scholarship from the government. Data sources show that different groups face different Education outcomes in parts of southwestern Uganda obstacles to enrolling in school. Boys and early-grade outperform expectations, despite poverty. Figure 2.2 dropouts report that poor academic performance and presents a version of the learning poverty index using discouragement prevent them from enrolling, while the share of P6 students that are out of school or did not girls cite pregnancy as a major barrier to attending late meet the minimum level of proficiency for literacy and primary and secondary school, a situation which was numeracy in the NAPE. The poverty levels across Uganda’s exacerbated by the COVID-19 pandemic. Girls’ enrollment subregions explains most of the variations in learning is more affected than boys’ by safety concerns related to poverty. However, certain subregions, including Kigezi inadequate school infrastructure (such as a lack of separate and Ankole, have much lower learning poverty rates than toilets) and by having to travel long distances to attend would be predicted by their poverty levels. One factor may school. In 2019/2020, 5.7 percent of girls and 3.7 percent be that these subregions receive a higher than average of boys aged 6 to 12 were not attending school because per-student UPE grant, though the differences between of distance barriers. 36 Students with disabilities are more subregions are not very large. More favorable public health than twice as likely to repeat grades than their peers due conditions may contribute as well, including lower malaria to barriers such as limited accessibility in schools, a lack rates, as ill health can negatively affect student attendance of assistive devices, teachers who lack adequate training and learning. on how to accommodate student with disabilities, and poor infrastructure and furniture in special and integrated schools. 21 2 EDUCATION FOR ECONOMIC GROWTH: A CATALYST FOR HUMAN CAPITAL AND INNOVATION Figure 2.2. Learning Poverty in Primary Education and Poverty Levels by Subregion a) Literacy b) Numeracy Source: World Bank calculations based on P6 NAPE Results 2018 and UNHS 2019/20. 22 2 UGANDA HUMAN CAPITAL DEVELOPMENT AND GROWTH REVIEW BOX 2.1: LIFECYCLE IN FOCUS: PRENATAL AND EARLY CHILDHOOD DEVELOPMENT The critical years for human capital formation span from conception to preschool, as rapid brain development during this period makes deficiencies in nutrition, healthcare, stimulation, and safety detrimental to national development. Research consistently shows the highest returns on investment occur in utero and during early childhood. Inequities in human capital start early. Uganda’s Situational Analysis of Early Childhood Development (ECD) highlights that factors like low income, disability, rural location, and parental incarceration links closely to limited access to early childhood services. Children ages 0–4 are more than 17 percentage points more likely than older children to face multidimensional poverty. The multisectoral nature of ECD poses coordination and resource challenges. The Ministry of Gender, Labour, and Social Development (MoGLSD) leads the implementation of the National Integrated Early Childhood Development Policy (NIECED) with support from other government entities, development partners, and civil society. A National Technical Committee exists, but coordination structures are weak, with overlapping mandates, no accountability framework, and limited sustainability planning. Poor alignment with development partners and donor dependence hinders geographic coverage and policy consistency. Trajectory of selected ECD indicators in Uganda Improving • 2.8% mother-to-child HIV transmission rate • 49% of children 6 to 23 months receive minimum meal frequency • 9.7 % of children underweight • 66% of children covered by birth registration Stagnating or Deteriorating • 83% of children experience violent discipline • 68% of pregnant women attend a fourth antenatal care visit Despite progress, ECD service provision in Uganda faces significant gaps. Key areas needing attention • Parenting programs: While effective homegrown programs exist to promote nonviolent parenting and early stimulation, implementation is fragmented and small-scale. • Childcare: Quality childcare supports child development and enables parents, especially mothers, to work more productively. Yet, nearly 40 percent of self-employed Ugandan women bring their children to work, associated with 45 percent lower profits. • Violence prevention and response: Reporting and referral systems for child protection are underfunded and underutilized. For instance, the Sauti Helpline serves primarily the central region, with fewer than 10% of staff on government payroll. Sources: For antenatal care: MoGLSD (2023) (except DHIS2); for pre-primary enrollment, MoES (2019); for early stimulation: Nurturing Care (2023); for parenting programs, MoGLSD (2020); UBOS, 2023 (DHS): Kimuli D, Nakaggwa F, Kasule K, Kiconco I, Nyakwezi S, Sevume S, et al. (2023) 23 2 EDUCATION FOR ECONOMIC GROWTH: A CATALYST FOR HUMAN CAPITAL AND INNOVATION Uganda has introduced many of the most cost- implementation. Additional interventions include those effective interventions to improve learning according aimed at gender-based violence mitigation in schools, to international evidence—“smart buys”—but there are and teaching socio-emotional and life skills. Uganda has significant gaps in implementation. Table 2.3 summarizes also partnered with humanitarian partners to pilot an the implementation status of interventions listed in the intervention in refugee hosting areas, in which teaching Global Evidence in Education Advisory Panel’s most recent teams are augmented by community-hired staff who review of rigorous international evidence. These include 37 speak the language of the refugees. ERP II calls for this providing structured pedagogy, teaching according to approach to be adopted in all refugee-hosting areas. Some children’s learning levels instead of by grade, and providing promising technology-driven initiatives, such as software parents with information about the benefits, costs, and that adapts to the learning level of the child and the use of quality of education. Notably, two of the three “great mobile phones to support learning, are nascent, while the buys” are focused on effective pedagogy, and, while their MoES is planning to expand a COVID-19 pilot to support implementation has begun in Uganda, their effectiveness individualized learning to increase the resilience of the has been constrained by limited coverage and flaws in education system to future shocks. Table 2.3: Implementation Status of Interventions Reviewed by the Global Evidence in Education Advisory Panel Intervention Status of Implementation in Uganda “Great Buys” Interventions that are highly cost-effective and supported by a strong body of evidence Supporting teachers with structured Implementing through EGR methodology. However, implementation could be pedagogy (a package that includes improved by (1) increasing coverage to all districts (2) improving teacher guides and structured lesson plans, learning materials, increasing teachers’ use of the guides, and (3) strengthening ongoing teacher support. and ongoing teacher support) Not yet implemented for numeracy, but MoES intends to pilot Early Grade Mathematics in the short term with potential to scale in the medium-term. Targeting teaching instruction by learning Piloted through several donor-financed projects including Community-Led Learning level, not by grade (in or out of school) (CLL, financed by FCDO) and Teaching at the Right Level (TaRL, financed by VVOB and others). Evidence from these pilots in Uganda confirms effectiveness at improving learning outcomes. Implementation through government systems to be initiated under the recently approved Uganda Learning Acceleration Program (ULEARN). Providing information to parents about the Not yet implemented. Could modestly increase attendance and learning at a very benefits, costs, and quality of education low cost if specific and locally relevant information is available and delivered in an actionable way to parents. “Good buys” Interventions with good evidence of cost-effectiveness Providing parent-directed early childhood Piloted through small-scale, mostly NGO-led programs. stimulation programs (0 to 36 months) Providing quality pre-primary education Implementing through private system, not yet implementing in government schools. (ages 3 to 5) The Early Childhood Care and Education (ECCE) Policy passed by Cabinet in May 2024 authorizes introduction of government-financed pre-primary in select areas. Reducing travel times to schools Implementing at a large scale through GoU programs to establish primary and secondary schools in underserved areas. However, 32 percent of children live outside the government-targeted distance of 3 km from the nearest primary school. Giving merit-based scholarships to Implementing at a limited scale. Government-financed scholarships are merit-based disadvantaged children and youths but may not be reaching the most disadvantaged. Administering school-based mass Implemented through projects including Multisectoral Food Security and Nutrition deworming where worm-load is high Project. Listed as a strategy in the draft School Health Policy. Note: FCDO = Foreign, Commonwealth, and Development Office of the United Kingdom; VVOB = Flemish language acronym for the Flemish Association for Development Cooperation and Technical Assistance. 24 2 UGANDA HUMAN CAPITAL DEVELOPMENT AND GROWTH REVIEW BOX 2.2. LEARNING FROM PEER COUNTRY EXPERIENCES In addition to the global evidence presented in Table 2.3, the experiences of peer countries – both successes and challenges – can provide useful lessons for the design and implementation of interventions in Uganda. Three examples aligned with the recommendations in this chapter are from Ethiopia, Kenya, and Rwanda. Ethiopia: Introducing one year of government-provided pre-primary education. Ethiopia introduced one year of pre-primary education, known as O-Class, in 2010. Pre-primary enrollment rates increased dramatically, from 5 percent to 46 percent, in 10 years. The quality of the program was highly variable, with most settings lacking sufficient learning materials and age-appropriate WASH facilities. Under Ethiopia’s decentralized system, success in implementing O-Class also varied with the level of regional commitment. Despite challenges, children who had attended O-Class were on average one year ahead academically in Grade 1 compared to peers.38 Kenya: Implementing Early Grade Reading (EGR) with quality. Kenya has adopted EGR as a structured pedagogical approach. While EGR is consistently effective at improving learning levels, it has been unusually so in Kenya, where the EGR program had the fourth-largest impact on learning- adjusted years of schooling (LAYS) among 150 rigorously evaluated interventions in a global review.39 A key element of Kenya’s success is a higher degree of fidelity to the teachers’ guides compared to other countries (Ethiopia, Malawi, and Uganda), which is one of the main predictors of student learning in EGR.40 Uganda’s program could benefit from improving the attractiveness and teacher-friendliness of the guides and aligning teacher training and support more intensively around practice with the guides. Rwanda: Rapid expansion of school infrastructure. Through the World Bank-financed Rwanda Quality Basic Education for Human Capital Development Project, the government of Rwanda carried out the largest school expansion program in the country’s history—delivering more than 22,500 classrooms in pre-existing and new school sites in under two years. This was achieved in part through successful implementation of a community-based construction approach, which has also been tried in Uganda at a smaller scale. This example shows that school expansion on the scale Uganda needs to keep up with population growth and meet its goals in the sector—6,070 additional classrooms per year throughout the 2020s, by one estimate—is achievable.41 25 2 EDUCATION FOR ECONOMIC GROWTH: A CATALYST FOR HUMAN CAPITAL AND INNOVATION Uganda’s public expenditures on education are low and inefficient, which is constraining human capital growth Uganda is an outlier in terms of its low public expenditure Uganda’s public expenditures on education are not only on education. Public spending on education represented low but also inefficient. There is usually a strong link just 2.7 of Uganda’s GDP in 2021, which was well below the between a country’s level of development, its expenditure, average for its East African peer countries (4.2 percent) and and its educational results. However, Uganda and its the minimum level recommended by the Education 2030 regional peers except for Kenya42 have lower learning- Framework for Action (at least 4 percent). Uganda spends adjusted years of schooling (LAYS) than the average for less per student than its peer countries at every level of countries at similar levels of development and with similar education, but the gap is most pronounced at the primary expenditure levels (see Game Changer #1 in Chapter level, where Uganda’s per-student expenditure is only one- 7). Considering Uganda’s level of development and third of the average for its regional peers. While Uganda’s expenditure, its LAYS are 11 percent lower than what might education spending has grown modestly in inflation- have been expected. Table 2.4 summarizes various studies adjusted terms in the past decade, this increase has mainly that have tried to quantify the sources of inefficiency in the benefited higher education (43 percent of the additional education system. resources) and central expenditures (24 percent). Table 2.4: Sources of inefficiency in the education system Source of inefficiency Magnitude of loss per year Reference Teacher absenteeism UGX 450 billion – 1.5 trillion World Bank (2023)a/ Inspectorate of Government (2021)b/ Lack of quality pre-primary education contributing to grade UGX 665 billion Weatherholt et al. (2019)c/ repetition through low readiness to learn Diversion of funds or supplies intended to benefit public UGX 244.6 billion Fazekas et al. (2021) education “Ghosts” - schools and teachers that receive payments but do UGX 50 billion Fazekas et al. (2021)d/ not exist, are duplicates, or are not providing services Sources: (a) World Bank (2023) Uganda Economic Update, 22nd edition; (b) Inspectorate of Government (2021) Study on the Costs and Extent of Corruption in the Education Sector in Uganda; (c) Weatherholt et al. (2019). Challenge and Drivers of Over Enrollment in the Early Years of Primary School in Uganda. (d) Fazekas et al. (2021) Study on the Extent and Costs of Corruption in the Education Sector in Uganda. When public expenditure on education is low, this shifts UNHS showed that “no funding” or “too expensive” were the financial burden onto households, exacerbating the reasons cited by the most respondents for why learners equity issues. For every UGX 1,000 that the government had to drop out of school starting from P3 through the end invests in education, households spend UGX 1,450. These of the secondary cycle.43 Pre-primary education is almost household contributions as a share of GDP are higher than entirely privately financed, and as a result, only 17 percent in most of Uganda’s peer countries but are still insufficient of 3-to-5-year-old children in the poorest quintile attend to bridge the funding gap. When local governments and pre-primary schools, compared with 57 percent from the schools receive limited funding, the shortfall must be made highest quintile. Fees in Uganda’s TVET sector are also up in extra fees and other out-of-pocket charges, even in higher than in comparator countries. At the tertiary level, government-aided schools. As a result, Ugandan children those from the top income quintile account for more than and youths are at high risk of being excluded from education two-thirds of enrollment. because they cannot afford to pay those fees. The 2019/20 26 2 UGANDA HUMAN CAPITAL DEVELOPMENT AND GROWTH REVIEW Substantial education investments are needed to reap the demographic dividend Population growth presents both an opportunity and to essential services such as water and electricity, which a challenge for Uganda. The growing size of Uganda’s negatively affects the quality of the learning environment youthful population presents the country with a never- and adds costs and inefficiencies. to-be-repeated opportunity to capture a demographic dividend, but reaping the benefits will require significant Demographic trends and increased completion rates investments. Between 2020 and 2040, Uganda’s primary- will increase demand for skills in the medium term. This age population is expected to grow from 9.4 to 12.9 million, will require significant expansion of the TVET sector and while its secondary-age population will grow from 6.6 to 10.6 strategies to enhances quality and affordability of skilling million. Even under a “business as usual” scenario in which programs through bursaries and other programs. The the system merely keeps pace with population growth, tertiary education sector, including public universities, face 48,000 additional public primary school teachers, 35,000 staffing and financial challenges. Even though universities additional classrooms, and 6.2 million additional textbooks are encouraged to diversify their sources of income, all would be required over that period at the primary level public universities are already understaffed, with salary alone. Under an “expansion with quality” scenario, which disparities among staff, and the welfare allowance for assumes increased investments to improve access and government-sponsored students is not commensurate quality as proposed in the Education Sector Strategic Plan with the current cost of living.45 (ESSP), education expenditures would need to increase by over US$1.1 billion by 2040.44 The lack of classrooms affects students’ access, retention, and learning outcomes. The introduction of Uganda’s UPE and universal secondary education (USE) policies led to an increase in primary school enrollment of nearly 250 percent over two decades and to a more modest increase at the secondary level of approximately 57 percent in one decade. However, the supply of schools, furniture, materials, and teachers has not kept up with the demand. While the number of primary schools has increased by 176 percent and the primary teaching force by 154 percent,g schools in most districts are overcrowded, with student- classroom ratios exceeding the government standard of 53:1. These ratios are even higher in rural areas and in districts with high poverty rates, particularly in the north and east regions. Overcrowding leads to poor learning outcomes, and thus to higher absenteeism and reduced student attention in class. Additionally, new schools are often located according to political considerations or where land is available, instead of taking into account proximity g The number of primary schools increased from 8,531 to 20,305 across the public and private sectors, and the number of teachers from 81,564 to 207,238. 27 2 EDUCATION FOR ECONOMIC GROWTH: A CATALYST FOR HUMAN CAPITAL AND INNOVATION Strengthening teacher effectiveness and education system management will improve outcomes Chronic teacher absences compromise the quality and that, whereas current teacher training has been effective in efficiency of education. The inefficiency of public spending enabling most primary school teachers to acquire teaching can be estimated by multiplying the average salary of qualifications and knowledge of “what” to teach, it has not primary school teachers by the number of teachers who been effective in building teachers’ capacity in “how” to are chronically absent from their classrooms. According to teach. the World Bank’s 2018 Service Delivery Indicators Report for Uganda, on any given school day approximately one in Most government education spending goes to wages, four public school teachers was absent from work, and 52 but teachers’ salaries are low compared to similarly percent were not teaching in the classroom. In other words, educated workers. Wages make up approximately 62 48 percent of public schoolteachers were not actively percent of total education spending, compared to a teaching at any given time. This implies that inefficiency 46 Sub-Saharan Africa average of 49 percent. However, the in public spending in FY2019 amounted to UGX 449.5 salaries paid to teachers with a university degree are 37 billion or 12 percent of total public education spending. h to 42 percent lower than the national average for other similarly qualified professionals. As Uganda moves toward More recent work has confirmed the scale of the problem requiring all pre-primary and primary teachers to have a and has suggested ways to address it. A 2023 report from degree under the 2019 National Teachers Policy, teacher Uganda’s Inspectorate of Government, an independent compensation will become an important consideration. institution charged with eliminating corruption and abuse While raising teacher salaries without also introducing of authority in public office, estimated that UGX 1.5 trillion reforms to increase professionalism and accountability had been wasted as a result of lost instructional time and is unlikely to increase learning, the competitiveness of noted that many teachers were taking on additional jobs to salaries is an important way for the government to attract supplement their income (“moonlighting”). A study in the the best candidates into teaching.48 Hoima and Mityana districts found that teachers regard an absence rate of 25 percent as normal, but that interventions Uganda has an ambitious reform agenda which, such as structured meetings where teachers talk about the if implemented well, could transform the teaching importance of attendance can change norms and reduce profession. In 2019, MoES approved the National Teachers absenteeism. 47 Policy, which identifies four key objectives for improving the profession: Inadequate teacher competence is one of the major 1. Streamlining teacher management to ensure greater causes of the low learning outcomes in Uganda. The productivity, discipline, retention, and motivation World Bank’s 2018 Service Delivery Indicators’ Survey 2. Strengthening pre-service and in-service teacher found that most primary school teachers in Uganda were training incapable of delivering effective lessons based on the 3. Standardizing the development, qualifications, and curriculum. Teacher tests conducted by the UNEB in 2018 practice of teachers in all levels of education, and showed that most teachers did not meet the expected 4. Integrating cross-cutting issues such as using proficiency level in numeracy, and about half did not meet information and communication technology (ICT), the proficiency level in oral vocabulary. Similarly, a 2018 gender responsiveness, and inclusivity into all aspects National Planning Authority report on the UPE pointed out of teacher training, management, and practice. h Only teachers in government-aided students were considered in the calculations. 28 2 UGANDA HUMAN CAPITAL DEVELOPMENT AND GROWTH REVIEW To accelerate the implementation of these policies, Uganda and retention rates and to uniquely identify learners, has established the Uganda National Institute for Teacher teachers, and institutions. The upgraded system will be Education (UNITE), with a mandate to oversee the training connected with the National Identification and Registration of teachers nationwide. Authority (NIRA) database for bioinformation, and all learners will have national identification numbers. Giving Low enrollment rates in science, technology, engineering, unique identifiers to all students, teachers, and schools and mathematics (STEM) programs are impeding the should eliminate the problem of “ghost” schools and growth of a skilled workforce. Although there has been an teachers. The upgraded EMIS will also be linked to the overall increase in tertiary-level enrollment, the enrolment UNEB and other examination bodies to enable analysis ratio for STEM programs falls short of the targets set in of learning outcomes and the recording of other data on NDP III: the current ratio of humanities students to science infrastructure, instructional materials, nutrition, and water, students stands at 2:5, falling short of the target of 3:5 sanitation, and hygiene (WASH).50 An effective EMIS is set in NDP III. This is due to insufficient equipment and necessary to support overall education management, and, laboratories for teaching STEM courses. This disparity if implemented effectively, could lead to higher student is hindering the development of a skilled workforce that achievement and a stronger education system. can drive technological innovation and industrialization in Uganda.49 School inspection, monitoring, and supervision are inadequate to enforce education standards and support The introduction of the Parish Development Model the delivery of quality education. Both the Directorate of (PDM) is an opportunity to prioritize last-mile delivery Education Standards at the MoES and local governments of free, universal, and high-quality primary education. are acutely underfinanced to carry out school-level With the appropriate level of resources and guidance support and inspection. In 2021/22, the budget provision from the central government, the PDM could be used to for the inspection function was UGX 112,000 per primary address several challenges in basic education. A first step school, but the adequate cost had been estimated to be will be engaging communities in the implementation of UGX 152,292 in 2018.51 Uganda’s Teacher Development the Cabinet’s directive to implement free and compulsory and Management Systems (TDMS) have divided the UPE and USE, beginning with UPE in 2024/25. The PDM country into 539 coordinating centers, managed by tutors could also be useful for ensuring that the NDP III target of who are responsible for providing instructional support having at least one primary school per parish is reached, to teachers together with school leaders. However, some while prioritizing areas with existing low enrollment and areas lack tutors, and many centers are understaffed, where students have to travel long distances to school. leading to infrequent classroom visits to observe teachers’ Mindset-change interventions (Pillar 5 of the PDM) at performance. the parish level can inform families about the benefits of staying in school, empowering them to demand higher- The introduction of an element of performance-based quality service from schools and to protect girls and boys financing for local governments is promising, but from violence. Finally, integrating the nascent EMIS with challenges remain in the decentralized service delivery the parish-based management information system (Pillar model. The MoES has introduced a School Performance 6 of the PDM) would strengthen the process of collecting Assessment System, which monitors teacher effectiveness data to be used as evidence in decision-making at both the and learner achievement at the school level, to link schools’ central and decentralized levels. performance to the size of the capitation/non-wage recurrent grant allocated to local governments for primary The lack of a sustainable, accountable, and efficient schools. The School Performance Assessment System is EMIS has slowed Uganda’s delivery of education expected to: services. Currently, the EMIS in Uganda is being upgraded to include functions for tracking enrollment, dropout, 29 2 EDUCATION FOR ECONOMIC GROWTH: A CATALYST FOR HUMAN CAPITAL AND INNOVATION 1. Enhance the impact of school inspections on the There is promising international evidence, for example from quality of education through by promoting the use of the Performance-Based Mechanisms for Intergovernmental information gathered during school inspections. Transfers in the State of Ceará, Brazil, that this approach 2. Provide incentives (financial and technical support) to can be effective. However, in Uganda, challenges remain, schools to improve their performance improvements. as there is currently little relationship between the average 3. Strengthen the oversight, monitoring, and support per student allocation to local governments and their level supervision of local and central governments functions of need, and teachers are inefficiently distributed across in the education sector. local government units. These challenges need to be addressed to ensure the success of the current system and the effective implementation of the PDM. Recommendations Drawing on the analysis in this chapter and on international evidence of the most cost-effective ways to improve education outcomes, Table 2.5 presents six recommendations for improving Uganda’s education system. Each recommendation is accompanied by both short-term and long-term actions. Table 2.5. Recommendations for education: Short-Term and Long-Term Recommendation Short-term actions Long-term actions Responsible parties (next 5 years) (5-10 years) 1. Gradually increase • Reverse the erosion of per-student • Ensure that education MoES, MoFPED, the education spending to reflect expenditures for basic education by expenditures are on National Planning an “expansion with quality” ensuring the efficiency of grant allocation a path to achieving Authority, and local scenario, prioritizing basic to enhance the adequacy of grants. the “expansion with governments education and skills over • Increase capitation grants to levels quality” scenario by further increases in tertiary recommended by the National Planning 2030. education. Authority and provide grants to schools awaiting grant aiding. • Expand primary-level infrastructure – building new schools or expanding or rehabilitating existing schools according to local needs – complete with the required furniture in underserved areas to complement externally financed projects in secondary education. • Increase TVET allocations, focusing on scaling up skilling programs that align with job market needs and in those sectors that are driving the Tenfold Growth strategy. 2. Introduce one year of quality • Complete a feasibility study, • Implement at scale MoES, MoGLSD, and pre-primary education in the develop standards, and produce an and consider adding development partners government education system implementation plan for the new Early a second pre-primary Childhood Care and Education Policy. year when the system • Pilot, evaluate, and begin to scale one year is ready. of pre-primary in government schools, leveraging the PDM to increase access and promote community engagement. 30 2 UGANDA HUMAN CAPITAL DEVELOPMENT AND GROWTH REVIEW Recommendation Short-term actions Long-term actions Responsible parties (next 5 years) (5-10 years) 3. Enhance ECD by • Promote digital interoperability and the • Fund existing MoES, MoGLSD, strengthening cross-sector automated generation of reports on child protection development partners, collaboration and data cross-sectoral ECD indicators as part of interventions, and the private sector systems, promoting positive the development of data systems within including child- parenting, and expanding government bodies. friendly schools existing programs, staffing, • Include positive parenting, early programming, and building capacity among nutrition, and stimulation interventions in permanently and at stakeholders information campaigns. scale. • Strengthen coordination mechanisms • Improve the enabling between and among government bodies environment for and development partners. entrepreneurs in the childcare sector. • Build the capacity of key actors in ECD and strengthen awareness of its role in sustainable development. 4. Comprehensively reform Provide sufficient funding for tutors at • Ensure that teacher MoES, MoFPED, UNEB, the teaching profession, coordinating centers. salaries converge to UNITE, NCDC, and local taking into consideration • Adopt a more transparent and formula- at least 80 percent governments not only compensation and based approach to allocating teachers, of the average for accountability but also support reducing differences in student-teacher comparably educated for teachers ratios. workers. • Gradually increase teacher salaries while strengthening merit-based recruiting and accountability measures (such as probationary periods). Ensure that all teacher training incorporates at least 50 percent hands-on practice, beginning with early grade reading. Use virtual technology to enable frequent and coordinated classroom support visits. 5. Leverage technology to • Roll out a revamped EMIS and strengthen • Consistently maintain, improve learning and reduce the implementation of the Teacher update, and improve inefficiencies in the system. Effectiveness and Learner Achievement the EMIS and system. promote its use in • Integrate data systems, including the decision-making. Parish Development MIS. • Use data to determine grant allocations, to improve equity, and to strengthen performance-based elements. • Use the EMIS to pilot an early warning system to reduce school dropouts. • Expand the use of e-learning for self- paced learning for students and teachers, including in digital and 21st-century skills. 6. Reduce out-of-pocket • Pilot low-cost information/behavior MoES, MoFPED, UNEB, costs and other barriers to change campaigns to encourage school NCDC, the National participation in education. enrollment and retention, including for Planning Authority, and pregnant girls. local governments • Revisit the role of the Primary Leavers Examination to de-escalate high-stakes examination culture. • Implement free and compulsory universal primary education and universal secondary education by financing school functions that are now financed by fees. Notes: MoES = Ministry of Education and Sports; MoFPED = Ministry of Finance Planning and Economic Development; MoGLSD = Ministry of Gender, Labour and Social Development; NCDC = National Curriculum Development Center; UNEB = Uganda National Examinations Board; UNITE = Uganda National Institute for Teacher Education. 31 3 HEALTH FOR BETTER HUMAN CAPITAL AND GROWTH: INVESTING IN HEALTH AND NUTRITION IS KEY TO ACCELERATING HUMAN CAPITAL DEVELOPMENT AND ECONOMIC GROWTH 3. Health for Better Human Capital and Growth: Investing in health and nutrition is key to accelerating human capital development and economic growth Good health and nutrition drive not only the accumulation and inpatient services as well as caesarian sections and and use of human capital but also economic growth. other minor surgeries. The local governments coordinate When individuals enjoy better health and nutrition, their health services at these levels of care delivery. The Ministry life expectancy, quality of life, and productivity improve. of Health provides policy direction and undertakes major Studies have shown that an extra year of life expectancy developments, strategic planning, resource mobilization, raises a country’s GDP by about 4 percent ‘ 52 53 and that and quality assurance. a 1-centimeter increase in height is associated with a 4 percent and a 6 percent increase in wages for men and The health sector contributes significantly to the women, respectively.54 Improved health outcomes drive employment and industrialization agenda in Uganda, employment, innovation, industrialization, and trade, which accounting for over 158,932 employees in both the public collectively impact economic growth.55 A panel study of and private sectors. Health workers and teachers constitute 74 industrialized and developing countries conducted the largest share of skilled employed people in Uganda, between 1980 and 2000 found that gross inflows of especially in rural areas, where their regular incomes drive foreign direct investment (FDI) are strongly and positively local economic activity, which in turn influences household influenced by population health, suggesting that a one- investments in human capital development. Uganda also year increase in life expectancy increases gross FDI by boasts of several innovative health-related industries. The 9 percent.56 Global evidence shows that the returns to country’s burgeoning pharmaceutical production sector investing in public health interventions is 14:1 with that for includes firms such as Quality Chemicals, which reported immunization being 19:1.57 a 48 percent increase in growth between FY 2019-20 and FY 2020-21, rising from UGX 192.7 billion to UGX 284.5 Uganda’s national health delivery system consists of billion,58 mainly through exports. national referral hospitals, regional referral hospitals, and the district health system. The district health system is further divided into health sub-districts within which there are district general hospitals, health centers IV, III, and II, and at community level village health teams. A health center II (HC II) provides outpatient preventive and promotive care in collaboration with community health workers. An HC III provides basic preventive, promotive, and curative care as well as maternity, inpatient, and laboratory services and supervises community health workers and the HC IIs. An HC IV provides curative, preventive, maternity, outpatient 32 3 UGANDA HUMAN CAPITAL DEVELOPMENT AND GROWTH REVIEW Despite making significant progress in health and nutrition outcomes, Uganda still experiences a high burden of disease Over the past three decades, Uganda registered decreased by 77 percent, 71 percent, and 66 percent significant improvements in key health outcomes across respectively. Less progress was made in adult mortality, the lifecycle. As highlighted in Table 3.1, life expectancy neonatal mortality, teenage pregnancy, the fertility rate, and increased by 48 percent between 1989 and 2024, while stunting, which highlights the need for more and smarter HIV prevalence, under-5 mortality, and maternal mortality investments targeting the root causes of these conditions. Table 3.1. Trends In Overall Health and Nutrition Outcomes (1989/90 – 2023/24) Indicator 1989/90 2005/6 2022-24 Percent Change (1989 – 2024) Trends in life expectancy (years) 46.3 51.2 68.5 48 percent HIV prevalence rate in adults (percent) 22 6.4 5.1 -77 percent Total fertility rate (per woman) 7.0 6.7 4.5 -36 percent Maternal mortality ratio (per 100,000 live births) 550 435 189 -66 percent Under-5 mortality (per 1,000 live births) 180 128 52 -71 percent Infant mortality (per 1,000 live births) 100 71 36 -64 percent Neonatal mortality (per 1,000 live births) 39 27 22 -44 percent Under-5 stunting (percent) 45 38 24.4 -46 percent Teenage pregnancy rate (percent) 37 25 24 -35 percent Adult mortality rate (per 1,000): male 517 453 345 -33 percent Adult mortality rate (per 1,000): female 395 414 242 -39 percent Sources: UBOS (UDHS and Census) and other government agencies, and World Bank (World Development Indicators). Note: Adult mortality is the likelihood that a 15-year-old will die by age 60; teenage pregnancy is percent of women 15-19 who have given birth or are pregnant with their first child at time of survey. Uganda, like several peer countries, suffers a high over the same period (Figure 3.1). While the proportional burden of disease, which threatens human capital contribution of infectious diseases among the top ten development. While the burdens of communicable leading causes of deaths in health facilities reduced from diseases and non-infectious maternal, child, and 67 percent to 42 percent between 2000 and 2019, the adolescent health complications have declined over contribution of NCDs tripled from 8 percent to 24 percent recent decades, they still contribute substantially to the (Figure 3.2). Uganda has one of the highest rates of road burden of disease, compounded by the rapidly rising traffic deaths in Africa, estimated at 29 traffic deaths per burden of non-communicable diseases (NCDs) and 100,000 people, exceeding the regional rate of 24.1 per frequency of major public health emergencies. Uganda is 100,000 people.59 In a period of two years (2020-2021), one of the six countries that account for over half of the Uganda experienced about 14 disease outbreaks, including global malaria burden. Malaria accounts for 29.1 percent the deadly COVID-19 pandemic. of outpatient visits, 39.5 percent of inpatient admissions, and 10.9 percent of hospital deaths in the country. The burden of NCDs, injuries, and mental health conditions is increasing. The contribution of communicable diseases to the loss of disability adjusted life years (DALYs) declined from 66.6 percent in 2001 to 42.2 percent in 2019, but the contribution of NCDs rose from 18.3 percent to 37.3 percent 33 3 HEALTH FOR BETTER HUMAN CAPITAL AND GROWTH: INVESTING IN HEALTH AND NUTRITION IS KEY TO ACCELERATING HUMAN CAPITAL DEVELOPMENT AND ECONOMIC GROWTH Figure 3.1. Trends in Contribution of Major Types of Diseases to disability Adjusted Life Years Lost in Uganda, 2000 – 2019 Source: IHME, Global Burden of Disease Database. Figure 3.2. Trends in the proportion of leading causes of mortality in Health Facilities in Uganda, 2012 – 2023 Source: MoH, Annual Health Sector Performance Reports (2012/13, 2017/18, 2022/23) Suboptimal progress in nutrition indicators further Capital Index (HCI) score to 0.56 and boosting growth. compounds other health complications since The proportion of children aged between 6 and 59 months malnutrition is associated with about half of all under-5 with anemia decreased from 73 percent in 2006 to 49 deaths globally. The prevalence of stunting in Uganda percent in 2011 but then increased slightly to 53 percent declined from 45 percent in 2001 to 26 percent in 2022 in 2016. Meanwhile, anemia among women aged 15 to 49 (Figure 3.3a). Maintaining this trend will only increase the declined from 42 percent in 2006 to 23 percent in 2011 but fraction of children who are not stunted from 74 percent in then rose again to 32 percent by 2016.60 It is imperative 2020/21 to 83 percent in 2040, compared to reaching 93 to take decisive actions to reverse malnutrition given its percent by 2040 if progress is accelerated in line with the high costs for the economy, which have been estimated to Vision 2040 and ten-fold growth aspirations (Figure 3.3b). be an average of 7.7 percent of GDP for 21 African Union Achieving this target will be crucial in raising the Human countries and 5.7 percent of GDP in Uganda.61 34 3 UGANDA HUMAN CAPITAL DEVELOPMENT AND GROWTH REVIEW Figure 3.3. Key Nutrition Outcomes (2001– 2022) and Projected Trends For Stunting among children under five years old (a) Trends in stunting among children under (b) Trends in the fraction of children under 5 in Uganda, 2001-2022 5 who are not stunted, 2000-2040 100 93.3 90 80 74 82.7 70 60 55.1 Percentage 50 40 30 20 10 0 2000 2005 2010 2015 2020 2025 2030 2035 2040 Historical trends Business as Usual Vision 2040 Acceleration Source: World Bank, based on data from the Uganda Demographic and Health Surveys. Unlocking Uganda’s human capital potential will require policymakers to pay deliberate attention to inequality and contextual factors like demographic pressures. According to the Uganda Bureau of Statistics’ 2022 report on the Multidimensional Poverty Index (MDPI),62 42 percent of Ugandans are multidimensionally poor, with Karamoja, Acholi, West Nile, Lango, and Teso regions experiencing rates higher than 50 percent. These regional disparities mirror patterns in key health outcomes. Under-5 mortality was higher in rural areas (68 per 1,000 live births) than in urban areas (52 per 1,000 live births). It was also higher among the poorest quintile (88) than among the richest (53), as well as being higher in Karamoja (102) than in Teso (54).63 Uganda has one of the highest population growth rates (3 percent per year) and one of the youngest populations in the world. While the country’s changing demographics provide an opportunity to reap a demographic dividend, they also come with changing disease patterns and increasing pressure on limited healthcare resources. 35 3 HEALTH FOR BETTER HUMAN CAPITAL AND GROWTH: INVESTING IN HEALTH AND NUTRITION IS KEY TO ACCELERATING HUMAN CAPITAL DEVELOPMENT AND ECONOMIC GROWTH Access to and the coverage of health and nutrition interventions have markedly increased, and their quality has improved, but major gaps and inequalities remain Uganda’s health and nutrition services have improved in Uganda has made strides in terms of promoting the the last decade in terms of access, coverage, and quality, inclusion of persons with disabilities and refugees in the but major inequalities persist. The percentage of people health system, though barriers to care still exist. A 2022 living within 5 kilometers of any health facility (either public report from the UN Refugee Agency (UNHCR) found that or private and of any size) increased from 83 percent in most refugees had access to health and nutrition services 2012/13 to 91 percent in 2019/20.64 However, there are within a 5-kilometer radius of their households. While regional variations in access, ranging from 77.6 percent in services are available to all people, including persons with Karamoja to 95.4 percent in Buganda North. Between 2000 disabilities, their access to these services is constrained and 2021, Uganda’s score on the WHO’s Universal Health by several factors such as lack of funds and an inability Care (UHC) Index,65 which measures countries’ progress to physically reach a health center.66 Uganda’s 2016 towards achieving universal health coverage increased Demographic and Health Survey (DHS) found that only 65 from 22 percent to 49 percent, as shown in Figure 3.4, with percent of mothers with disabilities delivered their babies low service capacity in health facilities being the weakest in a health facility compared to 74 percent of mothers link. Most of the UHC progress to date has been driven by without a disability. According to the UNHCR 2022 report, improvements in facility-level health services and, to some the overall rate of measles vaccination coverage in the extent, at the community level. However, other service refugee settlement camps was 95 percent, higher than delivery platforms, such as schools, digital platforms and the national average of 83 percent. Skilled health workers workplaces, are underused. conducted 95 percent of births in the settlements. Similar higher coverage rates are found for several other services, but this positive trend has begun to wane following a drop in humanitarian funding in the country. Figure 3.4. Trends in Universal Health Coverage (UHC) Index, 2000–2021 for Uganda and Comparator Countries Source: World Health Organization and International Bank for Reconstruction and Development / The World Bank, Tracking Universal Health Coverage: 2023 Global Monitoring Report. 36 3 UGANDA HUMAN CAPITAL DEVELOPMENT AND GROWTH REVIEW Inadequacies and inequities in access to and coverage of essential health interventions across the lifecycle indicate that several areas require targeted actions: Pre-conception, prenatal, and childhood periods. According to the Uganda Demographic Health Survey 2022, In 2022, 58 percent of family planning demand is met by modern methods, only 86 percent of deliveries took place in health facilities, up from 37 percent in 2001, while only 63 percent of children received all basic vaccinations.67 Half of children under the age of 5 and one-third of women of childbearing age have iron deficiency anemia.68 Notable inequalities exist between regions and wealth quintiles. Rates of giving birth in health facilities are highest (96 percent) among women who have a secondary education or more, compared to 77 percent among those without education, while rates are 23 percent higher among women in the highest wealth quintile compared to the poorest quintile. Modern family planning uptake is higher among the wealthiest (45 percent) compared to 22 percent among the poorest quintile. Adolescent health and wellbeing. There is a low coverage of the integrated adolescent wellbeing interventions, including good health and optimum nutrition; connectedness, positive values, and contributing to society; safety and a supportive environment; learning, competence, education, skills, and employability; and agency and resilience.i/69 The prevalence of teenage pregnancy stagnated at around 24 percent between 2016 and 2022, and the prevalence of substance abuse is growing.70/71 Adulthood and healthy aging. Although it is estimated that there will be 6.2 million elderly people in Uganda by 2050 given the country’s increasing life expectancy, healthcare and social protection services for the elderly are minimal.72 Elderly persons are plagued with several challenges, including poverty, increasing burden of NCDs, mental health conditions, and disabilities, the risk of facing catastrophic health expenditures, and social exclusion. Efforts to tackle these challenges are hindered by weak cross-sectoral coordination of older people’s interventions, inadequate statistics on elderly persons in the country, limited trained personnel for geriatric care, disintegrating traditional family and social structures, and a lack of adequate social protection systems. Significant gaps remain in the quality of health services hospitals down to 50 percent for HC IIs. The key drivers and the readiness of health facilities to deliver services. of poor quality services include: (1) a lack of professionally A WHO regional assessment for Africa estimated trained and motivated personnel, essential medicines, and Uganda’s quality of healthcare at 54.5 percent, compared functional equipment; (2) long waiting times; (3) unclean to the regional average of 61.3 percent.73 According to the premises; (4) staff disrespect toward clients; (5) the need to Ministry of Health (MoH), only 31 percent of healthcare travel long distances to access health facilities; (6) the high clients in Uganda are satisfied with the health services cost of services; (7) the limited range of services provided; that are available, far below the target of 79 percent set and (8) organizational, managerial, and governance in the Health Sector Development Plan 2019/20-2014/19. weaknesses in the health facilities. In additional health Ugandans are more satisfied with higher-level health facilities have low access to water, sanitation, and energy facilities, largely because of a lack of services and inputs facilities as shown in Figure 3.5.76 at primary health care (PHC) facilities. The MoH’s 2022 74 Harmonized Health Facility Assessment Report75 shows a decreasing readiness score ranging from 82 percent for i Adolescent health and well-being is defined as “adolescents being healthy and having the support, confidence, and resources to thrive in contexts of secure and healthy relationships, realizing their full potential and rights.” 37 3 HEALTH FOR BETTER HUMAN CAPITAL AND GROWTH: INVESTING IN HEALTH AND NUTRITION IS KEY TO ACCELERATING HUMAN CAPITAL DEVELOPMENT AND ECONOMIC GROWTH Figure 3.5. Access to basic amenities in health facilities, 2023 Source: Uganda Ministry of Health, Harmonized Health Facility Assessment for Uganda (2023). 38 3 UGANDA HUMAN CAPITAL DEVELOPMENT AND GROWTH REVIEW Investing in health should unlock critical constraints and leverage opportunities for accelerating human capital development This section analyzes the constraints to and opportunities for accelerating human capital development and growth in the following areas: (1) financing for health and nutrition; (2) human resources for health and nutrition; (3) the availability, quality, and functionality of service delivery infrastructure, medical equipment, and basic amenities for health; (4) data, information management and the digitization of health services; (5) medicines and essential supplies including blood products; (6) the governance of health and nutrition services; and (7) shocks, environmental pollution, and forced displacement. Although health and nutrition financing in Uganda is relatively effective and equitable, it is inadequate Uganda was one of the first countries in Sub-Saharan Uganda’s current health expenditure comes from external Africa to adopt an integrated health financing strategy (53 percent) and private sources (28 percent), which are in 2016. The aims of the strategy were to increase the not reliable and sustainable ways to fund vital services such adequacy, equity, and sustainability of funding; establish as healthcare.80 While there is a paucity of data on overall a social health protection system; and increase effective nutrition financing, it accounted for only 2 percent of health pooling and strengthen strategic purchasing to drive expenditure between 2019/20 and 2020/21.81 Uganda’s progress toward achieving UHC. The mid-term review of 77 rising public debt is further constraining the government’s the strategy in 2023 found that several health and nutrition ability to increase health spending. For example, in FY financing reforms were progressing well and positively 2020/21, the proportion of the national budget allocated influencing health services. The free health care policy to health with debt amortization was 7 percent, whereas started much earlier was successful in ensuring healthcare it would have been 11 percent without debt amortization/ equity, especially at the PHC level, and results-based repayment.82,83 Surprisingly, Uganda’s health financing financing (RBF), which has been scaled up nationally and system seems to be efficient in terms of generating results mainstreamed into the national PHC grant system from FY (see Figure 3.6d) compared to its peers. 2023/24, has strengthened strategic purchasing. A quasi- experimental impact evaluation of the Uganda Reproductive The low level of public expenditures on health is partly Maternal and Child Health Services Improvement Project due to decreased domestic investments in public health (URMCHIP)78 found that adopting RBF had significantly relative to overall public spending and economic growth. improved most of the incentivized performance indicators The Fiscal Space for Health Analysis Report of 2025 including antenatal care, facility deliveries, family planning, indicates that the elasticity of domestic spending on health and outpatient and inpatient visits. with respect to GDP is 0.76 based on analysis of data from 2001 to 2019, down from 0.95 in 2010, which implies that Uganda’s spending on health is low and is largely for every 1 percent increase in GDP, domestic financing externally and privately financed, yet it is comparably of health care only increases by 0.76 percent. Uganda efficient to that of peer countries. Figure 3.6 shows that currently allocates a much lower amount of its GDP to although Uganda’s per capita current health expenditure health (around 1 percent) than peer countries like Burundi, increased from US$37 in 2019 to US$57 in 2021, this is still far Kenya, Malawi, and Rwanda, which allocate 2 percent or below the US$112 that low- and middle-income countries more.84 need to spend to achieve UHC. 79 About 81 percent of 39 3 HEALTH FOR BETTER HUMAN CAPITAL AND GROWTH: INVESTING IN HEALTH AND NUTRITION IS KEY TO ACCELERATING HUMAN CAPITAL DEVELOPMENT AND ECONOMIC GROWTH Figure 3.6. Adequacy, Sources, and Efficiency of Health Financing in Uganda (a) Total Health Expenditure and General Public and (b) Trends in the Share of National Budget Allocated Domestic Financing on Health as Percent of GDP, to Health and GDP to Health (domestic), 2000/21– 2016/17–2020/21 2021/22 (c) Source of Health Financing in Uganda, 2014/15– (d) Health Financing Efficiency in Uganda and 2020/21 Comparator Countries (UHCI vs CHE per capita) Sources: World Bank, analysis based on data from National Health Accounts; WHO Global Health Expenditure Database; and Uganda National Household Survey. Notes: CHE = current health expenditure. PER = public expenditure review. THE = total health expenditure. UHCI = Universal Health Coverage Index. 40 3 UGANDA HUMAN CAPITAL DEVELOPMENT AND GROWTH REVIEW The heath financing situation is now complicated by recent marked reductions in external development assistance for health underscoring the need for enhanced domestic financing of health. Uganda receives substantial external financing for health, accounting for close to half of the total health expenditure (THE) (47 percent, as shown in figure 3.6c). The recent US Government cuts in funding obligations for health in Uganda through USAID in FY2024/25 amounting to US$ 307 million85 will significantly affect essential health services including reproductive, maternal, newborn and child health, and other services, broadly. This is because USAID has historically been the largest source of external financing for health. The FY2023/24 health sector off-budget resource tracking exercise conducted by the Ministry of Health with support from WHO and UNICEF shows that of the UGX 1,760.3Bn (about US$ 664 million) disbursed through 288 projects, USAID disbursed UGX 652 Bn (37 percent) through 27 projects.86 Any further cuts through other U.S. government agencies and global health initiatives will complicate the health financing situation further. While the number of households that face financial despite the government’s policy of providing free public hardship to access healthcare has reduced over healthcare. Nevertheless, access to public health facilities, time, more than 10 percent of households still spend especially at the PHC level, is largely equitable for all catastrophic amounts to access care. According to the income groups (Figure 3.7a and Figure 3.7b). Overall, about World Bank’s latest Public Expenditure Review (PER) for 50 percent of out-of-pocket is spent on medicines. Other Uganda, about 1 million households (approximately 4.9 key financing challenges include the fact that spending million people) in 2018/19 spent more than 10 percent of on healthcare is skewed toward curative care (increasing their incomes on healthcare, which prevented them from from 39.5 percent in FY2015/16 to over 56 percent for purchasing other services and from saving or investing. FY2016/17 to FY2020/2021),87 an inappropriate input mix, Further, 205,390 households (about 1 million people) were a public finance management system that is not agile in impoverished as a result of healthcare costs, affecting supporting public health emergencies, and weakness in national efforts to eradicate poverty. Most (64.2 percent) the design and execution of public investments resulting in of out-of-pocket (OOP) expenditure goes to private prolonged delays (from one to three years) in completing healthcare, followed by public healthcare (26.4 percent), projects.88 41 3 HEALTH FOR BETTER HUMAN CAPITAL AND GROWTH: INVESTING IN HEALTH AND NUTRITION IS KEY TO ACCELERATING HUMAN CAPITAL DEVELOPMENT AND ECONOMIC GROWTH Figure 3.7. Adequacy, Sources, and Efficiency of Health Financing in Uganda (a) Catastrophic Health Expenditure Trends (Urban-Rural), (b) Catastrophic Health Expenditure by Subregion, 2019/20 2005/06 – 2019/20 (c) Trends in Benefits from Public Health Facilities, by Income (d) Trends in Benefits from Public Health Facilities (Hospitals), Quintile (Primary Healthcare), 2012/13, 2016/17, and 2019/20 - by Income Quintile, 2012/13, 2016/17, and 2019/20 – PER Report PER Report Source: Figures 3-7(a-d) from Uganda Public Expenditure Review Report 2022-23. 42 3 UGANDA HUMAN CAPITAL DEVELOPMENT AND GROWTH REVIEW Inadequacies and inefficiencies in the availability, production, and management of the health workforce are constraining the provision of health services and jobs Although Uganda has made progress in improving gaps facilities from the HCIII to the regional referral hospital in the health workforce, key challenges persist at all (RRH) level shows significant staffing gaps against 2023 levels of care. Human resources are central to the delivery norms, for nurses (gap of 36,778), allied health workers of quality health services. Between FY2010/2011 and (18,749), midwives (14,787), environment officers (9,577), FY2021/2022, the proportion of health worker positions clinical officers (4,332), and medical officers (2,419). Only that had been filled increased from 56 percent to 78 16 percent of nutritionist positions at regional referral and percent. 89 However, this constitutes only 32.5 percent of general hospitals were filled. Out of the required 215,475 the total number of staff needed to overcome the sector’s staffing positions in the health sector, only 70,116 are filled, challenges as specified in the MoH’s updated 2023 staffing leaving a gap of 145,359 (see Figure 3.8). Expenditures on norms. The Health Labor Market Analysis of 2023 estimated salaries as a share of total public expenditure on health that Uganda was employing 25.9 health workers per 10,000 increased from 24 percent in 2016/17 to 37 percent in population, falling short of the 44.5 per 10,000 population 2020/21, but this is still below the range of 45 to 60 percent required to achieve UHC as recommended by the WHO. spent by peer countries.90/91 A review of public and private not-for-profit (PNFP) Figure 3.8. Status of Public and Private Not-for-Profit Human Resources for Health in Uganda Against Current and Future Requirements (a) Status, current norms (b) Status, MoPS staffing norms, 2023 Annual training output = 20,679 250,000 215,475 200,000 150,000 100,000 70,116 50,000 - (50,000) (100,000) (150,000) (145,359) (200,000) Available 2022 Gap vs 2023 norms 2023 Norms Source: World Bank computations from the and MoH’s human resource reports and datasets. Other critical human resource challenges include low without significantly increasing the wage budget. Also, wages, pre-service and in-service training of suboptimal while increasing the number of skilled personnel widens quality, and weak performance management. The coverage of essential services, it may not necessarily government increased the salaries of health workers in guarantee improved health outcomes unless accompanied FY2022/23 as part of its salary enhancement policy for by explicit efforts to improve the quality of health worker scientists, but this made it difficult to recruit new staff to training, regulation, and performance management. Other meet the updated public service staffing norms of 2023 drivers of poor workforce performance include lack of pre- 43 3 HEALTH FOR BETTER HUMAN CAPITAL AND GROWTH: INVESTING IN HEALTH AND NUTRITION IS KEY TO ACCELERATING HUMAN CAPITAL DEVELOPMENT AND ECONOMIC GROWTH service induction and preparation of new staff, especially To effectively address these human resource challenges, service managers, limited and fragmented in-service policymakers need to focus on increasing staffing capacity building, and weakly functioning integrated at PHC facilities and employing more specialized human resource information systems. healthcare cadres that are currently in short supply. This applies particularly to public health officers and nurses, These challenges result in low staff engagement, low allied health workers, midwives, and clinical officers. There technical competencies, absenteeism, presenteeism, is also a dire need for specialists of all kinds, especially and poor-quality services. For example, only 37 percent psychiatrists, pathologists, family medicine specialists, of health workers in Uganda were able to diagnose ophthalmologists, oncologists, cardiologists, geriatricians, and treat maternal, newborn, and child health (MNCH) neurosurgeons, and emergency medicine doctors. Of the conditions accurately, 92 and only 47 percent of facilities number of positions in these fields set by the 2023 staffing had a systematic staff performance management system norms, only 10 percent are filled. The health workforce in 2021. 93 Furthermore, client satisfaction surveys have accounts for about 5.5 percent of all formal jobs in the revealed that health workers often treat patients poorly. economy. Developing a roadmap for filling these staffing vacancies and gradually increasing wage allocations would make Uganda’s health services fitter for today’s needs. Uganda’s stock of health infrastructure has increased but suffers from suboptimal functionality and productivity Physical access to health services increased in of constituencies had no HC IV, and 29 percent of sub- Uganda over the period 2010 to 2020 due to increased counties had no HC III, while the general services readiness investments in health infrastructure but functionality index of health facilities, which measures the capacity remains low. The proportion of the population living within of facilities to provide services at the required quality a five-kilometer radius of a health facility increased from 83 standards, was only 59 percent. There are very few public percent in 2012/2013 to 91 percent in 2020. This increase 94 primary care facilities in urban areas, due to an investment was largely driven by a rapid increase in the number of focus on rural areas over the years, resulting in an overload new health facilities. Between 2002 and 2023, the number of patients and congestion in referral hospitals.97 Overall, of local government administrative units in Uganda more the productivity of health facilities is low, with an average than doubled, with a resultant demand for new facilities bed occupancy rate of 53 percent in government facilities, and upgrading of old health facilities.95/96 However, this 34 percent in PNFP facilities, and 23 percent in private may have diverted the attention of health policymakers health provider (PHP) facilities. All these percentages fall away from investing in the functionality and productivity below the WHO recommended bed occupancy rate of 80 of the existing facilities. By 2023, 55 districts of Uganda to 85 percent. (40 percent) had no hospital of any kind, 33 percent Table 3.2. Trends in Administrative Units in Uganda (2002 – 2023) Administrative Unit 2002 2023 Districts / cities 56 146 Counties 163 312 Sub-counties / town councils / divisions 958 2,184 Parishes 5,232 10,594 Sources: Data curated from the Uganda Ministry of Local Government website. 44 3 UGANDA HUMAN CAPITAL DEVELOPMENT AND GROWTH REVIEW There are several reasons why many health facilities distribution of specialized care and diagnostic services are not functioning well, but leveraging new policies such as laboratory and imaging services, a lack of a may change the picture. Among the reasons for poor functional referral system and digital connectivity between functioning of the health system are inadequacies in health different levels of facilities. However, the MoH has recently system inputs discussed in other sections of this report. adopted new policy instruments such as the Community Key among these inputs is the lack of adequate sanitation, Health Strategy, the Parish Development Model, and the basic water services, and basic waste management which Digital Health Strategy, which will strengthen community are available at 12 percent, 52 percent, and 47 percent of health interventions and facilitate digitization of health health facilities respectively. There are also inefficiencies 98 service delivery and management. in the health system operations such inequitable Progress has been made in digitizing health and nutrition information, but access, quality concerns, and data use challenges persist Over the past decade, Uganda has made substantial the high costs of acquiring ICT tools, and a low level of progress in increasing the digitization of health skills in using those tools are resulting in inequal access information. Uganda’s score on the World Bank’s GovTech to digital health management and information.101 In 2023, Maturity Index increased from 0.64 in 2020 to 0.86 in 2022, the Global Digital Health Monitor reported that Uganda’s making Uganda a GovTech leader at the global level.99 level of digital maturity averaged 2 to 3 out of a maximum Digital tools are being used to: (1) increase access to of 5; legislation, policy, and compliance, human resources, essential health services, including mental health services; and infrastructure scored least (2) while leadership and (2) manage healthcare resources (such as human, financial, governance, strategy and investment. standards and and medicines); and (3) undertake health promotion interoperability, and services and applications scored 3.102 and foster stakeholder engagement. By 2023, electronic The ongoing scale-up of digital backbone infrastructure medical record tools had been adopted in 14 regional and access to electricity provide a great opportunity to referral hospitals, several general hospitals, and more reinforce digital health. than 1,300 HIV facilities. Uganda also collects information through periodic studies, censuses, population, facility, and community-based surveys, and performance audits. Nevertheless, there have been some shortcomings in the use of digital tools to manage health information. The completeness of the health information that is stored digitally is generally above the 80 percent national target for the public health sector but is only 60 percent for the private sector. Key challenges in health information management and digitalization include suboptimal health information management capacity; availability of HMIS tools; disaggregation of data; reporting by private providers; access to data/information as well as fragmented information and digital systems, tools, and siloed investments; and dated data for some key indicators. The National Information Platform for Nutrition is in its infancy and is not yet widely used. Low levels of mobile phone ownership (68 percent) and internet access (40 percent),100 45 3 HEALTH FOR BETTER HUMAN CAPITAL AND GROWTH: INVESTING IN HEALTH AND NUTRITION IS KEY TO ACCELERATING HUMAN CAPITAL DEVELOPMENT AND ECONOMIC GROWTH Limited access to essential medicines, supplies, and blood products is constraining access to health services and driving catastrophic spending and impoverishment Access to essential medicines, supplies, and blood at the local level. Access to blood transfusion services has products has stagnated or declined in Uganda over the improved, with 86 percent (218/254) of HC IVs providing past five years, and frequent stockouts persist. Figure blood transfusion services in 2022/2023 compared to 27 3.9 shows that, between 2019 and 2023, the proportion of percent in 2012/2013.106 However, the volume of blood facilities reporting over 95 percent availability of a basket processed every year is about 30 percent of the national of essential commodities declined from about 50 to 15 requirements. percent (below the national target of 75 percent). However, out of 41 essential commodities and health supplies, 82 Inadequate financing, personnel challenges, and percent were available at central-level warehouses, which regulatory weaknesses constrain access to essential is above the MoH’s target of 80 percent.103 This is because medicines. Government financing for essential medicine procurement for future periods (quarters) is often front- and supplies consistently increased from UGX 142 billion loaded, while supplies to facilities are distributed quarterly. in FY 2016/17 to UGX 544 billion in FY 2021/22, but this The resultant out-of-pocket spending on medicines due to only covered about half of the country’s requirements. In stockouts accounts for 48 percent of all catastrophic out- 2020/21, a Public Expenditure Review showed that per of-pocket spending on healthcare. 104 capita spending on medicines in Uganda was US$3.2 as compared to the US$13 to US$25 recommended for low- The main reasons for stock-outs include inadequate income countries. Inadequate financing is compounded by supplies, delayed procurements and deliveries, a shortage of pharmacists; currently, only 30 percent of the discrepancies in orders and deliveries, and sudden number of pharmacist positions set by the revised staffing increase in demand during cycles of medicine norms are filled. This has resulted in mismanagement, distribution. Health facilities respond to stock-outs wastage, and poor-quality care. Weaknesses in Uganda’s through redistribution (75%), direct purchases (43%) medicine regulatory system limit the potential for the local including public facilities that have minimal autonomy production of medicines and for participating in global under the RBF Program (2019-2022), and placement of pharmaceutical markets. The National Drug Authority’s emergency orders (30%). 105 Stockouts are expected to overall regulatory maturity, as measured by WHO, is rated become rarer with the increasing digitalization of the only at level 2 due to legal and regulatory challenges, even supply chain from the national warehouses to the regions, though its laboratory system is rated at the highest level districts, and facilities, though there is still only limited (level 4)107 digitalization, internet connectivity, and electricity access Figure 3.9. Availability of a Basket of 41 Commodities in Health Facilities and Central Storage Warehouses, FY 2019/20 – FY 2022/23 Source: Uganda Ministry of Health: Annual Health Sector Performance Report 2022/23 46 3 UGANDA HUMAN CAPITAL DEVELOPMENT AND GROWTH REVIEW Uganda is taking major steps to foster local manufacturing of medicines and to use innovative ways to acquire medicines. Uganda imported medical and pharmaceutical products worth US$360 million108 in 2020, accounting for about 90 percent of all the country’s medicine needs.109 Some efforts are underway to increase local production of essential commodities such as intravenous fluids, gloves, disinfectants, and anti-malaria medicines. Uganda has rolled out various incentives to stimulate local manufacturing, leading to the number of local manufacturers increasing from 11 in 2009 to 29 in 2022. However, several factors are constraining the growth of local manufacturing including inadequate financial and human capital, limited pharmaceutical research and development, regulatory weaknesses, and the high cost of utilities. Weaknesses in the governance of health and nutrition services at various levels is leading to inefficiencies and corruption Existing policy, institutional, and accountability of increasing accountability, transparency, effectiveness, mechanisms in the health sector are not functioning and efficiency.113/114 Between 2001 and 2021 there was optimally leading to performance shortfalls, inefficiencies, a rapid increase in the number of cities, districts, and and corruption. For example, a 2022 assessment of local parishes.115 However, fiscal decentralization remains governments’ performance showed that only 51 percent weak, with local governments still relying heavily on met minimum service delivery conditions and performance central government support116 and health facilities are measures. 110 Key reasons for performance shortcomings inadequately resourced.117 Service delivery capacity at the include limited implementation of policies and strategies, local level is therefore low. While the overall performance limited enforcement of regulations, inconsistent application of local governments increased from 35 percent in 2020 of rewards and sanctions, low managerial capacity of to 48 percent in 2022, major performance inequalities health facility in-charges, poor alignment of public and persist.118 The Local Government Management and donor financing; and inadequate supervision of services Service Delivery Performance Assessment of measures and beneficiary engagement. In 2020/2021, the Inspector performance across six domains including management, General of Government reported bribery payments monitoring and supervision of services; investment to healthcare providers of UGX 670 billion per year management; human resource management; and (equivalent to 20 percent of the health budget), despite the environmental and social safeguards management. Based government’s policy of free healthcare in public facilities.111 on this assessment, Isingiro, Kiruhura, and Ibanda districts Additionally, about UGX 495 billion is lost annually to staff core above 90 percent while Bugweri, Nebbi Municipality, absenteeism.112 Bulambuli, and Lamwo scored less than 15 percent. The overall performance of the health sector across the six Decentralization of health services initially flourished domains was 66 percent, as shown in Figure 3-10. but thereafter declined, with major performance inequalities across local governments. In the early 1990s, Uganda decentralized responsibility for primary healthcare services to local governments with the aim 47 3 HEALTH FOR BETTER HUMAN CAPITAL AND GROWTH: INVESTING IN HEALTH AND NUTRITION IS KEY TO ACCELERATING HUMAN CAPITAL DEVELOPMENT AND ECONOMIC GROWTH Figure 3-10. Average Local Government Health Sector Performance Scores, 2022 (percent) Source: Office of the Prime Minister, Local Government Management of Service Delivery Performance Assessment (2022). Note: Performance scores are based on a maximum possible score of 100. Collaboration is critical to addressing complex health frameworks were to be fully and effectively implemented. challenges, given the multiplicity and cross-sectoral These include the Consolidated National Development nature of their drivers and solutions. Through effective Planning Framework, the Program-Based Approach to multisectoral and often whole-of-government approaches, Planning, the Uganda National Action Plan on Nutrition-2 Uganda has managed to: (1) reduce adult HIV prevalence (UNAP2), and the Public-Private Policy. Going forward, from over 20 percent in the 1990s to 6.5 over the past collaborative and multisectoral actions could be focused decade;119 (2) minimize the spread and impact of COVID-19 on intractable challenges such as teenage pregnancy and several other outbreaks; (3) increase coverage of DPT3 and non-communicable diseases by: establishing cross- immunization from 59 percent in 2001 to 70 percent in 2022; sectoral information systems, performance metrics, and and (4) reduce the stunting rate of under-5 children from performance management arrangements and reinforcing 38 percent in 2006 to 22 percent in 2022.120 However, more the capacity and performance management of the progress could be made if existing enabling collaboration collaborating bodies. 48 3 UGANDA HUMAN CAPITAL DEVELOPMENT AND GROWTH REVIEW Recommendations The table below highlights our key health and nutrition recommendations for accelerating human capital development and growth. The recommendations are categorized as either short-term (2025 – 2030) or long- term (2031 – 2040). Table 3.3. Recommendations for Health: Short-Term and Long-Term Recommendation Short-term action Long-term actions Responsible (next 5 years) (5-10 years) parties 1. Strengthen primary • Increase the coverage, functionality, • Increase the coverage, functionality, MoH, MoFPED, health care, including and quality of PHC facilities/services in and quality of PHC facilities/ MoES, MoGLSD, community health, underserved rural and urban areas and in services in underserved rural and MoLG, UCI, UHI, and streamline strategic growth areas designated in the urban areas and in strategic growth Butabika Hospital, investment in Tenfold Growth Strategy. areas designated in the Tenfold development specialized health • Revitalize community health by Growth Strategy. partners, the private services, focusing on functionalizing community health extension • Strengthen the community health sector, and civil the underserved and workers and village health teams while system by aligning it with relevant society including high potential growth leveraging the Parish Development Model socioeconomic services and health professional areas. and local government health management government structures. associations. structures. • Continue to develop, deliver, and • Develop, deliver, and monitor integrated, monitor integrated, sustained, and sustained, and high-impact mindset high-impact mindset and behavior and behavior change communication, change communication, health health promotion, and disease prevention promotion, and disease prevention interventions at scale. interventions at scale. • Cautiously scale up specialized health • Continue to cautiously scale up services to regions as has been adopted by specialized health services through the Uganda Cancer Institute. a regionalization strategy as has • Strengthen the networking, integration, been adopted by the Uganda and coordination of health facilities, Cancer Institute. emergencies, and referrals. • Strengthen the coordination of health services and the referral system. 2. Reinforce the • Gradually expand the fiscal space • Gradually expand the fiscal space MoH, MoFPED, health and nutrition for health to close urgent gaps in for health. MoWE, financing system in infrastructure, staffing, medicines, and • Scale up strategic/active development the face of dwindling utilities such as electricity and WASH while purchasing and RBF in referral partners, the private and uncertain enhancing the system’s resilience to public hospitals and other service delivery sector, and civil donor funding health emergencies. platforms. society including and catastrophic • Scale up strategic/active purchasing and • Strengthen resource mapping, health professional household health results-based financing (RBF) in primary expenditure tracking, and the associations spending. health care facilities. alignment and pooling of donor • Institutionalize resource mapping, support. expenditure tracking, and the alignment • Strengthen PIM and PFM systems and pooling of donor support. and practices. • Assess and reform public investment • Scale up the national health management (PIM) and public finance insurance scheme at all levels. management (PFM) practices. • Establish a national health insurance scheme focused on referral hospitals while maintaining the free healthcare policy in PHC facilities for explicitly defined subpopulations. 49 3 HEALTH FOR BETTER HUMAN CAPITAL AND GROWTH: INVESTING IN HEALTH AND NUTRITION IS KEY TO ACCELERATING HUMAN CAPITAL DEVELOPMENT AND ECONOMIC GROWTH Recommendation Short-term action Long-term actions Responsible (next 5 years) (5-10 years) parties 3. Revitalize • Gradually implement the 2023 health • Gradually increase the health MoH, MoES, workforce staffing norms by raising the staff vacancy sector staff vacancy fulfillment MoGLSD, MoLG, development, fulfillment rate from 34 percent to at least rate from 50 percent to at least 80 and professional recruitment, and 50 percent by 2030 by increasing wage percent by 2040. regulatory management allocations. • Scale up training for high-demand authorities practices to make • Scale up training for high-demand but but short-supply healthcare the workforce fit for short-supply healthcare workers and workers and scientists. purpose, productive, scientists. • Strengthen the competency- and resilient. • Develop and deliver a competency-based based capacity building of health in-service program for building capacity in professionals. priority health services skills in both clinical • Strengthen the iRHIS to provide full and non-clinical domains. visibility of the workforce. • Reinforce the integrated health workforce • Strengthen the regulation and information system (iHRIS) to provide coordination of the training and full visibility of the workforce in training, practice of health professionals. placement, and in-service training. • Strengthen the regulation and coordination of the training and practice of health professionals. • Revitalize the national in-service health workforce development center at Mbale. • Agree on a mechanism to support the recruitment of critical personnel that local government are failing to recruit/attract. 4. Increase access • Enhance budget allocations for essential • Enhance budget allocations for MoH, MoFPED, to efficacious and medicines and prioritize the procurement essential medicines in general. NDA, NMS, affordable essential and supply of life saving commodities. • Strengthen the medicine supply MTI, and the medicines and health • Strengthen the medicine supply chain chain and equipment management Pharmaceutical technologies and system and equipment management by systems. Society of Uganda scale up Uganda’s enhancing HR capacity, digital tools, and • Implement the action plan, participation in governance systems. incentives, and human capital for pharmaceutical • Update the action plan, incentives, increased local production, clinical markets. and human capital for increased local trials, and procurement of essential production, clinical trials, and procurement medicine and health technologies. of essential medicine and health • Strengthen the regulation of technologies. medicine and health technologies • Strengthen the regulatory capacity of overall. the National Drug Authority and relevant government bodies, health technology assessments, and post-market surveillance. 5. Reinforce digital • Develop for the health sector an integrated • Scale up for the health sector an MoH, MoICT health and health enterprise architecture based on digital integrated enterprise architecture andNG, and nutrition health solutions, leveraging geo-mapping based on digital health solutions, NPA, UBOS, measurement. and artificial intelligence capabilities. leveraging geo-mapping and development • Build capacity for insight-driven data artificial intelligence capabilities. partners, the private analytics, including for the surveillance of • Build capacity for insight-driven sector, and civil public health emergencies. data analytics. society • Support critical studies such as the • Support key studies on relevant annual joint reviews, Demographic and topics. Health Surveys, Harmonized Health Facility Assessments, the National Health Accounts, the Resource Mapping and Expenditure Tracking Survey, the National Health Workforce Accounts, the STEPS surveillance survey of risk factors for NCDs, and integrated human capital program analytical reviews every five years. 50 3 UGANDA HUMAN CAPITAL DEVELOPMENT AND GROWTH REVIEW Recommendation Short-term action Long-term actions Responsible (next 5 years) (5-10 years) parties 6. Strengthen the • Reinforce the functionality of health and • Strengthen the regulation of health MoH, Internal governance and nutrition governance, leadership, and services and the drivers of poor Affairs, MoWT, management of management structures at all levels. health outcomes. MoGLSD, MoLG, health and nutrition at • Enforce the regulation of priority health • Strengthen, monitor, and support the private sector, all levels. technologies, health services, and drivers performance management and civil society of poor health outcomes such as road systems, standards, rewards, and including health traffic, the consumption of risky products sanctions at all levels. professional like alcohol and tobacco, the quality • Update, disseminate, and associations of food, water, and the environment, adequately socialize strategic and health and safety in schools and health and nutrition policy workplaces. documents and guidelines. • Strengthen, monitor, and support • Strengthen community, beneficiary, performance management systems, and citizen engagement in health standards, rewards and sanctions at all service delivery and increase levels. the public disclosure of essential • Update, disseminate, and adequately information. socialize strategic health and nutrition policy documents and guidelines. • Develop systems and tools for enhancing community, beneficiary, and citizen engagement in health service delivery and increase the public disclosure of essential information. 7. Strengthen • Strengthen program-based design, • Strengthen program-based MoH, MoES, multisectoral actions planning, budgeting, and performance planning, budgeting, performance MoWE, Ministry of and private sector monitoring, and accountability towards monitoring, and accountability Trade and Industry, provision of health focusing on deep multisectoral actions in throughout the human capital MoGLSD, MoLG, and nutrition services. the areas of nutrition, teenage pregnancy, program. and Internal Affairs road traffic accidents, WASH, and • Enforce multisectoral performance environmental health. standards and targets for leaders, • Establish and roll out multisectoral managers, and operational teams. performance standards and targets for • Roll out capacity building in areas leaders, managers, and operational teams. requiring multisectoral actors at • Undertake targeted capacity building in national and sub-national levels. areas requiring multisectoral actors at • Expand the integrated human national and sub-national levels. capital management information • Develop integrated management systems to include the production information systems to optimize the of all relevant sectoral results. production of priority human capital • Scale up the integrated human results. capital management information • Develop or update and roll out system to encompass cross- service agreements, incentives, and sectoral results. accountabilities for the private sector, • Implement and strengthen the focusing on populations underserved by updated service agreements, public facilities and on strategic areas such incentives, and accountabilities for as diagnostics. the private sector. 8. Build resilience • Establish public health emergency and • Scale up public health emergency MoH, MoFPED, through climate- climate-sensitive and resilient health and climate-sensitive and resilient MoGLSD, MoLG, sensitive health infrastructure and services. health infrastructure and services. MoWE services, shock- • Review the emergency sensitivity and • Implement emergency sensitive responsive financing, effectiveness of the existing PFM rules and PFM rules and systems. and integrating health systems and update them. • Increase the coverage of social into social protection • Integrate health into the scale-up of the health protection interventions. systems. national social protection system and services. Notes: MoFPED = Ministry of Finance Planning and Economic Development; MoES = Ministry of Education and Sports; MoGLSD = Ministry of Gender, Labour and Social Development; MoH = Ministry of Health; MoICT = Ministry of ICT and National Guidance ; MoLG = Ministry of Local Government; MoWT = Ministry of Works and Transport; MTI = Ministry of Trade and Industry; NDA = National Drug Authority; NMS = National Medical Stores; NPA= National Planning Authority; UBOS = Uganda Bureau of Statistics; UCI = Uganda Cancer Institute; UHI = Uganda Heart Institute. 51 3 HEALTH FOR BETTER HUMAN CAPITAL AND GROWTH: INVESTING IN HEALTH AND NUTRITION IS KEY TO ACCELERATING HUMAN CAPITAL DEVELOPMENT AND ECONOMIC GROWTH BOX 3.1: LIFECYCLE IN FOCUS: HEALTH AND WELL-BEING OF ADOLESCENTS AND YOUNG PEOPLE “Adolescents represent the world’s greatest untapped resource.”—UN Secretary General Antonio Gutierres Adolescence is an important time for laying the foundations of good health, skills development, and productivity both for later years of life and for generations that follow. Adolescence is the developmental phase between childhood and adulthood (ages 10 to 19, extended to 24 years as young people and 18-30 years as youth) characterized by rapid physical, cognitive, and psychosocial growth, which shapes their thoughts, emotions, and behaviors, thereby determining their relationships, health, and well-being, learning outcomes, life skills, capabilities, and talents.[i] During this stage, individuals develop negative behaviors like the use of alcohol, tobacco and other drugs that lead to increased burden of disease in later years and positive behaviors like physical exercise and strong supportive relationships. Global estimates suggest that up to 35 percent of the global burden of disease is a result of behaviors that develop in adolescence.[ii] Others suggest that positive school and family connectedness of adolescents is associated with 48 to 66 percent lower odds of health-risk behaviors and experiences in adulthood. [iii] Poor adolescent health in Uganda undermines development. Adolescents account for a quarter of the population of Uganda, presenting great opportunities and great challenges alike. The teenage pregnancy rate has stagnated for years at around 24 percent, one of the highest rates globally. Two-thirds of all new HIV infections are found in adolescent girls.[iv] There is also a high prevalence of mental health disorders among young people, with the prevalence of depression among children and adolescents at 23.6 percent and that of university students at 26.9 percent.[v] About 60 to 71 percent of school-going children (12 to 24 years) use addictive substances like alcohol and tobacco.[vi] These factors conspire to limit development and learning among adolescents and other young people, yet the traditional protective social structure is disintegrating and being replaced by reduced time for parenting and competing new technologies. These negative outcomes contribute to multidimensional intergenerational poverty. The existing adolescent health, well-being, and empowerment interventions are low-scale, low-efficacy, and fragmented. The multisectoral nature of adolescent policy and programming and the paucity of data and information further complicate efforts to improve adolescent health and well-being. These gaps present opportunities for multisectoral actors to design and implement holistic interventions that ensure the country reaps from the potential demographic dividend of adolescents and youth. Figure A. Age at First Sex, Pregnancy, and Birth Rate for adolescents in Uganda Median age of marriage, First sex and birth in Uganda 90% 82% 80% 73% 70% 56% 56% 60% 46% 50% 41% 54% 40% 34% 26% 41% 30% 23% 14% 14% 28% 20% Sex 10% 6% 7% 18% Marriage 3% 0% 5% 9% Birth 89 10 11 12 13 14 15 16 17 18 19 Source: UBOS, Uganda Demographic and Health Survey, 2016 References: i. Black R. et al. 2022. Health and development from preconception to 20 years of age and human capital. DOI:https://doi.org/10.1016/S0140- 6736(21)02533-2 52 3 UGANDA HUMAN CAPITAL DEVELOPMENT AND GROWTH REVIEW ii. Sultana S. et al. 2021. Associations of lifestyle risk factors with overweight or obesity among adolescents: a multicountry analysis. iii. Steiner RJ, et al. 2019. Adolescent Connectedness and Adult Health Outcomes. Pediatrics. 2019 Jul;144(1): e20183766. doi: 10.1542/peds.2018-3766. PMID: 31235609; PMCID: PMC9125410. iv. Uganda Bureau of Statistics (UBOS). 2023. Uganda Demographic and Health Survey 2023. Kampala v. Kaggwa MM, et al. 2022. Prevalence of depression in Uganda: A systematic review and meta-analysis. PLoS ONE 17(10): e0276552. https://doi. org/10.1371/journal.pone.0276552 vi. Abbo, C. et al.2016. Alcohol, Substance Use and Psychosocial Competence of Adolescents in Selected Secondary Schools in Uganda: A Cross- Sectional Survey. International Neuropsychiatric Disease Journal. 7. 1-14. 10.9734/INDJ/2016/25387. 53 4 WATER AND THE ENVIRONMENT IMPACT HUMAN CAPITAL 4. Water and the Environment Impact Human Capital Water supply, sanitation, and hygiene (WASH) services contribute to human health and are therefore key to human capital development Achieving universal access to WASH is one of the 2030 learning environment that increases enrollment, reduces Sustainable Development Goals (SDGs). Providing dropouts, and leads to better educational outcomes and access to safe water and sanitation services and hygiene hence to increased human capital. (WASH) is specified under SDG 6 and it contributes to the health, well-being, and dignity of all. In both healthcare The provision of WASH in households enables women and education systems, having safe and adequate WASH to engage in productive activities. In many communities, facilities supports the effective delivery of services and especially in rural Uganda, women and girls are responsible helps maintain patients’ dignity, reduce child stunting, for fetching water, often spending hours each day on this and enhance the well-being of patients and staff. These task. By widening access to clean water and sanitation facilities also promote equitable access to education, facilities, these women have more time to spend on create conducive learning environments, and prevent other productive activities such as increasing their own diseases through measures such as handwashing and educational attainment. Thus, this expansion of female menstrual care. empowerment contributes to a country’s human capital development. Global evidence indicates that there is a direct causative link between the absence of WASH and stunting. For example, 25 percent of stunting among children under the age of 5 has been attributed to diarrheal diseases, the spread of which is often due to a lack of WASH. In addition to leading to healthier and more productive communities, WASH contributes to better nutrition outcomes, reducing malnutrition and its long-term effects. Furthermore, the latest statistics (2019) from the World Health Organization (WHO) indicate that 47 percent of mortality in Africa was attributed to exposure to unsafe WASH services (per 100,000 population). For Uganda, this figure was reported to be 28.1 percent. Access to adequate WASH increases school attendance and students’ focus on learning. WASH in schools includes a clean water supply, functional toilets, and handwashing stations, all of which create a conducive 54 4 UGANDA HUMAN CAPITAL DEVELOPMENT AND GROWTH REVIEW Despite progress, gaps in access to safe and adequate WASH services remain Uganda has made progress in increasing access low at only 9.8 percent in rural areas and 41.02 percent in to safe water, but it has yet to meet the targets set in urban areas. The report estimated that open defecation NDP III. According to the 2023 report of the Natural was 9.2 percent in urban areas and 20.5 percent in rural Resources, Environment, Climate Change, Land, and areas.121 Water Management Program (NRECCLWM) of the NDP III, access to safe water supply was 72 percent in urban areas Ongoing service delivery by the Ministry of Water and and 67 percent in rural areas, compared to the average Environment (MoWE) is contributing to the Human of 57 percent in the rest of Sub-Saharan Africa. Access Capital Development Program’s objective of improving to any form of sanitation regardless of its quality in rural the skills, health, and productivity of the Ugandan areas was at 79.5 percent and in urban areas it was 90.8 population. Table 4.1 illustrates the progress achieved percent compared with a Sub-Saharan Africa average of through the MoWE’s interventions under the Human 63 percent. However, access to safely managed sanitation Capital Development Program measured by key service services (defined as improved facilities not shared with delivery indicators under NDP III, with targets as defined in other households where excreta is safely disposed in situ the Program Implementation Action Plan (PIAP). or is transported away and treated off-site) was still very Table 4.1. Urban and rural water supply coverage compared with program implementation action plan targets, 2019/20 to 2022/23 (and target for 2024) Indicator 2019/20 2020/21 2021/22 2022/23 Target (2024) PIAP Safe rural water supply coverage (percentage) 68 68 67 67 85 Safe urban water supply coverage (percentage) 70.5 71.6 72.1 72.8 100 Source: Annual performance report of the Natural Resources, Environment, Climate Change, Lands, and Water Management program (APPR NRECCLWM) 2023. The number of people with access has increased in space, as evidenced by the inadequate financing for the real terms over the period, although the access gap sector, as only 18 percent of the required funding under has widened, given the 3 percent population growth NDP III was realized over the first four years of the plan. trend. Recent population statistics from the 2024 census show that 12 million people have no access to basic water Access to WASH in health and education institutions is supply, and 38 million have no access to safely managed dismal (see box 4.1). According to the MoWE, access to sanitation. Access to WASH services varies widely between WASH in different types of institutions is still very low, as districts, with safe water coverage ranging from 30 to 95 illustrated in Table 4.2. Access to water services in public percent and sanitation access from 16 to 99 percent. Basic health facilities and schools is at 56.8 percent and 32.5 sanitation (improved but not shared) access ranges from percent, respectively. The situation regarding sanitation is 0 to 64 percent. worse; for example, in the capital of Kampala, fewer than 17 percent of healthcare facilities are connected to a sewer, Trends indicate that the access to safe water has and an even lower percentage of schools can access a stagnated over the last five years. There is still a significant public sewer. This is not a surprise, because fewer than gap between current coverage and the NDP III targets for 7 percent of Kampala residents are connected to the both rural and urban areas. This is largely attributable to sewerage network.122 the high population growth rate and Uganda’s limited fiscal 55 4 WATER AND THE ENVIRONMENT IMPACT HUMAN CAPITAL Table 4.2. Wash in health facilities, schools, and prisons Institution category Total number of institutions Institutions with access to safe water Schools 29,908 9,717 (32.5%) Health facilities 3,470 2,827 (56.8%) Prisons 254 165 (65%) Source: Ministry of Water and Environment (2024) BOX 4.1. WASH SERVICES IN UGANDA’S SCHOOLS AND HEALTH FACILITIES A World Bank study on access to WASH in institutions surveyed WASH services in 250 schools and healthcare facilities in Uganda. About 71 percent of the schools had access to water services provided through a public utility, while 84.5 percent and 12.1 percent of the 58 health care facilities had limited and basic WASH services, respectively. However, services had been discontinued or were unavailable at several institutions, reportedly because of nonpayment of bills, high tariffs, or unreliable services. The sanitation situation varied at healthcare facilities, with 84.5 percent of them having limited sanitation services, 50.0 percent having limited environmental cleanliness services, and 56.9 percent having hand hygiene services. The level of access to these services is generally much lower in hospitals. Source: World Bank (2022) The World Bank’s 2022 study of institutions (see Box 2023/24. Overall, 341 institutions have been provided with 4.1) found that, despite having public water connections, an improved water supply under the program. over 90 percent of these institutions relied on alternative water sources, primarily rainwater harvesting. This may be attributable to limited financing for water bills. However, it also found that nearly 97 percent of the samples from the rainwater harvesting tanks were found to be contaminated with E. coli. There is no monitoring of the quality of harvested rainwater systems, even though more households and institutions rely on harvested rainwater than on the monitored public water systems. The construction or extension of water supply infrastructure in institutions such as schools, prisons, barracks, religious establishments, and health care facilities is ongoing, with targeted interventions by the MoWE in response to the dire WASH situation. Some of these interventions are being implemented as part of results-based financing programs aimed at local governments, while others are part of regular infrastructure development plans. For example, under the Uganda Intergovernmental Fiscal Transfer Program (UGIFT), the number of benefiting institutions from piped water systems has increased, from 23 in FY2021/22 to 87 in FY 56 4 UGANDA HUMAN CAPITAL DEVELOPMENT AND GROWTH REVIEW The governance framework for provision of WASH services lacks coordination and sector financing remains inadequate The institutional, policy, and regulatory framework for In addition, reporting on WASH is done by the different the provision of water and sanitation services assigns sectoral line ministries utilizing their management different duties and responsibilities to various government information systems (MIS). This fragmentation is entities with no adequate coordination. Policy formulation, inefficient, and there is opportunity to coordinate data regulation, and resource mobilization are managed at the management through the proposed MIS for the Parish national level by three sectoral ministries (Water, Education, Development Model (PDM). Related to the PDM are the and Health), supported by the Ministry of Finance and the ongoing catchment-based water resources management Ministry of Local Government. Water supply is delivered reforms, where planning for water resources management at the local government level, with complementary and development is considered holistically at the responsibilities for operation and maintenance of piped catchment/ water shed management level. The catchment water services assigned to the National Water and plans present a useful tool to facilitate sustainable water Sewerage Corporation and the six regional umbrella and sanitation service delivery and should be part of the authorities. Responsibilities for sanitation are shared by planning toolkit for the HCD sectors. different mandated actors, including households and the sectoral ministries (MoH for household sanitation and Financing for the water sector has increased over public health policy and regulation, MWE for sewerage the years, but it is still far too low to meet the sector’s and public sanitation, MoES for schools). Community financing needs as projected under the NDP. Over the structures such as village health teams that support health last five years, the budget of the MoWE increased from and hygiene promotion efforts. Coordination of the Human UGX 0.68 trillion in FY2019/20 to UGX 1.24 trillion in Capital Development (HCD) Program under the NDP III FY2023/24. However, the NDP III annual sector financing framework is by the Ministry of Education and Sports. needs are around UGX 6.8 trillion, more than five times The HCD program structure involving several ministries higher than the budget. Overall, the budget allocation for and departments and Agencies necessitates coordinated the water sector over the last 10 years has been less than 3 planning, budgeting, implementation, and accountability percent of the national budget, with lower-than-expected to close the WASH access gaps and achieve the related releases. For example, in FY 2022/23, only 72 percent of human capital development. the actual budget was released, and cumulatively over the last four years, only 84 percent of the budget was released. Several existing policies and structures provide Expenditure patterns are also similar, largely due to delayed opportunities for progress. There is already a mandate fund releases by the Ministry of Finance and inadequate for service delivery within the different sectors (water, planning by the water sector. education, and health), and human capital development remains a key national priority, as indicated in the NDP IV. Responsibility for delivering water and sanitation services has already been decentralized to local governments, which have established structures that could be better equipped to deliver the required services. This is in addition to the utilities (NWSC and Umbrellas) that deliver piped water supply services. A water and environment management information system (WEIS) exists at the central and regional levels in the MoWE, which is a decision support tool to aid intervention planning and equitable resource allocation. 57 4 WATER AND THE ENVIRONMENT IMPACT HUMAN CAPITAL Figure 4.1. Water Sector Budget Performance (UGX Billion), 2020 – 2024 Source: WASH PIAP_NDPIII and Annual Budget report from the Uganda Program Budgeting System (PBS). Note: PIAP = Program Implementation Action Plan. Financing for WASH in institutions is also limited. While Rapid population growth without matching budget existing legal and institutional arrangements for WASH increases is constraining the increased provision of provision in Uganda are well defined,123 the majority of and sustainable access to WASH services in Uganda. health and educational facilities tend either to have self- These financial constraints to the provision of needed supply or to be unable to sustain payments for water and water and sanitation infrastructure to the population are sanitation services due to limited financing for institutional compounded by an institutional “disconnect” concerning WASH. The Primary Health Care and Capitation funds for the delivery of water and sanitation services between the both health care facilities and schools, issued through the sector ministries and the various needs of the education Ministry of Local Government, are inadequate to address and health sectors. These service gaps continue to widen the competing the operational costs of these institutions. as rates of urbanization and population growth accelerate. Innovative and efficient financing options will be necessary to address the access gap. 58 4 UGANDA HUMAN CAPITAL DEVELOPMENT AND GROWTH REVIEW Recommendations Table 4.3 presents recommendations to address some of the constraints to increasing the provision of WASH services, with the aim of strengthening human capital development. Table 4.3. Recommendations for WASH: Short- term and Long-term Recommendation Short-term actions Long-term actions Responsible (next 5 years) (5-10 years) parties 1. Increase financing for • Conduct a public institutional and • Increase financing for WASH to MoWE, MoFPED, sustainable universal expenditure review (PIER) to identify match the population growth NPA WASH services, with financing gaps and cost-reduction rate and the provisions of the targeted financing for opportunities associated with government’s long-term plans (NDP health facilities and improvements in WASH service delivery. IV and Vision 2040) with requisite schools. allocations to the different sectors • Explore innovative sources of financing to (water, education, and health) increase the amount of funding available for sustainable WASH services, such as payment for ecosystem services (PES), climate financing, private capital mobilization, and adopting a business approach to social service delivery • Streamline and operationalize the institutional framework for the delivery of sanitation services complete with funded mandates 2. Ensure equitable • Coordinate the planning, use, and • Establish a national service MoWE, MOH, access to sustainable sharing of WASH data in the different delivery development program for NDP program WASH services. management information systems to WASH, with defined annual plans coordination unit, enable evidence-based decision-making reflected in the NDP program and MoLG, NPA and to optimize limited resources implementation action plans. (financial, human, and water resources). Undertake research into innovative technologies for providing sustainable services. • Enhance the ongoing implementation of catchment-based Water Resources Management reforms to improve the coordination, planning, regulation, and monitoring of water resources. • Develop a national service delivery development program for WASH aimed at achieving NDP IV’s human capital priorities. 3. Strengthen capacity • Implement professionalization and • Establish a clear institutional MoWE, MOH, for the operation and operational efficiency programs for framework for the operation and MoES, MoLG, management of WASH service providers and ensure sufficient management of rural WASH MoFPED, facilities, with due budget provision for water supply and services, building on the piloting prioritization of WASH public fecal sludge management services. experience on Area service services within health Establish a financing mechanism for providers. care facilities and sustaining and maintaining WASH service schools. delivery in health care facilities and schools. Notes: MoES = Ministry of Education and Sports; MoFPED = Ministry of Finance Planning and Economic Development; MoGLSD = Ministry of Gender, Labour and Social Development; MoH = Ministry of Health; MoLG = Ministry of Local Government ; MoWE = Ministry of Water, and Environment. 59 4 WATER AND THE ENVIRONMENT IMPACT HUMAN CAPITAL Having a healthy environment helps to increase household incomes and improves the health and well-being of all Ugandans The condition of Uganda’s environment is critical to such as poor mental health and malnutrition. Other negative achieving the NDP III goal of increasing household health consequences of climate change include water incomes and improving the quality of life of Ugandans. scarcity in some areas, the risk of conflict and biodiversity This involves the health of the country’s land and water, loss, and reduced crop yields. A study of climate change as well as other natural resources including non- commissioned by the MoWE estimated that between 2010 living resources such as oil, gas, and minerals. Natural and 2050, climate change will have caused damage to the resources are catalysts for growth opportunities not only agriculture, water, infrastructure, and energy sectors to the in agriculture but also in industry, tourism, and mineral, oil tune of 2 to 5 percent of Uganda’s GDP.124 and gas exploitation and ultimately increase incomes and improve quality of life. The poor management of natural resources, including wetlands, forests, land, water, and the rest of the The increasing frequency and intensity of shocks related environment, has itself also contributed to climate to climate change has resulted in major public health and change. This has serious negative implications for Uganda’s socioeconomic disruptions. Climate change negatively agricultural production and productivity, biodiversity, affects people’s health directly through extreme weather and extreme weather conditions characterized by severe events such as rising precipitation and temperatures and floods and prolonged droughts, which in turn affect the increased risk of vector-borne diseases such as malaria macroeconomic variables such as economic growth and and dengue, water-borne diseases such as cholera, and inflation. food-borne illnesses. It can also lead to indirect health risks 60 4 UGANDA HUMAN CAPITAL DEVELOPMENT AND GROWTH REVIEW Despite vulnerability to public health emergencies and climate shocks, preparedness is not adequate Uganda is prone to public health emergencies, including access to resources, information, services, or tools to disease outbreaks and natural disasters, which have promote resilience. Uganda already experiences many days been exacerbated by a lack of adequate investment in each year when the heat is over the threshold that makes building resilience into the health systems. Uganda’s it difficult for children to learn. Changes in the coming location in the Congo Basin and in the filovirus triangle decades will not affect the country uniformly, with some and the meningitis and yellow fever belts increases its districts having fewer hot days while others will have more. vulnerability to outbreaks.125 Between March 2020 and The risk of extreme weather is high and rising, especially February 2023, Uganda had several health emergencies, in the Western and Eastern regions of Uganda that have including four outbreaks of Crimean-Congo hemorrhagic already been affected by frequent flooding. Disaster risk fever (CCHF), three of yellow fever, and one of Ebola. 126 management strategies in the human capital sectors are Unlike major outbreaks, such as the COVID-19 pandemic, currently inadequate for addressing these challenges. which led to a 5 to 20 percent drop in the coverage of Pollution is a factor as well, as poor ambient air quality is essential health services including immunization services, associated with negative neurological, respiratory, cardiac, most outbreaks lead to an unnoticed but consequential pulmonary, and reproductive impacts on the general weakening of the health system in the affected localities.127 population and is a significant contributor to the toll of non- communicable diseases around the world. Uganda’s preparedness for and detection of disease outbreaks is not yet adequate. A 2023 Africa regional study Rising temperatures observed across the world can that included Uganda showed that, out of the 41 public also lead to complications during pregnancy. Such health events assessed, only 20 (49 percent) met a target complications, which can include pre-term birth, premature of 7 days to complete all early-response actions. Detection rupture of membranes, and stillbirth, are a particular bottlenecks were most common at the health facility level, problem in the least developed and low-income countries. and notification challenges were more prevalent at the local For example, temperatures are rising in the Sahel region at government level. 128 Uganda takes a One Health Approach 1.5 times the global average. Heat can also elevate blood to pandemic preparedness and response, a collaborative pressure and cause preeclampsia in pregnancy, which is effort between multiple disciplines, including human one of the three main causes of maternal death globally.130 health, animal health, and environmental health, to address Dengue fever and malaria, the spread of which is also public health challenges. While this has been enhanced linked to rising temperatures and related flooding, can over time, weaknesses continue to exist in some areas, cause miscarriage, premature birth, and anemia.131 such as the animal health disease detection component, emergency financing, and medical countermeasures, Extreme heat can also prevent students from learning.132 resulting in insufficient coverage of preparedness and While the size of this learning impact remains uncertain response activities.129 and is very context-specific, an average student could lose between 0.66 and 1.5 years of learning due to rising The main ways in which climate change is manifested temperatures by the time that student completes 12th in Uganda are through extreme weather events, rising grade. A 2024 study of school performance in Ethiopia, temperatures, rising sea levels, rainfall variability, for example, found that high temperatures over the school increased air pollution, and increased atmospheric year leading up to the high-stakes university entrance carbon dioxide. Climate change impacts all members of exam were associated with poorer performance on the a community, but women and girls are more vulnerable to exams. An additional day of temperatures higher than the impacts of climate change because of their unequal 33°C was associated with approximately a one-hundredth 61 4 WATER AND THE ENVIRONMENT IMPACT HUMAN CAPITAL of a standard deviation drop in average test scores, recorded fewer than 50 hot days with temperatures above representing a decline in average performance on the the threshold. By 2040, the number of hot days is projected exams of 2.28 percent for the sample year. The study also to remain relatively unchanged in West Nile and parts of found that female students were less affected by higher Acholi and is projected to decline in parts of Karamoja temperatures than males. Finally, the results showed that (Figure 4.4). However, significant increases in the number the scores of students from schools located in consistently of hot days—up to a maximum of 100— are projected to hotter regions of Ethiopia were less negatively impacted by occur in districts not currently affected by excess heat. higher temperatures than their peers from normally cooler regions.133 Some Ugandan regions with extremely hot temperatures also have high rates of learning poverty. Estimations using Exceptional heat trends and forecasts in Uganda vary data from the 2018 National Assessment of Progress in widely by region. Between 2015 and 2020, almost all Education (NAPE) for primary six (P6) students in Uganda districts in the Northern Region, except for Zombo, show that more than 60 percent of 10-year-olds in regions Karenga, and Kaabong, had more than 100 days with with over 150 hot days (those colored dark orange and red maximum temperatures above 30°C. Districts in the West in in Figures 4.2 and 4.3) are unable to understand a simple Nile sub-region had more than 200 days with temperatures written text. Taken along with COVID-19 learning losses, above 30°C (Figure 4.3). Meanwhile, most districts in the this means the achievement of the NDP III education Southwestern, Central, East Central, and Elgon sub-regions targets is in jeopardy. Figure 4.2. Extreme Heat Days by District, Figure 4.3. Extreme Heat Days by District, 2015–2020 Average Predicted for 2040 Source: World Bank, based on data from Uganda National Meteorological Authority (UNMA). 62 4 UGANDA HUMAN CAPITAL DEVELOPMENT AND GROWTH REVIEW Pollution is a big challenge with severe impacts on health and human capital Economic growth increases environmental pollution Air quality in Uganda is not meeting the WHO guideline. emissions, which in turn intensify but also inhibit From real-time data from May 2024, 100 percent of economic growth.134 Environmental pollution Ugandans were experiencing ambient air quality that did disproportionately affects the poorest communities and is not meet the WHO’s annual PM2.5 guideline.144 The 5 to one of the world’s leading risk factors for health; 24 percent 19 age group was most affected by this pollution. In May of all estimated global deaths are linked to the environment 2024, Kampala had moderate air pollution levels, with an and include complications such as heart disease, stroke, air quality index of 72, making it the 29th most polluted airway diseases, and pneumonia. 135 The World Health city in the world.145 The PM2.5 concentration of 20.2µg/ Organization (WHO) estimates that there are 6.7 million m3 in Kampala in May 2024 was four times higher than premature deaths from air pollution annually. 136 Poor air the WHO annual air quality guideline value of 5μg/m3.146 quality can also have a negative effect on learning through Historically, air pollution in Uganda is worst in February, school closures and impacts on students’ cognition and July, and August, coinciding with periods when schools are academic achievement.137 Exposure to fine particulate in session. Air pollution is the second leading risk factor matter (PM2.5), a harmful pollutant, has also been shown contributing to deaths and disability in Uganda.147 Globally, to lower test scores in Brazil, Chile, China, India, Iran, Italy, the WHO attributes a significant share of deaths from and the United States. 138 Rising temperatures intensify stroke and ischemic heart disease to air pollution.148 the impact of air pollution on the health and well-being of children of school age.139 Air quality interventions using technology, education, and behavioral change are being implemented in In Uganda, about 28,000 people die annually due to air Africa.149 In Africa, only 6 percent of children live within pollution, according to the Global Alliance on Health and a 50-kilometer radius of a reliable air monitoring station Pollution. Most of these deaths are linked to indoor air compared with 72 percent of children in Europe and North pollution from cooking over open fires, although the share America.150 Researchers at Uganda’s Makerere University of deaths from ambient air pollution is rising. Air pollution 140 have developed a low-cost air quality monitoring sensor is increasing in Uganda, with Kampala’s air quality being to detect air pollution. The deployment of such reliable among the worst in Africa at 39 μg/m . Only 53 percent 3 141 low-cost sensors linked to real-time cloud-based platforms of Uganda’s districts have an early warning system for across Uganda will make it possible to collect and share air environmental pollution and climatic shocks. 142 quality data to foster public awareness of the importance of air quality and to use in advocacy, research and education Women and girls in Uganda have been found to have to influence behavioral change. Gathering such data is also a 4.5-fold higher exposure than men to air pollutants key for the development of legislation and public health known to have detrimental health effects (PM2.5). policies. Ambient air pollution also has a particularly acute impact on children under the age of 5 by making them prone to Pollution of water bodies results in higher costs of lower respiratory infections. In Africa, models suggest that water treatment as well as treatment for water-related ambient air pollution reduces life expectancy in children by infections. According to the annual report of the Natural four to five years. One estimate suggests that the share of Resources, Environment, Climate Change, Lands and infant deaths attributable to air pollution could be as high Water Management (NRECCLWM) program for 2023, the at 12.8 percent of total deaths in Sub-Saharan Africa.143 share of water samples meeting the national standards for wastewater discharge was 33.4 percent as opposed to a target of 68 percent. The antimicrobial resistance (AMR) 63 4 WATER AND THE ENVIRONMENT IMPACT HUMAN CAPITAL surveillance carried out by the MoWE found evidence in burden from the costs of treating these water-borne the water of bacteria (E. coli, klebsiella, and entrococcus) infections and the need for the health sector to come up that are resistant to the antibiotics currently available on with appropriate responses to reduce mortalities. the market (Figure 4.4). This implies an increased health Figure 4.4. Number of Antibiotics for Which Resistance Is shown in Three Types of Bacteria Source: Ministry of Water and Environment. Annual performance report of the Natural Resources, Environment, Climate Change, Lands, and Water Management program (APPR NRECCLWM), 2023. The country’s framework for responding to these 1. Promote and encourage highly adaptive and productive environmental challenges is the National Climate crop varieties and cultivars in drought-prone, flood- Change Costed Implementation Strategy as defined prone and rain-fed crop farming systems. in Uganda’s National Determined Contribution (NDC) 2. Promote and encourage highly adaptive and productive in fulfilment of Article 4 of the Paris Agreement. The livestock breeds. strategy sets out targeted goals including: (1) the protection 3. Promote and encourage conservation agriculture and and restoration of strategic fragile ecosystems through ecologically compatible cropping systems to increase incentive mechanisms; (2) the mainstreaming of climate resilience to the impacts of climate change. change resilience in the country’s programs and budgets; 4. Promote sustainable management of rangelands and and (3) the development and implementation of national pastures through integrated rangeland management. and local disaster risk management plans. Uganda is also 5. Promote irrigated agriculture by encouraging irrigation strengthening its hydrometeorological monitoring network, systems that use water sustainably. having automated 67 percent of its weather and climate 6. Promote and encourage agricultural diversification and network with a 77 percent data accuracy rate as of 2023. improved post-harvest handling, storage, and value In the strategy, the Government of Uganda identified eight addition to mitigate rising climate-related losses and to strategic interventions for adaptation in the agricultural increase food security and household incomes. sector, with a proposed budget of about US$297 million 7. Support community-based adaptation strategies by over the next 15 years. The eight strategic interventions are: expanding extension services and improving ways to convey timely climate information to rural populations to enhance the climate resilience of agricultural systems. 64 4 UGANDA HUMAN CAPITAL DEVELOPMENT AND GROWTH REVIEW 8. Develop innovative insurance schemes (such as low- It will also be necessary to develop an indoor air quality premium micro-insurance policies) and low-interest management plan linked to school improvement plans credit facilities to insure farmers against crop failure and to the BRMS. This plan would identify low-cost ways and livestock losses due to droughts, pests, floods, and to improve indoor air quality, such as natural ventilation, other weather-related events. the use of environmentally friendly cleaning supplies (such as vinegar, baking soda, and lemon), and maintaining The total cost of implementing these adaptation, indoor humidity levels at between 30 and 50 percent to mitigation, coordination, monitoring, and reporting prevent the growth of mold and reduce dust mites. Other actions is estimated in the NDC at US$28.1 billion. Uganda mitigating measures include training teachers, school is committed to mobilizing domestic resources to cover leaders, and students to understand the importance of these actions to the tune of US$4.1 billion or 15 percent air quality, to recognize the symptoms of poor air quality of the total cost and will require international support to (such as sneezing and coughing) and to undertake visual cover the conditional measures and actions. It will also be inspections of school spaces to identify pollutants such necessary to find the funds to meet the capacity-building as dust and mold and the corrective actions. Portable and technology needs associated with implementing the air quality monitors, which can be shared among several eight actions. schools, and fixed sensors can be used to identify pollutants and their sources and to measure PM2.5 and PM10 levels. AMR surveillance in the water and environment sector can be incorporated into the integrated disease surveillance and response system, especially to monitor cholera and typhoid outbreaks and response efforts. The monitoring of enteric disease pathogens in the environment, including salmonella spp, campylobacter spp, and others that present a great threat to public health, can be prioritized in routine wastewater monitoring. It is becoming increasingly crucial to ensure that Uganda’s infrastructure is built or upgraded to be climate resilient. This includes residential buildings, non-residential private buildings, public infrastructure (including schools, hospitals, ports, airports, and government offices), and roads, railways and bridges. Therefore, it will be essential to integrate climate change into the country’s existing infrastructure risk assessment guidelines. Climate-proofing existing and future infrastructure will require conducting geotechnical site investigations to determine the appropriateness of locations for infrastructure development. It will also be necessary to revise Uganda’s current Basic Requirements and Minimum Standards (BRMS) to include resilience mechanisms to mitigate risks from air pollution, climate shocks, and heat, which can be reflected in World Bank projects in the country. For example, the Bank’s Uganda Learning Acceleration Program (ULEARN) incorporates low-cost strategies to provide cooler learning environments, increase the resilience of schools to floods, and, over time, develop mechanisms to monitor and manage classroom temperatures. 65 4 WATER AND THE ENVIRONMENT IMPACT HUMAN CAPITAL Recommendations The following are key recommendations to address some of the constraints to improve Uganda’s environment with the aim of strengthening human capital development. Table 4.4 Recommendations for Improving the Environment: Short-term and Long-Term Recommendation Short-term actions Long-term actions Responsible parties (next 5 years) (5-10 years) 1. Take action to mitigate • Conduct information gathering and forward • Implement MoWE, NEMA extreme events (e.g., floods planning. mitigation plans. and droughts). • Adopt resilience and adaptation measures. • Develop disaster risk planning and geo-enabled management information. systems across sectors with built-in early warning systems. 2. Carry out monitoring and • Implement basic, low-cost air quality monitoring • Conduct more MoWE, NEMA, targeted reduction actions, methods, such as visual inspections for mold or research on universities such as using portable air dust. emerging pollutants. quality monitors to track • Develop an indoor air quality (IAQ) • pollutants like PM2.5 and management plan that includes regular • Implement IAQ PM10 for indoor pollution and inspections, maintenance schedules, and management plan. greenhouse gases. response procedures for addressing air quality issues. • Develop simple plans for periods of poor air quality, such as staying indoors and limiting physical activities. Use local networks to communicate these plans effectively. • Educate citizens through various channels and touchpoints such as schools about the importance of air quality and how they can contribute to maintaining it. Train teachers and students to recognize symptoms of poor air quality. Notes: MoWE = Ministry of Water and the Environment; NEMA = National Environment Management Authority 66 5 UGANDA HUMAN CAPITAL DEVELOPMENT AND GROWTH REVIEW 5. Investing in Social Protection to Build and Safeguard the Human Capital of the Poor Low investment in human capital means poverty and inequality remain high Poverty and inequality remain high in Uganda. According There are persistent disparities in poverty rates by to the Uganda National Household Survey (UNHS) of location. Rural areas and the Northern and Eastern regions 2019/20, using the new national poverty line of US$1.77 have the highest poverty rates, which are correlated with purchasing power parity per day, the overall poverty high rates of employment in subsistence activities. In rate of 30.1 percent had declined by less than 1 percent 2019/20, the poverty rate in the Northern regions was since 2013/2013.j151 Using the international poverty line of 36 percent, much higher than the urban poverty rate of US$2.15 purchasing power parity per day, the poverty rate 11 percent. The subregions of Acholi (67.7 percent) and in Uganda fell significantly from 66 percent in 2002 to 37.5 Karamoja (65.7 percent) have the highest poverty rates, percent in 2012. However, it increased to 42.1 percent in followed by Bukedi (34.7 percent) and Busoga (29.4 2019.152 The COVID-19 pandemic brought about a large percent). Those regions with the lowest poverty rates have economic shock (Figure 5.1) and particularly contributed the highest scores on the Human Capital Index (HCI) and to the increase in poverty in urban areas. Among the poor, vice versa (Figure 5.2). 3.5 million (or 41.8 percent) are considered “food poor,” that is, lacking the minimum amount of income needed to meet The high frequency of shocks such as droughts, floods, their food needs. The UNHS also highlights inequality and crop pests and diseases are another challenge to trends, showing that the consumption expenditure of poverty reduction, especially in rural areas. The 2019/20 the richest 10 percent of the population is twice as high UNPS data showed that half of Uganda’s population is as that of the poorest 40 percent. Furthermore, gender vulnerable to shocks, and in the decade between 2010 disparities persist in the labor market. Women have fewer and 2020, 30 to 40 percent of mostly rural households opportunities to access productive employment, and they experienced shocks. The Uganda High-Frequency Phone are overrepresented among unpaid workers as compared Survey in 2021 found that nearly 60 percent of households to men (67 percent of women versus 50 percent of men).k had experienced at least one shock after March 2020.153 Uganda also has one of the youngest populations in the Furthermore, most rural households rely on subsistence world, mostly living in rural areas, and has high social and agricultural activities, which are increasingly vulnerable to economic inequalities. the effects of climate change. This vulnerability is worsened j According to the latest UNHS update from UBOS, the poverty rate fell to 16.3 percent in 2023/24 using the old national poverty line of US$1 per day. However, data based on the new poverty line of US$1.77 (PPP) per day has not yet been released. k According to the International Labor Organization (ILO), unpaid workers include trainees (those who work to gain workplace skills or experience without pay), volunteers (doing non-compulsory work for others without pay), unpaid community service workers, prisoners doing unpaid work, and those engaged in unpaid military or alternative civilian service. Also included in this category is unpaid care work such as childcare, eldercare, and care of the sick and permanently ill, which is often done by women and is disproportionately viewed as “women’s work.” 67 5 INVESTING IN SOCIAL PROTECTION TO BUILD AND SAFEGUARD THE HUMAN CAPITAL OF THE POOR by environmental degradation and lack of climate-resilient consumption, withdraw children from school to work infrastructure. By 2025, climate change is estimated to cost at home or in family businesses, or sell valuable assets the agricultural sector US$2.3–4.2 billion per year due to and deplete savings. Such strategies can significantly crop damage, loss of export revenue, livestock loss, and harm human capital. As observed before the COVID-19 unmet water demand. pandemic, the poorest households are less likely to rely on savings and more likely to cut back on food when faced In response to various shocks, households in Uganda with a shock.154 Additionally, data from the Uganda National employ a range of coping strategies. Poor households, Panel Survey (UNPS) indicates a positive correlation in particular, often resort to more detrimental methods, between experiencing shocks and the likelihood of being leading to a decrease in income and assets. Due to their chronically poor or falling into poverty. financial constraints, these households may reduce food Figure 5.1. Real GDP Growth in Uganda by Quarterly Figure 5.2. Correlation between Poverty Rate in Sector Contributions (percent year on year), FY 2020 2016/17 and Human Capital Index (HCI) circa 2016/17 and FY 2021 by Subregions Source: Uganda Bureau of Statistics (UBOS). Note: Net taxes are included to ensure that the value-added numbers are in line with the overall GDP growth statistics. 68 5 UGANDA HUMAN CAPITAL DEVELOPMENT AND GROWTH REVIEW Global initiatives and evidence highlight the critical role played by social protection in building human capital Social protection is a crucial policy instrument for including floors, and by 2030 achieve substantial coverage building and safeguarding the human capital outcomes of the poor and vulnerable.” This commitment subsequently of poor and vulnerable households. The role of social led to the launching of the Global Partnership for Universal protection as a foundational social policy has been globally Social Protection (USP2030) under the co-leadership of recognized. Several initiatives are being implemented to the World Bank and the International Labour Organization. coordinate and promote work on social protection among multilateral, bilateral, and civil society partners. The Social Social protection helps individuals and societies manage Protection Inter-Agency Cooperation Board (SPIAC-B) risks, shocks, and volatility, protects them from poverty, was launched in 2012 in response to a request from the and helps them to access economic opportunities. This G20 and has led to a step-change in technical cooperation can be achieved through a range of instruments that on social protection issues in recent years. In 2015, the UN increase equity, resilience, and opportunity throughout Member States adopted the 2030 Agenda for Sustainable the lifecycle through social assistance, economic and Development. As part of Sustainable Development Goal labor market inclusion interventions, and social insurance, (SDG) 1 (“to end poverty in all its forms, everywhere”), as shown in Figure 5.3. These instruments are critical for Target 1.3 calls upon states to “Implement nationally enabling households and countries to accumulate and appropriate social protection systems and measures for all, sustain human capital and to ensure its productive use. Figure 5.3. The Three Goals of Social Protection and Instruments for Achieving Them across the Lifecycle Early Childhood Childhood, Adolescence Working Life Old Age EQUITY Cash & in-kind Social pensions, care Child allowances, fee Child allowances, fee transfers, disability- Reducing poverty and inequality, services, contributory promoting equality of opportunity waivers waivers related transfers, pension top-ups and addressing exclusion public works OPPORTUNITY Nutrition/ECD CCTs for Training, CCTs for Education, entrepreneurship pre-school, health, Life-long learning, Promoting investments in human support to school-to- support, intermediation, UTCs, child care active ageing policies capital and helping men and work transition, skills public works, economic services women access productive work inclusion RESILIENCE Unemployment and Old-age and disability Emergency cash and Emergency cash and disability insurance, Providing insurance against, and pensions, care in-kind transfers in-kind transfers matching savings, building the capacity to manage services subsidized insurance shocks 0-5 years old 6-18 years old 18-65 years old 65 and older Accumulation of Use and protection of Protection of Human Human Capital Human Capital Capital Source: World Bank, Charting a Course Towards Universal Social Protection: Resilience, Equity, and Opportunity for All (June 2022). Note: CCT = conditional cash transfers; HC = human capital; ECD = early childhood education. 69 5 INVESTING IN SOCIAL PROTECTION TO BUILD AND SAFEGUARD THE HUMAN CAPITAL OF THE POOR The first goal of social protection is to foster equity by importance of having social protection programs in place reducing poverty and inequality, promoting equality of so that human capital is protected in the face of changing opportunity, and minimizing exclusion. The aim of many livelihoods and the increasing risk of natural disasters. social assistance programs is not only to directly reduce immediate poverty, but these programs are also designed The third goal of social protection is to promote to help poor individuals and families access basic nutrition, opportunity by supporting investments in human capital health, and education, thereby building their human and helping men and women access more productive capital and contributing to equality of opportunity. Labor employment. By providing income support to individuals programs and institutions, by facilitating access to more and households living in poverty, social assistance productive opportunities, directly support livelihoods, promotes demand for education, health, and nutrition and help the disadvantaged overcome the employment services, all of which build human capital. Labor programs and productivity barriers. Programs can be specifically help beneficiaries to build their skills and acquire work designed to promote equity by reducing gender gaps experience to further accumulate their human capital and and the exclusion experienced by certain groups such as use it effectively in the labor market. people with disabilities, indigenous people, and migrants. They can also provide support to households beyond the absolute poor, leveraging the redistribution function that social protection can play with an eye on reducing inequality and promoting fairness and social cohesion more broadly. The second goal of social protection is to foster resilience by providing households and individuals with insurance against shocks and helping them to build the capacity to manage them. Social insurance and social assistance programs can build the resilience of individuals and families by reducing the negative impact of certain types of shocks, thus helping the population to protect their human capital. Some examples of these kinds of programs are unemployment and disability insurance, old age pensions, and adaptable and scalable social assistance programs. Many labor regulations contribute to managing risks, for example by providing worker safety rules, sick leave, parental leave, and severance pay. Economic inclusion programsl can support resilience by helping people to diversify their livelihoods, while training programs can increase the capacity of workers to move between jobs and acquire new skills. Building resilience is particularly important for those who have the least ability to absorb a shock and are more exposed to shocks or large losses. The impacts of climate change highlight the critical l Economic inclusion programs are coordinated, multidimensional interventions that support individuals, households, and communities in increasing their incomes and assets. The term “economic inclusion” is sometimes used interchangeably with the term “productive inclusion” (World Bank, 2021). 70 5 UGANDA HUMAN CAPITAL DEVELOPMENT AND GROWTH REVIEW There is strong global evidence that social protection A large body of literature demonstrates the important yields substantial returns on investment at multiple role played by social assistance in reducing poverty levels, including the individual, household, and and building human capital, including through in-kind community levels. At the household level, one of the support, unconditional and conditional cash transfers, immediate effects of social assistance programs is and social pensions. Social assistance can increase providing additional resources, which helps families meet the use of health services by beneficiaries, help them to essential expenditures, such as those related to children’s diversify their diets, and, in some cases, improve their education and healthcare. Additionally, by alleviating health and nutrition outcomes.156 Social assistance can financial stress, it frees up time and mental space that allow also increase school enrollment and attendance rates and, families to prioritize the well-being and future potential of in some cases, improve children’s learning and cognitive their children. 155 Individuals who receive help from social development outcomes.157 These positive impacts on protection initiatives to access education, healthcare, schooling have been found to persist over the long term.158 and other social services tend to reap the benefits over Social assistance has also been found to reduce maternal time, especially by having better labor market outcomes. depression and stress, improve sexual and reproductive Through these mechanisms, social protection helps to health, as well as reduce rates of child labor.159 Importantly, break the cycle of poverty and fosters long-term increases these impacts have usually been greater for those whose in human capital that benefit individuals and societies. outcomes tend to be lowest, including the poorest, women and girls, minorities, and people living in rural areas.160 71 5 INVESTING IN SOCIAL PROTECTION TO BUILD AND SAFEGUARD THE HUMAN CAPITAL OF THE POOR Social protection in Uganda needs to be significantly improved before it can effectively foster human capital Social protection policy and strategy The National Social Protection Strategy (NSPS) for 2023- needs of individuals and households at different stages of 28 is the framework for reducing risk and vulnerability the lifecycle. The strategy presents six strategic objectives in Uganda. Based on the vision contained in the as follows: country’s social protection policy (2015) and the National To expand the scope and coverage of social security 1. Development Plan IV (NDP IV), the NSPS provides a across the life cycle. framework and roadmap from which priority actions will be To scale up the provision of holistic social care 2. drawn. It also outlines how the delivery of social protection and support services to socio-culturally vulnerable in Uganda will be harmonized and coordinated, recognizing individuals across the life cycle. that many programs are currently implemented by a variety To strengthen systems, policy and institutional 3. of both government and non-government agencies. framework for the effective delivery of social protection services. The NSPS 2023-28 aims to address both the economic To embed shock-responsiveness in all key social 4. risks and social dimensions of well-being. It focuses protection programmes and interventions. on a transformative model that addresses “…economic To generate evidence on the effectiveness, impact and 5. risk management as well as [being] focused on social efficiency of social protection and using this to inform dimensions of well-being and rights-based approaches.” public debate on social protection. Consistent with the Uganda social protection policy, this To strengthen linkages between social protection, 6. strategy is underpinned by the notion of a lifecycle, which complementary services and livelihood enhancement recognizes that vulnerabilities are very different at various interventions. stages of life. Consequently, the objectives and actions of NSPS 2023-28 will align themselves with the different 72 5 UGANDA HUMAN CAPITAL DEVELOPMENT AND GROWTH REVIEW Table 5.1 spells out in more detail the interventions that will be rolled out across the lifecycle.161 Table 5.1. Uganda’s National Social Protection Strategy for 2024-2029: Proposed Strategic Interventions by Lifecycle Stage and Cross-cutting Interventions Lifecycle stage Proposed age-specific strategic interventions Proposed interventions that cut across all stages of the lifecycle 0-5 years (early • Develop and gradually roll out a Child Disability Grant. • Provide social care and support to all childhood) vulnerable people throughout their • Expand the provision of Integrated Early Childhood lifecycle (rehabilitative, residential Development programs for the poor and vulnerable. and home-based care), including the provision of food and non-food items. 6-18 years (school • Strengthen the case management system for child abuse, age) neglect, and exploitation. • Roll out a National Health Insurance Program to enhance access to • Develop and progressively expand coverage of school feeding essential basic health services, programs, especially in highly vulnerable areas such as especially for low-income individuals Karamoja. and households. • Promote the establishment and rollout of school gardens for school feeding. • Create a social registry to facilitate the identification and targeting of 19-29 years (youth) • Provide support (livelihood, psychosocial, health, legal, etc.) to poor and vulnerable individuals and survivors of gender-based violence (GBV) and other forms of households. violence. • Document and progressively revive • Develop youth skills training and provide incentives to attract traditional social support systems to young people to take these courses. complement formal social protection services for the poor and vulnerable. 31-59 years (working • Expand the coverage of contributory social security to all age) workers in the formal sector. • Explore the possibility of relaxing nationality and residence restrictions • Fast-track reform of the non-contributory defined-benefit on national social assistance with a pension scheme for public servants to turn it into a contributory view to opening a window to include social security scheme for all civil servants. and enable refugees to access social • Develop and implement a strategy for extending social security protection. to those working in the informal sector. • Design and progressively implement a National Labour- Intensive Public Works Program that provides income security to poor and vulnerable households while providing them with work to enhance their livelihoods. • Advocate for bilateral and multilateral agreements on social protection to make social benefits portable among the countries of the East African Community. 60 years and over • Progressively lower the eligibility age for accessing the Senior (old age) Citizens’ Grant from 80 years to at least 75 years. • Develop policy and legislation to harmonize the age of retirement for all workers. Disability • Develop and gradually roll out a grant for those with severe disabilities. • Expand the provision of rehabilitative and assistive devices for vulnerable persons, especially those with disabilities. • Enforce the construction of disability-friendly infrastructure. • Develop waivers and incentives to enable persons with disabilities to access public transport, employment opportunities, etc. 73 5 INVESTING IN SOCIAL PROTECTION TO BUILD AND SAFEGUARD THE HUMAN CAPITAL OF THE POOR The NSPS is also aligned with the Human Capital The Ministry of Gender, Labour, and Social Development Program of the NDP IV. Within the Human Capital (MGLSD) has the mandate to lead on social protection Development Program, which aims to enhance human policy, oversight, strategy and implementation. It reports capital development throughout the entire life cycle, NDP on progress on social protection objectives to the Policy IV prioritizes the following social protection strategies: and Oversight Coordination Committee of the Human (i) expand social protection safety nets; (ii) promote Capital Working Group of the NDP IV, which is a body empowerment and livelihood programs for youth, women, of key ministries under the Human Capital Development children, elder persons, and people with disabilities; (iii) Program (see Figure 5.4). MGLSD thus implements the promote decent employment opportunities; and (iv) National Social Protection Strategy (NSPS) 2024-2029 in promote better nutrition for all. This is consistent with collaboration with other ministries, departments, agencies, the previous NDP III, which prioritized the provision of local governments, academia, civil society, and the direct income support, the expansion of social insurance private sector. Development partners have also played an coverage for social insurance, and the development of important role in the development of social protection in social care services for the vulnerable. Uganda from the outset, especially in terms of providing support for programming at the national and local Government levels. Figure 5.4. Organizational Chart for Social Protection Coordination Policy Coordination and Oversight Committee of the MGLSD (Lead Agency for National Level District level Human Capital Social Protection) Development Program Gender and Social Protection Thematic Social Protection District Social Protection Sub-Committee Committees Coordination Committees Sector coverage, delivery, and financing Although Uganda now has a comprehensive social protection strategy organized by the stages of the lifecycle, actual programming in the country is quite limited. Programs in the social protection sector come under two pillars: social security social care and support services, as is illustrated in more detail in Table 5.2. The social security pillar consists mainly of three programs combining social assistance and labor market support, whereas the social service pillar currently assists a narrower set of populations such as at-risk children, GBV victims, and persons with disabilities. 74 5 UGANDA HUMAN CAPITAL DEVELOPMENT AND GROWTH REVIEW Table 5.2. Programs in the Social Protection Sector: Objectives and Coverage Pillar Program Objective/category of beneficiaries Coverage/number of Responsible beneficiaries government body Senior Citizens Grant Senior citizens grant to all individuals Approximately 300,000 active MoGLSD age 80 and older, thus providing them beneficiaries with regular and predictable monthly cash transfers Northern Uganda Social Labor-insensitive public works and Nearly 2.4 million beneficiaries with Office of Action Fund (NUSAF) livelihoods activities to smooth direct income support the Prime Social Security beneficiaries’ consumption, increase Minister community assets, and stimulate short- (OPM) term employment The Development Program to increase access to basic Nearly 3 million beneficiaries OPM Response to social services (health, education, Displacement Impacts water, and sanitation), expand Project (DRDIP) economic opportunities, and enhance environmental management in refugee hosting communities and settlements in 15 districts Withdrawal, Interventions supporting the withdrawal, 716 street children have been MGLSD rehabilitation, and rehabilitation, and resettlement of street withdrawn, rehabilitated, and Social care and support services resettlement program for children resettled. street children Care and support for 17 GBV safe shelters established to 15,000 survivors have received MGLSD GBV survivors provide comprehensive GBV response temporary shelter and psychosocial support and legal services through the GBV safe shelters. Institutional support Strengthening of the capacity of Rehabilitated 900 persons MGLSD to vulnerable children, social welfare workforce in all local with disabilities (PWDs) at the persons with disabilities, governments to deliver childcare and institutional and community level and older persons protection services and to promote and also supported 300 destitute community-based care and protection older persons with food and non- food items and health care. Coverage gaps Currently there is only one nationwide government- Citizens Grant, with coverage being twice as high among financed social assistance program – the Senior Citizens those in the bottom consumption quintile than those in the Grant (SCG), which provides direct income support top quintile. Similarly, NUSAF 3’s targeting was progressive, to individuals over 80 years old. In 2020/21, safety with the number of beneficiaries from the poorest quintile net programs in Uganda covered only 3 percent of the being three times higher than the number from the richest population, a low figure given the country’s high poverty quintile (Figure 5.5b). rates, vulnerability to poverty,162 and wide inequality. At that time, the two largest programs were the SCG and the and the NUSAF 3 project, a World Bank-supported program targeting households in Northern and Eastern Uganda. The World Bank’s 2022 Poverty Assessment163 confirmed that both programs had low coverage but were pro-poor in their targeting. As shown in Figure 5.5a, about 9 percent of individuals aged 60 and over benefited from the Senior 75 5 INVESTING IN SOCIAL PROTECTION TO BUILD AND SAFEGUARD THE HUMAN CAPITAL OF THE POOR Figure 5.5. Beneficiary Incidence of Two Main Safety Net Programs (a) Incidence of beneficiaries of the Senior Citizens Grant (b) Incidence of beneficiaries of NUSAF during the previous during the previous 12 months in 2019/20 among individuals 12 months in 2019/20 among individuals aged 15 years+ by aged 60 years+ by consumption quintiles consumption quintiles Source: UNHS 2019/20 and World Bank staff calculations. The NUSAF project was created in 2002 with the support of the World Bank, and through 3 phases, has been one of the largest safety net programs in the country. Over time, the project has evolved from addressing community infrastructure and social needs in response to the conflict in Northern Uganda to targeting the economic transformation of poor and vulnerable households (Figure 5.5). The program provides a package of benefits and services to targeted households in the poorest and most vulnerable districts in Northern and Eastern Uganda. All three phases of NUSAF have focused on expanding the coverage of safety nets, promoting sustainable livelihoods, and building institutional capacity at the local level. Under the third phase of the project (NUSAF 3), which ran from 2016 to 2021, 67 districts were covered, benefiting nearly 600,000 households (approximately 3 million people). This phase also supported the development of a beneficiary registry and disaster risk financing (DRF) mechanisms, initiatives which are expected to continue in the upcoming NUSAF IV project. 76 5 UGANDA HUMAN CAPITAL DEVELOPMENT AND GROWTH REVIEW Figure 5.6. Successive Phases of Northern Uganda Social Action Fund (NUSAF) 2003 2009 2016 2025 NUSAF 1 NUSAF 2 NUSAF 3 NUSAF 4 US$ 100m US$ 135m US$ 130m US$ 130m Supported Reinforced recovery Deepened investments Will prioritize job creation Uganda’s response and rehabilitation in resilience-building and economic inclusion, to insurgency and through the lens of through labor intensive complemented by human vulnerability regional affirmative public works (including capital investments, through action (Community a shock-response strengthening climate- community infrastructure, labor- intervention) and smart resilience for infrastructure and intensive public works, piloted livelihoods extremely poor rebuilding social and integration of anti- support for groups households, and building cohesion corruption measures) national social protection delivery systems NUSAF 3 had the following positive impacts as highlighted in the NUSAF 3 Endline Assessment: The percentage of household beneficiaries who accumulated savings increased from 54.6 percent to 70 percent during the operation’s lifetime. The ownership of household assets increased significantly, with a 45.6 percent increase in livestock ownership and a 16 percent increase in ownership of equipment such as ox ploughs. 3,460 community assets were built such as soil and water conservation measures and rehabilitation of rural access roads which increased farmers’ access to markets and helped to commercialize agriculture. Small-scale infrastructure for the use and benefit of local communities was built through labor-intensive public works (LIPWs). Discretionary funds were held in reserve to be disbursed rapidly to households in times of droughts, using two sets of objective data as triggers to mount a scaling-up of LIPW support. Building on the success of NUSAF and other successful and who are highly vulnerable to falling into poverty. social protection project, there is a pressing need to take Diversifying the range of social protection instruments a lifecycle approach to providing protection, resilience, to cover these age groups will foster their human capital economic inclusion interventions in a context where development and enhance their resilience to shocks. the majority of the population are youth and children, 77 5 INVESTING IN SOCIAL PROTECTION TO BUILD AND SAFEGUARD THE HUMAN CAPITAL OF THE POOR Financing and delivery system gaps The financing of social protection programs in Uganda is those most in need. The existence of the social registry currently insufficient to meaningfully address the range would also facilitate the expansion of safety net programs and scope of the human capital challenges. The recent to other households and individuals who are not current overlapping crises such as inflation, slow recovery from beneficiaries of social protection programs. COVID-19, and climate change have further exacerbated this situation. Levels of expenditure for social protection in A digital payment system is a foundational requirement Uganda are very low, with expenditure on social protection for delivering effective and timely benefits to households. reaching just 0.6 percent of Budget in FY 2023/24. During To make the social protection system shock-responsive, it the same period, social protection spending was estimated will also be necessary to strengthen and expand digital at 0.17% of GDP, slightly up from 0.15% in 2022/23. This level payment systems to make it possible for the government of spending puts Uganda as one of the lowest spenders on to make rapid, efficient, and transparent distributions of Social Protection globally, with limited coverage of social support to the impacted households as well as to develop protection across the life cycle. a disaster risk financing strategy for ensuring Uganda’s financial resilience to disasters. The digital payments Another key constraint is the lack of a national-level social diagnostics that the World Bank conducted for Uganda in protection delivery system that is adaptive and could 2020/21 highlighted that the country already has a generally help in responding to shocks in a timely manner. The well-regulated and dynamic ecosystem of digital financial building blocks already exist for creating a national social services. However, there are regional disparities in terms of registry and for scaling up the use of digital payments as access to and the efficiency of these services. The findings the government has both a national identification (ID) and and recommendations of the diagnostics have guided civil registration system in place. The current national ID the design of the digital payments subcomponent of the and civil registration (birth and death registries) systems NUSAF IV project, which will support the scale up of digital cover about 70 percent and 30 percent of the population, payments and will increase the access of beneficiaries respectively. The World Bank has been supporting the to the necessary digital technology and information. In National Identification and Registration Authority (NIRA) collaboration with key stakeholders, the Government of in upgrading and expanding the capacity of these systems. Uganda is well-positioned to address these disparities and Despite this progress, significant gaps remain. Of to phase in and scale up the use of digital payments in its significance, there is as yet no dynamic and nationwide various social protection programs. social registry for objectively identifying poor and vulnerable groups and connecting them with relevant social benefits Furthermore, Uganda needs to develop a strategy for and services. Although a Single Registry was developed financing a shock-responsive social protection system. under NUSAF 3, it is only limited to data on beneficiaries The country has no reserve source of risk financing at the of existing programs. The sector is constrained by the national level that would make it possible to respond to lack of a national dynamic social registry (SR) (interlinked shocks with predictable, timely, and adequate resources to with the GoU’s National Identification and Registration help households to cope. The recent COVID-19 pandemic system) that is capable of objectively identifying the poor has further highlighted the urgent need for Uganda to and connecting them with relevant social protection develop a well-functioning, credible, and shock-responsive benefits and services, as well as responding to shocks. social protection system to help poor and vulnerable Making Uganda’s social protection system adaptive families to protect their hard-won gains from being eroded. should start with the creation of a dynamic national SR of Furthermore, Uganda lacks a clear disaster risk financing poor and vulnerable households. Having this information (DRF) strategy based on its risk profile, and a Disaster Risk immediately available would enable the government to Management Bill is still pending approval in Parliament. respond quickly to shocks with rapid support targeted to Although Uganda has piloted several risk financing 78 5 UGANDA HUMAN CAPITAL DEVELOPMENT AND GROWTH REVIEW instruments, its limited prearranged funds are not informed with rapid support targeted to those most in need. The by any adequate assessment of the kind or extent of the existence of the social registry would also facilitate the risks that the country faces and, therefore, may not be expansion of safety net programs to other households sufficient to the purpose. To support the Government of and individuals who are not current beneficiaries of social Uganda, particularly the Ministry of Finance, Planning protection programs. To make the social protection system and Economic Development (MoFPED) and the Office shock-responsive, it will also be necessary to strengthen of the Prime Minister (OPM), in 2022, the World Bank and expand digital payment systems to make it possible for commissioned a DRF diagnostic study that made four key the government to make rapid, efficient, and transparent recommendations : 164 distributions of support to the impacted households as well • Strengthen the policy framework for responding as to develop a disaster risk financing strategy for ensuring to climate shocks and crises by adopting the Uganda’s financial resilience to disasters. Disaster Risk Management Bill and developing a comprehensive DRF strategy. Social protection programs are important tools for • Strengthen existing prearranged financing building resilience, mitigating risks, and supporting instruments and consider additional instruments for households to invest in their human capital, especially moderate to severe shocks. during shocks. In the current scenario in Uganda, where • Upgrade social protection delivery systems to poverty is increasing and living standards are worsening, reduce vulnerability to shocks by allocating funding there is more than ever a need to increase investments for scaling up support to people at risk of falling into in social protection programs for the poorest and most poverty. vulnerable households. As the impacts of climate-induced • Make the transition to digital payments to increase shocks and COVID-19 have shown, social protection the timeliness and transparency of payments to programs protect households and make it possible for beneficiaries. them to avoid selling critical assets or taking their children out of school to survive. In the absence of such support, Making Uganda’s social protection system adaptive households that are vulnerable will fall further into poverty should start with the creation of a dynamic national and will stop making longer-term investments in improving social registry of poor and vulnerable households. their health, expanding their own livelihoods, and educating Having this information immediately available would their children. enable the government to respond quickly to shocks 79 5 INVESTING IN SOCIAL PROTECTION TO BUILD AND SAFEGUARD THE HUMAN CAPITAL OF THE POOR Recommendations This report makes four recommendations for strengthening social protection in Uganda: Table 5.3. Recommendations for Social Protection: Short-term and Long-term Recommendation Short-term actions (next 5 yrs) Long-term actions (5-10 yrs) Responsible parties 1. Increase • Approve and implement NUSAF IV to extend • Ensure adequate financing is made MGLSD, OPM, financing for coverage to high-poverty areas that have no available for social protection MoFPED, MOH, social protection social protection programs. programs, giving priority to (i) the development programs based on • Increase the coverage and improve the critical needs of populations at partners, the private needs efficiency and functionality of social different stages in the lifecycle and sector, and civil protection programs such as SCG, especially (ii) programs that demonstrate society in underserved rural areas. efficiency and effectiveness at • Expand financing of safety net programs to reducing poverty and vulnerability include livelihood programs targeting youths among the poorest population. and women in accordance with NDP IV. • Increase budget financing of social protection programs. 2. Use lifecycle • Focus the NUSAF IV on climate-smart • Adopt a comprehensive lifecycle MGLSD, OPM, approach in livelihoods, youth employment, and nutrition- approach and give priority to the MoFPED, MOH, social protection sensitive social protection. critical needs of populations at development programs • Expand coverage of social protection different stages of the lifecycle. partners, the private programs into areas with high levels of sector, and civil multidimensional poverty in accordance with society NDP IV (strengthening impacts on health and education for children). • Increase the percentage of the population that is food-secure. 3. Invest in • Consolidate lessons learned from existing • Adopt a comprehensive policy and MGLSD, OPM, economic inclusion programs and pilots on economic inclusion, strategy on economic inclusion MoFPED, MOH, and livelihoods but both GoU, Development Partners and and livelihoods programs, with development programs to make NGOs clear leadership and coordination partners, the private good use of human • Design, pilot, and scale up a national arrangements among Government sector, and civil capital economic inclusion program that targets the entities as part of Uganda’s Social society working-age population, particularly youth Protection Policy and Strategy. and women • Design a bundle of livelihood support interventions and wrap-around services to enable vulnerable populations to overcome the multiple constraints that they face to accessing productive economic activities 4. Develop and • Initiate the development of a dynamic • Ensure the regular use of the MGLSD, OPM, strengthen a national social registry. national social registry to respond NIRA, NITA-U national-level • Expand the coverage of the national social to shocks as a core element of an MoFPED, MAAIF, shock-responsive registry nationwide. adaptive social protection system. development social protection • Ensure that at least 50 percent of social • Ensure that a minimum of 80 partners, the private system protection beneficiaries can receive their percent of social protection sector, and civil payments digitally. beneficiaries can be paid to society • Develop and approve a national disaster risk beneficiaries digitally. financing strategy. • Ensure that the DRF strategy is • Implement the national disaster risk implemented effectively and results financing strategy with a multi-disaster in savings. risk-layering approach using appropriate financing instruments. Notes: MAAIF = Ministry of Agriculture, Animal Industries, and Fisheries; MGLSD = Ministry of Gender, Labour and Social Development; MoFPED = Ministry of Finance Planning and Economic Development; MOH = Ministry of Health; NDPIV = National Development Plan IV; NIRA = National Identification and Registration Authority; NITA-U = National Information Technology Authority – Uganda; OPM = Office of the Prime Minister; PDM = Parish Development Model. 80 6 UGANDA HUMAN CAPITAL DEVELOPMENT AND GROWTH REVIEW 6. Maximizing Human Capital Utilization in the Labor Market The effective utilization of human capital in the labor inactive in the labor market. This chapter analyzes the key market is as essential as its accumulation and protection trends and constraints that are hindering the effective use for realizing a country’s full economic growth potential. The of human capital and offers both short-term and long- Ugandan labor market currently underutilizes its human term recommendations to enable Uganda to maximize its capital, as a substantial proportion of young people are human capital resources. engaged in low-productivity economic activities or are Uganda’s human capital is significantly underutilized The World Bank’s Utilization-adjusted Human Capital The underutilization of human capital is more prevalent Index (UHCI) measures the expected productivity of a among women, rural inhabitants, younger individuals, child born today by the time he or she turns 18, assuming the less educated, and those in the Eastern and Northern that the current human capital use rate, the quality and regions (Figure 6.1). The employment ratio and average quantity of education, and the person’s health conditions working hours are lower for women than for men, while remain unchanged. Uganda’s HCI was estimated at 0.39 their unemployment rates are higher. For instance, the as of 2021. The human capital utilization rate is the ratio Ugandan Labor Force Survey (LFS of 2021) found an of individuals who are working to the total working-age unemployment rate of 14.1 percent for women compared population. According to the 2021 labor force survey report to 10.4 percent for men. Kampala has the highest work-for- by the Uganda Bureau of Statistics (UBOS), approximately pay share among workers, with 83.5 percent of workers 20.5 million out of 23.5 million working-age individuals were being employed for pay or profits, whereas other sub- engaged in the labor market, with only 10 million working regions lag behind with a significant share of the working for earnings rather than for their own-use production. 165 If age population is engaged in subsistence activities. Recent all workers are included, human capital utilization is 0.87, data from the Uganda National Population and Housing whereas it is only 0.49 when only those working for pay or Census (UNPHC) of 2024 also show that 61.9 percent of profits are considered. Uganda’s subsistence economy is concentrated in the Northern and Eastern regions. Individuals in subsistence The UHCI, which is the product of the HCI and the human activities tend to be young and less educated, with just capital utilization rate, is then measured as either 0.34 or under two-thirds of them having failed to complete primary 0.19 depending on the boundaries of the human capital education compared to 39 percent among work-for-pay utilization rate. This suggests that a significant share of the workers. They also live almost exclusively (90 percent) in skills and talents of Uganda’s population are being lost due rural areas, mostly in the Eastern and Northern regions (63 to the underuse of human capital in the labor market. The percent). implication of this is that Uganda’s GDP per capita could be nearly three to five times higher if every child received an adequate education, proper healthcare and made a full use of their human capital in the labor market. 81 6 MAXIMIZING HUMAN CAPITAL UTILIZATION IN THE LABOR MARKET Figure 6.1. Distribution of Subsistence and Work-for-Pay Individuals, by Age, Education, Rural/Urban Location, and Region Age Education Rural or Urban Region Source: World Bank calculations, based on the Uganda Household Panel Survey 2019. 82 6 UGANDA HUMAN CAPITAL DEVELOPMENT AND GROWTH REVIEW Underemployment ratesm are also an indication that a with more education. Meanwhile, underemployment rates country’s human capital is being underutilized, even increased four-fold between 2011 and 2019, with higher among those who are working. While unemployment rates rates among those in rural areas, younger age groups, and in Uganda were relatively low at around 2 percent (short- those with an incomplete primary or completed secondary term unemployment) of the labor force in 2019 (Figures 6.2a education. Underemployment in agriculture is especially to 6.2d),n unemployment is more common in urban areas, concerning because it indicates an insufficient use of especially among younger age groups and among those workers productive capacity. Figure 6.2. Unemployment and Underemployment Over Time, by Gender, Location, Age, Education, and Sector Unemployment and Underemployment by Gender and Unemployment and Underemployment by Age, 2011, Rural/Urban Location, 2011, 2016, and 2019 2016, and 2019 Unemployment and Underemployment by education Underemployment by sector, 2011, 2016, and 2019 level, 2011, 2016, and 2019 Source: World Bank calculations, based on the 2011 and 2019 Uganda Household Panel Survey and the 2016 Uganda Household Budget Survey. m The definition of underemployment used here is time-based underemployment: individuals are considered underemployed if they had worked less than 28 hours in the previous 7 days and would have liked to have worked more. n Definitions of unemployment can vary depending on the inclusion of subsistence activities in the category of employment. The 2021 NLFS found an unemployment rate of 12 percent as workers in subsistence activities are excluded, whereas the authors of this report found a lower unemployment rate of between 2 and 4 percent based on data from the 2011 and 2019 Uganda Household Panel Survey (UHPS) and the 2016 Uganda Household Behavior Survey (UHBS). 83 6 MAXIMIZING HUMAN CAPITAL UTILIZATION IN THE LABOR MARKET BOX 6.1. DATA USED IN THIS CHAPTER This chapter is based on several different data sources on labor market trends over the past decade. For most labor market indicators, the report uses the Uganda Household Panel Survey (UHPS) from 2011 and 2019, as well as the Uganda Household Budget Survey (UHBS) from 2016. It was decided to mainly use data from the 2019 UHPS rather than the 2019/20 UHBS data, because the HBS was partly fielded during the COVID-19 pandemic, which may have created short-term distortions in the longer-term labor market trends in which the authors were most interested. The chapter also used high frequency phone survey data to study the impacts of COVID-19. Both the UHPS and UHBS contain labor modules that provided most of the relevant labor market indicators used throughout the report. The chapter was integrated with the most recent National Labor Force Survey (NLFS) from 2021 and the 2024 Uganda National Population and Housing Census (UNPHC), although the micro datasets were not available. Aggregated information from these surveys were added, when possible, to reflect more recent information and to ensure the comparability of indicators over time. Occasionally, for cross-country comparisons and specific labor market indicators, World Development Indicators were used through the World Bank’s Jobs Structure Tool. There is little available data on formal labor demand in Uganda. The UHBS and the Kampala Informal Sector Survey, both published in 2016, were used for information on firms. 84 6 UGANDA HUMAN CAPITAL DEVELOPMENT AND GROWTH REVIEW Uganda’s abundant and youthful labor force is a challenge for maximizing human capital utilization Uganda’s population has been growing fast, resulting in share of the country’s human capital is employed. To a high dependency ratio. Uganda is the only country in the ensure that agriculture can continue to provide rural Sub-Saharan Africa region where the population has grown workers with income-generating activities, it is crucial to by more than 3 percent every year since 2000. According focus on increasing agricultural productivity and building to the World Bank’s World Development Indicators (WDI), resilience to climate change. At the same time, the growing the country’s total fertility rate was around 4.47 as of 2022, share of the population living in secondary towns creates and projections suggest that the population will double an opportunity for structural and economic transformation in less than 20 years. High fertility rates result in a high that could benefit the poor in rural areas. This can be dependency ratio, and Uganda was estimated in 2016 have achieved through the right mix of investments that avoids 92 dependents for every 100 economically active persons, congestion of unproductive labor in urban areas and which is the second-highest dependency ratio in Eastern takes advantage of agglomeration spillovers (proximity to Africa after Somalia.166 Having more people of dependent markets and services, as well as networks and information, ages (children and the elderly) in any society means that all important for economic activity). more people of working age need to be actively engaged in income-generating activities and that higher productivity is required to sustain per capita income levels. Large cohorts of young individuals enter Uganda’s labor market every year. This should be advantageous for the economy, but only if the labor market can fully utilize their human capital. However, in Uganda, the growth in productive jobs is not keeping pace with the size of the population who need them. The 2024 UNPHC found that 49.6 percent of the population of Uganda is under the age of 17, which is already putting significant pressure on the labor market and will only increase in subsequent years. The World Bank has estimated that approximately 1.1 to 1.2 million new workers enter the labor force annually, which will require the labor market to accommodate 14 million additional workers by 2040.o Both urban and rural areas face significant population growth pressures (Figure 6.3). While urban areas, excluding Kampala, are experiencing rapid population growth, the rural population is also projected to increase by more than 54 percent by 2030. This growth puts pressure on land, contributing to soil degradation and exacerbating the negative impacts of climate change. This also has a negative effect on agricultural activities, in which a large o Under the medium-variant scenario (World Bank, Tackling the Demographic Challenge in Uganda (2020)). 85 6 MAXIMIZING HUMAN CAPITAL UTILIZATION IN THE LABOR MARKET Figure 6.3. Population Shares of Urban vs. Rural Areas, Figure 6.4. Population Growth, 2015 – 2022 and 2015, 2022, and 2030 (projected) 2015 – 2030 (projected) Source: World Bank calculations based on UBOS projections. An increasing share of young people fall in the category 2024 census data show that more than half of all young of not in employment, education, or training (NEET). people between ages 18 and 30 (5.25 million) are NEET.167/q The labor force participation (LFP) rate of people between While further analyses are required to understand who ages 18 and 30 has decreased over time, partly due to an these youths are and why they are not active in the increase in educational attainment (Figure 6.5). It is not labor market, the trend indicates that the labor market is unusual in low- and lower-middle-income countries, for increasingly unable to use their human capital. LFP to decline as educational attainment increases.p The Figure 6.5. Trends in the Labor Force Participation, NEET, and Unemployment Rates of Youths Aged 18–30 Sources: LFS 2011-12, 2016-17, and 2021 and Census 2024. p World Bank, Pathway to Better Jobs in IDA Countries (Washington, DC: 2018). q The 2021 NLFS report found that the prevalence of NEET among youth (ages 18-30) was 41 percent, while the 2024 UNPHC found the share to be 51 percent, although the datasets were not available to be analyzed for this chapter. The 2021 NLFS found a significant gender gap in the NEET rates, with the prevalence of women being 52 percent while the prevalence among men was only 28 percent. 86 6 UGANDA HUMAN CAPITAL DEVELOPMENT AND GROWTH REVIEW Uganda has made strides toward developing a private young people lags far behind the level needed to fill these sector-led skills system, yet a lack of skills excludes kinds of jobs, with only 12 percent of the sample population youth from productive employment. With support from having attained an upper secondary or tertiary education. partners, the government is implementing the key reforms Almost none of the sampled youths wanted to work on set out in the Skilling Uganda Strategic Plan. These include farms, whereas many aspired to work in white-collar jobs. creating private sector-led skills councils and enhancing However, the reality of the labor market is starkly at odds the capacity of technical and vocational education and with these preferences. training (TVET) institutions to deliver high-quality and demand-driven training programs in the agriculture, The school-to-work transition for young Ugandans is construction, and manufacturing sectors. With the Private challenging. By the time they reach their early twenties, Sector Foundation of Uganda, the government has also most Ugandans are no longer pursuing education. launched an innovative Skills Development Facility, which Unemployment rates tend to be higher among those facilitates collaboration between training providers and ages 18 to 25 (Figure 6.6). While agriculture remains the employers to teach in-demand skills to workers. Despite main employer for most age groups, the services sector these initiatives, a lack of skills excludes many Ugandan is gradually employing a larger share of individuals who youths from productive employment. are 30 or older (Figure 6.7). Agriculture employs the largest share of women under the age of 30, whereas There are large discrepancies between young people’s men have more opportunities to find industrial or services education and employment aspirations and realities. jobs (Figure 6.8). Furthermore, having more educational According to a study on the aspirations of young people attainment plays a substantial role in helping individuals aged 15 to 25, they generally aspire to pursue high- to secure non-agricultural employment (Figure 6.9). This skilled occupations, with medical workers, engineers, and highlights the need to create pathways for young people to teachers being the most desired jobs because of their high access productive employment and support them through earnings. However, the educational attainment of these the school-to-work transition. Figure 6.6. School-to-Work Transition, 2019 Figure 6.7. Sector of Employment by Age, 2019 Source: World Bank calculations based on the Uganda Household Panel Source: World Bank calculations based on the Uganda Household Panel Survey 2019 Survey 2019 87 6 MAXIMIZING HUMAN CAPITAL UTILIZATION IN THE LABOR MARKET Figure 6.8. Sector of Employment by Age and Gender, Figure 6.9. Sector of Employment by Education, 2019 2019 Source: World Bank calculations based on the Uganda Household Panel Survey 2019 A significant number of young workers are engaged Access to formal and wage employment and high-skilled in low-quality employment, while higher-quality jobs occupations tends to be limited to those with higher levels are more common among those with more education. of education. More educated and younger workers also Individuals with low levels of education mostly work as have a greater diversity of sectors of employment. Outside unpaid employees (as family labor or in jobs where they of agriculture, the largest shares of workers are employed receive in-kind compensation), although this share has in wholesale and retail trade and in the social services decreased over time due to an increase in self-employment, (education and health). especially among individuals between the ages 15 to 34. 88 6 UGANDA HUMAN CAPITAL DEVELOPMENT AND GROWTH REVIEW Uganda’s human capital is absorbed mostly by low productivity activities The quality of human capital in the labor market is a broken down by sub-sector, there are notable variations growing concern, as the overall value added per worker in labor productivity, with agriculture and low-skilled remains very low. Uganda’s value added per worker, services, such as trade, transport, and other services, which is a common measure of productivity and a proxy lagging behind (Figure 6.11). While it is encouraging that for quality employment, is lowest in Sub-Saharan Africa there was modest productivity growth in sectors such and has been on a declining trend in Uganda since 2000. r as mining, manufacturing, ICT, and professional services In particular, agricultural productivity is significantly lower between 2016 and 2019, productivity in many sectors is still than productivity in industry or services (Figure 6.10). When stagnant or decreasing. Figure 6.10. Broad Sectoral Productivity, 2011, 2015, Figure 6.11. Sectoral Productivity, 2015, 2019 2019 Source: World Bank calculations, based on the Uganda Household Panel Survey 2019 and the Uganda Household Budget Survey 2016, and UBOS value added data. The share of workers in medium-skilled occupations has craft and related trades workers, and plant and machine been increasing, while the growth of high-skilled jobs operators; and (3) low-skilled occupations (ISCO group remains stagnant. In accordance with the International 9), which consist of elementary occupations. Between Standard Classification of Occupations (ISCO) codes, 2011 and 2019, there was a shift in employment from low- occupations are classified into three groups: (1) high- skilled to medium-skilled occupations, with limited growth skilled occupations (ISCO groups 1 to 3), which include in high-skilled employment. Both the agricultural and managers, professionals, and technicians and associate services sectors contributed to the growth of medium- professionals; (2) medium-skilled occupations (ISCO skilled employment, while high-skilled employment is groups 4 to 8), which include clerical support workers, concentrated in the services sector. service and sales workers, skilled agricultural workers, r Value added per worker in Sub-Saharan Africa is half that of South Asia, almost one fourth of Latina America and almost one sixth of Europe and Central Asia (WDI, 2021, constant 2017 PPP $). 89 6 MAXIMIZING HUMAN CAPITAL UTILIZATION IN THE LABOR MARKET High skills (ISCO groups 1 to 3) Medium skills (ISCO groups 4 to 8) Low-skills (ISCO group 9) Managers, professionals, and Clerical support workers, service and sales Elementary occupations technicians and associate workers, skilled agricultural workers, craft and professionals related trades workers, and plant and machine operators Education is strongly correlated with job quality, though equipment, facilities, and furniture in TVET institutions, there are some exceptions. Most low- and medium- more attention is needed to how to maintain these skilled occupations are filled by individuals with a primary investments. education or less, while most workers with high-skilled and more remunerative jobs have completed at least A wider diversity of occupations tends to be available secondary education (Figure 6.12).s Nonetheless, around as the required skills level increases. While low-skilled one-quarter of individuals in high-skilled occupations occupations are mainly in agriculture, employment in have only a primary education, particularly in the services medium-skilled occupations is more diversified, ranging sector. This may indicate that certain high-skilled jobs between wholesale and retail trade (30 percent), can be performed with human capital gained through agriculture (38 percent), other services (10 percent), and experience in the labor market, rather than solely through manufacturing (6 percent). High-skilled occupations are formal education. At the same time, about 10 percent of largely concentrated in the services sector, with 84 percent low-skilled workers hold higher education credentials, of these jobs being in education, health, and finance. This highlighting a potential mismatch of skills. This suggests suggests that investing in human capital in Uganda could there may be gains from reallocating skilled labor to more lead to the creation of higher-quality jobs in the short run. skill-intensive occupations, including through better labor market intermediation and matching. There are opportunities to improve the governance of the skills development system as laid out in the recently adopted 2025 TVET ACT. There is a need to establish the proposed TVET Council to reinforce the skills governance system, including fostering private-sector participation. The national quality assurance and standards framework for TVET needs to be linked to inputs and to emphasize skills development outcomes. The government has proposed to review the National TVET Qualifications Framework to introduce meaningful procedures for facilitating student or trainee progression, such as the recognition of prior learning, the accumulation of credits, and the ability to transfer between institutions. This approach will increase the opportunities to acquire skills for young people and for existing workers, particularly those working in micro-, small-, and medium-size enterprises. In addition, while considerable investments made in infrastructure such as s The skill level of an occupation is determined by its associated ISCO code. See here: https://ilostat.ilo.org/resources/concepts-and- definitions/classification-occupation/ 90 6 UGANDA HUMAN CAPITAL DEVELOPMENT AND GROWTH REVIEW Figure 6.12. Distribution of Workers’ Education Level Figure 6.13. Distribution of Workers’ Job Sector by by Occupation Skill Level, 2019 Occupation Skill Level, 2019 Source: World Bank calculations, based on the Uganda Household Panel Survey 2019 There are significant wage premiums associated with The gender gaps that exist in education and labor market higher education, advanced skills, and living in urban activities persist in occupations in the labor market as areas. The returns to educationt remain high, although well. Women are significantly less likely to have higher- they have been declining over time. For instance, in 2019 skilled and higher-paying jobs or to own a business than the median wage earnings for individuals with tertiary their male counterparts.168 Several factors limit women’s education were more than seven times higher than for ability to take advantage of economic opportunities, which those without any completed formal education. Similar accumulate throughout childhood, adolescence, and patterns are seen in returns to skills levels. Higher-skilled adulthood. These include weak enforcement of Uganda’s occupations generally offer better pay, and the premium for progressive legal and policy framework aimed at promoting these jobs remains substantial. For instance, the median gender equality, while social norms reinforce women’s earnings for high-skilled occupations were more than economic dependence on men, place care responsibilities four times higher than those for low-skilled occupations. primarily on women, tolerate high rates of gender-based Furthermore, the median earnings for low-skill occupations violence (GBV), and restrict women’s access to finance, fell by nearly half between 2011 and 2019, while earnings technology, information, and opportunities to build skills for medium- and high-skilled occupations remained and networks.169 The disadvantages faced by women relatively stable during the same period. Median earnings is persistent. Data from the 2011 and 2019 rounds of the are highest in the services sector and lowest in agriculture. UHPS show that median earnings for women declined Additionally, earnings are higher in urban areas than in significantly, while those of men remained stable. rural areas for individuals with the same level of education and skills. t The private rate of returns to education (reported here) is the increase in earnings from an additional year of education for an individual who chooses to invest in education, while the social rate of returns to education measures the increase in national income resulting from the same year of education (Borjas, 2004). 91 6 MAXIMIZING HUMAN CAPITAL UTILIZATION IN THE LABOR MARKET Structural transformation is slow, with limited productivity growth Structural transformation, which involves shifting labor Economic growth and structural transformation in from traditional agriculture to more diversified industrial Uganda have not kept pace with the needs of its rapidly and service sector activities, requires a higher level of expanding workforce. The contribution of agriculture to human capital and better utilization by the labor market. the country’s value-added has decreased significantly. At the same time, increasing human capital can accelerate However, the employment share in agriculture has the economy’s structural transformation by fostering the remained constant at around 64 percent (in 2019). The creation of better jobs and boosting productivity. In a number of people working in agriculture had actually tripled globalized environment where an economy is integrated by 2018 because of population growth, which also indicates into the global ecosystem through trade, foreign direct a decline in productivity in the sector. The latest data, from investment, and international markets, a well-educated NLFS 2021, show similar shares: individuals engaged and skilled workforce is crucial. It enables the country to in non-market-oriented agriculture, forestry, and fishing compete effectively, attract foreign investment, and engage accounted for the largest share of working individuals (50 in high-value-added industries, further accelerating percent) while the market-oriented agriculture, forestry, structural transformation. Thus, the positive reinforcement and fishing sectors accounted for 12 percent. The services between human capital and structural transformation is sector, which employs 25 percent of individuals, has shown critical for economic growth. more dynamism and a stronger increase in job numbers and is projected to surpass the productivity of industry by 2025. Therefore, in addition to increasing the productivity of the large number of poor workers in the agricultural sector, it is crucial to focus on the services sector, which will accommodate a growing and younger workforce. Figure 6.14. Employment by Sector, 2009–2025 Figure 6.15. Sectoral Productivity, 2018 Source: World Bank Job Structure Tool based on WDI data Source: World Bank Job Structure Tool based on WDI data 92 6 UGANDA HUMAN CAPITAL DEVELOPMENT AND GROWTH REVIEW Structural transformation occurs across four dimensions significant role in driving economic growth by enabling – sectoral, spatial, organizational, and occupational the production of more output with the same amount – and is closely tied to productivity. The sectoral and of labor resources (in other words, human capital) and spatial shifts allow labor to transition from low-productivity physical capital, plus residual, which is known as total activities, such as agriculture, to more productive sectors factor productivity and is also commonly referred to as in industry and services, and from rural to urban areas. The technological advancement. However, in recent years, organizational shifts focus on labor’s move into the modern, the impact of productivity on economic expansion has organized firm sector, emphasizing the importance of been steadily decreasing, largely due to slow sectoral capital deepening and human capital development. The reallocation and diminishing productivity in the service and occupational shift, in particular, signifies a move toward industry sectors (Figure 6.17). For instance, between 2000 more skilled occupations. A recent study highlights the u and 2009, shifts toward industry, along with productivity importance of both work experience and education in growth in both industry and services, contributed human capital accumulation and economic development, significantly to overall productivity gains. In contrast, stressing that good job opportunities are crucial not only between 2015 and 2018, there was little to no productivity for increasing income and escaping poverty but also for growth in these sectors. This decrease can be attributed protecting and expanding human capital.170 to the addition of workers in the labor force as a result of demographic factors without any meaningful improvement Uganda has experienced low levels of growth in in overall well-being and to low human capital outcomes. per-capita value-added and small contributions While Uganda’s regional peers all have invested more and, from productivity to its GDP growth (Figure 6.16). as a result, have higher levels of human capital, this has Decomposition analysis suggests that there has been not been the case for Uganda, which is perhaps the reason a shift in the factors driving the country’s economic why productivity has contributed less to economic growth expansion. In the past, productivity growth played a in the country in more recent years. u Capital deepening is essential for escaping low-income status and the growth of waged jobs, while the evolution of human capital through education, training, and on-the-job learning is crucial for occupational transformation. The development of human capital is vital for economic complexity and productivity growth. 93 6 MAXIMIZING HUMAN CAPITAL UTILIZATION IN THE LABOR MARKET Figure 6.16. Decomposition of Growth in per Capita Figure 6.17. Productivity Change Decomposition, Value Added, 2000–2018 2000–2018 Figure 6.18. Decomposition of Growth in per Capita Figure 6.19. Contribution of Change in Productivity, by Value Added, by Country, 2000–2018 Country and Major Sector, 2000–2018 Source: World Bank Job Structure Tool based on WDI data 94 6 UGANDA HUMAN CAPITAL DEVELOPMENT AND GROWTH REVIEW Low levels of human capital limit firm creation and growth In Uganda, most firms are micro in size, with very few percent of firms in Uganda. The productivity of household firms having 10 or more employees. The creation of good enterprises varies largely by the gender, age, and education jobs depends on the creation, growth, and productivity of of owners as well as the firms’ size and sector of activity firms. Larger firms tend to be more productive than smaller (Figure 6.20). After controlling for these characteristics, ones, pay better wages, and have greater access to market household enterprises operated by individuals with opportunities,v and therefore are better placed to provide a secondary education or above are almost twice as productive opportunities. However, most firms in Uganda productive as those with less educated owners (Figure are micro, informal, and largely in self-employment through 6.20). While most household enterprises are in the trade household-based enterprises. In 2014, Uganda was the or manufacturing sectors, businesses whose owners are third highest-ranked nation in the Global Entrepreneurship better educated are more likely to operate in the fields Monitor (GEM), with 28 percent of adults owning or co- of finance and real estate or professional administration. owning a new business. However, it also showed that the Firm growth is closely related to their owners’ educational country’s business discontinuation rates were among the attainment. More than half of all household enterprises highest in the world. operated by an owner with a secondary or above education increased their revenue over the previous three Many factors can hinder firms’ growth, with the low years, compared to 32 percent of household enterprises level of firm owners’ human capital being an important with an owner who had not completed primary education. one. The 2016 Uganda Household Budget Survey and the However, only a small portion of the informal sector has 2016 Kampala Informal Sector Survey revealed stylized the potential to grow as the majority are focused on facts about micro informal firms, which comprise over 90 subsistence livelihoods. Figure 6.20. Productivity per Worker by Household Enterprise Characteristics, 2016 Source: World Bank calculations, based on the Uganda Household Budget Survey 2016 Note: Controlling for owner gender, age, and education, the enterprise size, age, and sector. v For example, using a cross-sectional World Bank Enterprise survey dataset and pooled Ordinary Least Squares estimation (OLS), Atwine et al (2023) found that in East Africa: (1) employment growth is significantly associated with firm-specific characteristics (employment growth is positively related to firm size and innovation while it is negatively associated with the age of the firm); (2) a weak business environment characterized by electricity outages, informal payments, and poor court system undermines the firm’s ability to contribute to employment growth while strong business environment such as access to finance is positively associated with employment growth; and (3) employment growth is also positively influenced by managerial experience. However, it is important to note that the relationship between firm size and these variables may vary across industries and countries. 95 6 MAXIMIZING HUMAN CAPITAL UTILIZATION IN THE LABOR MARKET According to the 2016 Kampala Informal Sector Survey, 25 percent of firms in Uganda are engaged in exporting, there is a similar association among informal firms in compared to 46 percent in Kenya. Uganda also has the Kampala between the owner’s level of human capital highest percentage of firms located in the capital city, and the firm’s productivity and growth. Informal firms Kampala, compared to other East African Community with better-educated owners more often have a paid countries, which illustrates the large extent to which the employee and are more productive. Fewer than one-third Ugandan economy is concentrated in the capital city. of informal firms in Kampala reported having at least one paid employee. Generally, the share of informal firms with Given that human capital accumulation and managerial a paid employee increases with education and decreases skills are crucial for overall productivity,y there is still with the age of the owner. Furthermore, productivity is room for improvement in the performance of Ugandan higher in firms with better-educated owners. firms, and more opportunities exist for workers to enhance their skills on the job. Regionwide, an average Beyond the owners’ level of human capital, a lack of skills of only 36.6 percent of firms provide formal training to serves as a barrier to running a firm. The majority of Greater their employees (Kenya has the highest proportion at 34 Kampala’s informal sector work is in trading and services, percent, while Uganda lags behind at 24 percent), and and 69 percent of the city’s informal enterprises take in while managers in the region have an average of 15 years less than the lowest company income tax threshold. They of experience, Ugandan managers have an average of only mainly operate in a trader’s market, produce handicrafts, 13 years of experience (with Kenyan managers being the or are based at home and are thus exempt from annual most experienced at 18.36 years). trading licensing fees.w Business owners in Kampala often report skill shortages among prospective employees as Constraints on the business environment include being a bigger constraint than the difficulty of accessing high tax rates and reported corruption. In terms of the finance, with one of the most cited skills shortages being business environment, 66 percent of firms in the East customer service. Better-educated owners are more likely African Community reported that tax rates are a hindrance to recognize skills shortages. For instance, owners with to their operations. The majority of these firms are from a tertiary education also report experiencing shortages Kenya (33 percent), followed by Uganda (30 percent), and of managerial and communication skills. Skill shortages Tanzania (25 percent). Additionally, 75.3 percent of firms in are particularly pressing in labor-intensive activities such the region reported encountering corruption when dealing as the accommodation and food services sectors and in with public officials, with Uganda having the highest larger informal firms. proportion at 33.2 percent. Constraints on the business environment, including limited access to infrastructure Firms in Uganda are shorter-lived and less apt to export such as electricity, harm employment creation by formal than firms in neighboring countries. Using the latest small and medium-size firms. World Bank Enterprise Surveys for East African Countries, (EAC), Atwine et al found that formal firmsx in Uganda last an average age of 15 years, compared with 22 years for Kenyan firms and 11 years for Rwandan firms.171 Only w This also suggests that regulatory measures to enforce formalization are unlikely to have any effect. x Manufacturing and service sectors are the primary business sectors of interest and formal registered firms with 5 and more employees are targeted for this survey y In the mentioned study by Atwine et al (2023). pertaining to managers’ experience, the study established that an extra year of experience obtained by a firm manager leads to an increase in employment growth by 0.014- fold. These results are consistent with the findings of Jansen et al (2002) who also found a positive significant relationship between employment growth and managerial experience. 96 6 UGANDA HUMAN CAPITAL DEVELOPMENT AND GROWTH REVIEW Policy recommendations for increasing the utilization of human capital Given the analysis in this chapter, Uganda needs to increase the extent to which the labor market can absorb its growing youth population. Specifically, it needs to focus on three broad policy areas: (1) increasing human capital utilization, particularly for youths and women; (2) enhancing worker productivity; and (3) improving the entrepreneurship and business environment. Increasing human capital utilization Policymakers should take into account the age composition of the available workforce and provide tailored solutions for young people. The majority of the current labor force already consists of young people and this age group is growing rapidly, so short-term policies should be devised that prioritize this group. To support human capital accumulation beyond formal education, short-term, work-based skills development programs such as apprenticeships or other forms of on-the-job training should be created to facilitate the transition from school to work. The target populations for these programs would be young people who are outside the formal education system, those already employed in the informal sector, and those working in low-productivity jobs. Constraints to effective female employment should also be addressed. Changing social norms that prevent women from participating in the labor market may require longer-term policies. However, in the short term, programs can focus on by facilitating access to childcare, providing information on returns to education in different occupations, and offering tailored services that help women to break into more lucrative and traditionally male- dominated sectors.172 These efforts can help to shrink the gender gap and promote greater gender equality in the labor market. 97 6 MAXIMIZING HUMAN CAPITAL UTILIZATION IN THE LABOR MARKET BOX 6.2. INTERNATIONAL MIGRATION AS A CATALYST FOR HUMAN CAPITAL INVESTMENT AND UTILIZATION Improving employment services, including job search assistance and intermediation, is essential. The labor market currently suffers from a skills mismatch, with many individuals with higher levels of education working in low- skilled occupations. Therefore, there are efficiency gains to be made from reallocating skilled labor to occupations requiring higher levels of expertise. Both public and private sectors could provide intermediation and information services using digital platforms to lower costs and widen access. Alternative models such as in-person centers or community-based networks, can ensure inclusion for individuals facing connectivity challenges These services could enhance matching by extending opportunities beyond local markets to include foreign ones. It will be vital to develop a robust labor market information system, which should include: (1) the collection and compilation of reliable statistics on returns to occupations, employment, and productivity; (2) an accessible repository of this information; (3) analytical capacity and tools; and (4) clear institutional arrangements and networks governing the system. Both public investments and partnerships with private sector players will be needed to bring this to fruition. Uganda, bordered by five countries, has become a major migration hub in East Africa. Over the past decade, both immigration and emigration have grown significantly. Conflicts and economic crises in South Sudan and the Democratic Republic of Congo have led to an influx of migrants, with Uganda now hosting nearly 1.7 million people, including 1.4 million refugees.a Simultaneously, over 0.78 million Ugandans migrate abroad annually, primarily for better pay, up from 0.3 million three decades ago.b Ugandan emigration is largely driven by the existence of better job prospects abroad. The main destinations include Kenya (333,789), South Sudan (145,607), and the UK (72,256).c Recently, Saudi Arabia has also become a top destination, attracting around 150,000 Ugandan workers.d Uganda is currently negotiating bilateral labor agreements with Gulf states like the UAE, Qatar, and Oman. Most migrants to the Gulf Cooperation Council region work in domestic roles or in the construction, security, transportation, and hospitality sector.e In contrast, Ugandans moving to OECD countries tend to be highly educated and to occupy skilled jobs.f The gains from outward migration for Uganda have been significant—particularly in terms of remittance returns—and further investment in human capital could optimize the benefits of migration. In 2023, remittances into Uganda exceeded US$1.4 billion, accounting for nearly 3 percent of the country’s GDP. This made Uganda the seventh-largest remittance recipient in Sub-Saharan Africa (World Bank, 2024).g Uganda’s large youth population offers an opportunity for a “demographic arbitrage.” With the right training and skills, many young people could fill labor shortages abroad and gain a competitive edge in global markets. Migration can also stimulate domestic educational outcomes. A recent study found that for every nurse who emigrated from the Philippines, nine additional nurses were licensed.h Essentially, the prospect of migration and better wages abroad incentivized more individuals to pursue nursing education. Similarly, India’s IT industry benefited significantly from the skills that Indian professionals acquired abroad, particularly in response to U.S. demand for computer scientists in the 1990s. Many professionals returned to India to leverage their expertise and investments to help the country’s IT sector to grow.i 98 6 UGANDA HUMAN CAPITAL DEVELOPMENT AND GROWTH REVIEW The Global Skill Partnerships (GSPs) are a promising way to boost human capital through migration. First established in 2007 between Australia and the Pacific Islands, GSPs are expanding globally, including between Europe and North Africa. In this model, training occurs in the country of origin, with some graduates migrating abroad to work while others stay to enhance the local labor market.j This approach benefits the origin country by increasing the supply of skilled workers and reducing brain drain. The costs of the training are mainly covered by the destination firms that intend to employ the migrants. This model can also foster collaboration and innovation in skills training and formal migration management between Uganda and potential receiving countries, creating mutual benefits. a United Nations Department of Economic and Social Affairs, Population Division (2020). International Migrant Stock 2020; UNHCR (2023). Uganda refugee operation impact of underfunding in 2023. Reliefweb. UNHCR. b United Nations Department of Economic and Social Affairs, Population Division (2020). International Migrant Stock 2020. c United Nations Department of Economic and Social Affairs, Population Division (2020). International Migrant Stock 2020. d Business & Human Rights Resource Centre. (2023). Saudi Arabia to repatriate jailed Ugandan immigrant workers. Retrieved from https://www. business-humanrights.org/en/latest-news/saudi-arabia-to-repatriate-jailed-ugandan-immigrant-workers/ e International Labour Organization. (2021). Labour Migration in the Arab States. Retrieved from https://www.ilo.org/regions-and-countries/ilo- arab-states/areas-work/labour-migration f World Bank. (2016). Migration and Remittances Factbook 2016. Washington, D.C.: World Bank. https://openknowledge.worldbank.org/ bitstream/handle/10986/23743/9781464803192.pdf g World Bank. (2023). Uganda Data. The World Bank. Retrieved 2025, from https://data.worldbank.org/country/uganda h Paolo Abarcar & Caroline Theoharides, 2024. “Medical Worker Migration and Origin-Country Human Capital: Evidence from U.S. Visa Policy,” The Review of Economics and Statistics, MIT Press, vol. 106(1), pages 20-35, January. i Guarav dup Khanna & Nicolas Morales, 2023. “Did U.S. Immigration Policy Influence India’s IT Boom?,” Richmond Fed Economic Brief, Federal Reserve Bank of Richmond, vol. 23(42), December. j Clemens, M. 2015. “Global Skill Partnerships: A proposal for technical training in a mobile world.” IZA Journal of Labor Policy 4 (1): 1–18.; Clemens, et al. 2019. “Maximizing the Shared Benefits of Legal Migration Pathways: Lessons from Germany’s Skills Partnerships.” CGD Policy Paper 150. Center for Global Development, Washington, DC. https://www.cgdev.org/sites/default/files/maximizing-shared-benefits-legal- migration-pathways.pdf. 99 6 MAXIMIZING HUMAN CAPITAL UTILIZATION IN THE LABOR MARKET Enhancing worker productivity Continued investments in technical and higher Foundational and socioemotional skills should be taught education are needed, given the economy’s increasing in addition to technical skills to maximize the likelihood demand for advanced skills. The returns to education are of becoming employable. Many youths currently entering greater for higher levels of education. Providing effective the labor market lack these essential skills, which skills development in technical and higher education significantly limits their ability to carry out a job effectively. institutions can enhance worker productivity. Investing in Active labor market programs are increasingly focusing on the social sectors, such as education and health, can drive teaching these skills as well as fostering aspirations and not only human capital development but also the creation encouraging proactive behavior among their trainees.174 of quality jobs. Both of these sectors are poised to expand Behavioral interventions that encourage entrepreneurship, as population grows and thus will be able to absorb many help trainees to build networks, improve their management new workers. skills, and link them to markets and value chains have shown positive results.175 The technical skills being taught should be locally relevant and be in demand by the private sector. To Increasing agricultural productivity and building improve the school-to-work transition, technical skills, resilience to climate change are critical, given whether taught in general higher education or short- agriculture’s dominance in employment. Regenerative term TVET institutions, must be demand-driven, practical, agriculture, climate-smart production, and agro- and tailored to the local context. Strong private-sector forestry systems are examples of practices that not only involvement is crucial, both in choosing the skills to be support climate adaptation but also function as carbon taught and in providing on-the-job skills development. sequestration activities, making them eligible for financing The skills being taught should include for those that will through carbon credit markets. With such innovations, be in high demand in the future, including digital skills, agriculture has the potential to attract young workers, not green and blue economy expertise, and skills for the as a subsistence activity from which they wish to flee but creative economy such as communication, adaptability, as a source of new business opportunities. To capitalize and time management. For instance, the music industry on these opportunities, there is an urgent need to equip has potential for employing vulnerable youth, but this will young people with the skills and knowledge necessary require investing upfront in software and skills.173 Both for succeeding in agriculture, as well as to provide them classroom and on-the-job training could prioritize the with information and access to market opportunities. development of digital and transferrable skills, particularly Furthermore, the growing share of secondary towns offers related to sectors that show potential for growth, that are an opportunity to better integrate rural livelihoods into the labor-intensive, and do not require highly advanced levels markets and services available in urban environments. The of education. role that secondary towns play as major destination for rural migrants, as well as their function as key economic hubs near agricultural production, presents an opportunity to create better jobs in agriculture and connected value chains. This integration can benefit the rural poor by affording them access to markets and services that were previously only available in urban areas. 100 6 UGANDA HUMAN CAPITAL DEVELOPMENT AND GROWTH REVIEW Improving entrepreneurship and the business environment Entrepreneurship will continue to be a key labor market Programs should aim to support the human capital option for many workers, and it is important to support development of the owners of these small firms as well as their productivity. Offering specific training that has to improve the general business environment. Both formal proven to be helpful for micro and informal entrepreneurs, and informal firms have identified skills constraints as an and providing access to markets, finance, and services can obstacle to their own growth and employment creation. The make micro-enterprises a more attractive prospect for a human capital of firm owners and the availability of skilled young worker than the subsistence agricultural jobs that workers in the market affect the ability of firms to grow, they often leave behind. Urbanization and the growth of create more jobs, and be more productive. Alongside the secondary towns is also yielding easier access to markets need for skills training for small-scale entrepreneurs, it will and services for rural youths. Active labor market policies be important to enhance the overall business environment, (ALMPs) are needed to cater to the needs of young people for instance, by reducing corruption and increasing access in newly urbanized areas, as well as the different market to services such as utilities and finance. These are key potential and private sector activities operating there as priorities to unlock the potential of the private sector and opposed to in rural areas. Supporting organizations that for creating an enabling environment for businesses to already provide services to the informal sector (such as thrive and contribute to the country’s economic growth. “Jua-Kali types of associations”) could be fruitful as these organizations have a wide range of financial and insurance tools at their disposal as well as a network of informal sector clients, making them ideal partners in this effort. 101 6 MAXIMIZING HUMAN CAPITAL UTILIZATION IN THE LABOR MARKET Recommendations Table 6.1. Recommendations for Jobs: Short-term and Long-term Recommendation Short term actions Long term actions (5- Responsible (next 5 yrs) 10 yrs) parties 1. Increase human • Tailor jobs program toward the young labor force, including • Adress constraints MGLSD, MoES, capital utilization apprenticeships and on-the-job training, to support the to effective female the private through “jobs for transition from school to work and improve skills in low- employment, such as sector the youth and productivity or informal sector jobs broader social norms and jobs for the poor” • Improve employment services, including job search their impact on women programs assistance and intermediation, particularly through in the labor market enhanced digital platforms to lower costs and improve access • Enhance women’s employment through childcare access, information on career returns (including male-dominated fields), and tailored support for entry into higher-paying, non-traditional roles • Implement policies that foster human capital accumulation beyond formal education, with tailored solutions to enhance workforce productivity and ensure sustained labor market integration for youth • Expand job opportunities beyond local markets to address skill mismatches and enhance the benefits of outward migration through well-managed migration systems, such as the Global Skills Partnership (GSP) model. • Develop ALMPs that take into consideration the needs of youth in newly urbanized areas, as well as the different market potential and private sector activities operating here. 2. Enhance worker • Improve private-sector and industry involvement in on-the- • Continued investments MGLSD, MoES, productivity job skills development, focusing on future skills in demand in technical and higher MAAIF, the such as digital, green and blue economy expertise, and education given the private sector creative economy skills. increasing demand for • For workers skills development, also prioritize: advanced skills. ຓ Digital and transferable skills for growth sectors • Ensure technical that are labor-intensive and do not require highly skills taught in higher advanced education. education and short-term TVET institutions are ຓ Improve foundational and socioemotional skills demand-driven, practical, acquired through short term training programs for and tailored to the local youth already in the labor market lacking essential context. skills. • Increase agricultural productivity and build resilience to climate change, to support climate adaptation and generate better jobs in agriculture and connected value chains. 3. Improve • Support in facilitating programs that have demonstrated • Strengthen the business MGLSD, entrepreneurship an impact on micro and informal entrepreneurs, and has environment, through MoFPED, and business facilitated access to markets, finance, and services to for instance, reducing MGLSD, MoES, environment enable micro-enterprises to have better prospects than the corruption and improving the private subsistence agricultural jobs that youth often leave behind access to services, sector • Support organizations that already provide services to the particularly electricity informal sector (“Jua-Kali”), as they have a wide range of and access to finance, financial and insurance tools as well as a good network of are key priorities to informal sector clients. unlock the potential of • Strengthen programs that support the human capital private sector growth. development of firm owners. 102 6 UGANDA HUMAN CAPITAL DEVELOPMENT AND GROWTH REVIEW BOX 6.3: LIFECYCLE IN FOCUS: HEALTHY AGING AND PRODUCTIVE LONGEVITY IN UGANDA “As the number of Uganda’s elderly grow, their human capital can be a resource for Uganda’s transformation.” The world’s population is ageing rapidly, creating new challenges and opportunities for countries. Aging comes with reduced ability to participate in traditional jobs and job-related incomes while the cost of health and healthcare increases. There is a need to adapt social, health, and economic systems to address the needs of an ageing population. Healthy ageing and productive longevity refer to human life span lived to the best possible quality of health that helps to build and preserve human capital, especially as people age. Healthy ageing is particularly important because of increased prevalence of non-communicable diseases (NCDs), infectious disease comorbidities, and general vulnerabilities. There is growing evidence that the accumulated human capital in the elderly can be leveraged for socio- economic transformation. Productive ageing is a development approach that emphasizes the positive aspects of growing older, recognizing the important yet often ignored contributions of older people to their own lives, their communities, organizations, and society (CDC 2023; Dommaraju and Wong 2021). It is about optimizing opportunities for meaningful living for the older people in aspects such as employment, family, and community participation, and supporting healthy and productive lives among the elderly, including good nutrition and exercise, and increasing activities that help to reduce cognitive, physical, and mental health slow down and related ailments. This requires deep reforms to cultural and social norms, welfare policies and systems, structural constraints, and technological advancement. Uganda is currently a youthful population, but the population of the elderly is fast growing, presenting both challenges and opportunities. Uganda’s life expectancy increased from 44 years in the mid-1990s to 68 years by 2024 with the population of the elderly (age 60 and above) expected to reach 6.2 million by 2050. According to the State of Older Persons report, key challenges experienced by older persons in Uganda include the high rate (80 percent) of households headed by people age 60+ living under twice the international poverty line (US$ 3.20 PPP); increased prevalence of noncommunicable diseases, including mental health complications and disability; higher risk of catastrophic spending on health; more than 50 percent living alone without family or social support systems; and 26 percent looking after children, putting more pressures on their lowered capabilities. The likelihood of older persons having good health is better among those who have assets or control over assets and those who engage in physical activity compared to those that do not. Access to healthcare in the last 30 days for older persons increases for those who earn wages. Other key challenges facing the well-being of the elderly include ageism-related employment barriers, even for those able to work basic retirement age; huge unmet need for services and low capacity of the service delivery systems to address the needs of the elderly (for example, there is only one geriatrician in the country); the breakdown in traditional social support systems for the elderly; and weak coordination among the key actors, including the health sector, gender, and community development partners, and local government. The Government of Uganda has rolled out a host of interventions for older persons. Social assistance to older persons has increased under various interventions including direct Income Support/Social Assistance (SAGE); social insurance that benefits older persons including the Public Service Pension Scheme (PSPS) and the National Social Security Fund; livelihoods enhancement programs, and the Parish Development Model. However, the coverage remains low. For example, only 2.3 percent of people age 60+ receive a pension, and only 18.5 percent of 103 6 MAXIMIZING HUMAN CAPITAL UTILIZATION IN THE LABOR MARKET older persons receive a pension. Ring-fencing 10 percent of the PDM resources for the elderly is a welcome move and, if appropriately implemented, can significantly support Uganda’s growing elderly population. Recommendations to Foster Healthy Aging and Productive Longevity Fostering healthy aging and productive longevity requires deliberate changes in the social, cultural, and economic systems. Specific interventions that could be pursued include • Incorporating data on older persons’ well-being into the routine service delivery information systems and surveys; • Scaling up workforce development for the elderly, e.g. geriatricians, nurses, and social workers; • Expanding services and social protection systems for the elderly, including health and nutrition at free or reduced cost; • Establishing and enforcing standards, laws, and policies for older persons and disability-friendly infrastructure and services; and • Building awareness, as part of information and behavior change campaigns, about older people’s needs, services, ageism, and healthy behaviors. 104 7 UGANDA HUMAN CAPITAL DEVELOPMENT AND GROWTH REVIEW 7. Conclusion: Four Game Changers for Uganda’s Human Capital Development Uganda has renewed its commitment to deepening This chapter synthesizes the review’s sector-specific human development throughout NDP IV and beyond to analyses into four cross-cutting “Game Changers,” ensure that it can reap the full benefits of its demographic each of which is accompanied by recommendations for dividend. Uganda’s young and rapidly growing population Uganda’s human capital program. The Game Changers gives it a historic opportunity to follow the lead of countries are based on findings and lessons learned across all the that have moved from poverty to high-income status sectors discussed in this report. The recommendations within a short time by investing in human capital during are divided into short-term and long-term actions. They their demographic dividend window. However, Uganda is are aligned with the Government of Uganda’s strategies facing considerable challenges, the most pressing being and policies, including Vision 2040, the NDP IV Strategic the need to rapidly scale up investments for the delivery of Direction report (approved by Cabinet on March 26, 2024), quality human capital services to meet the rising demand and the Parish Development Model (PDM), and they of the growing population, while ensuring that enough highlight strategies that have been proven to be successful decent jobs are available for young people. in similar contexts. Game Changer #1. Prioritize the implementation of accelerator interventions Gaps in the implementation of initiatives and the Government of Uganda, the private sector, and civil interventions suggest a need to focus more selectively society, on those that are most likely to be successfully on a set of accelerator interventions. Together, NDP implemented in the short term. IV, PIAPs, and this review discuss hundreds of specific interventions to improve human capital. However, Table 7.1 proposes an initial set of accelerator experience has shown that many of these interventions interventions. The prioritization is based on their close are of low efficacy and or have failed to be implemented alignment with core Government of Uganda strategies successfully and fully. This suggests a need to concentrate and commitments and on evidence from both Uganda investments on interventions with the greatest potential to and other countries on their effectiveness and cost- rapidly accelerate progress in human capital development. effectiveness, as summarized in the sector chapters of this The NDP IV Strategic Direction report underscores lessons report. Most are already being implemented at some level, from previous plans, emphasizing the importance of but effort and commitment will be required to scale them prioritizing and sequencing interventions. It also highlights up and ensure that they deliver quality services. the need to align financing with the requisite capacity for implementation, monitoring, and accountability for results. Choosing certain accelerator interventions does not imply a need to abandon other initiatives but simply to concentrate the attention of all stakeholders, including 105 7 CONCLUSION: FOUR GAME CHANGERS FOR UGANDA’S HUMAN CAPITAL DEVELOPMENT Table 7.1. Proposed initial accelerator interventions and associated alignments and bottlenecks Intervention Alignments Key bottlenecks to address One year of quality pre-primary education • National Integrated • Officially provided only through the private sector, which in government schools ECD Action Plan excludes poor families. • ECCE Policy • Improvised classes in government schools lack trained • NDP III Project Idea teachers and relevant materials. Early grade reading • NDP III • Not yet fully scaled up nationally. • Literacy goals in • Infrequent refresher training and material replenishment. Vision 2040 and • Limited in-class support for and monitoring of teachers. Dar es Salaam Declaration Catch-up classes for students who have • Literacy goals in Fragmented and small-scale intervention. fallen behind academically Vision 2040 and • Reliance on financial and technical resources from Dar es Salaam development partner. Declaration • Disjointed teacher professional development interventions. Health promotion and disease prevention • NDP IV • Inadequate supply and uptake of high impact health through primary health care, community • SDG 3 promotion and disease prevention interventions amid a structures, schools, and workplaces high burden of disease, growing need for health care, and Integrated management of maternal and • Universal Health sub optimal readiness of health facilities to provide quality childhood and adolescent complications. Coverage Agenda services. Provision of a package of essential non-communicable disease (PEN) interventions. Managed scale-up of secondary and • NDP IV • Difficulty of accessing specialized care if overly centralized. specialized healthcare • SDG 3 Need to be decentralized to regional centers for each of the major causes of the country’s burden of disease, • Universal Health especially cardiovascular conditions and cancer. Coverage Agenda Nutrition supplementation and production • NDP IV • Persistent poor nutrition outcomes such as stunting and of nutrient-rich crops. • SDG 3 micronutrient deficiencies. Low delivery and uptake of other interventions due to staffing shortages and limited • Universal Health availability of appropriate technology. Coverage Agenda Scale-up of access to water supply and • NDP IV, SDGs • Limited financing to meet service delivery targets sanitation services at household, public, exacerbated by high population growth, use of non- and institutional (health facilities and revenue water, and aging infrastructure and capacity schools) levels limitations within the water service providers. • Fragmented planning, use, and sharing of data, requiring enhanced use of the WEMIS and coordination with related MIS. • Low impact of and lack of accountability for the limited public resources available for improving sanitation and hygiene at the local government level, including primary health care conditional grants (PHCCG), school facilities grants (SFG), and district sanitation and health conditional grants (DSHCG). Active labor market Programs (ALMP) • Fragmented with limited reach and scope. Need to such as intermediation and on the consolidate and to adopt best practices and evidence- job-training and apprenticeships, based programs and policies aimed at increasing plus packages of support for micro- productivity rather than formalization. entrepreneurs Scale-up of social protection programs • NDP IV • High levels of multidimensional poverty and very low coverage of safety net programs. Note: DSHCG = District Sanitation and Health Conditional Grant; ECCE = Early Childhood Care and Education Policy; ECD = early childhood education; EMIS = education management information systems; NDP = National Development Plan; PEN = Package of Essential Non-communicable Disease Interventions; PHCCG = Primary Health Care Conditional Grants; SDG = Sustainable Development Goal; SFG = School Facilities Grant; UNAP = Uganda Nutrition Action Plan; WEMIS =water and environment management information system. 106 7 UGANDA HUMAN CAPITAL DEVELOPMENT AND GROWTH REVIEW Impact evaluations should be carried out on the high average per country in the database is only 12.5.176 Despite impact interventions to ensure that ongoing investments Uganda’s strong track record of knowledge production, are focused on the best buys. Well-designed and the sector chapters highlighted that high impact human contextualized impact evaluations can provide rigorous capital interventions are not often deliberately tracked evidence on the effects of interventions on such indicators and scaled up through the public system. This disconnect as household incomes, learning levels, employment rates, can be addressed by including reviews and consultations and health outcomes. Uganda produces a significant with both local and international experts into the project volume of high-quality research in various areas of development process and by researchers, the private development including impact evaluations. An international sector, and policymakers collaborating to ensure that the database of randomized controlled trials (RCTs) undertaken research is fit for context. Finally, while political negotiation by highly vetted researchers (both local and international can never be removed entirely from policymaking, these partners) contains 53 evaluations from Uganda, while the processes can foster a more neutral and empirical process. Game Changer #1. Recommendations Short-term actions Long-term actions • Commit to a set of accelerator interventions, focus more investments on them • Review the performance of the accelerator and implementation enablers. interventions and, where necessary, revise the mix in NDP V and beyond. • Strengthen processes for ensuring research is designed appropriately for the context and for using evidence through the Human Capital Secretariat and Public Investment Management System, including developing a platform to make research more readily available to policymakers when it is needed. 107 7 CONCLUSION: FOUR GAME CHANGERS FOR UGANDA’S HUMAN CAPITAL DEVELOPMENT Game Changer #2. Gradually increase expenditures on human capital to ensure equitable access to quality services Increasing investment in Uganda’s human capital is By most international benchmarks, public financing pro-growth. According to the World Bank’s 2023 Public for human capital in Uganda is low. Box 7.1 presents a Expenditure Review (PER) for Uganda, continuing selection of indicators for the level of financing in human the current fiscal path that emphasizes infrastructure capital sectors compared to regional and international investments will yield lower growth rates without targets. Uganda significantly underinvests in human significantly increasing investments in human capital. capital by approximately one-third to one-half of most The PER estimates that maintaining aggregate levels of benchmarks. A 2021 demographic study reaches broadly spending but increasing human capital spending by 2 similar conclusions.178 Factoring in population growth and percentage points will increase real GDP growth from 5 to the costs of improving quality service delivery, Uganda’s 7 percent per annum by the late 2020s.177 overall human capital spending should be increased over time to approximately double of its current share of the national economy by 2040. 108 7 UGANDA HUMAN CAPITAL DEVELOPMENT AND GROWTH REVIEW BOX 7.1. HUMAN CAPITAL SPENDING: HOW MUCH IS ENOUGH? One way to assess the adequacy of human capital spending is against international benchmarks. For comparability, expenditures are normally converted into a share of the overall economy (percentage of GDP) or of total government expenditure. A country’s spending level can then be compared to those of its peer countries or to relevant benchmarks such as UNESCO’s Education 2030 Framework for Action estimate of the share of government spending on education that a typical country would need to achieve Sustainable Development Goal (SDG) 4 on education. The table below summarizes key human capital finance indicators for Uganda compared to such benchmarks. Table A: Human Capital Expenditure: Uganda vs. Benchmarks Indicator Uganda Benchmarks Public expenditure on education as percentage of total government expenditure 11.3% 15–20%a/ Expenditure per primary student as share of GDP per capita 3% 9%b/ Current health expenditure (CHE) per capita (US dollars) US$ 35.43 US$ 86c/ General government health expenditure from domestic sources (GGHE-D) as 3.9% 15.0%d/ percentage of total government expenditure Public spending on social assistance programs (% of GDP) (latest year available 0.14% 1.1% (LMICs) and 2017-18) 0.8% (LICs) Notes: (a) Education 2030 Framework for Action; (b) Regional peer average; (c) Benchmark from McIntyre et al (2017); (d) Abuja target for government spending – both domestic and on-budget external (WHO). A second way to assess the adequacy of spending is to forecast expenditure needs based on Uganda’s demographics and the cost of inputs for quality service provision. According to Tackling the Demographic Challenge in Uganda, substantial increases in health and education spending will be needed simply to prevent current levels of coverage and quality being eroded as the population expands (the “business as usual” scenario). An even greater fiscal effort would be required to achieve an “improved equilibrium” scenario. In education, this is defined as funding universal primary enrollment and 70 percent secondary enrollment as well as meeting basic quality targets such as student-teacher ratios and textbooks and classroom ratios. In health, the improved equilibrium would increase Uganda’s score on the WHO’s Universal Health Coverage Index to 90 percent. Under middle-range assumptions about population growth, Uganda will need to increase education expenditures to about 5 percent of GDP, or 20 percent of the government budget (from its current levels of 2.7 percent of GDP and 11.3 percent of budget) to achieve the “improved equilibrium” scenario in education by 2040. An increase in general government expenditure on health from the current level of about 2 percent of GDP to 3.4 percent would be required to attain 90 percent on the Universal Health Coverage Index. According to the Government’s Poverty Status Report 2021, Uganda’s high multidimensional poverty rate of 41.2 percent shows that it is unlikely to achieve SDG 1, which advocates for ending poverty in all its forms and everywhere. Social protection plays a key role in tackling multidimensional poverty by reducing income volatility during shocks, protecting people across the life cycle, reducing inequalities, and fostering opportunities for those at the bottom of the socioeconomic pyramid. However, Uganda’s expenditures on social protection are very low estimated at about less than 2 percent of GDP. Sources: World Bank. 2020. Tackling the demographic challenge in Uganda. Poverty and Equity Practice, Africa Region. ©World Bank.; Uganda Bureau of Statistics (UBOS). 2022. Multi-dimensional Poverty Index. 109 7 CONCLUSION: FOUR GAME CHANGERS FOR UGANDA’S HUMAN CAPITAL DEVELOPMENT Low resource provision to health facilities results survive shocks to their income. However, in 2020/21 the in suboptimal performance. The growing burden of coverage of safety net programs in Uganda was only 3 disease, coupled with a high population growth rate and percent of the population, which is low given the country’s proliferation of local government administrative units, has high rates of poverty and vulnerability to poverty in the led to an increased focus on building new health facilities, country and high level of inequality.181 The high financial which has left existing facilities operating at low capacity. burden put on households puts poor Ugandans’ human This has spread the resource envelope thin, leading to capital at greater risk. Households with high out-of-pocket inadequate inputs and a poor mix of inputs. Nationally, 59 health expenditures face a greater risk than others of falling percent of health facilities have been assessed as being into poverty and/or having to forgo care. In the education ready to provide services, with lower-level facilities having sector, most survey respondents who reported having left the weakest performance. 179 In education, most recent primary or secondary education cited “no funding” or “too resource increases to the sector have been allocated for expensive” as the reason. establishing new tertiary education institutions in those regions that have none, even though per-student financing These outcomes – foregoing essential care, dropping out for basic education has stagnated at a low level. In the of school, or being pushed into poverty—can permanently water and environment sector, financing has increased damage households’ ability to accumulate human capital. by 54 percent over the past five years, but these budget Despite the low coverage of social protection programs in provisions are still only 50 percent of the investment Uganda, some, such as NUSAF 3, have demonstrated their requirements estimated in NDP III. 180 More resources effectiveness in protecting households from shocks. They for human capital overall would help to reduce these make it possible for households to avoid adopting negative undesirable trade-offs between expanding the number of coping strategies such as reducing food intake, selling facilities and ensuring quality at existing facilities. critical assets, or taking their children out of school in order to survive, while also allowing them to save and invest in Increasing expenditures versus efficiency is sometimes alternative livelihoods beyond subsistence. Because of a false choice as adequacy and efficiency are NUSAF 3 payments, the Government of Uganda saved 51 complementary. While efforts to get greater value for percent of its emergency response fund of UGX 19 billion money (Game Changer #3) and increasing expenditures for the fiscal year ending 2016/17, as households’ adaptive (Game Changer #2) appear to be alternative strategies, they capacity was strengthened. work hand in hand. Spending too much can be inefficient but so can spending too little as many examples in the Uganda’s active labor market programs (ALMPs) could sectoral chapters have shown. In education, low spending be strengthened to increase the coverage of poor and on ECE contributes to repetition and dropout in primary vulnerable youths and those in the informal sector, both education, to the extent that investments in ECE would of whom are overrepresented in the workforce. Over 1 eventually pay for themselves. In health, underinvestment million young people will enter the labor market each year in primary and preventive healthcare leads patients to over the next 40 years, which represents both an urgent develop complications and rely too much on higher levels challenge and an untapped opportunity for Uganda’s of care, which are more costly to provide. economy and society. To avoid the underutilization of this vast human capital, it will be crucial to prioritize measures The limited coverage of social protection is a particularly to increase their productive capacity and facilitate clear example of low expenditures leading to inefficient the development of the private sector to expand labor outcomes. Social protection interventions throughout the demand. In addition to strengthening general education lifecycle complement other human capital interventions by and training, short-term upskilling and work-based skilling enhancing food and nutrition security, stimulating demand programs such as apprenticeships are needed, and they for health and education services, and preventing the need can be implemented as on-the-job training for those young for households to adopt adverse coping mechanisms to people who are already employed. There is evidence that 110 7 UGANDA HUMAN CAPITAL DEVELOPMENT AND GROWTH REVIEW informal sector workers and household enterprise owners Last, significant skills mismatches also exist in the labor lack the solid cognitive and socioemotional foundational market, which means that there is a need to improve skills that are needed to enable them to adapt to the intermediation and the dissemination of information. country’s changing skills demand. Most youths engaged Investing in labor market intermediation can significantly in micro-enterprises could benefit from tailored packages enhance market efficiency by matching workers’ skills with of services to improve their business practices, to increase appropriate job opportunities. This process helps reduce their managerial and other business-relevant skills, to unemployment and underemployment by ensuring that enable them to expand into new markets, and to access workers are placed in roles that best utilize their skills, to networks and affordable finance opportunities. Those leading to increased productivity and economic growth. young people who are not entrepreneurially inclined will Additionally, it can help employers find the right talent require a different kind of support including help with more quickly, reducing hiring costs and improving overall skills development via apprenticeships, information about workforce quality. With relatively modest investments, available jobs, and support with job matching. intermediation services can yield swift benefits in the current labor market by reallocating skilled labor to positions requiring higher skill levels. Both public and private sector providers can offer intermediation and information services at a low cost, while digital platforms can facilitate these processes efficiently. Game Changer #2. Recommendations Short-term actions Long-term actions • Protect human capital expenditures from cuts in Uganda’s current challenging fiscal • Move as rapidly as possible toward environment and prioritize basic social services and social protection investments doubling the share of human capital over further increases in higher levels of service (such as tertiary education, curative expenditures in the economy. and specialized healthcare). • Gradually increase the coverage of • Pilot and scale up innovative financing mechanisms including human capital sensitive social protection for the most vulnerable taxation such as health taxes, the mobilization of private capital for utilities, targeted members of society. PPPs, and climate financing. • Build an effective labor market • Provide incentives to parents, communities, and organizations to facilitate human information system by investing in and capital development in their localities. partnering with private sector players. • Increase expenditures on the human capital program by 50 percent as envisioned in • Build a critical mass of service providers NDP IV. to ensure that households can easily • Prioritize reducing out-of-pocket expenditures for basic services (such as free access sanitation services, products, universal primary education) and expenditures that increase efficiency (for example, and financing. on early childhood education). • Implement a functional shock-responsive social protection system with effective and transparent targeting to the poor as well as to vulnerable households in times of shock. • Consider adopting active labor market programs (ALMPs) that have been shown to be effective at reaching different target groups. • Develop and gradually roll out a national water sector investment program, with a coordinated financing framework for service providers and consumers. 111 7 CONCLUSION: FOUR GAME CHANGERS FOR UGANDA’S HUMAN CAPITAL DEVELOPMENT Game Changer #3 Increase the efficiency of the human capital program through data, incentives, community mobilization, and enforcement of regulations and standards Even at its current low levels of spending on human Absenteeism, presenteeism, and poor performance are capital, Uganda could be achieving better human serious challenges. On a given school day in Uganda, capital outcomes because of underlying inefficiencies. approximately 1 in 4 teachers are absent, and an additional This game changer has four elements that are all aimed 1 of the 4 is present but not teaching.183 Absenteeism at tackling and overcoming those inefficiency issues: among health workers is estimated at 46 percent, and (1) upgrading and integrating data systems; (2) offering although part of that is authorized it adversely affects performance incentives to local governments and service service delivery units. Absenteeism contributes to poor providers to increase their efficiency and improve their service delivery and greater burdens on the staff who are outcomes; (3) mobilizing communities for development; present (e.g., larger class sizes and increased workload). and (4) enforcing service standards and rules. Furthermore, high rates of absence are seen as a social norm, and there are few if any consequences for Even though expenditures on human capital are quite absenteeism. Survey data also point to gaps in knowledge low (see Game Changer #2), Uganda could achieve and training. Teacher tests conducted by the Uganda better human capital outcomes at the current levels of National Examinations Board (UNEB) in 2018 show that spending. Uganda’s education system produces fewer most teachers did not meet the expected proficiency level learning adjusted years of schooling (LAYS) than would in numeracy, and about half did not meet the proficiency be expected from its level of expenditure. Uganda’s health level in oral vocabulary. According to another study, only 37 access and quality indicators are near the peer-country percent of health workers in Uganda were able to diagnose average relative to current health expenditure (CHE) per and treat maternal, neonatal, and child health (MNCH) capita, but improvements here are also possible. In the conditions accurately. Box 7-2 summarizes principles from water sector, addressing some contributory factors to poor international evidence to help improve the performance of performance—including high investment costs, reliance the human capital workforce. on non-revenue water (28% to 35%), and insufficient functionality rates of rural water-supply facilities (averaging 85%)—will be important to improve efficiency. The performance of the human capital workforce is the primary driver of efficiency issues. The most important ingredient for successful human capital development is a well-prepared and accountable workforce of teachers and school leaders; health workers and managers; probation, social and welfare officers; and water utility workers; among others. Wages account for 62 percent of public expenditures in education and about 37 percent in health.182 Therefore, maximizing the motivation and productivity of the workforce is key to achieving a better return on Uganda’s investment. 112 7 UGANDA HUMAN CAPITAL DEVELOPMENT AND GROWTH REVIEW BOX 7.2. EFFECTIVE HUMAN RESOURCE MANAGEMENT Uganda has the potential to transform its human capital workforce to significantly accelerate progress towards achieving the country’s growth aspirations. The Tenfold Growth Strategy lists several priority areas (agro-industrialization, tourism, mineral development, and science, innovation, and technology) with the greatest potential to spur economic growth if the workforce can acquire the relevant skills. This will require changing current recruitment, compensation, training, support, and accountability. Below are five key principles, derived from local and international evidence, that could enable this transformation of the workforce to happen. 1. Make human capital workforce professions more attractive by raising their status, increasing their compensation, and improving their career progression paths. Attracting the best candidates into these fields will, over the long run, require increases in compensation aligned with results. For example, salaries for teachers with a university degree are 37 to 42 percent lower than the national average for other professionals (World Bank, 2023). While the government has increased some salaries, most notably for science teachers and water and sanitation sector professionals, international evidence suggests that raising salaries in the absence of other reforms to increase accountability does not improve service delivery outcomes (de Ree et al, 2018). 2. Ensure that pre-service training includes a strong component of practice-based learning to ensure a smooth transition into the workplace. Pre-service training for teachers and health workers has historically been overly theoretical, with insufficient time, resources, and attention given to practice-based training methods such as practicums and internships, which evidence has shown is how adults learn best. 3. Promote meritocratic selection and promotions. This can help to align hiring, rewards, and sanctions with performance, a connection which is too often neglected. 4. Provide workers with ongoing support and motivation in the form of quality, practice-based in-service training and effective management to foster continuous improvement. Workers in the human capital sectors can benefit greatly from continuous support, feedback, and motivation, which is essential for recognizing and nurturing effective leaders within the system. 5. Use technology to complement the human factor, focusing on effectiveness and accountability. Uganda has made significant progress on which to build, including the introduction of the Teacher Effectiveness and Learner Achievement (TELA) system to curb absenteeism and to digitalize health care processes. Source: Adapted from Béteille and Evans (2019). Upgrading data systems Investing in high-quality, integrated, and harmonized data human capital development sectors of education, health, systems has great potential to increase efficiency and social protection, and water and sanitation. However, the improve performance management. Such data systems quality of these data is a challenge, and there is still a need can help to ensure the quality and efficiency of service to integrate all of these different systems to ensure that the delivery and provide decision-makers with evidence of data can be used in both sector-based and multi-sectoral needs and of the effectiveness of policies. Uganda has decision-making. Reliable real-time data systems can already invested in sound and tested data systems in the make service delivery more efficient by: Uganda Bureau of Statistics (UBoS) as well as in the key 113 7 CONCLUSION: FOUR GAME CHANGERS FOR UGANDA’S HUMAN CAPITAL DEVELOPMENT • Providing actionable data to inform the planning and characteristics of all Ugandan households and would delivery of services and to combat inefficiencies like be an invaluable tool that would enable policymakers to absenteeism; identify and measure needs at the local, regional, and • Eliminating “ghost” workers, facilities, and national levels. The government would be able to direct beneficiaries; and resources precisely to the places where they would have • Gathering information on the effectiveness of the highest returns, where there were the highest levels of programs (such as the labor-market outcomes of skills poverty and vulnerability, and where people had indicated program beneficiaries) and services to gauge whether a willingness and ability to pay for a given level of service. changes need to be made to a program’s design. The forthcoming roll-out of the PDM is also expected to facilitate the collection of real-time information on There is an urgent need for Uganda to create a national interventions at the parish level, though the development social registry to facilitate all aspects of human of the Parish Management Information System (MIS) is capital development. This cross-sectoral, country-wide currently ongoing. registry would contain data on the key socioeconomic Offering incentives and leveraging experiences of positive deviants Results-based financing has shown promise in increasing and achieving other performance targets. A performance- the efficiency of human capital investments. Results- based component has been added to local government based financing (RBF) is a financing model that rewards grants in the education sector based on data on outcomes people or organizations for achieving specific outcomes. It from the School Performance Assessment. In line with improves results by and increases efficiency by: international evidence, including the transformational • Focusing the attention of recipients on producing the experience of the Brazilian state of Ceara, these incentives best possible outcomes; should be designed to give the biggest rewards to those • Increasing transparency and accountability and local governments that increase attendance rates and improving performance management; and improve other performance indicators the most from the • Allowing for innovation and flexibility on the part of lowest starting point. recipient facilities or providers. The Government of Uganda reports continue to Uganda has implemented RBF nationwide in the health indicate positive deviance (the idea that some people sector and other sectors with notable success; however, are better able to solve problems than others with the for RBF interventions to be effective, they need to be same resources or knowledge) across entities at both accompanied by the right incentive and oversight national and subnational levels. This phenomenon has mechanisms. This has increased the quantity and been manifested by local governments, health facilities improved the quality of services such as antenatal visits, and schools pointing to differences in the various enablers family planning services, and postnatal care, particularly and constraints across these entities. However, beyond under the Uganda Reproductive Maternal and Child identifying the top performer through annual sectoral Health Services Improvement Project (URMCHIP). This performance reports, there are not robust programs to momentum could be sustained by incorporating RBF systematically document and invest in scaling up good into the grants system for public health centers. RBF has practices. also been successfully included in Uganda’s Water for the Poor program, which was implemented under the World Targeted support from the central government can Bank’s Global Partnership for Output-Based Aid (GPOBA). improve the performance of lagging local governments. In this program, payments to contractors and operators Under the Uganda Intergovernmental Fiscal Transfers were conditional upon their producing certain outputs UgIFT program, the government has developed a process 114 7 UGANDA HUMAN CAPITAL DEVELOPMENT AND GROWTH REVIEW for helping the worst performing local governments governments that were required to develop performance to improve and to undertake annual performance improvement plans in 2021, all but one improved their assessments under the stewardship of the together with assessment scores, and the majority improved their the Office of the Prime Minister and the Ministry of Local ranking (even as aggregate scores rose) in 2022. In the Government (MoLG). The MoLG coordinates with other WASH sector, since 2000, dedicated regional decentralized ministries and with these local governments to jointly units have supported local governments to implement an develop performance improvement plans. These plans average of 25 water supply systems per year in in small are then implemented by the local governments, while towns. receiving occasional follow-up visits from representatives of the central ministry. Of the 26 poorly performing local Mobilize communities Communities play a key role in ensuring the quality of enhance the participation of local communities in planning services. Rigorous evaluations from Uganda and the and to support the development of local action plans to rest of the region have shown that, when communities reduce the vulnerabilities of women, youths, and persons are given information on the performance of service with disabilities. providers and are supported to develop action plans, they can improve services by demanding change. In Households can complement government investments Uganda, providing communities with information and by monitoring and ensuring the quality of service support through representative bodies like health unit delivery and by investing in their own human capital. management committees improved health outcomes, Household expenditure data for Uganda show that every including infant weight-for-age and under-5 mortality doubling of household income results in an increase of rates. Under the Uganda Multisectoral Food Security approximately 25 percent in household expenditures on and Nutrition Project led by the Ministry of Agriculture the education and health of its members. However, given a few years ago, areas where households engaged that multidimensional poverty remains high and social more with community health workers, the production of protection is non-existent in disadvantaged areas of the micronutrient-rich crops increased through better use of country, in the short term the most valuable household inputs. Under the Northern Uganda Social Action Fund contributions are likely to be non-financial. These 3 (NUSAF 3), community institutions played a key role in contributions can include parents becoming more engaged selecting beneficiaries, prioritizing community needs, and in their children’s early childhood development by providing helping to select appropriate labor-intensive public works them with stimulating interactions in the home, parents projects. In Kenya, providing school committees with encouraging their children to stay in school, household training on how to monitor teacher attendance resulted in members adopting healthy eating habits, exercising, and improved learning outcomes.184 making other healthy life choices, and behaving more safely in and around vehicles to reduce morbidity, disability, In Uganda, community-based maintenance systems and mortality from accidents. As discussed in the earlier have been set up for maintaining rural water facilities. chapters, international evidence has shown that social These systems, which operate on participatory principles, protection programs and communications and information have maintained the functionality of rural water services at interventions can change many of these behaviors at low over 80 percent in the last five years. The community-led cost, even with budget constraints. total sanitation (CLTS) approach, which has been adopted by different water and health sector actors since 2007, has increased household sanitation coverage as a result of citizen action. Similarly, the roll-out of the PDM is likely to 115 7 CONCLUSION: FOUR GAME CHANGERS FOR UGANDA’S HUMAN CAPITAL DEVELOPMENT Enforce standards The effectiveness of these measures can be significantly to standards has been blamed for the rising case of impacted by how well the country’s rules and standards traffic accident and pollution of air, food and water. It is are enforced. Weak enforcement has affected human therefore critical to ensure the enforcement of standards capital development is several ways. These include failure and regulations by reviewing and updating the existing to maintain standards for basic infrastructure, inputs, incentive mechanisms across sectors and at both the and processes thereby diluting results in health facilities, national and subnational levels. schools, and water sources. Further, lack of adherence Game Changer #3. Recommendations Short-term actions Long-term actions • Scale up the digitalization of human capital service delivery, demand generation, and • Combine increases in the compensation accountability interventions. Examples include EMIS, TELA, DHIS-2, iHRIS, eLMIS, of the human capital workforce with WEMIS, and a new national social registry. measures to and impose consequences for absenteeism and poor performance. • Introduce a requirement that at least 50 percent of training for the human capital workforce should consist of hands-on practice (including internships, practicums, • Based on experiences at the district level, and other types of on-the-job learning) with ongoing feedback. consider introducing performance-based allocations to the parish level under the • Deepen performance-based financing for local governments in education, health, PDM. and water based on international best practices. • Continue investing in digital • Mobilize communities and advance mindset and behavior change campaigns development, strengthening of to foster early childhood stimulation and positive parenting, school retention, performance incentives, and community community-led sanitation, good nutrition, and other healthy choices, especially for mobilization of development. poor and vulnerable households. • Ensure that community involvement under the PDM and service delivery programs incorporates training, actionable information, and action plans. • Enforce performance standards across all service delivery programs including schools, health facilities, water supply facilities, and local governments. Note: DHIS-2 = District Health Information System; eLMIS = Electronic Logistics Management Information System; EMIS = Education Management Information System; iHRIS = Uganda Integrated Human Resource Information System; PDM = Parish Development Model; TELA = Teacher Effectives and Learner Achievement System; WEMIS = Water and Environment Management Information System. 116 7 UGANDA HUMAN CAPITAL DEVELOPMENT AND GROWTH REVIEW Game Changer #4 Improve the enabling environment for cross-sectoral and intergovernmental collaboration Uganda has established an architecture for cross- A key milestone, achieved in January 2024, was the sectoral human capital governance and has decentralized establishment of a Human Capital Secretariat, housed in the delivery of basic social services, but neither initiative the MoES, which is the lead ministry for the Human Capital is functioning optimally. Chapter 1 gave a brief overview Program. Guided by priorities set by the human capital of how Uganda has shifting toward program-based (or Inter-ministerial Committee, the secretariat is expected multisectoral) budgeting to strengthen the links between to analyze the program’s policy and project requirements, the budget and national development objectives, with identify any key implementation bottlenecks that need to human capital development as one of its core programs. be resolved, and ensure that interventions are guided by It also discussed the implementation of the government’s evidence (see Game Changer #1). There have also been decentralization policy under which policy, political, some challenges in the implementing decentralization, fiscal, and administrative functions are delegated to local including the increased number of administrative units and governments who execute those functions and deliver the inadequate resources and capacity possessed by local basic services. At the central government level, structures governments to fulfill their mandate. The Intergovernmental for multisectoral collaboration exist but are still nascent, Fiscal Transfers Reform Program has recently helped to while local governments are not yet routinely using the improve fiscal decentralization enabling increase allocation program-based approach. Government bodies report of resources to local governments although much more that there is little basic coordination on service delivery at needs to be done to make the policy effective. the local level, such as ensuring that schools and health facilities are located in the vicinity of professional water and The introduction of the Parish Development Model (PDM) energy suppliers instead of having to resort to taking the provides an opportunity to create real multisectoral lower-quality and less cost-effective self-supply approach. cooperation on key development challenges at the community level. This will require solutions to be found to The Ministry of Water and Environment (MoWE), Ministry the challenges of decentralizing service delivery, including of Health (MoH), and Ministry of Education and Sports the low capacity of local institutions and the lack of strong (MoES) signed a memorandum of understanding (MOU) checks and balances to ensure accountability. The PDM in 2002 related to the implementation of sanitation and has several pillars, and the social services pillar (Pillar 4) hygiene in health and education facilities. The MOU can benefit from initiatives under Pillar 5 (mindset change assigns sectoral responsibilities as follows: the MoWE for and cross-cutting issues - gender, environment, and planning investments in sewerage services and public disability), Pillar 6 (the development of a parish-based facilities in towns and rural growth centers, the MoH management information system), and Pillar 7 (governance for household hygiene and sanitation, and the MoES and administration) to improve service delivery. for school latrine construction and hygiene education. The implementation of this MOU has yielded some Cross-sectoral and intergovernmental collaboration improvements but has been constrained by a lack of is vital to achieve a resilient and shock-responsive resources and overlapping interventions. This experience service delivery system that is capable of safeguarding points to need for a systematic way to operationalize cross- households. Uganda is experiencing more frequent and sectoral interventions, including how to allocate, use, and more intense climatic and health-related shocks that monitor resources, especially at the local government level. often cause major disruption in lives, service delivery, and livelihoods and economic activity. The country has had many successful experiences of delivering shock-responsive 117 7 CONCLUSION: FOUR GAME CHANGERS FOR UGANDA’S HUMAN CAPITAL DEVELOPMENT services on which to build, including effective responses to (see Game Changer #1) would make it possible identify pandemics (COVID-19 and Ebola) and pioneering disaster- the areas that are most vulnerable to particular shocks and risk financing instruments that provided households with therefore require timely and regular monitoring to ensure timely support to cope with droughts in Karamoja. The that responses are disaster-ready. Uganda has several creation of a national social registry that can be linked to disaster response funds, but they are fragmented and other information systems in the human capital sectors ineffective and need to be rationalized and streamlined. Many of the human capital challenges identified in this review are inherently cross-sectoral in nature and will require cross-sectoral interventions to be overcome. These challenges include the need to: • Provide comprehensive early childhood development that includes security and safety, adequate nutrition, good health, responsive caregiving, and early learning; • Prevent adolescent pregnancy and provide services to adolescent mothers, including those aimed at re- integrating them into school and/or skills programs; • Train young people in labor-market-relevant skills, especially digital skills, and integrate them into the labor market and entrepreneurship, while also increasing the productivity of agricultural workers; • Ensure a better match between skills production and the economy’s needs and increase the production of advanced specialties such as surgery; • Build resilience to climate change and natural disaster into the social service delivery infrastructure and design buildings to reduce the negative effects of heat on health and learning; and • Prevent human capital losses from environmental and other hazards, including pollution and traffic injuries and fatalities. Game Changer #4. Recommendations Short-term actions Long-term actions • Strengthen the human capital coordination structures at national and local levels. • Undertake a longitudinal study to • Establish integrated human capital frameworks for the setting and measurement of performance measure the adoption standards, for evidence generation, and for the monitoring and evaluation of the human capital of social services and program. other services, lessons, • Include cross-sectoral indicators in PIAPs and for leaders across the human capital sub programs. and outcomes from the PDM. • Develop cross-sectoral projects under NDP IV including the priority areas such as nutrition, early childhood development, teenage pregnancy, and control of non-communicable diseases. • Reactivate, update, and implement the MOU on sanitation between the MoWE, MoH, and MoES. • Build on the progress under the Intergovernmental Fiscal Transfers Reform to ensure that fiscal transfers to local governments are sufficient to enable them to fulfill their mandates. • Leverage the PDM structures, other social structures, and technology to promote learning, provide health, nutrition, and hygiene information, maintain water supply systems, conduct financial and economic activities, and engage in agricultural production. • Strengthen human capital governance at the subcounty and district/city levels by establishing human capital working groups as sub-committees of technical planning committees and by enhancing community engagement, transparency, and accountability. Note: MoES = Ministry of Education and Sports. MoH = Ministry of Health. MOU = memorandum of understanding. MoWE = Ministry of Water and Environment. NDP = National Development Plan. PIAPs = Program Implementation Action Plans. 118 Appendix UGANDA HUMAN CAPITAL DEVELOPMENT AND GROWTH REVIEW Appendix A. Human Capital Index Methodology The three components of the Human Capital Index School= e∅(Expected Years of School × (Harmonized Test Scores)/625 -14) (HCI)—survival, school, and health—are combined into In the literature, adult height is used as a proxy for health, a single index by first converting them into contributions and based on this an improvement in health associated to productivity relative to a benchmark of complete with a one-centimeter increase in adult height raises education and full health. Multiplying these contributions productivity by 3.4 percent. The HCI uses this proxy on adult to productivity together gives the overall HCI: height for the health component. The health component of HCI = Survival × School × Health the HCI, has two components, (i) survival from age 15 to 60, and (ii) fraction of children under five not stunted. The interpretation of survival in relation to productivity is clearcut: children who do not survive childhood never For stunting, a direct relationship exists between stunting become productive adults. Accordingly, the expected in childhood and future adult height, as growth deficits productivity as a future worker of a child born today is in childhood generally persist into adulthood, combined reduced by a factor equal to the survival rate, relative to with associated health and cognitive deficits. Based on the benchmark in which all children service. the literature, a reduction in stunting rates of 10 percentage Survival = (1-Under 5 Mortality Rate)/1 points increases attained adult height by approximately The school component of the HCI assesses two key one centimeter, which increases productivity by 3.5 measures. First, the expected years of school, which percent (10.2 × 0.1 × 3.4). accounts for the quantity of schooling. This is measured by the number of years of school a child can expect to For adult survival, the evidence suggests that if overall complete by age 18 (which is 14 years of school), given health improves, both adult height and adult survival the age-specific enrollment between ages 4 and 17 rates increase, raising adult height by 1.9 percent for (World Bank, 2021). The second measure is harmonized every 10-percentage point improvement in adult survival. test scores, which assess the quality of education. This Therefore, an improvement in health that leads to an measures attainment from at least 300 to a maximum of increase in adult survival rates of 10 percentage points is 625, corresponding to Trends in International Mathematics associated with an improvement in worker productivity of and Science Study (TIMSS) as a benchmark. Expected 6.5 percent (1.9 × 3.4). years of schooling and harmonized test scores are combined into a third measure, the learning adjusted years The contribution of health to productivity is expressed of schooling (LAYS). The combination of information on relative to the benchmark of full health, defined as the the quantity and quality of schooling to derive the LAYS absence of stunting and a 100 percent adult survival rate: provides a summary metric to understand progress in Health= e(γ_(ASR × (Adult Survival Rate-1) ) + γ_(Stunting × (Not Stunted Rate-1) )∕2 education (Filmer et al., 2018). From the literature, an The above parameters, used to convert the components of additional year of school raises earnings by 8 percent, and the index into their contributions to productivity (∅=0.08 for this is captured by the parameter ∅=0.08. This parameter school, γ_(ASR)=0.65 for adult survival, γ_Stunting=0.35 measures the returns to an additional year of school and is for stunting), serve as weights in the construction of the used to convert differences in LAYS across countries into HCI. differences in worker productivity. Sources: (Kraay, 2018), (World Bank, 2018) 119 Appendix UGANDA HUMAN CAPITAL DEVELOPMENT AND GROWTH REVIEW Appendix B. List of Current and Recent World Bank- Financed Human Capital Projects Project Project Development Objective Project Funding Source of duration level (US$) funding Uganda COVID-19 The objective of the Project is to prevent, detect and 2020-2025 195.5 million IDA, Global Response and respond to COVID-19 and strengthen national systems for Financing Emergency public health emergency preparedness in Uganda. Facility, Preparedness Project Pandemic Fund (UCREPP) Uganda Reproductive The objectives of the Project are to: (a) improve utilization 2016 -2023 180 million IDA, Global Maternal and Child of essential health services with a focus on reproductive, Financing Health Services maternal, newborn, child and adolescent health services Facility, Improvement Project in target Districts; (b) scale up birth and death registration Sweden (URMCHIP) services; and (c) to provide immediate and effective response to an eligible crisis or emergency Eastern and Southern To strengthen selected Eastern and Southern African higher 2016-2023 24 million IDA Africa Higher Education education institutions to deliver quality post-graduate Centers of Excellence education and build collaborative research capacity in the regional priority areas Uganda Secondary The project development objective is to enhance access 2020-2025 150 million IDA & WHR Education Expansion to lower secondary education by focusing on underserved Project (P166570) populations in targeted areas. Uganda skills The project development objective is to enhance the 2015-2023 100 million IDA development project capacity of institutions to deliver high quality, demand- driven training programs in target sectors. Irrigation for Climate To provide farmers in the project areas with access to 2020-2026 169.2 million IDA Resilience Project irrigation and other agricultural services, and to establish (ICRP) management arrangements for irrigation service delivery Uganda Multisectoral The Project Development Objective (PDO) is to increase 2015-2023 27.64 million Global Food Security and production and consumption of micronutrient-rich foods Agriculture and Nutrition Project and utilization of community-based nutrition services in Food Security smallholder households in project areas. Program Uganda COVID-19 The objective of the Project is to support student learning 2020-2021 14.70 million EFA-FTI Emergency Education in pre-primary, primary and lower secondary during school Education Response Project closures associated with the COVID-19 pandemic and Program ensure a safe reopening and student reentry. Development Fund Uganda: Albertine To improve regional and local access to infrastructure, 2014-2022 145 million IDA Region Sustainable markets, and skills development in the Albertine Region. Development Project Uganda To improve the adequacy, equity and effectiveness of 2017-2025 500 million IDA Intergovernmental financing and the oversight, management and delivery of Fiscal Transfers local government services in education, health, water and Program environment, and micro irrigation, including refugees and their host communities. 120 Appendix UGANDA HUMAN CAPITAL DEVELOPMENT AND GROWTH REVIEW Project Project Development Objective Project Funding Source of duration level (US$) funding Integrated Water The PDO is to improve access to water supply and 2018-2026 305 million IDA, WHR, Management and sanitation services, integrated water resources KFW Development Project management, and operational performance of water and sanitation service providers in Project areas. Uganda COVID-19 The objective of the Project is to prevent, detect and 2020-2025 15.2 million IDA, Pandemic Response and respond to COVID-19 and strengthen national systems for Emergency Emergency public health emergency preparedness in Uganda. Financing Preparedness Project Facility Uganda Investing in (i) to improve sustainable management of forests and 2020-2026 148.2 million IDA, WHR Forests and Protected Protected Areas in Target Landscapes; and (ii) to increase Areas for Climate- benefits to communities from forests in Target Landscapes Smart Development Project Competitiveness and To support measures that facilitate increased private 2013-2024 100 million IDA Enterprise Development sector investment in the tourism sector and strengthen Project (CEDP) effectiveness of the land administration system. AFR RI-East Africa The objective of the East Africa Public Health Laboratory 2010-2021 25 million IDA Public Health Networking Project for Africa is to establish a network of Laboratory Networking efficient, high quality, accessible public health laboratories Project for the diagnosis and surveillance of Tuberculosis (TB), and other communicable diseases. Third Northern Uganda The development objective of the Third Northern Uganda 2015-2021 130 million IDA Social Action Fund Social Action Fund Project for Uganda is to provide (NUSAF 3) effective income support to and build the resilience of poor and vulnerable households in Northern Uganda. Uganda Learning To improve teaching and learning in Early Grade Reading 2025-2030 430.9 IDA/ Global Acceleration Program in target schools, improve learning environments in target million Partnership for (ULEARN) schools, and increase the coverage of the Education Education Management Information System (EMIS) in Uganda Uganda Development To improve access to basic social and economic 2025-2031 338 million IDA financing Response to services, expand economic opportunities and enhance is US$328m. Displacement Impacts environmental management for host communities and The additional Project Phase II refugees in the target areas US$10m (DRDIP II) million is private capital mobilized. 121 Endnotes UGANDA HUMAN CAPITAL DEVELOPMENT AND GROWTH REVIEW Endnotes Notes to Chapter 1 1 C. A. 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For more information, please visit: www.worldbank.org/uganda Join discussion on: ugandainfo@worldbank.org http://www.facebook.com/worldbankafrica http://www.twitter.com/worldbankafrica http://www.youtube.com/worldbank Citation: World Bank, Ministry of Education and Sports, and Ministry of Finance, Planning and Economic Development. 2025. The Uganda Human Capital Development and Growth Review Report. Washington, DC: World Bank.