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Uganda Road Fund sets funding strategies for road maintenance

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Since 1990s Uganda’s road subsector has been undergoing a number of reforms that aim at commercialising management of the road works and ensuring their sustained financing. The reforms resulted in the formation of Uganda National Roads Authority (UNRA), restruc-turing the Ministry of Works and Transport (handling the functions of policy, monitoring and regulation), and the Uganda Road Fund (URF). The URF, established by the Act of Parliament in August 2008, is charged with ensuring adequate and stable funding for mainte-nance of the country’s public roads.

Uganda Road Fund Chairman Eng. Dr Baziraake FrancisPublic roads include national, district, urban and community access roads. The Uganda Road Fund’s principal objective is to finance routine and periodic maintenance of these public roads. Soon the roads will be like commercial goods and the road users will pay for usage. Under the new arrangement of rising funds for the URF, road users will pay for road usage under “free-for-service” arrangement. “In other words, if you use the road, you pay. The more you use the road, the more tear and wear you impose on it and the more you pay,” says Eng. Dr Francis Baziraake, URF Board Chairman.

The payments will be through road user charging systems approved by the minister of finance.At institutional level, the URF will receive funds and disburse them to the road agencies without being subjected to the general budget process. Designated road agencies like UNRA (for national roads), districts, sub-counties and urban councils (for district, community access and urban roads) will implement the road maintenance works. URF will ensure that the road agencies use the monies effectively so as to offer road users value for money.  

It is hoped that the resulting high operational efficiency of the roads sub-sector will yield high economic dividends, with positive spill over effects to other sectors. Although road maintenance under-funding may initially not be completely eliminated, its severity and extent will be significantly reduced. The anticipated gains of stable and predictable financing among others, will ensure reduced road maintenance costs, a vibrant local construction industry, reduced road maintenance backlog and eventually reduced total transport and vehicle operarting costs, which is the ultimate drive of the reform.

According to the Road Fund Act 2008, a number of sources of funding have been outlined. The main source of revenue to the Fund are road user charges in form of a fuel levy, which will be determined by the Minister of Finance, Planning and Economic Development, from time to time, on the recommendation of the Board. The fuel levy will be directly remitted to the Road Fund Account as stipulated in the Act.Other sources of revenue outlined in the Act include monies appropriated by Parliament for the purposes of the Fund, grants, subsidies and donations. In FY 2009/10, the fuel levy is budget neutral because no additional fuel tax has been introduced for purposes of the fuel levy. Instead, a portion of the original fuel excise duty will be dedicated to the Road Fund and the fuel Levy expected to come into place on 1st July 2010, will be adjusted in accordance with rigorously determined road maintenance requirements.

Road Fund Executive Director Eng. Dr Moses Micheal OdongoOver 80% of Uganda road network is made up of District and Community Access Roads. While they have much lower volumes of traffic than the busier national roads, they are vital to the prosperity of our country and as such will receive equitable levels of funding from the Road Fund. It should however, be noted that the District and Urban Authorities will still be expected to make an additional contribution to the costs of upkeep of their road networks through their locally generated revenues.

Progress on Operationalisation of the Road Fund Act Following the enactment of the Uganda Road Fund Act in August 2008, a number of achievements have so far been made. The key ones include:a) The appointment of the Road Fund Board which was inaugurated on 25th May 2009. The Board members are comprised of four members of the private sector namely; Institution of proffessional engineers,

 Institution of public accountants and auditors, Uganda Fright forwders association,Passenger Transport services and three from the public sector, who include:

Ministry of Finance Planning and Economic Development, Ministry of works and Transport and Ministry of Local Government, all nominated by their respective organizations as prescribed in the Act; b) The appointment of the Executive Director who will assume office on 1st November 2009. c) Drawing up of the Road Fund Secretariat organization structure including job descriptions and conditions of employment;d) Received short term Technical Assistance funded by the European Union and DANIDA for the period of February-September 2009;e) Gazetted the District and Urban Authorities as Agencies for the Road Fund which took place in July 2009 f) Drafted the Regulations and Procedures to facilitate the establishment of Financial Management Systems; and g) Procurement of office premises.

As a way of consolidating the reform, it is anticipated that the Road Fund will become fully operational in January 2010. Meanwhile, the budget for road maintenance for FY 2009/10 has been split in two parts, 50% to be run in accordance with the normal budgetary system for the period July-December 2009 and 50% to be disbursed by the Road Fund to the designated Agencies effective January 2010. 

In order to have thorough understanding of the Road Fund Act, the Board is organizing regional sensitization workshops to enable the Districts and Urban Councils understand the concept fully as well as get started on the operationalisation process effective November 2009.

Though delayed, the operationalisation process of the Road Fund is progressing on well and the key technical issues such as the funds allocation formula shall be shared with all stakeholders when ready so as to ensure maximum transparency and cooperation.

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