55643 BETTER REGULATION FOR GROWTH GOVERNANCE FRAMEWORKS AND TOOLS FOR EFFECTIVE REGULATORY REFORM REGULATORY CAPACITY REVIEW OF UGANDA INVESTMENT CLIMATE ADVISORY SERVICES WORLD BANK GROUP WB209_RCRU.indd i 5/21/10 8:15:41 PM ©2010 The World Bank Group 1818 H Street NW Washington DC 20433 Telephone: 202-473-1000 Internet: www.worldbank.org All rights reserved Rights and Permissions The material in this publication is copyrighted. Copying and/or transmitting portions or all of this work without permission may be a violation of applicable law. The World Bank encourages dissemination of its work and will normally grant permission to repro- duce portions of the work promptly. For permission to photocopy or reprint any part of this work, please send a request with complete information to the Copyright Clearance Center Inc., 222 Rosewood Drive, Danvers, MA 01923, USA; telephone: 978-750-8400; fax: 978-750-4470; Internet: www.copyright.com. All other queries on rights and licenses, including subsidiary rights, should be addressed to the Office of the Publisher, The World Bank Group, 1818 H Street NW, Washington, DC 20433, USA; fax: 202-522-2422; e-mail: pubrights@worldbank.org. About the Investment Climate Advisory Services of the World Bank Group The Investment Climate Advisory Services (IC) of the World Bank Group helps governments implement reforms to improve their business environment, and encourage and retain investment, thus fostering competitive markets, growth and job creation. Funding is provided by the World Bank Group (IFC, MIGA, and the World Bank) and over 15 donor partners working through the multi- donor FIAS platform. The findings, interpretations and conclusions included in this note are those of the author and do not necessarily reflect the view of the Executive Directors of the World Bank Group or the governments they represent. Better Regulation for Growth Program The Better Regulation for Growth (BRG) Program was launched in 2007 by the Dutch Ministry of Foreign Affairs, the UK Depart- ment for International Development (DFID) and IC, the investment climate advisory services of the World Bank Group. The objective of the BRG Program is to review and synthesize experiences with regulatory governance initiatives in developing countries, and to develop and disseminate practical tools and guidance that will help developing countries design and implement effective regulatory reform programs. Reports and other documentation developed under the BRG Program are available at: www .ifc.org/brg WB209_RCRU.indd ii 5/21/10 8:15:44 PM Table of Contents Acknowledgment ................................................................................. v Foreword ............................................................................................ vi Acronyms: Uganda ............................................................................ vii Executive Summary ............................................................................ ix Regulatory Reform in a National Context ............................................. 1 Development context ...........................................................................................1 Administrative and legal environment ....................................................................4 Recent regulatory reforms to improve public administration ......................................8 National Policies and Institutions for Regulatory Reform .................... 13 Regulatory reform principles and policies .............................................................13 Institutions and drivers to promote regulatory reform ..............................................15 Coordination between levels of government .........................................................20 National ­ local ................................................................................................21 National ­ international .....................................................................................22 Administrative Capacities for Making High Quality Regulation ........... 24 Administrative transparency and predictability ......................................................24 Provisions for law-making procedures ..................................................................24 Provisions for consultation ..................................................................................27 Communication of regulations ............................................................................29 Compliance and enforcement of regulation ..........................................................30 Public redress and appeals.................................................................................30 Policy instrument alternatives ..............................................................................31 Use of RIA for understanding regulatory effects .....................................................32 Building administrative skills for regulatory reform .................................................33 Updating Regulations ......................................................................... 36 Revisions of existing laws and regulations ............................................................36 Reducing administrative burdens .........................................................................38 Use of ICT to support regulatory reform ...............................................................39 Conclusions and Recommendations .................................................... 41 Assessment of strengths and weaknesses ..............................................................41 Recommendations .............................................................................................42 APPENDIX A. Principles of Good Regulation ....................................... 43 APPENDIX B. DB Indicators, DB 2009.................................................. 44 APPENDIX C. Legal System in Uganda ................................................ 45 iii WB209_RCRU.indd iii 5/21/10 8:15:44 PM List of Figure Figure 1: Adequacy Checklist for Cabinet Memoranda ..........................................26 iv WB209_RCRU.indd iv 5/21/10 8:15:44 PM ACKNOWLEDGMENT This report was produced by Roy Pepper, a con- and from interviews with many key stakeholders sultant and former Lead Investment Policy Offi- and experts on regulatory reform in Uganda, cer in FIAS between 2002 and 2007. Delia including Gabriel Hatega, Maggie Kigozi, Moses Rodrigo and Peter Ladegaard of the World Bank Ogwal, Naboth Namara, Nsubuga Kiyagga, Opio Group's Investment Climate Department designed Lukone, Peter Atipo, Peter Ngategize, Rob Rudy, the approach for the study and provided ad-hoc Samuel Amule and Sarah Kigundu. guidance and input. Zai Fanai and Vanessa T. Co supported the pub- The report benefited from valuable comments lication of the report. from Patrick Banya, Fred Zake and Delia Rodrigo, v WB209_RCRU.indd v 5/21/10 8:15:44 PM FOREWORD Regulatory reform has emerged as an important East and Southern Africa (the others are on policy area in developing countries. For reforms Kenya, Tanzania, Rwanda and Zambia), and rep- to be beneficial, regulatory regimes need to be resents an attempt to apply assessment tools and transparent, coherent, and comprehensive. They the framework developed by the Organization must establish appropriate institutional frame- for Economic Cooperation and Development works and liberalized business regulations; (OECD) in its work on regulatory capacity and enforce competition policy and law; and open performance to developing countries. external and internal markets to trade and investment. The report is an input to IC discussions aimed at helping governments improve regulatory This report analyses the institutional set-up and quality--that is, to reform regulations to foster use of regulatory policy instruments in Uganda. competition, innovation, economic growth and It is one of five reports prepared on countries in important social objectives. vi WB209_RCRU.indd vi 5/21/10 8:15:45 PM ACRONYMS: UGANDA CDI Confederation of Danish Industry CEEWA Council for Economic Empowerment for Women of Africa COMESA Common Market for Eastern and Southern Africa CJRP Commercial Justice Reform Program DFID U.K. Department for International Development DP Deregulation Program DPSF Decentralization Policy Strategic Framework D-SSWG Decentralization Sub-Sector Working Group EABC East Africa Business Council EAC East African Community EACA United Nations Economic Commission for Africa FUE Federation of Ugandan Employers ICA Investment Climate Assessment IC Investment Climate Advisory Services ICT Information and Communication Technology IFMN Information Flow Management and Networking project JLOS Law and Order Sector Program LGA Local Government Associations LGFC Local Government Finance Commission MFPED Ministry of Finance, Planning, and Economic Development MJCA Ministry of Justice and Constitutional Affairs vii WB209_RCRU.indd vii 5/21/10 8:15:47 PM MOLG Ministry of Local Government MSME Medium and Small-scale Enterprises MTCS Medium-term Competitiveness Strategy MTTI Ministry of Tourism, Trade, and Industry NCC National Consultative Commission NCUSBO National Council of Uganda Small Business Organizations NGOs Non-governmental Organizations NIMES National Integrated Monitoring and Evaluation Strategy NRA National Resistance Army NTBs Non-tariff barriers PAU Policy Analysis Unit PEAP Poverty Eradication Action Plan PMA Plan for Modernization PSFU Private Sector Foundation Uganda PSRRC Public Service Review and Reorganization Commission PSRP Public Service Reform Program RBP Regulatory Best Practice Program RIA Regulatory Impact Assessment ROM Results Oriented Management SWAPS Sector-wide approaches UBOS Uganda Bureau of Statistics UEPC Uganda Export Promotion Council UIA Uganda Investment Authority UIRI Uganda Industrial Research Institute ULAA Uganda Local Authorities Association ULRC Uganda Law Reform Commission UMI Uganda Management Institute UNBS Uganda National Bureau of Standards UNCC Uganda National Chamber of Commerce and Industry UTB Uganda Tourist Board UWA Uganda Wildlife Authority viii WB209_RCRU.indd viii 5/21/10 8:15:51 PM EXECUTIVE SUMMARY Like many developing countries, Uganda needs a with an average real rate of annual growth in GDP comprehensive regulatory reform agenda in of 6.9 percent. These high levels of growth have response to emerging domestic and international largely continued in the current decade, with influences. Since 1986, the government has acted growth in real terms in FY2007/8 rising to 8.6 first to rehabilitate and stabilize the economy, percent. Despite its sustained performance, through macro-economic stabilization and liber- Uganda, with a population of 28.2 million (2007 alization programs, focusing on sound fiscal and est.) that is growing at more than 3 percent per monetary policies. Throughout the 1990s, the annum, remains one of the world's poorest coun- government promoted growth and tackled tries. According to the Uganda Bureau of Statistics increasingly difficult challenges, such as returning (UBOS) report for 2007, 31 percent of the popu- confiscated properties to their original owners, lation lived in poverty in 2005/6. and privatizing state enterprises. It also liberalized the investment code by eliminating the preferen- Sustaining and increasing growth is a key chal- tial treatment granted to domestic investors and lenge facing policymakers in Uganda, as well as by making approval of the investment authority widening the impact of growth. To reduce the virtually automatic. poverty rate to 10 percent by the year 2017, as envisaged in the government's Poverty Eradication During the 1990s, the economy turned in a solid Action Plan (PEAP), GDP growth will need to be performance, resulting from continued invest- higher than 7 percent per year, with an investment ment in the rehabilitation of infrastructure, rate of 30 percent of GDP, or higher. Although improved incentives for production and exports, Uganda has an impressive track record on the reduced inflation, gradually improved domestic growth and investment front, the required increase security, and the return of exiled Indian-Ugandan in future investment is more challenging than it entrepreneurs. Uganda recorded an impressive seems at first sight. Uganda's performance in the economic performance between 1990 and 2000, past has to a large extent involved restoration and ix WB209_RCRU.indd ix 5/21/10 8:15:51 PM rehabilitation of existing productive capacity. In World Bank's Doing Business indicators provide the future, growth will need to come from new more detailed measures of regulations concerning investments and new activities, which will require the start-up and operation of business that tend a deeper commitment of capital, more intensive to confirm the conclusion that regulatory barriers acquisition of know-how, and more complex col- remain serious in Uganda. Compared to its rank- laboration between local and foreign partners. ing of 105th globally in 2007, Uganda was ranked The PEAP places great importance on the role of 111th globally in the "ease of doing business" private investment, both domestic and foreign. synthetic indicator and 10th in Sub-Saharan Private investment will need to increase from its Africa by DB2009, a slight deterioration and far share of about 10 percent of GDP in recent years behind best practice internationally. to more than 24 percent, on average, over the PEAP horizon. Regulatory reform, both explicit and implicit, has been an element of the Uganda's overall poverty Growth in investment required to increase Ugan- alleviation and growth strategy for close to 15 da's GDP growth rate to the latest PEAP levels will years. It has been an important component of require substantial improvements to the business broader policy responses directed towards business- environment. As indicated in the World Bank's enabling reform and increasing economic dyna- 2004 Investment Climate Assessment (ICA), mism and competiveness. Uganda, like the other Uganda faces broad challenges in creating an East African countries, initially attempted to improved environment. Factors ranked as "major achieve legal and regulatory reform by fast-tracking or very severe constraints on enterprise operations review and simplification of existing commercial and growth" were, in order of importance: laws and addressing existing regulatory bottle- necks, rather than controlling systematically the cost of financing; flow of new regulations that went through the pol- icy and law-making machinery of government. tax rates; Many of the legal and regulatory reforms in the 1990s were ad hoc and piecemeal in nature, focused macro-economic instability; on eliminating specific bottlenecks, and imple- mented through individual donor-supported access to financing; reform programs for the legal sector, financial sec- tor, civil service, budget reform, etc. electricity; corruption; Systemic, as opposed to specific, regulatory reform actions in Uganda essentially date from 2000, tax administration; when the Deregulation Program (DP) was intro- duced to remove unnecessary regulations that regulatory policy uncertainty; and hampered the business sector. The core of the DP was a pilot reform of trade licensing at the local customs and trade regulations and procedures. government level. This was evaluated as highly successful in demonstrating the benefits of stream- Although, as the ICA showed, enterprises do face lined regulation and implementation. Other more severe problems than regulatory and admin- activities within the first phase of the DP included istrative procedures, regulatory policy uncertainty advising government on further opportunities for and specific regulatory regimes are significant, regulatory simplification; promoting reform of and the private sector as a whole in Uganda must specific legislation affecting business; capacity cope with a substantial regulatory burden. The building and training. These were designed to x WB209_RCRU.indd x 5/21/10 8:15:51 PM support eventual institutionalization of regula- If the government wishes to implement the regu- tory best practices in law and policymaking latory strategy that it has adopted, there are a throughout government. number of steps that must be taken to resuscitate the process: Renamed the Regulatory Best Practice (RBP) program in 2004, the second phase of the project a) Reaffirm publicly the government's intention was given a wider focus and redefined to institu- to pursue regulatory reform through a state- tionalize best practices and the government-wide ment by the president that it is a priority that use of Regulatory Impact Assessment (RIA) in all will be supported by adequate resources. policy formation and law and regulation making b) Establish a ministerial position to champion in Uganda. The end result was intended to be the regulatory reform at Cabinet level and to coor- establishment of a simpler and more appropriate dinate regulatory reform across government. and suitable regulatory environment for business that would contribute to the goal of enterprise c) Have the RIA Unit currently in the Cabinet growth and competitiveness by fundamentally Secretariat report to the new ministerial changing the way government conceived, drafted, position. implemented and enforced regulation as a policy instrument. d) Carry out an assessment of the human and organizational resources available within the The program adopted an ambitious "big bang" government to carry on a regulatory reform approach to RIA implementation, in that the agenda. In particular, focus the assessment strategy focused on introducing RIA as soon as upon the capacity of the Policy Analysis Units possible throughout government and to regula- to support regulatory reform activities. tory issues affecting other than the business envi- ronment. e) Establish a short-term program of "quick wins" that could be implemented within the As a result of the RBP program, significant capac- fiscal year. This should be done in collabora- ities were developed to promote, manage, and tion with the business community and lead- coordinate regulatory reform in Uganda. RIA, ing non-governmental organizations (NGOs) monitoring and evaluation frameworks, and to ensure that high priority items are on the social impact analysis have been introduced to action agenda. support future development of regulatory reform. f ) Consider whether the focus of regulatory However, effective capacity has not developed reform in the medium term should continue since the conclusion of the program, financed by to be on improving the business environ- the U.K. Department for International Develop- ment, or should be broadened to areas of ment (DFID), primarily because of reduced social policy and other areas where there is a funding within the government's budget. Com- demand for RIA techniques. peting reform priorities are a particular challenge for Uganda. RIA has had to compete for atten- g) Establish clear budgets for regulatory reform tion and resources with other public sector policy activities, including resources for effective management and efficiency improvement tools consultation. being implemented, such as Results Oriented Management (ROM). A multiplicity of reform h) Engage in a dialogue with local governments initiatives and lack of effective government har- to plan out the next stages of regulatory reform monization has meant competition for the lim- at local government levels after the roll-out of ited resources, capacities, and staff time. the licensing reforms has been completed. xi WB209_RCRU.indd xi 5/21/10 8:15:52 PM WB209_RCRU.indd xii 5/21/10 8:15:52 PM REGULATORY REFORM IN A NATIONAL CONTEXT Development context In January 1971, Obote's government was ousted in a military coup led by armed forces com- At independence in 1962, Uganda had a per cap- mander Idi Amin Dada. Amin declared himself ita income of less than US$200, similar to that in president, dissolved the parliament, and amended Kenya and Tanzania, and was thus one of the the constitution to give himself absolute power. poorest countries in the world. However, the Idi Amin's 8-year rule produced economic country, endowed with significant natural decline, social disintegration, and massive human resources, including ample fertile land, regular rights violations. The economy plummeted, rainfall, and mineral deposits, was thought to GDP fell by more than 30 percent by 1980, and have considerable potential for rapid economic per capita GDP was halved as the population growth and development. For a while, Uganda's increased from its independence level of 8 million economy experienced steady growth, with its to approximately 18 million by 1980. GDP increasing by approximately 30 percent over the decade. But the economic growth took The Ugandan army's unsuccessful invasion of place against a backdrop of political instability as Tanzania in October 1978 led to Amin's removal supporters of a centralized state vied with those in April 1979, when the Uganda National Libera- in favor of a loose federation and a strong role for tion Front formed an interim government with tribally-based local kingdoms. In February 1966, Yusuf Lule as president. This government adopted Prime Minister Milton Obote suspended the a ministerial system of administration and created constitution, assumed all government powers, a quasi-parliamentary organ known as the National and removed the ceremonial president and vice Consultative Commission (NCC). Renewed dis- president. In September 1967, a new constitu- putes over the extent of presidential powers tion proclaimed Uganda a republic, gave the resulted in several changes in government, until president even greater powers, and abolished the elections returned Obote to the presidency in traditional kingdoms. December 1980. Under Obote, the security forces 1 WB209_RCRU.indd 1 5/21/10 8:15:52 PM had one of the world's worst human rights records. financing of coffee trading and exports. These In their efforts to stamp out an insurgency led by key measures were fundamental to the turnaround Yoweri Museveni's National Resistance Army in the economy of Uganda after two decades of (NRA), they laid waste to a substantial section of precipitous decline. Throughout the 1990s, the the country. Nonetheless, the second Obote gov- reform agenda shifted toward promoting growth, ernment was able to attract some donor assistance with increasingly more difficult challenges being to help stabilize the very fragile economy, with the tackled. Between 1992 and 1995, Uganda suc- World Bank extending two Economic Recovery cessfully returned confiscated properties to their loans in 1982 and 1984. original owners, mostly Ugandans of Asian origin. The investment code was liberalized by eliminat- Obote ruled until July 1985, when an army bri- ing the preferential treatment granted to domestic gade took over Kampala and proclaimed a military investors and by making the approval of the invest- government. The new regime, headed by former ment authority virtually automatic. By 1999, the defense force commander General Okello, opened government had successfully privatized about negotiations with Museveni's forces and pledged two-thirds of the 150 existing public enterprises, to improve respect for human rights, end tribal primarily through sales of corporate control to rivalry, and conduct free and fair elections. In the strategic investors, both domestic and foreign. meantime, massive human rights violations con- tinued as the Okello government murdered civil- During the 1990s, the economy turned in a solid ians and pillaged the countryside to destroy the performance based on continued investment in the NRA's support. Following negotiations between rehabilitation of infrastructure, improved incen- the Okello government and the NRA in the fall of tives for production and exports, reduced inflation, 1985 and an agreement for a ceasefire, the NRA gradually improved domestic security, and the seized Kampala in late January 1986, and assumed return of exiled Indian-Ugandan entrepreneurs. control of the country. It was only after the estab- Because of the prudent macro-economic policies, lishment of the Museveni presidency, which con- Uganda recorded an impressive economic perfor- tinues to this day, that attention could be given to mance between 1990 and 2000, with an average economic development and reform. real rate of annual growth in GDP recorded at 6.9 percent. These high levels of growth have largely Since 1986, the government has acted to reha- continued in the current decade: GDP growth in bilitate and stabilize the economy by undertak- real terms in FY2007/8 rose to 8.6 percent, from ing currency reform, raising producer prices on 7.0 percent in FY2006/7. export crops, increasing prices of petroleum products, and improving civil service wages. The Despite its sustained performance, Uganda policy changes were especially aimed at dampen- remains one of the world's poorest countries, ing inflation and boosting production and export with a population of 20 million that is growing at earnings. Initially, the trade regime was substan- more than 3 percent per annum. According to tially liberalized through removal of quantitative the Uganda Bureau of Statistics (UBOS) report restrictions and onerous export taxation. Foreign for 2001, 36 percent of the population lived in exchange allocation systems were also disman- poverty. To eradicate poverty, Uganda has been tled, and market determination of the exchange implementing an economic transformation and rate and major improvements in fiscal discipline poverty reduction strategy spelled out in the were achieved by 1990. PEAP.1 This program ends in 2010 when it will In the early 1990s, the coffee industry was liber- 1 The first PEAP was adopted in 1997; a second version fol- alized through a sharp disengagement of the lowed in 2000/01, and the current version was adopted in public sector from the marketing, transport, and 2003/04. The current version emphasizes production and 2 WB209_RCRU.indd 2 5/21/10 8:15:53 PM be replaced by five-year National Development from about 10 percent of GDP in recent years to Plans. Because the economy is heavily dependent more than 24 percent, on average, over the PEAP on agriculture, the PEAP gives particular atten- horizon (until 2017). tion, through the Plan for Modernization (PMA), to transforming the agricultural sector from Growth in investment required to increase Ugan- peasant farmers to commercial enterprises. Agri- da's GDP growth rate to the latest PEAP levels will culture accounts for 44 percent of GDP, contrib- require substantial improvements to the business utes more than half of export earnings, and environment. As indicated in the World Bank's employs over 80 percent of the labor force. To 2004 Investment Climate Assessment, Uganda reduce the poverty rate to 10 percent by the year faces broad challenges in creating an improved 2017, as envisaged in PEAP, GDP growth will environment. Factors ranked as "major or very need to be higher than 7 percent per year, with an severe constraints on enterprise operations and investment rate of 30 percent of GDP or higher. growth" were, in order of importance, cost of Sustaining and increasing growth is one of the financing, tax rates, macro-economic instability, key challenges facing Uganda. access to financing, electricity, corruption,3 tax administration, regulatory policy uncertainty and Although Uganda has an impressive track record customs and trade regulations and procedures. The on the growth and investment front, the required effect of the business environment on foreign- increase in future investment is more challenging invested firms (those with 10 percent or more for- than it seems at first sight.2 Uganda's performance eign ownership) and the effect on entirely domestic in the past has to a large extent involved restora- firms diverge, with foreign firms reporting more tion and rehabilitation of existing productive sensitivity to corruption, regulatory policy uncer- capacity. In the future, growth will need to come tainty, customs and trade regulations and crime. from new investments and new activities, which will require a deeper commitment of capital, Although, as the ICA showed, enterprises do face more intensive acquisition of know-how, and more severe problems than regulatory and admin- more complex collaboration between local and istrative procedures, regulatory policy uncertainty foreign partners. Uganda has also benefited enor- and specific regulatory regimes are significant,4 mously from development assistance for almost and the private sector as a whole in Uganda must two decades, but the magnitude of foreign aid cope with a substantial regulatory burden. Large may or may not hold up in the next decade, enterprises and companies with foreign equity depending on factors often beyond Uganda's find administrative and regulatory problems control. more of a nuisance than smaller or domestic The PEAP places great importance on the role of 3 Uganda loses 510 billion shillings (US$250 million approxi- mately) a year through corruption and procurement malfea- private investment, both domestic and foreign. sance, according to the 2007 African Peer Review Mechanism Given severe limits on the scope of domestic Report. Governance indicators prepared by the World Bank confirm the significance of corruption in defining the busi- resource mobilization and commitments to social ness environment in Uganda. Uganda's ranking, according to expenditures, the share of government invest- Transparency International's Corruption Perception Index, has ment to support business and the economy is not improved in an absolute sense since 2002 when it was ranked 2.1 (on a scale of 1­10); it rose to 2.5 in 2005 and 2.6 in expected to increase much above the current level 2008. However, its relative ranking has not changed very of about 6 percent of GDP. In view of this situa- much, and the country remains on the borderline between rampant and very serious corruption. Its 2008 ranking is tion, private investment will need to increase lower than all but Kenya in the five countries reviewed in these case studies. income growth, competitiveness, good governance, and 4 Given that respondents to the ICA survey had been success- human development. ful in negotiating regulations relating to entry and operation, 2 The conclusion is drawn from the World Bank's Investment it may well be that the relative importance of regulation has Climate Assessment, 2004. been underestimated. 3 WB209_RCRU.indd 3 5/21/10 8:15:54 PM firms. Because most exporting businesses are also in Uganda are statutory law, common law, and foreign firms, the same can be said of them as doctrines of equity and customary law, although well. Senior management of large, exporting or customary law is now in effect only when it does foreign firms spends more time on average deal- not conflict with statutory law. It is worth noting ing with regulations than the management of that Uganda's Constitution contains several pro- small or domestic enterprises, and they use more visions that are compatible with the principles than twice as much time in inspections with gov- underlying good regulatory practice. ernment officials and lose almost 10 times more money on fines or seized goods as a result of these Principle 1 requires the president to report to Par- inspections. It also takes large and foreign com- liament at least once a year; principle 2 stipulates panies longer to clear customs for exports. that the state is based on democratic principles that empower and encourage active participation The World Bank's Doing Business indicators of citizens, in part through decentralization of provide more detailed measures of regulations government functions. Principle 10 requires the concerning the start-up and operation of busi- state to involve the citizenry in formulation and nesses, which confirm the conclusion that regula- implementation of development plans and pro- tory barriers remain serious in Uganda. Compared grams. It is also worth noting that these provi- to its ranking of 105th globally in 2007, Uganda sions of the Constitution have been influenced by was ranked 111th globally in the "ease of doing the shift towards increasing presidential power business" synthetic indicator and 10th in SSA by over the last decade. DB2009, a slight deterioration and far behind international best practice. Only in the area of In terms of the hierarchy of legal and regulatory "paying taxes" was there any significant improve- instruments, the supremacy of the Constitution6 ment. Uganda's ranking was particularly low in is explicitly stated in Chapter 1, Article 2.7 Other the areas of "starting a business," "registering written law comprises statutes, Acts of Parliament property," and "trading across borders."5 One and Statutory Instruments, all of which have to be indicator of the relative difficulty of starting busi- published in the national Gazette. The Parliament ness is the large share of GDP generated in the is the supreme legislative authority, and bills can informal sector and its continuing growth. Some be proposed to Parliament by both individual 50 percent of GDP is estimated to be generated MPs8 and the Cabinet. Over time, the trend has within the informal sector, and more than 90 per- been for the government to look for increased del- cent of enterprises in Uganda are estimated to be egated powers so it can issue regulations without informal to some degree. the need for new primary legislation. This trend has been accentuated by the growing tendency for enabling regulations to be drafted separately from, and after passage of primary legislation. These Administrative and legal environment Uganda's regulatory structure exists within a 6 Uganda has adopted three constitutions since independence. broad legal and administrative framework, most The first was the 1962 constitution, which was replaced by the 1967 constitution. In 1995, a new constitution was of which is centered on central government. adopted and promulgated on Oct. 8, 1995. Given that Uganda was a British colony, Uganda's 7 Article 2 states "This Constitution is the supreme law of legal system is based on English Common Law Uganda and shall have binding force on all authorities and persons throughout Uganda. If any other law or custom is and African customary law. The laws applicable inconsistent with any of the provisions of the Constitution, the Constitution shall prevail, and that other law or custom shall, to the extent of the inconsistency, be void." 5 To be fair, Uganda's ranking in "trading across borders" is 8 Private members' bills can not be considered by Parliament affected to some degree by transport and port conditions in if they attempt to impose additional taxation or a charge on Kenya and Tanzania. the budget. 4 WB209_RCRU.indd 4 5/21/10 8:15:54 PM secondary legislations have taken the form of an attorney general12 who is the "principal legal decrees, bylaws and circulars. adviser" of the government. The 1995 Constitution established Uganda as a Chapter 11 of the Constitution lays out the basis republic with executive, legislative, and judicial for local government in Uganda. The Preamble to branches. The three branches operate as follows: the Constitution establishes "the principle of decentralization and devolution of government (a) The Executive branch. The executive branch functions and powers to the people at appropriate is headed by the president, who is simultaneously levels where they can best manage and direct their the head of state, head of government and com- own affairs."13 The powers assigned to the local mander-in-chief.9 Following written nomination governments under the Local Government Act, and support from at least 100 voters in each of at 1997, include the following: least two-thirds of all districts in Uganda, the president is elected by universal adult suffrage making local policy and regulating the deliv- through secret ballot10 for a term of five years. ery of services; The president is assisted by a vice president, the prime minister and Cabinet ministers. The vice formulating development plans based on president is appointed by the president, following locally determined priorities; approval from Parliament by a simple majority. receiving, raising, managing and allocating revenue through approval and execution of The Constitution (Article 111) provides for a own budgets; altering or creating new bound- Cabinet, consisting of the president, vice presi- aries; dent and a number of ministers determined by the president, whose function is to develop and appointing statutory commissions, boards implement the policy of the government. Cabi- and committees for personnel, land, procure- net ministers are appointed by the president with ment, and accountability; and the approval of Parliament, and are either mem- bers of Parliament or persons qualified to be establishing or abolishing offices in Public members of Parliament. Article 117 of the Con- Service of a District or Urban Council. stitution provides for individual accountability of ministers to the president and collectively respon- Line ministries carry out technical supervision, sible for Cabinet decisions. Article 113 stipulates technical advice, mentoring of local governments that the total number of ministers shall not exceed and liaison with international agencies. 21, except with the approval of Parliament,11 while article 114 allows the president to appoint The system of local government in Uganda is "other ministers to assist Cabinet ministers in the based on the district as the basic unit under which performance of their functions," subject to the there are lower local governments and adminis- numbers limitation. The Cabinet also contains trative unit councils down to the county, parish, 12 Appointed by the president with the approval of Parlia- 9 To be eligible for election as president, a person must be a ment. Candidates for appointment have to be qualified to citizen by birth, between 35 and 75 years of age, and qual- practice as an advocate of the High Court and to have prac- ified to be a member of Parliament. ticed or gained necessary experience for at least 10 years. 10 With the proviso that the winning candidate secures more 13 The Preamble also establishes principles of involving the than 50 percent of valid votes cast. If this does not happen, population in the formulation and implementation of then a second election takes place between the two candi- development plans which affect them, bringing about bal- dates receiving the most votes. anced development of various areas within the country and 11 Currently, the Cabinet contains 28 ministers, and there are providing adequate resources for the functioning of in addition 48 ministers of state. government at all levels. 5 WB209_RCRU.indd 5 5/21/10 8:15:54 PM and village levels. Elected councils are made up of a request for reconsideration or notify the Speaker persons directly elected to represent electoral that assent will not be given. In the case of a bill areas, with persons with disabilities, the youth, being returned for reconsideration, if the Parlia- and women forming one-third of the council. ment passes the bill with a two-thirds majority, Councils are corporate bodies having both legis- the bill becomes law without the assent of the lative and executive powers, with the authority to president. make local laws and enforce implementation. Administrative unit councils serve as political Parliament is headed by a speaker19 and deputy units to advise on planning and implementation speaker, both elected by the members of Parlia- of services, and also assist in the resolution of dis- ment from among their number (article 82), and putes, monitor the delivery of services and assist no business can be conducted in Parliament if the in the maintenance of law, order and security. office of speaker is vacant. Article 88 establishes that the quorum of Parliament in the case of a (b) The Legislative branch. The Legislature con- vote shall be one-third of all members of Parlia- sists of a unicameral Parliament that has a term of ment, and gives Parliament the power to establish five years.14 According to Article 78 of the Con- its quorum in the conduct of business other than stitution, Parliament, which currently consists of voting. Any question put to vote can be deter- 305 members, contains: members directly elected mined by a simple majority of those present and to represent constituencies;15 one woman repre- voting.20 Article 90 of the Constitution gives Par- sentative for each and every district; representa- liament the power to appoint standing commit- tives of the army, youth, workers, persons with tees and ad-hoc committees, and its rules of pro- disabilities, and other groups determined by cedure can prescribe the composition and Parliament;16 and the vice president and minis- functions of those committees. ters.17 Parliament has the sole power to make laws, and Article 79 (2) stipulates that no body other (c) The Judiciary. Article 128 of the Constitu- than Parliament shall have power to make provi- tion establishes the independence of the judi- sions having the force of law, except under author- ciary. The court system in Uganda, as specified ity conferred by an act of Parliament. Laws passed by Article 129, include the Supreme Court, the by Parliament are presented18 to the president for Court of Appeal, the High Court and subordi- assent, after which the president has 30 days in nate courts, including qadhis courts for marriage, which to assent, return the bill to Parliament with divorce and inheritance. The Constitution also provides for the establishment of a Judicial Ser- 14 According to Article 95, a session of Parliament shall be held at least once a year, and the period between one ses- vice Commission, which advises the president on sion and the next has to be less than 12 months. judicial appointments, oversees terms and condi- 15 Members of Parliament must be citizens and a registered tions of service, prepares and implements train- voter and must have completed formal education at least to Advanced Level. Persons specifically disqualified include ing programs for judicial officers, serves as a link those holding offices related to conduct of an election, with the public, and advises the government on bankrupts and traditional or cultural leaders defined in Article 246 (6) of the Constitution. the administration of justice. The judiciary is 16 Representatives of these groups are elected by Electoral headed by the chief justice and deputized by the Colleges. Article 78 (2) requires Parliament to review the deputy chief justice. For further details of the representation of women and special groups in order to retain, increase or abolishing such representation. The first judicial system in Uganda, see Annex 3. review is to be held after expiration of ten years after the introduction of the Constitution and thereafter every five years. 19 The role of the speaker is to determine the order of business 17 Ministers who are not members of Parliament are ex-officio in Parliament, and he/she is required to give priority to members of Parliament with no vote (Article 78 (1). government business. 18 Interestingly, Article 91 (2) requires only that a bill passed 20 The person presiding in Parliament, normally the speaker, by Parliament shall be presented to the president for assent does not have either an original or a casting vote where the "as soon as possible." vote is tied. 6 WB209_RCRU.indd 6 5/21/10 8:15:54 PM Outside of the judiciary, the legal sector in Uganda promoting legal advice of the constitution; comprises various institutions concerned with the and provision of legal services, the administration of justice and enforcement of legal instruments or disseminating legal information to the public. orders. The main institutions, established by the Uganda Constitution of 1995, include the Minis- These functions are carried out through various try of Justice and Constitutional Affairs, the Uganda directorates and departments of the ministry, Police Force, the Inspectorate of Government,21 such as the Directorate of Civil Litigation, the Uganda Law Reform Commission,22 and the Directorate of Public Prosecution, Office of the Uganda Human Rights Commission. Further- First Parliamentary Counsel, the Administrator more, there are legal education institutions such as General's Office, and the Office of Legal Advi- faculty of law at Makerere University, the Law sory Services. Development Center, professional bodies such as the Uganda Law Society, the Judicial Service Com- There appears to be no complete and compre- mission, and other organizations. hensive inventory of laws and regulations affect- ing businesses in Uganda. Licensing reforms The mandate of the Ministry of Justice and Con- have focused on a small subset of business stitutional Affairs is "to promote and facilitate licenses to date, and there has been no need effective and efficient machinery capable of pro- within that particular reform to prepare a broad viding a legal framework for good governance and inventory of licenses and permits at central or delivering legal advice and services to the Govern- local government level. However, as indicated ment, its allied institutions and the general pub- by the Uganda Investment Authority (UIA) in lic." Major roles of the ministry include: an interview, agriculture faces a large regulatory burden in Uganda, with considerable redun- initiating and facilitating the revision and dancy in licensing, since various agencies within reform of Ugandan laws, providing an effec- government require very similar licenses and fre- tive mechanism for their change; quent renewal and repeated submission of docu- ments by licensees. advising the government on all legal matters; In addition, UIA suggested that particular atten- drafting all proposed laws and legal docu- tion should be paid to licensing of services, ments; which now provides more than 50 percent of GDP. Finally, UIA stated that the latest amend- instituting or defending civil suits to which ment to the Investment Act (not yet enacted) government and/or its allied institutions are calls for UIA to act as a "one-stop-shop," which party and ensuring that court decisions are would require UIA to act as the principle access satisfied; point in government for investment and busi- ness procedures currently operated by between overseeing the training of lawyers; 30 and 40 government agencies. However, UIA is concerned that the current legislation for these agencies often prevents them from delegating 21 Under the leadership of the inspector general, the func- their responsibilities to any other body, such as tions of the Inspectorate (article 225 of the Constitution) UIA.23 are: to promote adherence to the rule of law; foster elimina- tion of corruption; promote good governance; supervise enforcement of the Leadership Code of Conduct; investi- gate administrative acts by public officials and promote 23 As an example, the Immigration Act specifically precludes public awareness. the responsible minister from delegating his/her responsi- 22 Article 248. bilities for issuing visas to any other agency. 7 WB209_RCRU.indd 7 5/21/10 8:15:54 PM Recent regulatory reforms to improve vulnerable to regulatory burdens, as they are less public administration able to take advantage of economies of scale to reduce the impact of regulatory burdens. How- Uganda has been engaged in broad and compre- ever, these documents did not recognize regula- hensive economic reform for the last 20 years. The tory governance and reform as a cross-cutting political and economic crises of the 1970s and initiative requiring a specific strategy. 1980s necessitated introduction of stabilization and growth policies, and then structural, institu- Uganda, like the other East African countries, tional, and regulatory reforms. These include initially attempted to achieve legal and regulatory reform of the business climate, legal reform, finan- reform by fast-tracking review and simplification cial sector reform, civil service reform, public of existing commercial laws and addressing exist- enterprise restructuring and privatization, anti- ing regulatory bottlenecks. It did not attempt to corruption initiatives, competition policy, and control systematically the flow of new regulations decentralization reforms. The PEAP developed a that went through the policy and law making comprehensive framework for reducing poverty in machinery of government. Many of the legal and the country and established priorities for achiev- regulatory reforms in the 1990s were ad hoc and ing the goal, including sector-wide approaches piecemeal in nature, focused on eliminating spe- (SWAPs) that contain costed targets and priority cific bottlenecks and implemented through indi- actions. PEAP goals have also been developed vidual donor-supported reform programs for the within a Medium-term Competitiveness Strategy legal sector, financial sector, civil service, budget (MTCS), and have been supported by reforms of reform, etc. public expenditure budgeting and expenditure systems, which resulted in shifts in expenditure Legal reform began in the mid-1990s through patterns. the Justice, Law and Order Sector Program (JLOS), which had as its goal to revise and sim- Regulatory reform, both explicit and implicit, plify criminal and civil laws and ensure improved has been an element of the Government of Ugan- access to justice. Within the broader JLOS, a da's overall poverty alleviation and growth strat- comprehensive Commercial Justice Reform Pro- egy for close to 15 years, and as an important gram (CJRP) was identified as a key priority and component of broader policy responses directed launched with the aim of establishing a sound towards business-enabling reform and increasing enabling environment and clear and stable rules economic dynamism and competiveness. Ugan- for business. The program arose out of not only da's PEAP stresses that constraints on private sec- an awareness of the inadequacy of the legal frame- tor competitiveness need to be removed in order work, but also growing inconsistencies between to promote economic transformation, and that a the laws and regulations and the actual proce- high quality, low cost regulatory environment is dures. critical to the emergence of a strong and vibrant private sector-driven economy able to compete in Public sector reform has been pursued by Uganda regional and international markets. since the establishment of the National Resis- tance Movement (NRM) government in 1986, The PEAP stresses that micro, small, and medium when the civil service was bloated with untrained enterprises (MSMEs) are particularly important workers who were badly paid and poorly to growth and development of the Ugandan resourced. The reforms included both decentral- economy and the government's efforts to reduce ization reforms as well as a general public service poverty and improve the quality of life for its reform, but the two strands progressed along two citizens. It stresses that MSMEs are especially separate tracks. 8 WB209_RCRU.indd 8 5/21/10 8:15:55 PM The public service reform program, which is now has been the Local Government Finance Com- in its third phase,24 concentrated initially on mission (LGFC), which advises the president on efforts to rationalize the structure of the civil ser- fiscal decentralization. In 2005, a Decentraliza- vice, reduce public employment, freeze recruit- tion Policy Strategic Framework (DPSF) was ment, improve performance and reform pay developed to provide the basis for coordination structures. The Public Service Review and Reor- and consolidation of decentralization, and MLG, ganization Commission (PSRRC) was established in collaboration with the LGFC and Local Gov- in 1989 with the responsibility for developing a ernment Associations (LGA), produced a Local vision for the public sector. Initial successes were Government Investment Plan as the framework not sustained. Pay reforms stagnated and efforts for budget allocations.27 As a result of govern- to introduce results-oriented management ment actions, the 80 local governments now (ROM), staff appraisal systems, decentralization manage some 35 percent of public finances and programs, and anti-corruption campaigns all fell employ 80 percent of the public servants. How- short of their goals. In April 2006, the third phase ever, fiscal sustainability remains an issue, espe- of the Public Service Reform Program (PSRP), cially after January 2005, when the Graduated covering 2005­2010, was approved by Cabinet, Tax, the main source of own revenue for discre- with the goals of introducing a competitive pay tionary development activities, was removed,28 policy and improved career development policies and not fully compensated through central gov- and working conditions; improving performance ernment transfers. and accountability of civil servants, including results-oriented management; and constructing The current phase29 of Public Sector Manage- human resource management systems.25 One ment Reform (which began in 2007 and will fin- important component relevant to the regulatory ish in 2010) brings both public service and reform agenda is the creation of guidelines for decentralization reforms together under one review of organizational structures and imple- management structure, headed by the Office of mentation procedures. the Prime Minister. The Public Sector Manage- ment Sector Working Group has been estab- Uganda adopted a decentralization policy in lished, under the chairmanship of the Office of 1992, with the intention of improving local the Prime Minister and with membership from democracy, transparency, and popular participa- Ministry of Public Service, MLG, LGFC, Public tion, as well as improving the efficiency and man- Service Commission, LGA and the Ministry of agement of basic services. The decentralization Finance. The major function of the WG is to policy was described in the Resistance Council strengthen budgeting planning and ensure coor- Statute 1993 and the Constitution 1995 and dination of public service and decentralization elaborated in the Local Government Act 1997. components, including development of monitor- Decentralization policy has been implemented ing and evaluation frameworks. under the Ministry of Local Government, which chairs the Decentralization Sub-Sector Working Each of the reform programs discussed above had Group (D-SSWG).26 Another important institu- implications for policies, laws and regulations, tion involved in implementing decentralization 27 The LGIP is coordinated with the Medium-Term Expendi- ture Framework (MTEF). 24 The first phase as implemented in 1991­97, and the sec- 28 In the face of quantitative analysis supporting its continua- ond phase ran from 1997­2002. tion. The DAI report cites this policy shift as an example of 25 Including payroll management and existence of "ghost political expediency taking prominence over evidence- workers." based decisionmaking. 26 A small Decentralization Office (DAO) has been created to 29 Funded by a donor pool, comprising DANIDA, DFID support the latest phase of work. and the World Bank. 9 WB209_RCRU.indd 9 5/21/10 8:15:55 PM but the approaches to and analysis of regulatory institutionalize best practices and the government- options have been determined on a program-by- wide use of RIA in the formulation of all laws program basis without overarching principles. and policies in Uganda. The end result was Systemic and cross-cutting regulatory reform has intended to be the establishment of a simpler and been under consideration since the second half of more appropriate and suitable regulatory envi- the 1990s, when a study of regulatory impacts ronment for business that would contribute to provided advice to the government on the design the goal of enterprise growth and competitiveness of regulatory reform. by fundamentally changing the way government conceived, drafted, implemented and enforced Systemic, as opposed to specific, regulatory reform regulation as a policy instrument. The program actions in Uganda essentially date from 2000, adopted an ambitious "big bang" approach to when the Deregulation Program30 (DP) was intro- RIA implementation, in that the strategy focused duced to remove unnecessary regulations that on introducing as soon as possible RIA through- hampered the business sector. The core of the DP out government and to regulatory issues affecting was a pilot reform of trade licensing at the local other than the business environment. The RBP government level;31 this was evaluated as highly Program focused upon the following: successful in demonstrating the benefits of stream- lined regulation and implementation. Other establishing a RIA Unit in the Cabinet Secre- activities within the first phase of the DP included tariat, Office of the President, as the focal advising government on further opportunities for point for institutionalization of RIA across regulatory simplification, and promoting reform government, including monitoring and polic- of specific legislation affecting business, capacity ing the quality of RIAs; building, and training, which were designed to support eventual institutionalization of regulatory securing formal presidential endorsement of best practices in law and policymaking through- the new RBP policy and its immediate imple- out government. Practical expression of the gov- mentation throughout government; ernment's emerging commitment to systemic regulatory reform was included in the 2001 Bud- securing formal Cabinet endorsement for get Act, which required that every bill introduced RBP principles; into Parliament should be accompanied by calcu- lations of its financial implications for both reve- developing a methodology for RIA tailored nue and expenditure. The 2003 Budget speech to the Ugandan context; also confirmed the government's commitment to best practices in regulation by stating that any new laws should be preceded by proper consulta- building capacity across government to apply tion, consideration of alternatives to regulation, RIA in the design and review of regulations; conduct of RIAs, and identification of the man- power and financial resources needed for imple- building capacity among private sector and mentation and enforcement. civil society organizations to use RBP and RIA principles for more effective policy RBP Program in 2003, the second phase of the advocacy; project was given a wider focus and redefined to creating local training capacity to build up 30 Funded by DFID. 31 Cerstin Sander, Bannock Consulting Ltd. UK, "Less is broad capacity for RIA; More: Better Compliance and Increased Revenues by Streamlining Business Registration in Uganda," Case Study for the WBR 2005 on Investment Climate, Growth and providing advice on institutional arrange- Poverty, November 2003. ments to support RIA; and 10 WB209_RCRU.indd 10 5/21/10 8:15:55 PM providing mentoring, training, and assistance their welfare to come through social protection to officials, including training in micro-eco- of the vulnerable, not through business strength- nomic methods for calculating the impact of ening and better employment opportunities. One proposed regulations. of the key features of the Ugandan regulatory reform program was publication of numerous One of the outputs of the second phase project handbooks and guides that attempted to place was development and publication of a long-term regulatory reform processes and techniques in the strategy for regulatory reform. The strategy, cen- broader economic, political, and social context. tered on introducing regulatory best practices within government's policy and lawmaking pro- During the RBP Program, coordination of regu- cesses and systems, included an emphasis on: latory reforms was carried out through the RBP Program Coordination Committee, chaired by improving the capacity and efficiency of reg- the Ministry of Tourism, Trade, and Industry ulatory systems and processes; (MTTI) and containing the Cabinet Secretariat, Ministry of Local Government (MLG), Ministry implementing RIA as a tool for policy devel- of Finance, Planning, and Economic Develop- opment and review; ment (MFPED), and the Office of the Prime Minister, which met bi-monthly. With the end of strengthening public-private consultation the project and with the efforts to mainstream and policy dialogue; and regulatory reform in government processes, new coordinating mechanisms were identified to pro- ensuring that the processes are Ugandan- mote the implementation of the Long-Term owned and -driven, including incorporation Strategy for RBP. of gender, informal sector, and regional dimen- sions into the evaluation tools. The Cabinet Secretariat and the MLG are mem- bers of the Public Sector Working Group under Publication and adoption of the strategy was pre- the Public Sector Reform Program. The Work- ceded by a great deal of consultation and prosely- ing Group brings together ministries and tizing within government and among stakehold- departments that are responsible for driving ers, which was deemed necessary to counteract public sector reform activities. MTTI is a mem- several widely held views about the business envi- ber of the Competitiveness32 and Investment ronment and regulation. According to the DAI Climate Strategy Working Group that coordi- evaluation, there was a tendency within govern- nates activities falling under Pillar II of the ment ministries to view improvement of the busi- PEAP.33 RBP activities designed to improve the ness environment as wholly the concern of the business climate were being coordinated reform-coordinating institution, the Ministry of through the Competitiveness and Investment Finance, and the business reform coordinating Climate Strategy, whose overall objective is to units, such as the Ministry of Industry. improve delivery of public services that affect the private sector. There was also a belief that a focus on improving the business environment provides advantages to foreign investors at the expense of domestic busi- 32 MTTI, MFPED, Office of the Prime Minster, Ministry of nesses and the social sector. Improving the well- Public Service, Ministry of Lands, Housing and Urban Development, and MLG. being of the majority of citizens through better 33 The PEAP is established on five pillars: Pillar I: Economic regulation, business competitiveness and wealth Management; Pillar II: Enhancing Production, Competitive- ness and Incomes; Pillar III: Security, Conflict Resolution creation was not an easily appreciated message, and Disaster Management; Pillar IV: Good Governance; and and many Ugandans expected improvements in Pillar V: Human Development. 11 WB209_RCRU.indd 11 5/21/10 8:15:55 PM Relationships between RBP and these broader capacity and readiness of selected ministries to strategies have been built into the monitoring promote and implement the long-term strategy and evaluation framework developed within the or RBP. RBP Program. The framework for RBP was developed taking into account existing monitor- As a result of the RBP Program, significant ing and evaluation frameworks, particularly the capacities were developed to promote, manage National Integrated Monitoring and Evaluation and coordinate regulatory reform in Uganda, Strategy (NIMES).34 The framework was based and tools (RIA, monitoring and evaluation on institutional assessments that were undertaken frameworks, social impact analysis) have been in 2005 and 2006, first to assess use of RBP in introduced to support future development of preparation of policy submissions by ministries regulatory reform. However, effective capacity to the Cabinet,35 and second to evaluate the has not developed since the conclusion of the DFID-financed program, primarily because of reduced funding within the government's bud- 34 NIMES was developed in 2003 as a coordinating frame- work to ensure that all government programs (country- get. Competing reform priorities are a particular wide, sector-wide and local government) were assessed in a challenge for Uganda. RIA has had to compete harmonized manner. It acts as a public information tool that supports evidence-based planning and ensures that for attention and resources with other public sec- specific monitoring and evaluation systems are compatible tor policy management and efficiency improve- with each other and with national reporting requirements. ment tools being implemented, such as ROM. A 35 The assessment was based on a RIA Scrutiny Tool, which assigned percentage ratings according to use of best prac- multiplicity of reform initiatives and lack of tice criteria for developing high quality proposals. Subse- effective government harmonization has meant quently, the Cabinet Secretariat has created a Cabinet Decisions Making database, which is an inventory of poli- competition for the limited resources, capacities, cies, legislation and regulations. and staff time. 12 WB209_RCRU.indd 12 5/21/10 8:15:56 PM NATIONAL POLICIES AND INSTITUTIONS FOR REGULATORY REFORM Regulatory reform principles In 2006, the Cabinet endorsed RBP/RIA princi- and policies ples as the basis for policy and law-making in Uganda, and approved a long-term strategy for Governments should be clear about why they are RBP that is consistent with the best practice prin- pursuing private sector development and reform- ciples promulgated by OECD. The "Long Term ing regulation, the principles and objectives of Strategy for RBP in Uganda" identified five long- reform, and the responsibilities of the groups term strategic objectives and their specific modes involved in reform. The most effective way to do of implementation:36 this is to establish an explicit regulatory reform policy, based on internationally accepted princi- 1. Policymakers and regulators will use RBP ples of good regulation (See Annex A). in new policy and law-making by: Uganda has taken several steps over the past years securing official requirement for RIA; to prepare and adopt a formal strategy for RBP. implementing an RIA system; In June 2004, MFPED issued a "Guide to Good Regulation," containing a foreword by President supporting an RIA system; and Museweni, in which the president restated his building capacity. government's commitment to reducing proce- dural and regulatory obstacles to doing business 2. Policymakers will achieve effective public, in the country and minimizing the burden of private, and civil society engagement by: regulation. The president also sent a memo to the Public Service and the prime minister endorsing ensuring stakeholders contribute to strat- the importance of RIA and the need to make full egy development; use of RIA mechanisms in formulating policies 36 Reproduced in Section 3.3 of "Monitoring and Evaluation towards the private sector. Framework for the Long Term Strategy for RBP in Uganda," DAI 2006. 13 WB209_RCRU.indd 13 5/21/10 8:15:56 PM publicizing the strategy and make it widely to deliver fair, efficient comprehensive available; implementation and enforcement; and strengthening public-private dialogue: put strengthening redress and complaint effective public-private dialogue channels mechanisms in place for hearing and in place at national and local levels for reviewing complaints concerning adminis- articulating reform issues/priorities and trative unfairness ­ i.e. ombudsman. potential solutions; putting effective consultation practices in 5. The goal will be to have a Uganda-owned, place; and resourced, and publicly accountable: facilitating awareness of regulatory agenda strong institutional policy development through timely effective notification system/ and management framework in place; process so that new proposals can be tracked, strong coherent reform strategy/action plan and opportunities for intervention readily in place (incorporating ongoing review and identified. monitoring framework) and which is cross 3. Ministries will carry out regular review of ministerial, established roles, outcomes, existing regulations to ensure they con- budgets, targets, indicators, timetable, and form with RBP. This will involve: reporting requirements. accountability structure in place that forces designing a model review and monitoring ministries to be accountable for delivery of framework, internalized by ministries, and reform strategy; incorporated into ministry work-plans and widespread public awareness as to the rea- budgets; sons that reform is essential, its key ingre- a coordinating body that monitors and dients and who is responsible; reports on progress; informed media monitoring implementa- capacity in ministries to analyse and evalu- tion and "naming and shaming" default- ate the present situation, to consult, review ers; and costs, and benefits objectively, identify a good regulation index/scorecard system opportunities to reduce costs and options in place, including capacity to evaluate for delivery, and present the analysis in a changes/improvements in quality of the clear and convincing way; and regulatory environment for business. capacity in private sector and civil society to respond to ministerial reform proposals. Since its adoption, however, the strategy has not been implemented as intended. A Cabinet memo- 4. Provide fair, efficient, comprehensive imple- randum was prepared by MTTI stipulating that mentation and enforcement of regulations RIA should be used for the development of poli- by: cies and regulations. It called for the designation by government of a coordinating institution within making information on regulations, their government to champion implementation of RIA intent, and how they should be imple- and RBP. The Cabinet took a decision to endorse mented available to civil servants and pub- RIA/RBP principles as developed in Uganda, but lic at all levels; requested the Ministry of Public Service to con- increasing capacity in government and sider the proposed institutional arrangements and agencies to understand importance of, and to return to Cabinet with a recommendation. 14 WB209_RCRU.indd 14 5/21/10 8:15:58 PM To date, the Ministry of Public Service has not Policies and Practices. There were well-established submitted a proposal to Cabinet. Various sources and documented mechanisms within the Ugan- interviewed for this case study suggested that it was dan government for policy- and law-making this lack of action rather than the end of DFID before the implementation of the RBP Program. funding that was the primary reason the strategy These are laid out in the Cabinet Handbook, the has not been pursued. Neither the Cabinet Secre- Policy Development Guide and administrative tariat, which houses the RIA Unit, nor the MTTI, instructions issued by the Cabinet Secretariat. which houses the RBP Unit, has felt empowered to press the issue of implementation of the strategy. The Cabinet is the highest policy-making organ of the executive branch. Since executive authority is vested in the president, Cabinet is advisory to the president and supports him in carrying out Institutions and drivers to promote his executive powers. In practice, most policy regulatory reform decisions37 are considered in the Cabinet before Reform mechanisms with explicit responsibilities being implemented, and its approval of a bill sig- and authorities for managing and tracking reform nifies adoption of a government position to be inside the administration are needed to keep presented for Parliamentary consideration. In reform on track and on schedule, and to ensure Uganda, the Cabinet adheres to the principle of that regulatory quality standards continue to collective responsibility, while individual minis- improve. It is often difficult for ministries to ters are primarily responsible for policy formula- reform themselves, given internal countervailing tion and implementation within their areas of pressures. Initiating and taking up a reform agenda, responsibility. The following figure38 summarizes maintaining its consistency and pursuing system- the policy process in Uganda, elements of which atic approaches across the entire administration are discussed at greater length in the following is necessary if reform is to be broad-based. This paragraphs. requires the allocation of specific responsibilities and powers to agencies at the centre of govern- In Uganda, preparations for legislation and sub- ment. International experience has shown that ordinate regulations are usually initiated by the central oversight units are most effective if they ministry which carries policy responsibility. have the following characteristics: While the Constitution defines the general pro- cess of making new laws, there are no laws in independence from regulators (i.e. they are Uganda governing the process of law making, but not closely tied to specific regulatory goals); the process is laid out in considerable detail within the Cabinet Handbook, and detailed operation in accordance with a clear regula- guidance on preparing and submitting proposals tory policy, endorsed at the political level; to Cabinet are set out in the Policy Development Guide. horizontal operation (i.e. they cut across gov- ernment); 37 Individual ministers are responsible for discharging statu- tory powers of their portfolios. They can therefore make certain decisions without reference to the Cabinet. Gener- expert staffing (i.e. they have the information ally, a policy matter will be submitted to the Cabinet only and capacity to exercise independent judg- when it represents a new policy or a change in existing policy, entails significant financial implications, has signifi- ment); and cant impacts on other ministries, requires legislative changes, or is in response to a report from a Parliamentary links to existing centers of administrative and Committee. 38 Taken from page 38 of "Effective Advocacy in Uganda," budgetary authority (centers of government, Bannock Consulting, for the RBP Program and MFPED, finance ministries). February 2005. 15 WB209_RCRU.indd 15 5/21/10 8:15:58 PM From Idea to Decision Mid to long-term Rolling decision making Idea pool priority setting agenda · Government ideas · Strategic or annual · Database to track (Manifestos, state of the · Planning (policy focus) upcoming items nation, budget speeches) · Business planning (fiscal focus) · Regular monitoring · Bottom up (Ministry generated) · External events · Commitment database Cleared by MOFPED and Ministry submission Cabinet decisions Cabinet Secretariat · Prepared by Line Ministry staff and approved by Minister Cabinet minute Implementation Review and evaluation · Formal record of · Delivering on the Cabinets' decisions and government's decisions direction for action Ministry's responsibility Source: From page 38 of "Effective Advocacy in Uganda," Bannock Consulting, for the RBP Program and MFPED, February 2005. Ministries are required to follow the intra-gov- being submitted to Cabinet to enable him/her to ernment consultation guidelines laid out in the make an informed contribution during any Cabinet Handbook: "Ministers should also be debate. aware of the need for consultation where the sub- ject matter affects the portfolio interests of Cabinet papers must be submitted to the Cabinet another Minister.39 The principle for Cabinet Secretariat in good time before the relevant dead- decision-making is based on the assumption that line (usually several days before the relevant meet- all the Ministers at the Cabinet table have had ing). The practice has been for a new Cabinet access to the same level of information needed to submission to be circulated to all members and make a particular decision. It is therefore not fair then kept on pending business to enable minis- for a Minister to push an issue on the Cabinet ters, if needed, to consult their technical officials table when not every member has had the same on the proposals that are being brought before level of information on it. It is also important the Cabinet. The agenda and the accompanying that Ministers have the opportunity to consult Cabinet papers are required to be distributed and their technical officials on a new policy proposal received in the ministers' offices 48 hours before the scheduled meeting . . . . Amendments to Cab- 39 The Cabinet Handbook indicates that in most cases policy inet papers already submitted to the Cabinet Sec- proposals will have implications for other ministries, and that the onus is on the initiating ministry to ensure that all retariat will not be accepted unless the change is other organizations are consulted at the earliest opportu- minimal. If the amendments proposed are sub- nity and that their views are accurately reflected in the Cabinet paper. These aspects are emphasized also in the stantive then the usual practice is to withdraw the RIA Handbook and the Guide to Good Regulation. original paper and submit a new one." 16 WB209_RCRU.indd 16 5/21/10 8:15:58 PM More detailed instructions on consultation are who is appointed by the president in consulta- provided in the Policy Development Guide. It tion with the Public Service Commission. The appears that the various documents that shape the responsibilities of the secretary are: (a) to take consultation process do not prescribe time limits charge of the Cabinet Office, keep all Cabinet for consultation, and are not specific about mea- minutes and convey decisions of the Cabinet to sures that should be taken to ensure good quality the appropriate persons or agencies; and (b) to be consultation. However, in February 2005, Ban- the head of the Public Service and to assure the nock Consulting issued, in collaboration with general efficiency of the public service. In terms MFPED and the Private Sector Foundation, of duties as Secretary to Cabinet, the secretary is "Effective Advocacy in Uganda," a document that deputized by a deputy secretary (at permanent had the primary purpose of educating business secretary level) who is responsible for day-to-day organizations and NGOs about making their cases operations of the Cabinet Office. to the government. This document includes rec- ommendations on how to conduct consultations The mission of the Cabinet Office is to provide that are as relevant to government departments. support to the Cabinet in discharge of its respon- sibilities for formulating and implementing The Rules of Procedure for Parliament require that government policy. Its strategic objectives are bills are submitted to Parliament, after publica- quoted as: tion in the Gazette,40 with an explanatory memo- randum "setting out the policy and principles of supporting the presidency in providing lead- the Bill, the defects in the existing law, if any, the ership in public policy management, and remedies proposed to deal with those defects, and promotion of good governance; the necessity for introduction of the Bill."41 Moreover, "all Bills shall be accompanied by a providing support to the Cabinet in its man- certificate of financial implication setting out: date for formulating and implementing pol- (a) the specific outputs and outcomes of the Bill; icy; and (b) how those outputs and outcomes fit within the overall policies and programs of government; facilitating the policymaking process and (c) the costs involved and their impact on the coordinating implementation. budget; (d) the proposed or existing method of financing the costs related to the Bill and its Its specific functions, as laid out in the Cabinet Feasibility."42 Handbook, are to: The Cabinet Office is the main secretariat of the support the political authorities in translat- government, and is intimately involved in the ing their manifesto into policies and pro- formulation of policies and laws. The Cabinet grams for implementation by developing Office43 is headed by the secretary to the Cabinet, policy capacity across government; 40 Where the House determines upon the recommendation support ministries in developing capacity for of the appropriate Committee of the House appointed policy analysis and in the development of for the purpose, that a particular bill is of an urgent nature, that bill may be introduced without publication. Cabinet memoranda and the management of (clause 103). policy work, including organization of policy 41 Clause 101. The memorandum has also to be signed by a workshops; minister. 42 Clause 102. The memorandum has to be signed by the Minister of Finance. The Cabinet Handbook specifies that provide secretariat services to Cabinet and its the financial implications shall cover a period of not less than two years. committees, including preservation of Cabi- 43 Also known as the Cabinet Secretariat. net minutes; 17 WB209_RCRU.indd 17 5/21/10 8:16:00 PM support Cabinet ministers in implementa- Parliament is the penultimate stage in the law- tion of Cabinet decisions and in monitoring making process. The bill is read the first time their implementation; and finally and most without debate or question; it is referred to the recently appropriate committee, which is supposed to report back within two months. At the second institutionalize RBP within government to reading, the committee's report is presented, facilitate better policy- and law-making. and the merits and principles of the bill are debated and may attract a motion to approve. If There are other ministries that are involved in the the motion is approved, the parliament is con- regulatory process. stituted as a committee of the whole, and the bill is discussed clause by clause. Upon conclu- The Ministry of Finance, Planning and Eco- sion of the debate, the bill is read a third time. nomic Development44 is consulted on draft poli- cies, laws and regulations affecting the budget and The president is the final stage of the process, fiscal policy. It provides the sponsoring ministry through his powers to promulgate laws passed by with a certificate to confirm that financial resources Parliament. The president may return bills to to support the initiative will be available. parliament for reconsideration a maximum of three times, and after parliament has reconfirmed The Ministry of Justice and Constitutional the bill three times, it enters into law. Affairs45 is consulted on legal issues arising from policies. It provides the sponsoring ministry with The Deregulation and RBP Program focused a certificate confirming whether legal resources their efforts on building, on this existing deci- will be available to implement the initiative. In sion-making structure, a central regulatory agency the case where the policy proposal entails new to coordinate the introduction of better regula- legislation or amendment of existing laws, the tion. Starting in 2000 and until the end of 2005, minister responsible is required to prepare and RBP/RIA initiatives were centered on the submit to the Cabinet the principles for the legis- MFPED. This base in the ministry gave the proj- lation.Once approved, the ministry issues draft- ect status and credibility, and MFPED had a ing instructions to the first parliamentary counsel strong team of senior managers and staff who in MJCA. The minister submits the draft bill for benefitted from the project and initially gave Cabinet approval, with the Cabinet memoran- active support. The ministry played a pivotal role dum accompanied with a certificate issued by the in supporting the introduction of RIA into pub- first parliamentary counsel saying that the bill is lic policymaking. consistent with the principles. After Cabinet has approved the draft bill, the first parliamentary As the project entered its second phase, however, counsel instructs the government printer to pub- it became clear that MFPED was not demon- lish the bill in the Gazette and the bill is then strating commitment and ownership needed to placed on the Parliament's order of business. guarantee sustainability. MFPED had many calls on its time and resources, and its responsibility The Ministry of Public Service46 is consulted for economic management was diverted increas- on the implications of the proposed policy for the ingly to fiscal and macro issues. Changes in key civil service and human resources required for staff also resulted in less engagement with private implementation, and provides the sponsoring sector issues. Therefore, it was decided to house ministry with a certificate to that effect. the RBP Program team, for its remaining time, in MTTI, which was attempting to strengthen its 44 www.finance.go.ug 45 www.justice.go.ug capacity and staff, particularly in policymaking 46 www.publicservice.go.ug for industrial and commercial development. The 18 WB209_RCRU.indd 18 5/21/10 8:16:00 PM RBP team moved in early 2006, shortly after projected substantially increased levels of compe- appointment of a new minister of MTTI, who tence and professionalism, and having shown had been a member of the Parliamentary Task- itself to be committed to international best prac- force on Good Regulation and a strong supporter tice standards . . . . In addition, strong institu- of the project. The RBP unit in MTTI was given tional support and leadership has come forward the responsibility for: from the Office of the Prime Minister." The Cab- inet Secretariat has been able to use its powers to strengthening the quality of policymaking, determine the Cabinet agenda to promote RIA legislation, and regulation by consolidating and regulatory best practice. RBP/RIA within MTTI and championing regulatory good practice for the business The Office of the Cabinet Secretariat has pro- environment for across government; vided a home for the RIA Unit, which was made responsible for: championing best practice for consultation in policy development/ review and best prac- championing institutionalization of RIAs tice in setting agendas for public-private sec- across government, including sustained sup- tor dialogue in order to ensure better policy port for RIA case study work in six selected outcomes; and ministries and rolling out RIA across all gov- ernment ministries; monitoring and evaluating progress in imple- mentation and impact of business-related issuing policy guidance and new policy sub- regulatory reforms over the long term period, mission frameworks based on the RBP and sharing outcomes with other key stake- approach to policymaking to all government holders in the economy in line with the mon- ministries, departments and agencies; and itoring and evaluation strategy and imple- mentation toolkit. monitoring quality of draft policy submis- sions to the Cabinet, and undertaking peri- In 2006, another champion for the RBP emerged. odic assessments and sharing them with other According to the final report prepared by DAI, stakeholders responsible for public sector the Office of the Cabinet Secretariat in the Office reform under the newly launched Public Sec- of the Presidency became the strongest institu- tor Reform Strategy. tional champion for the RBP program. As the report indicated, "the Office of the Cabinet Sec- and the Secretary to the Treasury. The Policy Coordination Committee reviews progress in the implementation of gov- retariat. . . . despite it formerly being perceived as ernment policies and programs and reports to Cabinet bian- having little more than a "ticking and totting nually. This committee is supported by the Committee of Permanent Secretaries and the Technical Level Committee. role," is now being entrusted with key responsi- Sector working groups, comprising of representatives of bilities in government policy monitoring, man- stakeholders in various sectors, review policy at the sectoral agement and performance evaluation,47 having level, and submit reports and recommendations to the three coordination committees through the Technical Level Com- mittee. The Office of the Prime Minister is charged with the 47 In Uganda, the Cabinet Office in the Office of the President role of ensuring that government policy and programs are coordinates policy proposals on their way to the Cabinet. The effectively and efficiently implemented, and a National Prime Minister's Office coordinates and ensures the delivery Integrated Monitoring and Evaluation System (NIMES) of agreed policies. General policy coordination in govern- has been established to realize this objective. NIMES is ment is supported by a three-tier committee arrangement supported by working groups of geographical information namely: a Policy Coordination Committee (a committee of systems, district information systems and research and Cabinet) chaired by the prime minister; the Committee of evaluation systems. These working groups are steered by a Permanent Secretaries under the chairmanship of the head committee of permanent secretaries and a National Moni- of the public service and Secretary to Cabinet; and a Techni- toring and Evaluation Coordination Committee of cal Level Committee under the alternating chairmanship of Experts, with the Office of the Prime Minister providing the Permanent Secretary in the Office of the Prime Minister the secretariat. 19 WB209_RCRU.indd 19 5/21/10 8:16:00 PM Another champion that was to have an important out analysis of the ministry's policies on the basis coordinating role was the Inspectorate Depart- of ad-hoc requests from the ministry. An inter- ment of the Ministry of Local Government. Dur- view with the head of the PAU revealed that there ing the past decade, Uganda has decentralized is no active work program for business regulation administrative responsibility and many aspects of reform, that the PAU is not carrying out any fee-setting and revenue collection to local author- activities related to regulatory reform, that the ities. The Local Governments Act of 1997 and unit has no free time for regulatory reform activi- new legislation relating to specific economic sec- ties because of its primary responsibilities, and tors have had an impact on responsibilities and that the head of the unit is the only staff who has procedures. While the decentralization process been trained in RBP/RIA skills. The PAU has can offer many benefits once it is complete, it is been authorized to recruit three more staff, and in many ways unclear and requires a more consis- the head of the unit considered that doubling of tent and systematic approach. As a result, there is staff would provide some potential for carrying duplication (e.g., licensing and fees) and a focus out RIA work. on revenue generation at the regional and local levels that does not consider the combined bur- Ideally, the head of the PAU would like to recruit den of multiple taxes and licensing fees on the a lawyer, but is not confident that MTTI would business community. be able to retain a candidate for more than a few months.49 Finally, the MTTI in general has inad- Other focal points for regulatory reform were set equate capacity and staffing in relation to its up within five ministries (Ministry of Health, responsibilities, and is not able to provide leader- Ministry of Education, Ministry of Water and ship to a business regulation reform. Environment, Ministry of Lands, Housing and Urban Development, and the Ministry of Tour- The RIA Unit in the Cabinet Office is also staffed ism Trade & Industry.) that were part of the RIA at minimal levels, which permits it to apply the pilot project, and capacity for social impact anal- Adequacy Checklist as a guide for its scrutiny of ysis was built in the Uganda Law Reform Com- draft Cabinet papers. However, the fact that it mission (ULRC), Ministry of Gender, Labor and contains only three staff ensures that it is not able Social Development, and Uganda Management to expand its horizons to promoting introduction Institute (UMI). of RIA. However, these institutional arrangements have not been robust enough to maintain the impetus Coordination between levels of for regulatory reform activities. Rather than government becoming a separate funded unit in the MTTI, the RBP program moved to the Policy Analysis International experience has been fairly consis- Unit48 which already existed in the MTTI. Cur- tent in advocating that regulatory reform should rently, the PAU/RBP unit consists of three staff, occur at all levels of government. This difficult two economists, and one statistician. It is fully task is increasingly important as regulatory engaged in coordinating formulation of the min- responsibilities are shared among many levels of istry's budget and development plans and carrying government, including supranational, interna- 48 Uganda adopted a policy in the mid-1990s to establish tional, national, and sub-national levels. High PAUs in each ministry to provide a planning and policy quality regulation at one level can be undermined capacity. These units were generally staffed with econo- mists and statisticians, and were a natural home for regula- 49 Demand within the private sector for lawyers is very robust. tory responsibilities. As indicated later, the PAU staff It is typical for young lawyers to join government and then, included some of the first civil servants trained under the after establishing a record, to be hired away by private legal RBP Program. firms. 20 WB209_RCRU.indd 20 5/21/10 8:16:00 PM by poor or inconsistent regulatory policies and Within this administrative structure, a district is practices at other levels, and coordination between divided into counties and municipalities or towns, levels of the administration can vastly expand the depending on their size and other criteria set by benefits of reform. Equally, central governments the MOLG. Every county is sub-divided into can undermine the purpose of decentralization sub-counties, while municipalities are divided and devolution by adopting heavy-handed regu- into divisions. Sub-counties, divisions and towns latory policies. The policies and mechanisms for are sub-divided into parishes and wards, respec- coordination between levels of administration are tively, and these are further sub-divided into vil- thus becoming increasingly important for the lages, the lowest administrative areas. development and maintenance of an effective regulatory framework. The rationale for decentralization has been politi- cal, oriented towards restoring democracy and National ­ local returning power to the people. The constitution at independence in 1962 established a decentralized As indicated in section 1.3, Uganda has been pur- system combining federalism with a unitary state. suing a decentralization program since the late It gave federal status to the Kingdom of Buganda 1980s. A highly centralized state has been gradu- and semi-federal status to the kingdoms of Ankole, ally transferring powers, functions and services Bunyoro and Toro and the territory of Busoga, from central government to local councils. Decen- and provided for the establishment of councils in tralization is expected to contribute to develop- the districts of Acholi, Bugisu, Bukedi, Karamoja, ment by empowering the people and institutions Kigezi, Lango, Madi, Sebei, Teso and West Nile. at every level of society, including public, private, In 1966, the constitution was abrogated, and and civic institutions; improving access to basic replaced with a new constitution that emphasized services; increasing people's participation in deci- centralized power and a unitary state. Subse- sion-making; assisting in developing people's quently, the Amin regime, that took power in capacities; and enhancing government's respon- 1971, dissolved district and urban administrations siveness, transparency and accountability. and established provincial administrations led by governors, many of whom were military officers. The central government has two offices of presi- dent and prime minister and 28 line ministries, From the beginning of the National Resistance one of which is the Ministry of Local Government Movement's rule, decentralization was a central (MOLG), which oversees local governments' part of the program, and it has been embodied in administration. There are currently 82 district both the 1995 constitution and the 1997 Local councils (LCV) and one city council (Kampala) Government Act.50 One can point to seven charac- that have the powers of a district council: Kampala teristics of Uganda's brand of decentralization. has five divisions that constitute lower local gov- First, it was seen as crucial to establishing good gov- ernments with the status of sub-county councils. ernance and democracy. The second characteristic The rural districts' lower level governments comprise 903 sub-county councils (LCIII) and 50 The Local Government Act has been amended four times, 63 urban councils with some autonomy from reflecting the gradual evolution of decentralization policy and administrative structures. First, in July 1997, it was the district. The urban councils comprise 13 amended to provide for the establishment of interim local municipal councils (LCIV) with 34 municipal councils for newly created local government units. Second, divisions and 50 town councils (LCIII). In addi- in 2001, it was amended to give effect to decentralization of powers. Third, in November 2001, amendments were tion, there are administrative councils consisting introduced relating to village and parish executive commit- of County Councils (LCIV), Parish Councils tees. And fourth, in November 2003, it was amended to facilitate establishment of the Local Government Finance (LCII) and Village Councils (LCI). There are Commission and to repeal sections of the act that became currently 1,050 local government units. part of the Local Government Finance Commission Act. 21 WB209_RCRU.indd 21 5/21/10 8:16:00 PM has been that decentralization policy has been Common Market for Eastern and Southern developed gradually, starting with giving local gov- Africa (COMESA). ernment watch-dog and policymaking functions, and then transferring financial and personnel func- The Treaty for the Establishment of the East Afri- tions. In general, functions have been transferred as can Community was signed on Nov. 30, 1999, at capacity at the local level has developed. In the Arusha, Tanzania, by the three partner states: financial realm, recurrent budget responsibilities Kenya, Tanzania, and Uganda. It entered into were transferred before the development budget, force on July 7, 2000, after the necessary ratifica- since capacity to produce development plans tion. It rose from the ashes of the former com- required considerable institutional investment. munity which was formally dissolved in 1977 in an atmosphere of mutual recrimination, barely The third has been the principle of devolution, 10 years after its creation in 1967. The first step building on the public service functions of the has been to create a Customs Union. A common resistance councils that had carried out the func- tariff was adopted on Jan. 1, 2005. Currently, a tions of the failed state in the 1980s. Devolution draft protocol for the creation of a common mar- then was defended as a way of giving citizens deci- ket is being finalized.51 sion-making powers in their areas of jurisdiction. Regulatory reform in Uganda has not yet been The fourth characteristic is that local councils driven by the demands of the East Africa Com- have been granted wide-ranging powers, includ- munity since the EAC has yet to devise formal ing both executive and legislative powers, so that regulatory standards for its members. However, they are empowered to make local laws, as long as there are a number of regulatory reform areas that they are not inconsistent with the constitution or are now being developed as a result of the Cus- other laws. Local councils have powers to make toms Union and the Common Market. In the development plans based on locally determined case of the Customs Union, each of the member priorities; to make and implement their own countries is carrying out customs modernization budgets, to appoint statutory commissions, projects, which are meant to lead to harmoniza- boards and committees for personnel, land, pro- tion of customs procedures. In addition, atten- curement and accountability. tion is being paid to non-tariff barriers, which Fifth, districts can, in accordance with Article have been identified as serious hindrances on 178 of the 1995 constitution, cooperate and form trade and business operations. various administrative structures to manage the cooperation. Sixth, the devolution policy pre- Following the signing of the Customs Union in sumes that line ministries will gradually concen- 2004, the East Africa Business Council (EABC)52 trate on national standards and policy, leaving commissioned a study to identify the scope and direct delivery of services to the local govern- severity of non-tariff barriers. The study found ments. And finally, the constitution establishes a that NTBs have evolved around business registra- formula for determining the distribution of rev- tion and licensing, customs procedures, police enue between central and local government, road checks, road axle regulations, and standards including a basic "unconditional" grant and other and certification requirements. Between Novem- conditional grants. ber 2006 and February 2007, a follow-up National ­ international 51 The draft protocol is being presented to the 7th meeting of the Sectoral Council on Legal and Judicial Affairs, sched- uled for April 16­24, and then to the Summit of Heads of Uganda belongs to two regional organizations ­ EAC governments, scheduled for April 29­30. The East African Community (EAC) and the 52 A consortium of traders from the member countries. 22 WB209_RCRU.indd 22 5/21/10 8:16:01 PM Community Business Climate Index Survey was the EAC Secretariat to identify, report on, and conducted to assess the business climate and to monitor the status of non-tariff barriers.53 estimate the impact on business operations. Sub- sequently, the NTB Monitoring Mechanism was 53 For details, see "Proposed Mechanism for the Elimination of NTBs in EAC," a study carried out for EAC and EABC developed as a joint initiative of the EABC and by Simon Ngatia Ihiga (Trace and Investment Consortium, Nairobi) and ICON Institute, under the GTZ Project "Support of Regional Business Organizations in East Africa (SRBO-EA). 23 WB209_RCRU.indd 23 5/21/10 8:16:01 PM ADMINISTRATIVE CAPACITIES FOR MAKING HIGH QUALITY REGULATION Administrative transparency and Uganda does not have specific requirements or predictability procedures for making laws and regulations. However, the Constitution provides a basic A transparent regulatory system is an essential framework for the lawmaking process. Article 79 feature of a stable and accessible regulatory envi- gives Parliament the right to make laws, and stip- ronment that promotes competition, trade, and ulates that no other person or body has this right, investment, and helps ensure against undue influ- except when conferred by an Act of Parliament,54 ences by special interests. It reinforces the legiti- and allows the Cabinet and individual MPs to macy and fairness of regulatory processes, but it is propose bills to Parliament.55 not easy to establish in practice. Transparency involves a wide range of practices, including stan- The formal process of making policies and laws dardized processes for making and changing regu- in Uganda centers on the Cabinet Memorandum, lations; consultation with interested parties; plain preparation of which is initiated by a ministry or language in drafting; publication, codification, and other ways of making rules easy to find and 54 (1) Subject to the provisions of this Constitution, Parlia- ment shall have the power to make laws on any matter for understand; and implementation and appeal pro- the peace, order, development, and good governance of cesses that are predictable and consistent. Uganda. (2) Except as provided by this Constitution, no person or body other than Parliament shall have power to make provisions having the force of law in Uganda except under authority conferred by An Act of Parliament. Article Provisions for law-making procedures 79 of Chapter 6 ­ the Legislature. 55 Article 94, section (4) (b) ­ a member of Parliament has the right to move a private member's bill; (c) the member moving Transparent and consistent processes for making the private member's bill shall be afforded reasonable assis- and implementing laws and regulations are fun- tance by the department of government whose area of opera- tion is affected by the bill; and (d) the office of the attorney damental to ensuring public confidence in the general shall afford the member moving the private member's rulemaking process. bill professional assistance in the drafting of the bill. 24 WB209_RCRU.indd 24 5/21/10 8:16:01 PM government agency. All draft cabinet memoranda recommendations: the format for policy submis- introducing new policies are submitted to and sions was adjusted accordingly, and the RBP Pro- vetted by the Cabinet Secretariat before being gram team also helped the Cabinet Secretariat placed on the Cabinet agenda. The secretariat prepare a new Cabinet Handbook and reviewed submits its analysis to the vice president (who has the new Policy Development Manual, prepared by been mandated by the president to chair regular the Cabinet Secretariat. The manual consolidates meetings of the Cabinet), and the vice president all past policy guidance to ministries and aims to may require a meeting with the sponsoring min- rationalize policymaking processes across all istry and other ministries affected by the pro- Ugandan ministries. The manual is premised on posed policy to iron out any differences that can a RBP/RIA approach to making policies and be resolved at the technical level. Prior to the laws. The manual also provides authoritative RBP program, it seems that the vetting by the guidance on policy design, development, and Secretariat concentrated upon ensuring that con- implementation to all Ugandan ministries and sultations with affected ministries had taken agencies. A comprehensive guideline for RIA has place, and that legal and financial implications been issued along with an RBP-based framework had been presented clearly to the satisfaction of for the submission of principles for new laws. the Ministries of Finance and Justice. The Cabinet Secretariat's Adequacy Checklist, During the RBP Program, administrative proce- which guides staff in scrutinizing draft memoranda dures for development of policy and legislation from all Ugandan ministries, was also reviewed by were revised to incorporate best practices of RIA. the RBP Program, and improvements were pro- The "Guide to Good Regulation" summarized posed and adopted, as shown in Figure 1. these practices as follows: "consultation is vital to designing an effective law . . . laws must be drafted Consultations in the development of policy are in simple straight-forward language . . . wherever stressed in all of the documents emanating from possible, laws should specify the goal to be the RBP Program. The Guide to Good Regulation achieved . . . regulators must be able to justify issued in 2004 under a foreword by the president decisions on the basis of having carried out full stressed that "consultation is vital to designing an and fair consultation, proper research and quan- effective law." The Guide to RIA indicated that titative analysis . . . an RIA should always be pre- "effective consultation is vital to producing a high formed when a proposed new policy or law would quality RIA . . . (and) consultation should start appear to have significant consequences on busi- early in the process and continue throughout." It nesses . . . proposals and the analysis behind them added that "effective consultation needs to be should be widely published before decisions are preceded by analysis of the individuals or groups taken . . . implementation of the law must be con- that will be affected . . . and the individuals or sidered early in the process and clearly communi- groups that have the ability to impact on the cated to all stakeholders . . . once a new law has proposed new measure." The RBP Program sup- been introduced, it should be monitored to ported not only assistance to government minis- ensure it is working." These principles have been tries and departments to improve their abilities to reflected in other documents that were intended carry out policy consultation but also assistance to guide the government's policymaking practices to business associations and civic groups to and procedures. improve their ability to participate effectively in these consultations. The Program drafted and The RBP Program team reviewed then-existing circulated widely a manual, "Effective Advocacy in guidelines for submissions to the cabinet and Uganda: A Guide to Impacting Policy and Law recommended improvements in line with RBP Making." 25 WB209_RCRU.indd 25 5/21/10 8:16:01 PM Figure 1: Adequacy Checklist for Cabinet Memoranda Title of Paper: Code ASPECTS OF REVIEW YES/NO COMMENT 1.0 Title 1.1 Is the title of the memo clear? 1.2 Is the title of the author/minister spelled out? 2.0 Introduction/Background 2.1 Is reference made to previous Cabinet decisions? Is a brief explanation of the reasons for the paper made? Is a summary of developments made? (establishing the context) 2.2 Is the object of the memo stated? 3.0 Main body of the Memorandum 3.1 Is it clear what is the fundamental problem being addressed? (elaboration of the problem) 3.2 Is the magnitude of the problem identified? Is a case made for why government action is needed? 3.3 Is there a clear articulation of the policy objectives sought by government action? Have the outcomes, goals or targets of the proposed government action been reflected in the policy objective? 3.4 Are linkages to the relevant strategic objectives of the country's overarching policy frameworks (e.g. the PEAP, PMA, MTCS, etc.) established? 3.5 Are aspects of the consultative process highlighted? (Form of consultation, articulation of the significant concerns of those consulted, how the concerns were addressed, if there was no consultation; is an explanation made?) 3.6 Is the proposed course of action clearly articulated? 3.7 Is an implementation arrangement outlined? 3.8 Are the cost implications specified? Has MFPED cleared this? 4.0 Conclusion 4.1 Are the recommendations being made clearly stated? Is the approval, authority, direction, agreement, deferment, note, etc. that is being sought reasonably summarized? 5.0 Attachment and References 5.1 Is a Certificate of Financial Implications of MFPED attached? 5.2 Is an outline of the financial implications and modalities of implementation of the draft bill/policy attached to the memo? 5.3 Are attachments referred to within the memo attached and/or are relevant attachments appended to the memo? 6.0 Address of Author and Date of initiation/submission 6.1 Is the address of the author/minister indicated at the bottom of the last page? 6.2 Is the date of writing or initiating of the memo indicated at the bottom of the back page? The Adequacy Checklist imposes extensive obliga- given the limited availability of staff trained in tions on the sponsoring ministry and the Cabinet policy analysis and RIA within the ministries and Secretariat in the development and evaluation of the small size of the Cabinet Secretariat, that the proposals put before cabinet. It is not conceivable, system can be implemented as designed. 26 WB209_RCRU.indd 26 5/21/10 8:16:06 PM Provisions for consultation access to a contact database for private sector and civil society organizations. The framework for Consultation is a systematic attempt to discover policy consultation and dialogue is not yet well the opinions of groups affected by regulation and established, especially for cross-cutting issues, and to obtain data useful in regulatory development there are a number of gaps in the dialogue frame- and analysis. It may be general (e.g. advertise- work at sectoral and local government levels. ment for comment) or specifically targeted (e.g. focus groups, working parties). Consultation can Opportunities for external input to the policy contribute to regulatory quality by bringing new process in Uganda are often limited, and consulta- ideas, perspectives and data to the attention of tion on policy has not yet reached a sufficient stage regulators; helping to balance opposing interests of regularity and formality to be considered trans- and reduce the risk of capture; identifying unin- parent and inclusive. Consultations still mostly tended effects and practical problems; gathering take place through personal contacts with a minis- information on compliance issues; and by pro- ter or senior civil servant, informal meetings/ viding a quality check on the administration's conversations56 with government representatives, assessment of costs and benefit. Consultation can or working groups with junior civil servants. Only also enhance voluntary compliance by creating a a few formal channels exist for regular, transpar- sense of "ownership" of the resulting regulations, ent, and structured consultation. reducing reliance on enforcement and sanctions. Deficiencies in the consultation process with Inter-ministerial consultations play a major business associations and civil society due to poor role in the policy development process. Other organization by the government are often rein- ministries can evaluate how a policy option can forced by inadequacies in the private sector's skills affect their portfolio areas and can provide feed- and capacity to effectively advocate. This often back on the implications of a proposal, including means that limited evidence-based input into unforeseen impacts. It is the responsibility of the policy and law making from outside government ministry preparing the cabinet memorandum to is available. Particular weaknesses among Civil undertake the necessary inter-ministerial consul- Society Organizations/Business Membership tations. Ministries are required to circulate the Organizations (CSO/BMOs) at the moment draft cabinet memorandum to the affected min- include the inadequate involvement of members istries early in the process to provide enough in institutional issues and participating in actual lead-time so that whatever differences there are advocacy campaigns; ineffectively presented pol- can be effectively addressed. As the previous sec- icy position papers which lack an evidence-based tion indicated, the Cabinet Secretariat works to foundation; and the lack of actionable short-term ensure that proper consultations within govern- advocacy strategies around specific issues. CSO/ ment take place as policies, legislation and regu- BMOs need to get better in these and other areas lations are developed. if they are to become credible, sought-after con- tributors to policy and law making. Public consultations can range from informal consultations to one-time meetings with stake- The RBP Program prepared and circulated, under holders to extended formal public consultations a foreword by the Private Sector Foundation, a on discussion papers or draft legislation. In comprehensive guide to consultation issues titled, Uganda, public stakeholder consultation proce- "Effective Advocacy in Uganda: A Guide to Impact- dures are not particularly institutionalized in the ing Policy and Law Making." Its objective was to policy management process. Few ministries have permanent committees or round tables with sec- 56 Communications are often through e-mail and telephone calls, which gives contacts an informal quality, and it is not tor representatives, and ministries do not have usual for them to be recorded. 27 WB209_RCRU.indd 27 5/21/10 8:16:07 PM provide practical guidance and consultation best associations and NGOs to carry out RIA, if they practices on how to affect policy making, and are unaware of the government's legislative agenda combined international best practice and experi- and unable to prepare analyses and their posi- ences specific to Uganda. tions in time to influence the policy debate. At the parliamentary level, there appear to be a The advocacy document indicates that, in many number of serious deficiencies in the consultative cases, very little warning is given prior to parlia- process in Uganda relating to legislation, in spite mentary committee meetings, and organizations of the introduction of a parliamentary Web site often report having to locate agendas and meet- that offers information on its activities. The key ing schedules without assistance from the com- sources of strategic policy issues for inclusion in mittee. In addition, it is extremely difficult to the policy and legislative agenda include: track legislation, and relevant CSO/BMOs do not necessarily hear about a new law until a final President's Election Manifesto; draft is distributed. As a result, the response time for comment and input into new legislation is Budget Speech; often very short. In addition, as little as only one or two weeks may be given for responses and State of the Nation Address: comments on lengthy or complicated laws. As a result, the quality of responses may be low. Finally, The State of Nation Address is the first formal little or no feedback is provided to organizations opportunity for the government to outline its leg- on the result of prior consultations, including islative plans, and is repeated each year at the how their input has affected the contents of the beginning of the parliamentary calendar. It is a proposal. public speech given by the president, and contains proposed executive programs, expected bills, and Yet due to the success of the government's democ- programs for the year. The legislative program ratization and empowerment programs, there are provides an annual framework within which pri- a number of civil society organizations that are orities are established for the management of pro- extremely vocal and alert. Increasingly, these posed legislation. interest groups are making significant contribu- tions to policy development at the point of However, it is not clear whether more detailed approval in Parliament. Within this procedure, information is made available on the legislative there are opportunities for civil society and pri- program during the year.57 In the recent past, vate sector engagement in the process. Particu- parliament published in the print media This larly at the committee stage when a draft bill is Week in Parliament. The publication was widely being scrutinized, parliament allows for witnesses considered to be informative, and included par- from the private sector and civil society to make liament's weekly agenda that benefited all stake- presentations on various matters related to the holders in the legislative process, including the bill. In practice, however, many parliamentary private sector. It is important that such a calendar committees are not pro-active in soliciting exter- be publicly available to allow for effective consul- nal input and often give CSO/BMOs inadequate tation. There is little point enabling business time to prepare their testimony. 57 During the RBP Project, parliament began providing to Parliament recognizes the need for a deliberate DAI the work programs of parliamentary committees, which DAI channeled to civil society groups, presumably mechanism to support private sector engagement. providing assistance to those groups in preparing presenta- At present, there is no formal mechanism in place, tions. There is no evidence that the effectiveness was fully evaluated, and with the end of DAI's participation in so media coverage of parliamentary business tends Uganda, it is presumed that the initiative ended. to have the biggest influence, highlighting essential 28 WB209_RCRU.indd 28 5/21/10 8:16:07 PM elements of parliament's agenda, including issues the Uganda Law Reform Commission. Some of interest to the private sector. Parliament rec- ministries have Web sites from which relevant ognizes the need to revive this initiative but it is regulations and decisions are available. The Law important to note that private sector engage- Development Center is mandated to prepare and ment needs to be based on more than a weekly publish law reports and other legal material, but publication. to date has published only High Court Bulletins. Today, the other legal reporting comprises the Parliamentary committees also need to change Uganda Commercial Law Reports59 and Kampala the way they plan and deliver their meetings, Law Reports.60 including dealing more proactively and system- atically with external parties, making them more Under the RBP Program, while the RIA case aware of their deliberations, providing them more study work largely focused on strengthening time to prepare submissions and providing feed- capacity in policy research and analysis in the back on how these submissions influence the pilot ministries, improved capacity to communi- contents of proposals. Plans are underway to cate policy positions, including draft submis- revive an Internet-based facility that allows the sions to cabinet, was considered an important public to track the progress of bills in parliament, area that merited specific attention. The Cabinet therefore making the legislative process more Secretariat, with the support of the RBP team, accessible to the wider public. organized training for permanent secretaries and other senior government policy officials. The workshops, among other issues, addressed current Communication of regulations practices and common constraints encountered Another dimension of transparency is the need while communicating policy positions. Atten- for the government to effectively communicate tion was also given to capacities, roles, and the existence and content of all regulations to the responsibilities of ministries with regard to com- public. This means that the regulations are avail- municating policy effectively, policy submission able to the public at reasonable cost, in a language writing, and need for communication strategies that can be easily understood. Communication is as part of policy development. also essential to achieving effective compliance. Over 50 government officials, including perma- nent secretaries, benefited from this training. Law and judicial reporting has been generally Building on this training, the RBP team worked weak in Uganda over the past decades.58 In with the Cabinet Secretariat to prepare a draft Uganda, the full text of new laws and regulations cabinet memorandum on introducing a policy is published in the Official Gazette, which is pub- communications strategy across government. In lished on a weekly basis. The Ministry of Justice is addition, the project developed a database61 for responsible for preparing volumes of legal registers tracking draft policy submissions from ministries codified according to subjects, and an electronic and cabinet decisions. By the end of the project, version of the laws and regulations is accessible the database was still under construction, but (for an annual fee) from a Web site maintained by making progress. Since then, according to the 58 In the 1950s, Uganda Law Reports were published, but they Cabinet Secretariat, further progress has been slow, were discontinued in 1957, and East Africa Law Reports, in part because of funding issues for the computer which covered decisions of the Court of Appeal for East Africa and the superior courts of the constituent territories, 59 The reports cover decisions of the Commercial Division of namely, Kenya, Uganda, Tanzania, Aden, Seychelles and the High Court of Uganda since its establishment in 1996. Somaliland, were published from 1957 to 1975, when they The first such report, covering judgments from 1997­98, were discontinued following the dissolution of the East was printed in 2005. African Community. They have been reintroduced by Law 60 These are publications by a private Ugandan lawyer. Africa with the launch of EA 2000 and EA 2001. 61 The database is constructed in MS Access. 29 WB209_RCRU.indd 29 5/21/10 8:16:07 PM specialists and in part because of the small staff evading regulation and also the complaints from and broad responsibilities of the Secretariat. the private sector about unclear requirements and arbitrary enforcement. These weaknesses were Currently, there are no formal requirements for acknowledged in the "Guide to Better Regulation," "plain language" drafting. However, the Guide to which recommended that enforcement costs and Better Regulation does stipulate that regulation benefits should be dealt with explicitly in the RIA. should strive to be simple and transparent, which implies a requirement for straight-forward lan- guage. Public redress and appeals Mechanisms to redress regulatory abuse must also Compliance and enforcement of be in place, not only as a fair and democratic safe- regulation guard in a rule-based society, but also as a feedback mechanism to improve regulations. The first stage The adoption and communication of a law or of seeking redress is to complain directly to the regulation is only part of the regulatory process. government agency that has taken the decision. The law can achieve its intended objective only if The second stage is to seek review by the courts. it is adequately implemented, applied, complied There may be other institutions for redress, such with and enforced. A low level of regulatory com- as arbitration, mediation, or an ombudsman. pliance threatens the effectiveness of regulations, public policies, and ultimately the capacities and In Uganda, the rights to redress are embodied in credibility of governments in taking action. Com- general terms in chapter 4 of the Constitution. pliance and enforcement issues can be considered Article 42 ­ Right to just and fair treatment in in terms of processes and practices as well as insti- administrative decisions ­ states "any person tutional structures. appearing before any administrative official or body has the right to be treated justly and fairly Policy development and decision-making repre- and shall have the right to apply to a court of law sent a comparatively small proportion of govern- in respect of any administrative decision taken ment's regulatory activities. Implementation of against him or her." Article 44 ­ prohibition of policies often demands the most resources, and it derogation from particular human rights and is a highly visible activity that ultimately forms freedoms ­ states that "notwithstanding anything the basis on which the effectiveness and coher- in this Constitution, there shall be no derogation ence of the government's actions will be judged. from the enjoyment of the following rights and It is, therefore, important that during the policy freedoms ­© the right to a fair hearing." development process careful account is taken of implementation issues, which, if done poorly, can The first stage of redress in any country is to file offset the benefits of high quality analysis and a complaint with the administration. In Uganda, policy development. Inadequate attention is various organs of government have established placed on implementation issues during the pol- specific procedures for dealing with appeals and icy development process. This includes consider- complaints. For example, appeals against tax rul- ation of the costs of implementation early in the ings are governed by a well-defined procedure:62 a process ­ in particular realistic enforcement costs taxpayer can lodge an objection against a ruling, to government. 62 The objections and appeals procedure is provided for under Uganda does suffer from weaknesses in enforce- Section 123A - 123D of the Custom Management Act, 1970, Sections 34A - 34E of the Value Added Tax Statute ment and compliance, as exemplified both by the 1996 and Sections 100 - 103 of the Income Tax Act, 1997. large number of informal enterprises that are See www.ugrevenue.com/regulations/OBJECTION.doc 30 WB209_RCRU.indd 30 5/21/10 8:16:07 PM and then can approach the Tax Tribunal63 in the Policy instrument alternatives event that he/she is dissatisfied by the reconsid- eration triggered by the objection. The appeal A core administrative capacity for good regula- procedures include deadlines within which the tion is the ability to choose the most efficient government is required to respond, but does not and effective policy tool, whether regulatory or stipulate that the appellant must be furnished non-regulatory. In the OECD, the range of pol- with a justification for the decision. If dissatisfied icy tools and their use are expanding as experi- by the decision of the Tax Tribunal, the taxpayer mentation occurs, learning is diffused, and may move onto the court system. understanding of the markets increases. Increas- ingly, guidelines for regulators in OECD coun- The second stage of redress is to launch a review tries require ministries and agencies to consider through the courts, in keeping with Article 42 of whether "command and control" regulation is the Constitution. A petition can be filed irre- likely to be the most effective policy instrument spective of whether administrative review has or whether other options might succeed in been exhausted or not, but the rules call for an achieving policy goals at lower cost. But the use appeal to the courts to be on a point of law only. of regulatory alternatives in OECD countries, Petitions are filed with the Commercial Court, while increasing, is still at a relatively low level. and its decisions can be appealed to the Court of Appeal, and eventually to the Supreme Court. At the same time, administrators, rulemakers and regulators often face risks in using relatively Another avenue of appeal is to the Office of the untried tools. A clear leading role ­ supportive of Inspector General of Government.64 The IGG, innovation and policy learning ­ must be taken originally set up in 1987, is established under by reform authorities if alternatives to traditional Article 225 of the Constitution, and has clearly regulations are to make serious headway into the defined responsibilities.65 The Inspectorate is an policy system. independent institution charged with the respon- sibility of eliminating corruption and abuse of Government intervention should be based on office. Because it reports to parliament and has clear evidence that a problem exists and that gov- the function of promoting and ensuring strict ernment action is needed. This should include adherence to the rule of law and principles of nat- assessments of the size of the problem, of likely ural justice in administration, it is also the national government effectiveness and of the likely costs of ombudsman. It is also a complaints office to government intervention. Good practice in this which any person aggrieved with a decision of a area is increasingly seen as requiring consideration public official or authority takes his or her com- of both regulation and alternative policy tools. plaint for redress. According to independent assessments, the IGG has been able to function Current Policy and Practices. Historically, Ugan- reasonably effectively, without direct political da's regulation regime has been rooted in the interference in its work. However, its effectiveness "command and control" approach. The RBP has been judged as compromised to some degree program explicitly requires consideration to be by funding limitations.66 given to alternatives to regulation. Both "The Guide to Good Regulation" and "The RIA Hand- book" stipulate that regulators should examine 63 The Tribunal was established by Article 152 of the Consti- whether government action is justified. The tution of Uganda, and set up under the Tax Appeals Tribu- nal Act, Cap. 12 of 1997. Guide indicates that, after a problem is shown to 64 www.igg.go.ug/ exist that requires public action, the issue is 65 http://www.igg.go.ug/functions.htm 66 See http://www.globalintegrity.org/reports/2006/Uganda/ whether government action is justified, and scorecard.cfm?subcategoryID=66&countryID=38 whether, given resource, manpower and other 31 WB209_RCRU.indd 31 5/21/10 8:16:07 PM constraints, government action will solve the panied by its financial implications on both revenue problem. The Guide also requires consideration and expenditure. The Budget Speech of 12th June of alternative ways of solving the problem, 2003 confirms our commitment to the principles of including the options of doing nothing, applying Regulatory Best Practice. These requirements infer existing laws and regulations better, improved that any new laws are preceded by proper consulta- information, voluntary schemes, self-regulation, tion, consideration of alternatives to regulation, the and economic incentives. conduct of regulatory impact assessments, and iden- tification of manpower and resources for proper One new alternative to regulation is the devolu- enforcement. tion of regulatory authority and function to organized non-government bodies, such as cham- I want to stress the importance of Regulatory bers of commerce and professional organizations. Impact Assessment. This is not an add-on to the For example, the Ugandan Code of Judicial Con- policy process. It is an integral part of the advice duct has been adopted as a voluntary code by that goes to Ministers, helping to inform options as which the conduct of members of the judiciary the policy develops, to Cabinet and to Parliament. can be guided. The effects of policy options on small firms ­ the engine of our economy ­ must be a key part of the assessment process." Use of RIA for understanding A Cabinet memorandum was prepared in 2005 to regulatory effects the effect that RIA is an important tool to be used RIA provides a systematic basis for choosing the by all ministries before they come up with policies best regulatory (or non-regulatory) alternative to and regulations affecting the private sector, and respond to a problem. A range of different that RIA training was going to be a requirement approaches to RIA exist, depending on policy pref- for promotion in government beyond a certain erences and administrative capacities. At the core level. The memo was not approved or circulated of any RIA system, however, are the following: by the Cabinet, yet it was to be the official launch of the requirement for RIA. an assessment of selected types of impact of specific types of regulation; The Cabinet memo required the Cabinet to do two things: i) endorse RBP/RIA as the basis for assessment methodology according to pre- policy and law making in Uganda; and ii) desig- defined standards and procedures; and nate a coordinating institution within govern- ment to champion RIA. Towards the end of the a process of quality control by an indepen- RBP program, the Cabinet met and endorsed dent government agency/unit. RBP/RIA principles, but deferred the decision on the coordinating institution, pending further The use of RIA was conceived as central to the consultation. The first deputy prime minister was RBP Program in Uganda. The foreword, from given the responsibility for resolving the institu- the president in the "Guide to Good Regulation," tional issues in collaboration with the Ministry of states: Public Service, but as of the time of writing this report, the issue has not been resolved or referred "Government is striving to ensure that we raise the back to the Cabinet. quality of our laws by incorporating international best practice standards into our policy and law- RIAs have been done for some important legis- making processes. The 2001 Budget Act requires lation, and during the time period covered by that every Bill introduced to Parliament be accom- the RBP Program, it became customary for 32 WB209_RCRU.indd 32 5/21/10 8:16:07 PM ministries to consult the RBP Unit to do a RIA that the impact of the RIA was to have the study or commentary on proposed legislation. A work- refocused to some degree to avoid undue concen- ing relationship was also created with the tration on revenue issues. However, the outcome Uganda Law Reform Commission whereby of the study is unclear as to results and recom- experts from the RBP Unit and RIA Unit made mendations, and as to the nature of the RIA that commentaries on proposed legislation, and was carried out. helped to ensure stakeholder consultations. The RIA unit would use the RIA checklist to ask rel- Finally, pilot RBP/RIA activities were started in evant questions and to identify whether it com- different ministries - Ministry of Health, Minis- plied with the RIA system in full. try of Education, Ministry of Water and Envi- ronment, Ministry of Lands, and Housing and The RIA system designed for use in Uganda Urban Development. Although the DAI's final focused on identifying and measuring the distri- report on Phase II declared that these pilots were bution of impacts as well as the aggregate costs successful, there does not appear to have been and benefits of regulation. The RIA handbook dissemination of the results and the successes and starts from the presumption that regulation weaknesses. should be as equitable as possible, but makes the assumption that costs and benefits rarely fall equally across all segments of society. The Hand- Building administrative skills for book requires that the analysis should consider the impact of regulation on groups that are "par- regulatory reform ticularly susceptible to disproportionate regula- A skilled and well-trained civil service recruited tory impact," namely SMEs, vulnerable groups on the basis of merit is a prerequisite for develop- (the poor, women, children, the elderly, the dis- ing and maintaining high-quality regulations and abled, people living with HIV/AIDS, etc), differ- regulatory policies. ent districts, tribes and religions, and civil society and NGOs. It is not clear whether any RIAs that From the beginning of the RBP program, atten- incorporated such a distributional analysis were tion was given to training and creation of skills carried out in fact. related to RIA. In addition, steps were taken to emphasize the importance of skills in RBP and The RBP program also participated in discus- RIA by including demonstrated ability in these sions between MTTI and consultants carrying fields in the criteria for promotion to high-level out the business levies study,67 within which a jobs in the civil service. RIA was conducted, and it has been suggested 67 This study, financed through the Local Government Devel- Between 2000 and 2003, a major emphasis of opment Project II, was commissioned in 2005 to review the the program was to build understanding and laws and regulations administered by local governments awareness of regulatory reform among top-level relating to operation of businesses in Uganda, from a per- spective of effective revenue generation, ease of administra- officials. Training courses and materials were tion and compliance, regulatory best practice and any best developed, including modules on social and practices that had been adopted in East Africa and South Africa. The study was to propose options to rationalize the environmental dimensions of RIA, and were legal framework and consider specifically the merits of mov- delivered to government, private sector and civic ing to a framework where business registration and regula- society. More than 350 persons received training, tion procedures were independent of business tax assessment and collection. In Phase II, the study was to determine the including 65 policy analysts, 60 or so media and modalities of implementing the selected option, design the public relations representatives of regulatory selected regulatory framework, stipulate what reforms are required to which Acts, develop a detailed implementation plan, and carry out a regulatory impact assessment. In Phase (including the possibility of new acts) and draft changes to III, the study was to draft the appropriate new regulations, the respective existing Acts. 33 WB209_RCRU.indd 33 5/21/10 8:16:08 PM agencies, senior business reporters/editors, and that they have limited capacity to contribute to parliamentary technical and analytical staff. consultation undertaken by government as part of the RIA process. From March 2004, the proj- The need for basic RIA training for MTTI tech- ect had, as a key activity, the building of capacity nical staff was identified as an early priority. A of business organizations and civic society organi- three-day RIA course was delivered with the sup- zations to contribute to policy and law-making port of the senior analyst, Cabinet Secretariat ­ processes through effective evidence-based analy- Office of the President and the Principal Policy sis and advocacy. In March 2004, a formal assess- Analyst in the Ministry of Water Lands and the ment was made of the capacity of five CSO/ Environment. Nearly 30 MTTI technical staff BMOs (and later, three more were added) to carry and staff from affiliated institutions, including out their role as advocates for better regulation.70 Uganda National Bureau of Standards (UNBS), The assessment was carried out using a frame- Uganda Industrial Research Institute (UIRI) work71 developed by the Confederation of Danish and Uganda Tourist Board (UTB), Uganda Industry,72 which examines the way an organiza- Export Promotion Council (UEPC) and Uganda tion develops its policy advocacy strategy right up Wildlife Authority (UWA), were trained. The to the delivery of the message. training partly focused on the Ministry's draft policies ­ including the Cooperatives,68 Indus- The CDI's assessment concluded that Ugandan trialization and Tourism policies ­ which were organizations differed widely in terms of their analysed using the RIA methodology. internal capacity, experience and interest in engag- ing in policy advocacy, and that the RBP Program The RBP project developed the capacity of a local would need to dedicate significant time and training organization, the UMI, to deliver train- resources to assisting them. Consequently, the ing in RIA to Ugandan officials.69 A business plan Program worked extensively to upgrade the abil- for UMI's RBP/RIA training was developed, and ity of key partner institutions to provide evidence- the initial training curriculum was modified so based advocacy, through formal training in RBP/ that it could meet the diverse requirements of the RIA, workshops and mentoring on advocacy market. One core program was a one-week train- ing course in basic RIA, which was offered to government's policy analysts before the RIA 70 The organizations targeted were the Private Sector Founda- tion Uganda (PSFU), Uganda National Chamber of Com- requirement was formally introduced. DAI's merce and Industry (UNCCI), the Federation of Uganda evaluation of the RBP program concluded that Employers (FUE), the Uganda National NGO Forum and developing local capacity to provide training was the Development Network of Indigenous Voluntary Asso- ciations (DENIVA). Later in 2004, evaluations were also a key advantage of the program, because it carried out on the National Council of Uganda Small Busi- reduced resource costs and enabled training to be ness Organisations (NCUSBO), Uganda Tourism Associa- tion (UTA) and the Council for Economic Empowerment linked closely to local conditions and examples. for Women of Africa (CEEWA). However, following the end of the RBP Program, 71 Concentrating on 10 different components of a policy funding from government for training courses advocacy campaign listed below, the framework allowed the program to score and rank organizations on: dried up, and it appears that UMI is no longer advocacy strategy; active in providing training to civil servants. process used to develop position papers; presentation and interaction with government; role of the secretariat; Civil society organizations and business associa- member input and timing; tions also received training, since it was recognized member presentations; use of the media; 68 According to the head of the RBP Unit, RIA principles tracking and following up legislative initiatives; and were subsequently used during 2008 for the preparation of documenting advocacy successes and failures the cooperative development policy. diversity of advocacy activity 69 The university also added training in RIA into its curricu- 72 The Confederation of Danish Industry (DI) was the RBP lum, but UMI remained the premier organization deliver- Program's principal partner in delivering capacity building ing training for government officials. assistance to partner organisations. 34 WB209_RCRU.indd 34 5/21/10 8:16:08 PM strategy and hands-on assistance in developing the positive side, it was concluded that each strategies, position papers and policy advocacy institution had become much more attuned to campaigns. its membership and the need to solicit views. In addition, the introduction of "compliance costs" During 2005, the Program tried to assist three was seen to be a positive move for documenting partner institutions (FUE, DENIVA and business concerns. However, the biggest remain- NCUSBO) to develop their advocacy capacity by ing problem was still the lack of capacity to focusing on: (i) overall policy advocacy strategy, guide the implementation of advocacy activity, and (ii) development of advocacy campaigns and the tendency to resort to "fire-fighting" around specific issues. Also in 2005, the Program rather than using a structured approach. Staff provided assistance to CEEWA and the Uganda turnover and lack of resources have been com- Women Entrepreneurs Association Ltd (UWEAL), pounded by the fact that, first, policy advocacy who were leaders within the Gender and Growth is simply not a core function in most CSO/ Coalition's efforts to remove regulatory, adminis- BMOs, and second, evidence-based/cost-bene- trative and institutional barriers to women's par- fit analysis is still in its early stages. The RBP ticipation in the economy. Program's involvement provided evidence that, when an institution is at the very early stages of A follow-up evaluation of partner advocacy its development, it is necessary to couple advo- capacity was carried out in August 2005.73 On cacy capacity building with institutional and other forms of capacity building. 73 Follow-up evaluations were carried out in August 2005 on PSFU, FUE, DENIVA, CEEWA, NCUSBO and UTA. 35 WB209_RCRU.indd 35 5/21/10 8:16:08 PM UPDATING REGULATIONS Revisions of existing laws and Institutional Capacity Building project, under regulations which reviews were carried out of the major com- mercial laws, including the Companies Act,74 Assessment of new regulation is not enough to Partnership Law, Cooperative Societies Act and ensure a high quality regulatory structure. As tech- Joint Venture Law, and has in recent years been nology, the economy and society change, existing supported by the World Bank's second Private regulations often become less relevant and effec- Competitiveness Project. The reviews identified a tive. Regulatory management should involve peri- total of 20 laws for revision or development, with odic reevaluation of whether existing regulations a view to meeting seven objectives: still constitute the best available solution to the problems they seek to address. A systematic reduce the cost of doing business;75 approach is required to ensure that all regulation is regularly subjected to this reassessment. encourage new products onto the market;76 Over the past years, there have been a number of support new financial and lending programs designed to review and revise existing products;77 laws in Uganda. The ULRC has had general responsibility for review and revision of the coun- 74 The current Companies Act is a reflection of the 1948 UK try's criminal and commercial legal code since Companies Act, and has not been revised substantially 1996. There seems to be a consensus within gov- since its passage. ernment and the private sector that the ULRC 75 The Audit Bill gives greater autonomy to the Auditor Gen- eral for shortened procedures, and the revision of the has been reasonably well resourced and has car- Investment Act is meant to support the "one-stop-shop" ried out its functions well. function of the UIA. 76 Industrial Property Bill, to replace the Patents Act, and Counterfeit Bill, to prevent trade in counterfeited goods. Commercial law reform began as a sub-compo- 77 Mortgage Bill, Hire Purchase Bill and Company Act, which nent of the legal sector reform supported by an provides for capital pooling. 36 WB209_RCRU.indd 36 5/21/10 8:16:08 PM provide for dispute resolution;78 and stakeholders have not been extensive because of resource constraints. provide security for electronic business;79 The ULRC has also been involved in compiling a sixth, to provide consumer protection;80 and consolidated volume of existing and revised laws. The last revision of the laws of Uganda was car- seventh, to provide the legal framework for ried out in 1964. Since then, the laws of Uganda specific institutions, such as the Uganda Free have only been published as supplements to the Zones Authority and Bureau of Standards. Gazette, with the result that applicable laws were not easily accessed and many other laws were irrel- These priority pieces of legislation have been evant. Machinery to revise the laws of Uganda was under development since before 2004, when the launched and re-launched several times, but to no Presidential Investors Round Table began tracking effect. Uganda set up a new Department of Law their progress. Although a commitment was made Revision (otherwise known as the Law Revision to complete the passage of all the bills by Decem- Centre81) under the Uganda Law Reform Com- ber 2008, only two bills (the Audit Bill and Copy- mission, with the objective of having a small, per- rights and Neighboring Rights Bill) have been manent and specialized body to update the laws of enacted. The rest remain in Cabinet or in Parlia- Uganda on a continuing basis and to produce ment at various stages of completion, and the annual volumes of the revised laws. deadlines for their enactment have been exceeded, greatly in several cases. Interviews in Uganda In 2003, the department published a revised edi- revealed that the Ministry of Finance is a bottle- tion of the Principal laws of Uganda 2000, having neck, and that many of the bills have been referred completed the revision of the principal laws of back to the originating ministries for further Uganda covering the period 1964 to December rounds of consultations, although consultations 31st 2000. The revised edition, which is contained have been carried out. With the exception of the in 13 volumes covering a total of 365 laws, omits National Bureau of Standards (Amendment) Act, all laws which had been expressly repealed, and it does not appear that RIA principles (other than includes all the repealing laws and amending laws, consultation) have been applied in the develop- and all statutory instruments, ordinances and ment of the various pieces of legislation. decrees made under the authority of the principal laws.82 The department has more recently been A Competitiveness Bill is also under preparation, engaged in revising all the subsidiary legislation supervised by the Commissioner of External up to December 2000; revising all the principal Trade. According to the RBP Unit in the MTTI laws from 2001-2003; preparing annual supple- (which has been involved only peripherally), ments for the revised edition; updating the com- RIA principles have been followed in the process mission Web site with the revised laws for the of developing this law, but consultations with benefit of the users; collecting and compiling bye- 78 Contracts Act, Sale of Goods and Supply of Services Bill, laws from the districts for public consumption and Geographical Indications Bill. and Court of Appeal and Supreme court deci- 79 Recent commercially-oriented legislation put forward to Par- sions; and reviewing all laws at the end of the con- liament includes laws to govern cyberspace: the Computer Misuse Bill, the Electronic Signatures Bill and the Electronic stitutional review process. Transactions Bill, which are Uganda's interpretation of the common information security policy on cyber-crime formu- lated by East African countries. The five member states of the 81 The Centre is headed by a commissioner, law revision. It East African Community (EAC) are pursuing a coordinated currently has a principal legal officer, senior legal officer, approach to harmonize cyber-crime laws that would be effec- legal officer and a research assistant on staff. tive throughout Burundi, Kenya, Rwanda, Tanzania and 82 The revised edition was brought into force on 1st October Uganda. 2003 by the Attorney General by Statutory Instrument 80 Bureau of Standards Bill. No. 69 of 2003. 37 WB209_RCRU.indd 37 5/21/10 8:16:09 PM Reducing administrative burdens the RBP program, this pilot was expanded to incorporate a service delivery and private/public Regulatory paperwork and government formalities partnership dimension, including: can be unnecessarily burdensome on regulated groups if coordination is lacking among regulators, (i) linking licensing revenues to service delivery new technologies are not used to assist in informa- costs and promoting accountability and trans- tion gathering, and unnecessary information is parency in local governance; sought by regulators. Governments worldwide are adopting programs to reduce the administrative (ii) introducing structured consultations with burdens associated with regulatory requirements. the business community to set priorities on expenditure; and The RBP program had its origins in a specific effort to reduce administrative burdens on busi- (iii) reorienting the focus of local governments nesses in the area of licensing practices under the towards business development. control of local government. At the beginning of Following the success in Entebbe, these licensing the deregulation project, an Administrative Com- reforms were introduced into three local govern- pliance Cost Survey based on the standard cost ments (Mukono,85 Tororo, and Lira), followed by model was used to demonstrate and substantiate implementation of a phased nationwide rollout the regulatory burden in Uganda. It identified to 10 more local governments. Key elements of and measured Uganda's high compliance costs the rollout were: and the specific burden placed on small and micro businesses. The calculation, which estimated the (i) universal enumeration of businesses and potential cost of `red tape' to the economy as a computerization of business registries; whole at 11 percent of GDP, captured the atten- tion of both government and the private sector (ii) education and information campaigns; and and built their support for the reform program. (iii) monitoring and review mechanisms. The primary regulatory reform in the RBP pro- gram was trade licensing, which had been identi- The RBP program also offered support to local fied as a time-consuming and costly process. A governments that were willing to commit their pilot streamlined licensing system was launched own resources for trade licensing reform. Local in Entebbe Municipality in mid-2002,83 based authorities, including Wobulenzi, Kasese and on a "before and after" model after undertaking Lugazi used their own funds to computerize their the survey which captured simple time and cost databases, and Hoima Town Council used its measurements. The reform was based on fewer own funds to implement the reform package. approval stages, a simplified form, improved ser- During the final year of the RBP Program, one of vice delivery and provision of better information the priorities was to formulate a roll-out strategy on health and safety standards.84 Over the rest of with the MLG and the Uganda Local Authorities Association (ULAA) for the new business regis- 83 Results from the Entebbe pilot were: time to get a license tration system and its future funding. In addi- down by 90 percent; compliance costs to firms down by 75 percent, administration time spent by Entebbe on tion, the lessons of the pilot licensing project licensing down by 25 percent, voluntary compliance up by were incorporated into the Local Government 47 percent, revenues to Entebbe up by 40 percent. Enteb- Finance Commission's guidance to councils on be's practices in trade licensing reform were incorporated in the Local Government Finance Commission's guidance on best practices for revenue enhancement. revenue enhancement best practices, and recommended to all local governments for immediate application. 85 Trade licensing reforms in Mukono Town Council were 84 Entebbe's reform attracted international recognition, winning recognized by the UN-HABITAT biannual Mashiriki the Africa 2004 Investor Award for Smart Regulation, and Innovations Awards Program (MILGAP), especially for was showcased in the 2005 World Development Report. their potential to be replicated across all governments. 38 WB209_RCRU.indd 38 5/21/10 8:16:09 PM However, with the conclusion of the RBP Pro- Information Flow Management and Network- gram, the impetus for further rollouts appears to ing (IFMN) project86, the MTTI started in have disappeared: the majority of local authori- 2005 to develop an ICT policy and implemen- ties have not yet introduced the reforms, either tation strategy for its areas and sectors of respon- because they have been unable to mobilize sibility, with a view to harmonizing specific ICT resources for the reform activities themselves or projects within the sectors Trade, Tourism and because they do not support the reform. More- Industry. An IICD-funded project87 began in over, the reform of the trade license had been August 2005 to develop an ICT policy and an expected to lead to reforms of other licenses at implementation strategy for the tourism, trade the local government level, but these have not and industry sectors. Both the policy and imple- emerged, probably because the end of the RBP mentation strategy were finalized in September Program removed the institutional support and 2006 following extensive consultation within resources for further reforms. government and with the private sector and civic society. The policy component led to the formulation of guidelines for the use of IT at the Ministry, as well as the creation of an IT Use of ICT to support regulatory forum (the ICT Advisory Committee (ICTAC)) reform overseeing all matters of ICT at MTTI88. This would be the vehicle through which e-govern- Once government procedures have been stream- ment elements in a regulatory reform program lined and redesigned as part of regulatory reforms, would be developed and approved. use of computerized databases and registries can lead to further improvements in regulatory per- Second, the ICT strategy has been particularly formance, particularly for enterprises that are a focused on local government. A DistrictNet pilot long distance away from the agencies with which project (funded through IICD) was implemented they have to deal. ICT can be used to provide several years ago by the Ministry of Local Gov- information to the users of government proce- ernment to improve communications between dures, and can also enable users and applicants to the different government levels within a district: submit requests for services in a structured and parish, sub-county, and district HQ in four dif- consistent fashion. Moreover, use of ICT for reg- ferent districts: Kayunga, Lira, Mbale and Mba- ulatory and administrative tasks within the pub- rara. This was done by introducing data and voice lic sector is increasingly seen as an important way of combating corruption. 86 The project arose from an IICT round-table held in November, 2000, where all stakeholders agreed that poor Uganda has adopted a broad e-government strat- information flows within the ministry were a hindrance, egy, essentially aimed at empowering the popu- and that a project to address this weakness should be developed. The outcome was the Information Flow Man- lation to improve their living standards. The agement and Networking (IFMN) project, to improve country's National ICT Policy Framework dis- information flows within the Ministry and its departments (Tourism, Wildlife, Trade, Cooperatives, Industry and cusses a wide range of issues, such as informa- Technology) and between the Ministry and its affiliated tion as a resource for development, mechanisms institutions. for accessing information, and ICT as an indus- 87 See http://allafrica.com/stories/200610231227.html and http://www.iicd.org/projects/articles/iicdprojects.2005- try, including e-business, software development 12-09.2164038218 and manufacturing. 88 As of the current date, two of the six programs (capacity development centre for the sector and an Intranet site to support the IFMN initiative) are being implemented, while There are various elements of the national the Ministry is seeking funding for the remaining pro- grams. Implementation appears to have slowed, with the e-government strategy relevant to the regulatory departure of the Permanent Secretary who championed the agenda. First, following implementation of an initiative. 39 WB209_RCRU.indd 39 5/21/10 8:16:09 PM communication links between the districts and a shortage of, and large turnover of com- lower level government offices as well as intro- puter maintenance staff; and ducing electronic data processing in financial management, data communication, data storage limited budgets of district governments, and analysis. This program has been an attempt which means that the scaling-up process to support the objectives of the decentralization has to be carried out gradually. program by providing the district and lower councils with tools and infrastructure to handle These lessons learned in the ICT arena are likely increased responsibilities.89 to be important factors underlying the design of regulatory reform programs that depend on Implementation of the projects appears to have e-government solutions. been slow, and a recent evaluation report noted the following factors as important: During the RBP Program, a Web site was estab- lished: www.goodregulation.or.ug. It was consid- high turnover of staff within the local gov- ered to be an important part of the dissemination ernment offices, with the consequence that of information during the RBP program. Cur- new staff is constantly having to be trained in rently, the Web site cannot be accessed. ICTs;90 Efforts to introduce e-government and ICT at the regional level are also underway. The EAC, with 89 The project had the following specific goals: technical assistance from United Nations Eco- Reduce administrative costs by improving communica- tions between the districts and lower councils. nomic Commission for Africa (ECA), has under- Reduce the long cycle of releasing funds by donors and taken to develop a harmonized policy and strategy the Ministry of Finance by improving the process and framework for e-government among EAC partner- capacity of districts and smaller local government offices to provide timely and accurate information. states­Uganda, Kenya and Tanzania. This frame- Improve the district authority's overall efficiency by set- work is envisaged to cover all major aspects of ting up a single sharable database that could be used by regional cooperation on e-government. In devel- all local government officers. Train staff in basic ICT skills. oping this document, a participatory approach Enhance the transparency and efficiency of local govern- and consultative methodology were followed to ment offices. Strengthen the public information function. gather data from the three states. The data base 90 One issue is where to develop ICT capacity development includes information on current activities and programs. The general plan has been to site training at the requirements as well as challenges and opportuni- district level so that local government employees do not have to travel all the way to Kampala for their ICT training. ties in promoting e-government. 40 WB209_RCRU.indd 40 5/21/10 8:16:10 PM CONCLUSIONS AND RECOMMENDATIONS Assessment of strengths and end of the DFID-financed project in 2007. The weaknesses government did not budget funding for continued implementation, and faced with a continual short- Uganda has, through the RBP program, put age of funds for their programs, the ministries have together a regulatory governance and reform model tended to switch funding away from their RIA/ based on international best practice (and largely a RBP activities. The RIA unit is not staffed at a level modification of the English model). The program required to carry out RIA promotion, and the RBP benefited from the highest level of political cham- unit in MTTI, which has three staff members, itself pionship in the form of the president. Champions acknowledges that it is incapable of doing anything were developed in the core ministries (MFPED, of substance to promote regulatory good practice. Cabinet Secretariat, MLG, MTTI) at both political and technical levels and in Parliament. Local capac- The shortage of funds also limited the scope for ity was developed for implementing RBP principles consultation, since ministries have a tendency to and for training civil servants and business associa- preserve their financing of overhead and staff at tions and NGOs. A Uganda-specific RIA technique the expense of activities and programs outside incorporating measures of distributions of costs their ministries.The fragility of the consultation and benefits of regulation was developed to support process was increased by the fact that few private the government's poverty alleviation strategies. sector organizations had yet developed an organi- Quick wins were secured through a licensing reform zational, technical or financial base for sustaining program that also supported the government consultation on a continuing basis. The ministries decentralization objectives and brought different have been encouraged in these choices by the fact levels of government together. that most of the laws and regulations developed with an active RIA have been stuck in Cabinet or However, the momentum for reform and for imple- Parliament, and by the fact that decision-making mentation has reportedly been lost, following the has tended to be made on an ad-hoc basis. 41 WB209_RCRU.indd 41 5/21/10 8:16:10 PM Finally, alternative attempts to secure funding for Carry out an assessment of the human and continuation of the program, such as a proposed organizational resources available within the World Bank project, have not borne fruit. As a government to carry on a regulatory reform consequence, RIA is not openly practiced in agenda. In particular, focus the assessment Uganda at the present time, although the basic upon the capacity of the Policy Analysis Units principles are well known by officials involved in to support regulatory reform activities. policy formulation. Establish a short-term program of "quick wins" that could be implemented within the fiscal year. This should be done in collabora- Recommendations tion with the business community and lead- If the Ugandan government wishes to implement ing NGOs to ensure that high priority items the regulatory strategy that it has adopted, there are on the action agenda. are a number of steps that it must take to resusci- tate the process: Consider whether the focus of regulatory reform in the medium term should continue Reaffirm publicly the government's intention to be on improving the business environ- to pursue regulatory reform through a state- ment, or should be broadened to areas of ment by the president that such reform is a social policy and other areas where there is a priority that will be supported by adequate demand for RIA techniques. resources. Establish clear budgets for regulatory reform Establish a ministerial position to champion activities, including resources for effective regulatory reform at Cabinet level and to consultation. coordinate regulatory reform across govern- ment. Engage in a dialogue with local governments to plan out the next stages of regulatory Have the RIA Unit currently in the Cabinet reform at local government levels after the Secretariat report to the new ministerial roll-out of the licensing reforms has been position. completed. 42 WB209_RCRU.indd 42 5/21/10 8:16:12 PM APPENDIX A. PRINCIPLES OF GOOD REGULATION The 1997 OECD Report on Regulatory Reform includes a coordinated set of strategies for improving regulatory quality, many of which were based on the 1995 Recommendation of the OECD Council on Improving the Qual- ity of Government Regulation. These were: A. BUILDING A REGULATORY MANAGEMENT SYSTEM 1. Adopt regulatory reform policy at the highest political levels. 2. Establish explicit standards for regulatory quality and principles of regulatory decision-making. 3. Build regulatory management capacities. B. IMPROVING THE QUALITY OF NEW REGULATIONS 1. Regulatory Impact Analysis. 2. Systematic public consultation procedures with affected interests. 3. Using alternatives to regulation. 4. Improving regulatory coordination. C. UPGRADING THE QUALITY OF EXISTING REGULATIONS 1. Reviewing and updating existing regulations. 2. Reducing red tape and government formalities. The OECD report recommended adoption of a set of regulatory quality standards based on the OECD principles as follows: "Establish principles of "good regulation" to guide reform, drawing on the 1995 Recommendation on Improving the Quality of Government Regulation. Good regulation should: (i) be needed to serve clearly identified policy goals and effective in achieving those goals; (ii) have a sound legal basis; (iii) produce benefits that justify costs, considering the distribution of effects across society; (iv) minimize costs and market distortions; (v) promote innova- tion through market incentives and goal-based approaches; (vi) be clear, simple, and practical for users; (vii) be consistent with other regulations and policies; and (viii) be compatible as far as possible with competition, trade and investment-facilitating principles at domestic and international levels." Source: OECD Report to Ministers on Regulatory Reform,1997. 43 WB209_RCRU.indd 43 5/21/10 8:16:12 PM APPENDIX B. DB INDICATORS, DB 2009 Ease Trade of Business Constr. Property Investor Paying across Economy DB start-up permit Employment Regist. Credit Protection Tax borders Contracts Closure Global Ranking Kenya 82 109 9 68 119 5 88 158 148 107 76 Zambia 100 71 146 135 91 68 70 38 153 87 80 Uganda 111 129 81 11 167 109 126 70 145 117 57 Tanzania 127 109 172 140 142 84 88 109 103 33 111 Rwanda 139 60 90 93 60 145 170 56 168 48 181 SSA Ranking Kenya 5 14 1 10 16 2 14 36 26 19 10 Zambia 7 7 32 26 11 6 11 5 30 15 12 Uganda 10 21 14 1 41 14 20 15 24 21 2 Tanzania 14 14 42 28 27 7 14 21 9 1 19 Rwanda 17 5 16 13 5 27 43 10 40 4 34 44 WB209_RCRU.indd 44 5/21/10 8:16:14 PM APPENDIX C. LEGAL SYSTEM IN UGANDA The Supreme Court is the highest Court in the Civil Division, the Commercial Division, the Uganda, and is the final court of Appeal. It only Family Division, the Land Division and the decides cases on appeal from lower courts, except Criminal Division. for presidential election petitions, where the Supreme Court has original jurisdiction. Subordinate Courts include the Chief Magistrate's Court , Industrial Court Magistrates Grade I and The Court of Appeal is next in hierarchy, and it II Local Council Courts levels 3-1 (sub county, handles appeals from the High Court but also sits parish, and village). Magistrate's Courts handle as the Constitutional Court in determining mat- the bulk of civil and criminal cases in Uganda. ters that require Constitutional interpretation. There are three levels of Magistrates courts: Chief Established by the 1995 Constitution, it is an Magistrates, Magistrates Grade I and Magistrates intermediary between the Supreme Court and Grade II. These are subordinate courts whose the High Court and has appellate jurisdiction decisions are subject to review by the High Court. over the High Court. It is not a Court of first Presently, the country is divided into 26 Chief instance and has no original jurisdiction, except Magisterial areas administered by Chief Magis- when it sits as a Constitutional Court to hear trates who have general powers of supervision constitutional cases. over all magisterial courts within the area of their jurisdiction. The High Court of Uganda is the third court of record in order of hierarchy and has unlimited Specialized courts or tribunals also form part of original jurisdiction, which means that it can try the judicial structure: for example, the Industrial any case of any value or crime of any magnitude. Court, Tax Appeals Tribunal, NPART Tribunal, Appeals from all Magistrates Courts go to the Land Tribunals, Tax Appeals Tribunal and the High Court. The High Court has five Divisions: Human Rights Tribunal. 45 WB209_RCRU.indd 45 5/21/10 8:16:15 PM Subordinate Courts include Magistrates Courts, established under the Land Act (Cap 227), and Local Council Courts, Qadhis' courts for Communications Act (Cap 106) and Electricity marriage, divorce, inheritance of property and Act (Cap 145), and Tax Appeals Tribunal Act. guardianship, and tribunals such as those 46 WB209_RCRU.indd 46 5/21/10 8:16:16 PM