SAGA Progress Report-2004-Annex-Research-Uganda

SAGA
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SAGA PROGRESS REPORT (12/03-12/04) &
UPCOMING WORKPLAN (1/05-12/05)

ANNEX

II. RESEARCH
E. UGANDA

Uganda: Past Activities

Due to SAGA’s cash flow problems, research activity in Uganda slowed considerably in the second half of the past fiscal year. While several of the core research papers authored at Cornell have been completed, our inability to commit to funding for the Economic Policy Research Centre (EPRC) made researchers there put SAGA activities, understandably, at a lower priority status. We have only recently signed a contract with EPRC for delivery of its part of the following papers, and a conference to be held in Kampala shortly.

As discussed in our previous reports, a key focus of the SAGA research effort to date in Uganda is to make better use of existing data, of which there is an abundance, but which gets relatively little use. Researchers at the Economic Policy Research Centre (EPRC) and Cornell have started nine research papers, all of which make use of existing data, primarily national surveys of household income and expenditure (IHS and NHS) and the Demographic and Health Surveys (DHS). Those projects, their principal investigator(s) and status, follow.

Determinants of Poverty Dynamics (Ibrahim Kasirye) - being revised. This paper uses the 1992-1999 panel of households in the Integrated Household Survey (IHS) and National Household Survey (NHS) to model change in poverty status over time. After receiving comments on the initial draft, the authors are revising the focus to include an analysis of vulnerability. Steve Younger has been assisting on his frequent trips to Uganda in the past three months. A draft will be ready for the upcoming conference.
Multidimensional Intertemporal Poverty Comparisons (Stephen Younger) - completed, published as a SAGA working paper, presented at the Centre for the Study of African Economies’ annual research conference and at a USAID brown bag lunch in Washington. This paper uses the 1992 IHS and 1999 NHS crosssections to compare poverty over time in Uganda, where poverty is measured is multiple dimensions. In particular, the author considers household expenditures per capita, children’s nutritional status (height), and mother’s literacy. Results are less optimistic than univariate comparisons of expenditures (e.g., Appleton, 2001), with some regions and areas not showing multivariate improvement.
Multidimensional Spatial Poverty Comparisons (Stephen Younger, David Sahn, Jean-Yves Duclos) - completed, published as a SAGA working paper. This paper builds on Duclos, Sahn, and Younger (2003a, 2003b) to make spatial poverty comparisons when poverty is measured in the dimensions of household expenditures per capita and children’s nutritional status (height) in Uganda and other African countries. Most regional comparisons are consistent with prior expectations based on univariate poverty comparisons based on expenditures alone. However, comparisons of rural areas in one region with urban areas in others are more nuanced, with rural areas in some regions actually appearing less poor than urban areas in others. The Uganda results are published in Duclos, Sahn, and Younger (2003b), and the authors are now adding results from other countries for this paper.
Modeling Infant Mortality over Time (Sarah Ssewanyana and Stephen Younger) - Completed and presented at the recent DPRU conference in South Africa. This paper, like the previous two, addresses the concern in Uganda that not all dimensions of well-being are improving as rapidly as incomes. It uses birth history recall data from the DHS to construct time series for infant mortality from the mid-1970s to 2000. It then models infant mortality rates, attempting to understand how both macro and micro variables have influenced mortality rates over time. An innovation of the paper is to use the model to project infant mortality to 2015, the target year for the Millennium Development Goals. Even under optimistic assumptions about policy changes to reduce infant mortality rates, Uganda will fall short of the two-thirds reduction IMR targeted by the MDGs.
Tax Incidence (John Matovu, Margaret Banga, Sarah Sssewanyana, and Stephen Younger). This study will examine the incidence of taxes in Uganda in 1999 and 2003, updating a previous study by Chen, Matovu, and Reinikka (2001) for 1992 data. A particular concern is to look at the graduated tax, which is a main source of revenue for districts and thus key to Uganda’s decentralization plans, but which the President has suggested may be eliminated before the 2005 elections. Both participatory assessments in Uganda have found this tax to be extremely unpopular. Unfortunately, John Matovu has been unable to participate in this project due to the demands of his regular duties at the IMF, and Margaret Banga has left EPRC to pursue her PhD at the University of Dar es Salaam. Nevertheless, the Ministry of Finance and the World Bank have recently expressed interest in a study of tax incidence, so Ssewanyana and Younger will pick up the project, hoping to complete it before the end of 2004, in time to inform the 2005 budget.
Demand for Health Care Consultations (Sarah Ssewanyana and Stephen Younger) - being revised. The 2002 round of the National Household Survey has an unusually rich set of information on respondents’ access to health care and the quality of those services. This paper uses this information to estimate the demand for public and private health care. Given that user fees were recently abolished, understanding these demands is particularly relevant for policy makers in Uganda.
Public Water Supply and Women’s Time Use (Peter Glick and Stephen Younger) - Completed. This paper uses an econometric analysis to ask whether public investments in water supply will reduce the work burden on females relative to males. It considers the implications for time allocated to the following activities: water collection itself, all domestic activities, market oriented work, and leisure. The results suggest that, in Uganda, such investments can have at best only limited impacts on time use and the gender distribution of work and leisure, largely because women (and children) with access to wells in rural areas, where most Ugandans live, spend as much time fetching water as those that use surface sources.
Agricultural Commercialization and Children’s Nutritional Status (Godfrey Bahiigwa and Stephen Younger). Being revised. This paper responds to a direct request and concern of the Ministry of Agriculture in Uganda. The Plan for the Modernization of Agriculture (PMA) is a central feature of Uganda’s poverty reduction strategy. The PMA, in turn, aims to promote the transformation from subsistence to commercial farming. This strategy has raised the concern, however, that commercialization may have negative consequences for children’s nutrition. While available evidence casts doubt on this concern (e.g., von Braun and Kennedy, 1994), examining the issue for Uganda-specific data will be more persuasive for Uganda’s policy-makers. Authors plan to complete work before the upcoming conference.

Stephen Younger visited Uganda in March and September, 2004 to further the research projects outlined above. In addition, we have begun discussions with EPRC and other stakeholders about the best direction for future SAGA research activity in Uganda.

Uganda: Planned Activities

Conferences

The EPRC conference for high-level policy makers first described in our March, 2004 report continues to evolve. In addition to SAGA and the World Bank, the Bank of Uganda is now a third sponsor, and the meeting has developed a more macroeconomic focus than previously envisioned, though poverty issues and the MDGs remain prominent in the program. The conference organizers arranged a very high profile program, including David Bevan, Paul Collier, Louis Kasakende, Benno Ndulu, and Jeffrey Sachs, in addition to the (courageous!) participation of EPRC researchers Godfrey Bahiigwa, John Okidi, and Sarah Ssewanyana. Given the marquis quality of the participants, EPRC and Cornell felt that it was better not to present SAGA research papers in conjunction with the policy conference, because it was unlikely that people would be willing to miss four consecutive days of work and that, given the option, most would attend the high profile sessions rather than the SAGA research sessions.

As a result, we decided to hold a separate event at a different time to present the SAGA research. SAGA will still support the high-level policy conference, and SAGA research provides the background for EPRC’s presentations on poverty and the MDGs there. But the nature of the presentations in this forum will be less academic. Originally scheduled for October 18-19, the organizers postponed the event due to last minute cancellations by some of the participants. They expect to hold the conference in January of 2005.

The target audience for the SAGA research conference will be mid-level, technical staff from the government, donors, and NGOs, along with academic researchers at universities and think tanks in Uganda. In addition to researchers from Cornell and EPRC, we have invited Simon Appleton to discuss the recent controversy over poverty changes in Uganda between 1999 and 2003. Our hope is to run this conference in November or December of 2004, but we are waiting for confirmation from Appleton before setting a firm date. A tentative agenda is attached. See Attachment 3.

As part of SAGA’s institution building effort, we have endeavored to put EPRC rather than SAGA (or the World Bank or the Bank of Uganda) front and center. They are organizing the conferences, and it will be clear to all that they are running them. Our goal is to build EPRC’s reputation as a place where quality research and policy analysis is done in Uganda.

Volume of Papers

Once we have completed the conferences, authors will revise their papers in light of criticism and comments received. We then intend to prepare an edited volume of the conference papers, other SAGA papers left out of the conference due to time constraints, and perhaps also a contribution from Simon Appleton and Sarah Ssewanyana on recent poverty trends. While preparation of this volume will require a substantial amount of time from the editors (John Okidi and Stephen Younger), most of the research work for the first phase of SAGA activities in Uganda is coming to a close.

Planning for Next Phase of Research

Accordingly, researchers at EPRC and Cornell have begun to consider options for a second phase of activities. During visits to Kampala in March, September, and October, 2004, Stephen Younger consulted with EPRC and a variety of stakeholders in Uganda (USAID, government staff, and donors) about possible research areas of interest. To date, two potential topics have emerged: an expanded audit of local government finances, and a detailed consideration of the poverty changes in recent years in Uganda. A brief discussion of the issues and interests for each possibility follows.

Local government finance

The interest in local government finance is driven by existing research including work done at EPRC (Bahiigwa and Ellis, 2003) and the Uganda Participatory Poverty Assessments (UPPAP). Both studies found considerable unhappiness amongst rural Ugandans regarding local revenue generation from the graduated tax (a cross between a poll tax and a very roughly calculated property tax) and from a variety of market fees and taxes to transport goods across local government borders. This issue is important because Uganda has gone a long way towards decentralizing public administration, and the government is intent on finding ways to increase local government revenues. But at the same time, taxing markets and the transport of agricultural produce clearly runs counter to the government’s Plan to Modernize Agriculture (PMA) which aims to promote commercial agriculture.

The public accounts suggest that locally generated revenues are very small, less than onehalf a percent of GDP including the graduated tax. This seems somewhat inconsistent with the level of dissatisfaction expressed about these taxes. There are two possible explanations: (1) even though the revenues raised are small, people do not see local governments doing anything with the funds beyond paying “sitting fees” to local government councilors and administrators; and (2) substantially more funds are actually collected, but they never make it to the local government’s accounts. To pursue these ideas, we are considering an expanded audit of local government accounts. This would include internal audits of the local government’s books, something that is supposed to be done by the Local Government Finance Commission. This audit would trace the flow of funds from local revenue generation to locally provided services or other expenses. More interestingly, we also would survey taxpayers (farmers and market participants) about taxes and fees paid, with the goal of cross-checking this amount with reported revenues at the local government level.

Poverty survey and analysis

The fact that reported poverty increased from 34 to 38 percent between 1999 and 2003, despite continued growth in per capita GDP, is of grave concern to many people in Uganda. The result is so surprising that it has already received considerable attention, both politically and by researchers. To date, no attempt to explain away this result has been compelling. It is our opinion that only a painstaking dissection of survey sampling issues, the poverty calculations, and the national income accounts will resolve this apparent contradiction. Such a project is of obvious interest to policy makers, in Uganda and elsewhere. But it also has two obvious risks. First, even a painstaking analysis might not uncover a plausible explanation of the result. (Witness the long-running controversy over poverty in India in the 1990s.) Second, it may be the case that by the time we are able to uncover an explanation, policy makers will have moved on, so that the policy impact is small or non-existent.

Both of these projects would require considerably more effort than any of the individual papers currently being completed under SAGA. As such, they imply a change in focus of SAGA research from a broad range of topics united largely by a poverty theme and a reliance on existing survey data, to an in-depth pursuit of a specific research project.

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