Imp_Irrigation Master Plan 2010-2035

REPUBLIC OF UGANDA

MINISTRY OF WATER AND ENVIRONMENT

A NATIONAL IRRIGATION MASTER PLAN FOR UGANDA

(2010-2035)

FINAL REPORT

NOVEMBER 2011

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Executive Summary

This document is being issued as the Final Deliverable of a study targeted at the preparation of an Framework Master Plan for a reinvigorated, expanded and upgraded irrigation sub-sector in Uganda (hereafter called the FMP). This Executive Summary provides an overview of the FMP in terms of:

The Current Drivers of Irrigation Development in Uganda Objectives of Irrigation Development in Uganda Irrigation Potential An Enabling Policy The Framework Master Plan Water Availability Financial and Economic Analysis, and the FMP Financing Plan Next Steps

Thus:

i Drivers of Irrigation Development

There are at least four current drivers of irrigation development in Uganda.

First among them is the National Development Plan, which calls for a transformed Uganda society from a peasant to a modern and prosperous country within 30 years.

With this in mind, the FMP, is predicated on three kinds of irrigator:

- Traditional Farmers which are those practicing subsistence cropping with minimal to nil cash crops;

- Emerging Farmers which are those with farming systems combining subsistence with significant commercial cropping, and who hence are already participating in the economy at large;

- Commercial Farmers which are those for whom the greater part, if not all of their farming systems comprises cash crops these include farmers of all size, including those within public schemes that operate commercially oriented farming systems.

Irrigation development enables increasing numbers of traditional farmers to become emerging farmers; emerging farmers to increase the proportion of their commercial production and for the numbers and scale of commercial operations to increase. Figure i illustrates this, and identifies the changing policy thrusts necessary.

The second driver of irrigation development in Uganda is climate change. Irrigation mitigates against decreased or intensified precipitation, while appurtenant drainage works mitigate against increased flooding. Not only does this secure production, it also reduces perceived risks associated with crop diversification and higher input production systems.

Thirdly, there are the new markets in which Uganda, given an expanded irrigation sub-sector, can begin to compete in terms of both volume and quality. These markets moreover are not limited to the immediate region, but include (or will include sooner, rather than later) South Asia and indeed the entire world which is facing a looming food security crisis caused by growing populations, land-use change in traditional producing areas and sea level rise. Yield gap closure in the traditional producing areas that remain

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is not expected to fill the gap between demand and supply, so new build is going to be essential, and many countries in Sub-Saharan Africa - Uganda included - are well placed for this in terms of the three key factors of production (land, labour and water).

Figure i Socio-economic Transformation in the Agricultural Sector

Finally, and closely related to the third is the increasing number of major international investors looking to establish commercial agricultural assets in the region. Although such investments need careful regulation if they are to have social benefits and minimal environmental impact, an appropriate irrigation policy and FMP such as this one can catalyse such investments by establishment an investment environmental that potential investors consider enabling.

ii Objectives of Irrigation Development in Uganda

Irrigation has the potential to contribute to food security, poverty alleviation and economic growth, but given the immense potential that improved rainfed agriculture has for food security in Uganda, the high investment costs associated with irrigation development suggest that the sub-sector should be more oriented towards economic growth and poverty alleviation i) at the schemes in terms of improved yields and higher value production; and elsewhere ii) added value activities and livelihood differentiation accruing to increased trade goods and market activity. The Overall Objective of irrigation development in Uganda, in line with the NDP is therefore:

Poverty Alleviation and Economic Growth as a result of the sustainable realisation of the countrys irrigation potential mitigating the effects of

climate change and contributing to the transformation of Uganda society from a peasant to a modern and prosperous country

This Overall Objective is supported by two Subsidiary Objectives and four Immediate Objectives as shown in Figure ii:

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Figure ii The Nested Objectives of the FMP

OVERALL OBJECTIVE

Poverty Alleviation and Economic Growth as a result of the sustainable realisation of the countrys irrigation potential contributing to the transformation of Uganda society from a peasant to a modern and prosperous country

SUBSIDIARY OBJECTIVES

Irrigated agriculture contributing to poverty alleviation in Uganda as a result of farmer managed, small scale

schemes and best practice service delivery

Irrigated agriculture contributing to economic growth in Uganda as a result of an enabling investment

environment and the profitable investment in irrigated crop production, value addition and/or service

provision

IMMEDIATE OBJECTIVES

Increasing household incomes and social equity

Enhanced human capital development and

increased availability and quality of gainful

employment

Productive use of expanded irrigation

service infrastructure as a result of new build and

enabling economic instruments and

incentives

High economic water use efficiency at basin

level

iii Irrigation Potential

The FMP is predicated on three land types, namely:

- Type A land which lies close to surface water resources on which agricultural water can be managed without the need for storage. For the purpose of this policy, Type A potential has been estimated to total some 295,000 ha of which 243,500 ha is intended for publicly funded development under this policy (approximately 24,000 ha of which will be upland, and the balance managed wetlands):

- Type B land which does not lie close to surface water resources or which cannot be fully developed in the absence of storage facilities and/or feeder systems. For the purpose of this policy, Type B land has been estimated to total some 272,000 ha of which approximately 9,750 ha is intended for publicly funded development under this policy.

- Off-plan land which could be either Type A or Type B, commercially developed but with bulk service infrastructure selectively financed by government on a demand driven basis.

iv An Enabling Policy

It is clearly crucial that any FMP, especially a radical and innovative one such as that proposed herein is legitimised at policy level. A Draft Irrigation Policy, having the same objectives as the FMP itself has therefore been articulated as an integral part of the FMP preparation process and includes:

Guiding principles as regards:

- The allocation and use of water resources

- Investment planning and decision making

- Facilitation and regulation of commercial investments

- The provision of effective irrigation services

The Implementation Strategy for the FMP in:

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- an Immediate Term lasting 4 years, and characterised by capacity building and various studies targeted at both institutional and investment challenges and opportunities;

- a Short Term lasting 5 years, and characterised by a much needed reinvigoration of the irrigation sub-sector;

- a Medium Term lasting 5 years, and characterised by both spatial and market expansion; and

- a Long Term lasting 12 years, and characterised by increasing integration into regional markets and beyond, coupled with increasing commercialisation of production models.

The next section of this executive summary provide more information with respect to the scope and nature of the implementation strategy, but it is important to note that the draft policy also makes clear the assumptions and preconditions essential for successful FMP implementation. These cover:

- political commitment, especially as regards institutional changes (including water rights, economic pricing of water, the need for an apex body for the sub-sector etc.)

- the need for supply and market chain infrastructure, including the provision of facilities to add value to agricultural production, especially that produced by the small farmers

- effective operation of the countrys food reserve.

- improved rural access and communications infrastructure.

- crop diversification and improved soil management practices

v The FMP Itself

As indicated by the scope of the draft policy, the FMP comprises a four stage strategy.

The stages themselves are intentionally consistent with the time frame adopted for the current and future NDPs and are summarised in Figure iii. It is important to note that although i) the capacity building, institutional measures and various studies should be considered crucial to the success of the FMP; and ii) an increasing role for the commercial sector (both domestic and international) is essential to the achievement of the FMPs overall objective, the greater part of the public investments (around 75% in fact, see section vii) are targeted at the traditional emerging farmer. These are the building blocks not only of the agricultural sector, but of the overall economy, and will remain so for at least the lifetime of the NDP. Also, they are clearly the prime targets of the socio-economic shift called for by the NDP.

Accordingly, the FMP is intended to increase irrigation service delivery to such farmers by an average of around 6.25% year over the 25 year lifetime of the plan (ie from a baseline of just under 57,000 ha to over 253,000 ha), as compared with a business as usual rate of under 2.7%.

The benefits moreover will not be limited to spatial expansion. The FMP also provides for an increasing shift from simple surface irrigation to more precise methods: sprinkler and drip. These will not only reduce pumping costs where applicable, they will also increase savings in water rights-in-use, which could be monetised, they will also reduce

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the sub-sectors overall demand in the context of the countrys shift to an IWRM paradigm.

Figure iii The Four Stages of the FMP

TIME SLICE YEARS KEY CHARACTERISTIC

Immediate 2011 - 2012 Capacity Building and Studies:

feasibility studies for the rehabilitation of existing government schemes

scoping studies for new smallholder and bulk service schemes

demonstrations and awareness raising

institutional capacity building

scoping of options for Public Private Partnerships

reformulation of the policy legal and regulatory frameworks

Short Term 2013 - 2017 Reinvigoration of the Sector:

institutional measures identified and studied in the Immediate Term;

successfully appraised investments;

a fresh round of studies (investments, markets and Public Private Partnerships); and,

awareness raising and closer coordination/cooperation with the private sector (which will include the emerging farmers as defined earlier).

Medium Term

2018 - 2022 Spatial and Market Expansion:

continuing demand driven development of Type A irrigation potential with new build becoming rapidly more significant than rehabilitation;

increasing development of Type B potential; and,

the development of bulk service infrastructure.

Long Term 2023 - 2035 Integration and Commercialisation:

deeper integration with regional and global markets

ongoing spatial expansion of both Type A and B potential;

increasing commercialisation of the sector (recall Figure 3.2) - this may involve radical farming system diversification;

private investment in bulk service infrastructure and service delivery; and,

more Public Private Partnerships.

vi Institutional Arrangements

Although a detailed design for a full scale institutional restructuring and capacity building programme is obviously beyond the scope of this FMP. It is nonetheless necessary to understand that successful implementation of the proposed FMP will depend on i) a strategic reformulation of institutional mandates and linkages; and ii) a well-focussed and comprehensive capacity building programme. On the basis of a series of stakeholder consultations, an institutional architecture has been suggested as illustrated by Figure iv below, where it can be seen that the proposed architecture calls for four cluster of service institution:

there are four clusters of institutions:

- research and information - agriculture and extension - regulation - investment, infrastructure, operation and maintenance

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Figure iv Indicative Institutional Arrangements Assumed by the FMP

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Of particular interest is the proposed Apex Body, currently thought of in terms of a Secretariat, although the possibilities of establishing a Commission for the purpose has been considered. The benefits of an Apex Body will include:

efficient and effective coordination and representation of the diverse stakeholders that make up the irrigation sub-sector: These include line and non-line ministries, each with different priorities and agendae; regulators; farmers and farmer groups; agribusiness interests, banks and investors.

A significant reduction in the transaction costs involved in facilitating, regulating and monitoring activities in the sub-sector, and a corresponding increase in the efficiency of sub-sector service provision and regulation.

Increased confidence among the farming community. A single institution to oversee implementation of the FMP characterised by

a strong understanding of and commitment to its objectives. The opportunity to concentrate necessarily diverse subject matter

specialisation in a single body, with a single objective. The provision of one-stop-shop services to incoming international

investors. A highly focussed clearing house for new knowledge and the specification

of demand driven research.

vii Water Availability

The FMP has been subjected to a detailed water audit agglomerated at basin level, but based on district specific hydrology, agro-climatology and indicator crops (which were recommended by MAAIF). As indicated by Table i, implementation of the FMP is highly affordable in terms of water availability: although trans-seasonal storage may be necessary at specific locations, and a transparent rights based allocation mechanism will be necessary for reasons of both equity and environmental management.

In addition to the internal water audit, the FMPs Transboundary impact has also been assessed and found to be insignificant in terms of downstream demand, and even so will be easily accommodated by expected increases in irrigation water use efficiency in Sudans vastly greater irrigation sector to the North.

Table i Water Audit for the eight main Catchments

Catchment Total amount available for

abstraction (106 m3/yr)

Total gross crop water

demand (106 m3/yr)

Water demand/available

water (%)

Albert Nile 2,358 46 2.0

Aswa 606 14 2.3

Lake Albert 684 8 1.1

Lake Edward 1,306 63 4.9

Lake Kyoga 4,621 302 6.5

Lake Victoria 2,192 89 4.1

Victoria Nile 1,181 45 3.8

Kidepo 116 1 1.2

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viii Financial and Economic Analysis and the FMP Financing Plan

The overall costs and benefits of the proposed FMP are set out in Table ii and illustrated by Figure v, where shows that over 75% of the expected budget is dedicated to publicly funded investments which the FMP targets mainly at the traditional and emerging farmer.

The table is largely self-explanatory except for the Private Sector Leverage Fund. Experience in other countries suggests that large commercial investments are more likely to take place when government itself is prepared to cover or share the costs of enabling service infrastructure such as dams or feeder canals systems in order to attract commercial investment. For instance Tanzanias National Irrigation Development Fund is predicated on the principle that an investment in such infrastructure catalyses a commercial investment of around three times that of Government, hence leverage. Such infrastructure is potentially wide ranging in nature and could include dams; bulk irrigation service infrastructure; grid connections and cold chains etc.

Table ii Summary of Costs and Benefits

ITEM

TERM

TOTAL immediate short medium long continuation

Government costs

institutional capacity building 19,212.50 8,562.50 1,822.50 2,500.00 - 32,097.50

public cost of infrastructure 2,407.56 33,450.82 103,445.66 1,146,669.71 850,027.99 2,136,001.74

private sector leverage fund 17,224.74 86,123.72 86,123.72 206,696.92 - 96,169.09

total Government 38,844.81 128,137.03 191,391.88 1,355,866.62 850,027.99 2,564,268.33

Producers' costs

farmers cost contribution - 1,753.80 4,292.11 39,330.44 27,877.93 73,254.28

operation and maintenance - 3,557.75 19,882.59 490,306.52 1,208,269.45 1,722,016.32

production costs - 32,883.76 162,531.03 2,664,195.15 6,262,575.28 9,122,185.22

total producers - 38,195.31 186,705.73 3,193,832.11 7,498,722.66 10,917,455.82

OVERALL TOTAL COSTS 38,844.81 166,332.34 378,097.61 4,549,698.74 8,348,750.65 13,481,724.15

Revenues - 115,566.85 584,302.12 10,195,906.51 24,165,230.82 35,061,006.30

CASH FLOW -38,844.81 -50,765.50 206,204.51 5,646,207.78 15,816,480.17 21,579,282.15

The cashflow set out in Table ii was subjected to a financial and macro-economic analysis. Its Financial Internal Rate of Return was fixed at 30% (and achieved as such by setting the annual leverage fund allocations accordingly), which corresponds to an Economic Rate of Return of 45%. The large jump from financial to economic RR is explained by the shadow prices associated with the high proportion of exports and/or import substitution expected to accrue to the FMP.

FMP sensitivity to increased costs (plus 10% and 20%), decreased revenues (minus 10% and 20%) and delayed revenues (income stream delayed in relation to costs by 1 year and two years). The risks, which are illustrated in Figure vi

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are well within acceptable limits, and in any case can be manipulated by changing the scale of the Private Sector leverage Fund.

Figure vi Reduction Percentages of Base Case EIRRs Resulting from Reduced Revenues, Increased Costs and Delayed Revenues

The FMP financing plan is illustrated by Table iii and Figure vii which indicates a gradual reduction in public commitment in favour of user financing, especially in terms of recurring costs.

Table iii The FMP Financing Plan

ITEM

TERM

immediate short medium long continuation

Financed by Government

capacity building 4,803 1,713 365 208 -

infrastructure (new) 602 6,690 20,689 93,857

infrastructure (replacement) - - - 1,699 56,669

private sector leverage 17,224.7 17,224.7 17,224.7 17,224.7 -

Figure v Distribution of Public FMP Costs by Budget Class

1.87%

75.02%

23.11% institutional capacitybuilding

public cost ofinfrastructure

private sectorleverage fund

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Table iii The FMP Financing Plan

ITEM

TERM

immediate short medium long continuation

Financed by Beneficiaries

capital cost contribution (new) - 351 858 3,219 -

capital cost contribution (replacement) - - - 58 1,859

operation and maintenance - 712 3,977 40,859 92,944

Figure vii Annual Financing Requirements of the FMP (Ugx106)

ix Next Steps

The key next steps themselves fall into two categories. First are those that will have to be taken at Ministerial level, there are two of these. Most pressing is finalisation and promulgation of the Irrigation Policy presented as a draft in Annex 1, after which the decision to proceed with the FMP implementation can be made. Both of these tasks require early buy-in by the Minister, hence a detailed and comprehensive briefing process may be necessary.

Second are the transitional studies which will help the FMP to get off to a good start. There are four, three of which will add value to the sub-sector even if it is decided not to proceed with the FMP while the fourth is essential to its success:

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1. concerns streamlining of the Analytical which is not a deliverable of the FMP study, but rather a tool developed by the consultant as a means by which to organise and process the vast and complex data necessary to model and analyse the sub-sector;

2. is an institutional design for the proposed Apex Body

3. is preparation of a position paper on Public Private Partnerships in irrigated production and service delivery: Annex 5 provides a generic discussion of the essential issues, but does not transform these into serious opportunities for investors in Uganda

4. Is the preparation of a detailed implementation plan for the FMP, this will largely involve the preparation of contracts for the first round of FMP activities which will include scoping for new schemes; various capacity building initiatives; studies addressing the soft institutions; awareness raising; design and procurement of the proposed remote sensing networks; detailed design of the Private Sector Leverage Fund and the establishment of the FMP implementation monitoring framework.

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Contents Executive Summary ........................................................................................................................ ii

List of Abbreviations ................................................................................................................... xvii

Key Definitions and Caveats ........................................................................................................ xix

PART 1 BACKGROUND TO THE STUDY ........................................................................... 1

1 IRRIGATION, POVERTY ALLEVIATION AND ECONOMIC GROWTH IN UGANDA ... 2

2 THE IRRIGATION FRAMEWORK MASTER PLAN ............................................................. 3

3 THIS DOCUMENT .................................................................................................................... 5

PART 2 UNLOCKING UGANDAS IRRIGATION POTENTIAL ........................................ 7

4 CURRENT STATUS OF THEIRRIGATION SUB-SECTOR SECTOR ................................. 8

4.1 Currently Irrigated Crops ........................................................................................................ 8

4.2 Infrastructure ........................................................................................................................... 8

4.3 Stakeholders and Institutions ................................................................................................ 10

4.3.1 At the Centre ............................................................................................................. 10

4.3.2 At the Decentralised Level ........................................................................................ 11

4.3.3 At the Farm Level ...................................................................................................... 11

4.4 Markets .................................................................................................................................. 11

4.5 Contribution of the Sub-Sector ............................................................................................. 15

4.6 Constraints............................................................................................................................. 16

4.7 Current Initiatives .................................................................................................................. 17

4.7.1 Integration of Climate Change Issues Into Sustainable Agricultural Advisory Services ............................................................................................................................. 17

4.7.2 Karamoja Livelihoods Programme (KALIP) ............................................................ 17

4.7.3 Agri-Business Initiative: The U-Growth Programme ............................................... 18

4.7.4 Farm Income Enhancement and Forestry Conservation Project .............................. 18

5 THE STRATEGIC RELEVANCE OF IRRIGATION TO UGANDA .................................... 19

5.1 The National Development Plan ........................................................................................... 19

5.2 Irrigation and Socio-Economic Transformation.................................................................... 23

5.3 Possible Objectives for Reinvigorated Irrigation in Uganda ................................................. 24

5.3.1 Why Irrigation is Needed? ........................................................................................ 24

5.3.2 Poverty Alleviation .................................................................................................... 26

5.3.3 Economic Growth ...................................................................................................... 27

5.4 Climate Change ..................................................................................................................... 28

5.5 Key Issues for Ugandas Irrigation Development Strategy ................................................... 30

5.5.1 Physical Investments ................................................................................................. 30

5.5.1.1 Sweating the Assets ............................................................................................... 30

5.5.1.2 New Build .............................................................................................................. 30

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5.5.1.3 Bulk Service Infrastructure ................................................................................... 31

5.5.1.4 Ancillary Investments ............................................................................................ 32

5.5.1.5 Investment Strategy ............................................................................................... 32

5.5.2 Water Resources Management .................................................................................. 33

5.5.3 Institutions ................................................................................................................. 35

6 UGANDA'S IRRIGATION POTENTIAL ............................................................................... 37

6.1 Land....................................................................................................................................... 37

6.2 Water ..................................................................................................................................... 40

6.2.1 ET0/Pe Ratios ............................................................................................................. 40

6.2.2 Surface Water ............................................................................................................ 41

6.2.2.1 In-Stream ............................................................................................................... 41

6.2.2.2 Wetlands ................................................................................................................ 42

6.2.3 Groundwater ............................................................................................................. 43

6.2.4 Total Water ................................................................................................................ 43

6.2.4 The Nile Basin ........................................................................................................... 44

6.3 Markets .................................................................................................................................. 45

6.4 Crops ..................................................................................................................................... 45

7 A FRAMEWORK MASTERPLAN FOR IRRIGATION IN UGANDA ................................. 47

7.1 The Framework Approach .................................................................................................... 47

7.2 The Objectives Axis .............................................................................................................. 48

7.3 The Sub-sector Axis .............................................................................................................. 48

7.4 The Time Axis ....................................................................................................................... 48

PART 3 THE FRAMEWORK MASTER PLAN.................................................................... 51

8 THE NEED FOR A FRAMEWORK MASTER PLAN AND A LEGITIMISING POLICY .. 52

9 UGANDAS IRRIGATION FRAMEWORK MASTER PLAN .............................................. 56

9.1 The Analytical Tool and Sector Expansion Model ............................................................... 56

9.2 Institutional Roles and Responsibilities ................................................................................ 61

9.2.1 Principles .................................................................................................................. 61

9.2.2 Arrangements ............................................................................................................ 62

9.3 The Framework Itself ............................................................................................................ 64

9.3.1 Immediate Capacity Building, Studies and Investigations ..................................... 64

9.3.2 Short Term Reinvigoration of the Sector ................................................................ 69

9.3.3 Medium Term - Spatial and Market Expansion ........................................................ 70

9.3.4 Long Term Integration and Commercialisation ..................................................... 72

9.3.5 The Completed Framework ....................................................................................... 73

10 DETAILED ANALYSIS BY CATCHMENT .......................................................................... 78

11 WATER AUDIT ....................................................................................................................... 95

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12 SOCIAL AND ENVIRONMENTAL IMPACT ASSESSMENT ........................................... 100

13 COSTS AND BENEFITS ....................................................................................................... 104

13.1 Rationale and Methodology ........................................................................................ 104

13.1.1 Institutional Capacity Building ........................................................................... 104

13.1.2 Cost Elements of Publicly Funded Irrigation Development ................................ 108

13.1.3 Irrigation Investment and Recurring Costs ......................................................... 110

13.1.4 Operation and Maintenance of Publicly Funded Irrigation ............................... 110

13.1.5 Private Sector Schemes: the Leverage Fund ....................................................... 110

13.1.6 Crop Budgets ....................................................................................................... 111

13.2 Consolidated Costs and Benefits ................................................................................. 115

14 MACRO-ECONOMIC ANALYSIS ....................................................................................... 116

14.1 Methodology ............................................................................................................... 116

14.1.1 The Difference Between Financial and Economic Rates of Return .................... 116

14.1.2 Derivation of the Shadow Pricing Factors .......................................................... 116

14.2 Results ......................................................................................................................... 119

14.2.1 Sensitivity Analysis .............................................................................................. 119

14.2.2 Incremental Benefits ............................................................................................ 119

15 MOVING FORWARD ........................................................................................................... 122

15.1 Recapitulation of Main Arguments ............................................................................. 122

15.2 Implementation, Financing and Cost Recovery Plans ................................................. 123

15.2.1 Logframe and Implementation Plan .................................................................... 123

15.2.2 Financing and Cost Recovery ............................................................................. 136

15.3 Maintaining Momentum .............................................................................................. 136

15.3.1 Necessary Ministerial Action .............................................................................. 136

15.3.2 Transitional Studies ............................................................................................. 137

15.3.2.1 Refinement of the Analytical Tool ....................................................................... 137

15.3.2.2 Legal Framework Review .................................................................................... 138

15.3.2.3 Institutional Design for the Apex Secretariat ...................................................... 138

15.3.2.4 Position Paper on Public Private Partnerships in Irrigation ............................. 139

15.3.2.5 Detailed Implementation Plan for the FMP ........................................................ 139

15.4 Closing Comments ...................................................................................................... 142

ANNEX 1 DRAFT IRRIGATION POLICY ............................................................................ 144

A1.1 Context ........................................................................................................................ 144

A1.2 Policy Objectives......................................................................................................... 146

A1.3 Fundamental Guiding Principles ................................................................................. 147

A1.3.1 Allocation and Use of Water Resources .............................................................. 147

A1.3.2 Investment Planning and Decision Making ......................................................... 148

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A1.3.3 Facilitation and Regulation of Commercial Investments .................................... 149

A1.3.4 The Provision of Effective Irrigation Services .................................................... 150

A1.4 Implementation Strategy ............................................................................................. 151

A1.4.1 Immediate Term: 4 years ..................................................................................... 151

A1.4.2 Short Term: 5 years ............................................................................................. 152

A1.4.3 Medium Term: 5 years ........................................................................................ 153

A1.4.4 Long Term. 12 years ........................................................................................... 154

A1.5 Assumptions and Preconditions .................................................................................. 155

ANNEX 2 THE SAMPLE AREA APPROACH ...................................................................... 157

ANNEX 3 THE WATER AUDIT ............................................................................................ 181

ANNEX 4 DETAILED COSTS AND BENEFITS .................................................................. 185

ANNEX 5 IRRIGATION SECTOR PUBLIC PRIVATE PARTNERSHIPS .......................... 191

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List of Abbreviations

AfDB African Development Bank

CAADP Common African Agricultural Development Programme

CICS Competitive and Investment Climate Strategy

DNIMP Draft National Irrigation Master Plan

DoWfP Department of Water for Production

DRC Democratic Republic of Congo

DSIP Development Strategy and Investment Plan

EIRR Economic Internal Rate of Return

FAO Food and Agriculture Organisation (of the United Nations)

FDI Foreign Direct Investment

FIRR Financial Internal Rate of Return

FMP Framework Master Plan

FOREX Foreign Exchange

GDP Gross Domestic Product

ICT Information and Communications Technology

IFAD International Fund for Agricultural Development

IPCC Inter-governmental Panel on Climate Change

ISFG Integrated Support to Farmers' Groups

IWMI International Water Management Institute

IWRM Integrated Water Resources Management

MAAIF Ministry of Agriculture, Animal Industry and Fisheries

MFPED Ministry of Finance, Planning and Economic Development

MIS Management Information System

MWE Ministry of Water and the Environment

NAPA National Plan of Action

NBI Nile Basin Initiative

NDP National Development Plan

O&M Operation and Maintenance

OPM Office of the Prime Minister

PPP Public Private Partnership

ToR Terms of Reference

UBOS Uganda Bureau of Statistics

WfP Water for Production

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WfPSIP Water for Production Sector Investment Plan

WS&S Water Supply and Sanitation

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Key Definitions and Caveats

It is likely that nomenclature used in this document might mean different things to different stakeholders. In order to avoid ambiguity or misunderstandings therefore, the following definitions apply herein.

The Government uses the term sector when referring to recognised components of the economy, ie transport sector, agriculture sector etc. There is however, no official meaning attached to the term sub-sector. Nonetheless, in the absence of a suitable alternative Government has authorised its use in this document to define the portion of the agricultural sector that benefits from irrigation infrastructure and services.

Agricultural Water Management refers to all man-made measures taken to maintain root zone moisture at the optimal conditions for crop growth. In general, these measures vary with service level as do those responsible for providing them as illustrated by Figure ii where:

Irrigation is the practice of maintaining root zone moisture at levels necessary to ensure optimal growth conditions for a given crop at a particular stage of growth when soil moisture would otherwise be inadequate. Irrigation Infrastructure comprises the physical works necessary to abstract water from its natural location to the root zone of the crop. However, storage works are only defined as Irrigation Infrastructure in the unlikely event they are built exclusively to store irrigation water.

Supplementary Irrigation is a somewhat loosely applied term that refers to irrigation practised in areas with reasonable but inadequate or unreliable rainfall, and can be thought of as a means by which to add value to whatever rainfall is received.

Drainage is the practice of maintaining root zone moisture at levels necessary to ensure optimal growth conditions for a given crop at a particular stage of growth when soil moisture would otherwise be excessive. Drainage Infrastructure comprises the physical works necessary to convey excess water from the root zone to the natural drainage system and can involve the use of natural or artificial wetlands to purify water that is polluted with farm chemicals and the like.

Terracing describes physical measures taken to divide rolling topography into step-like layers in order to slow down or intercept surface run-off thereby increasing percolation rates and reducing the risk of soil erosion.

Water harvesting describes simple physical and operational measures to divert and/or store water for the purpose of irrigation (and other uses) and is usually characterised by its highly localised nature, low costs and suitability for community based implementation.

Agro-forestry is the practice of incorporating trees into a farming system in order to reduce advective energy (and depending on the variety of tree, to provide timber, fuel, fodder, fertiliser and fibre etc)

Farming system diversification in the context of this document refers to a shift away from crops and/or husbandry regimes that do not represent the most productive use of natural resources, infrastructure and services to ones that do.

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Such shifts are unlikely in the absence of enabling measures that convince risk averse farmers that the shift does not expose them to more risks than they currently perceive.

For convenience hereafter, and unless the context calls for specificity, the term Irrigation is used to describe the full gamut of agricultural water management measures that lie within the scope of this Framework Master Plan1. These are identified by blue text in Figure I, where drainage includes works necessary to manage wetlands.

Figure ii Irrigation Measures and Service Provision

Evapotranspiration denotes the total amount of water physically evaporating from the soil and physiologically evaporated (transpired) by the crop. Reference Crop Evapotranspiration (ET0) is defined as the evapotranspiration rate from a reference surface that is not short of water. Usually the reference surface is assumed to be a hypothetical grass crop. Crop Evapotranspiration (ETc) is the evapotranspiration

1 This does not compromise however, the significance of the items identified by brown. As will be argued in the Main

Text (sub-section 5.3), irrigation should be targeted primarily at localized poverty alleviation and general economic growth, leaving food security gains to be achieved largely in the rainfed sector, which has declined in productivity in recent years due largely to poor soil management and low-input farming systems. It will be clear that i) restoration of organic material in the root zone; agro-forestry; farming system diversification and terracing etc, are not only crucial for increasing the returns of irrigated agriculture but also for improving rainfed yields.

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from a specific disease-free, adequately fertilised crop grown in a large field under conditions of optimum soil moisture and achieving full production under the given climatic conditions. Crop evaporation, which is growth stage dependent is estimated from the reference crop evapotranspiration using Crop Factors that are specific both to the crop in question and its stage of growth.

Effective Rainfall (Pe) is the portion of rainfall that remains available to a plants root zone during or after a precipitation event and Irrigation Water Requirement is the difference between the amount of water needed to maintain optimal soil moisture conditions and the amount represented by effective rainfall.

In common with similar studies in Uganda and elsewhere, this framework Master Plan is predicated on:

three kinds of farmer

- Traditional Farmers which are those practicing subsistence cropping with minimal to nil cash crops;

- Emerging Farmers which are those with farming systems combining subsistence with significant commercial cropping, and who hence are already participating in the economy at large;

- Commercial Farmers which are those for whom the greater part, of not all of their farming systems comprises cash crops these include farmers of all size, including those within public schemes that operate commercially oriented farming systems.

two kinds of investor:

the public sector (comprising government and to whatever extent is considered expedient, its development partners) and

a well regulated commercial sector (comprising both national and international players).

Two kinds of institution:

- Hard institutions which include public sector institutions in the form of relevant official stakeholders at every level of the civil administrative hierarchy, plus where water is managed on a basin basis, at every level of the hydrocracy. They will also include farmer organisations and private sector service providers and investors in service infrastructure.

- Soft institutions which are the policies, laws, regulations and incentives that ensure the smooth and equitable running of the sector, attract new players into it and guarantee the sustainability of the natural resource base on which it depends.

Three land types, namely:

- Type A land which lies close to surface water resources on which agricultural water can be managed without the need for storage. For the purpose of this policy, Type A potential has been estimated to total some 295,000 ha of which 243,500 ha is intended for publicly funded development under this policy (approximately 24,000 ha of which will be upland, and the balance managed wetlands):

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- Type B land which does not lie close to surface water resources or which cannot be fully developed in the absence of storage facilities and/or feeder systems. For the purpose of this policy, Type B land has been estimated to total some 272,000 ha of which approximately 9,750 ha is intended for publicly funded development under this policy.

- Off-plan land which could be either Type A or Type B, commercially developed but with bulk service infrastructure selectively financed by government on a demand driven basis.

five types of infrastructure:

- Small Scale schemes which will be simple gravity fed schemes, usually beginning close to the water source. Sprinkler and drip technology on these schemes will typically be low tech, and in the case of drip for instance, mainly charged by treadle pumps.

- Formal Government Type A schemes which will be similar in concept to small scale schemes in that they will be situated close to the water sources, but will require pumped withdrawal facilities at the water source and be generally, will be larger. Any irrigation technology such as sprinkler and drip will also be more sophisticated.

- Government Type B schemes which will be similar in concept to Type A except that they will be situated further from the water sources, and will require not only pumped abstraction systems but also feeder systems and possibly storage. Irrigation technology such as sprinkler and drip will also be more sophisticated.

- Managed (seasonal) wetlands which will generally be used only for rice, although, there will be some local opportunities for a quick short season legume crop taken off the residual moisture.

- Private Sector schemes which will comprise schemes which are entirely financed by purely commercial interests and as a result are beyond the scope of the FMP except that, in order to attract such investments, Government may decide to invest in bulk service infrastructure (dams and large feeder systems for instance).

And finally, this Framework Master Plan assumes

two kinds of funding allocation:

- On-plan which covers publicly funded investments, planned and prepared in advance (at the demand of and with the participation of the stakeholders)

and

- Leverage which is an unallocated budgetary provision that will allow Government to fund any infrastructure considered necessary to encourage and/or facilitate private investment in irrigated agriculture or irrigation service provision, but which is not included in the On-plan works. Usually, such infrastructure will be developed on the basis of expressed demand from the potential private investor(s).

A National Irrigation Master Plan for Uganda (2010 - 2035) Volume 1 Main Text

VOLUME 1 MAIN TEXT


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PART 1 BACKGROUND TO THE STUDY


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1 IRRIGATION, POVERTY ALLEVIATION AND ECONOMIC GROWTH IN UGANDA

The overall vision of Ugandas Draft National Development Plan (see section 5 below) is a transformed Uganda society from a peasant to a modern and prosperous country within 30 years. Its eight objectives have between them a strong focus a/o on poverty alleviation and economic growth in the context of the sustainable use of the countrys natural resources. Water for production is among the priority interventions/investments, and although this includes industry and power generation, agriculture (including fisheries and livestock) is the major consumer of water for production.

Domestic agriculture remains the mainstay of Ugandas food security at both the household and national levels, and has been a significant contributor to gross domestic product (24%), to export revenues (estimated at 48%) as well as providing a livelihood for over 70% of the population. The sector however, is dominated by rainfed farming systems:

the viability of which is becoming increasingly compromised by climate change;

the productivity of which is reducing in the case of some crops, due to a variety of constraints both technical and institutional;

and

the ability of which to contribute to national food security is decreasing due to one of the highest population growth rates in the world.

Yet despite the fact that improved irrigation can mitigate climate change risk; facilitate the concentration of support services (and hence reduce the unit costs of improved service provision); and obviate the perceived risks of diversified or intensified farming, only some 14,420 ha is understood to have been equipped for formal irrigation and with another 53,000 ha or so of managed wetlands. And this is despite Ugandas plentiful water resources at least at the national level. Estimates of Ugandas spatial potential for improved irrigation vary from 170,000 ha to over 560,000 (see sub-section 6.1 below), whereas the total potential arable area is some 4,400,000 ha. The difference between the two represents, of course, the rainfed potential. It will be obvious therefore that the irrigated portion of the agriculture sector is always going to be small in relation to rainfed farming with or without climate change but that is more relevant to food security strategies than poverty alleviation and economic growth (this is discussed in detail in Chapter 5). For poverty alleviation and economic growth, an invigorated, intensified and expanded irrigated sub-sector represents very significant potential.


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2 THE IRRIGATION FRAMEWORK MASTER PLAN

Accordingly the Government has prepared a National Irrigation Framework Master Plan with consultancy support. The study had four formal deliverables:

The first was a Preliminary Report intended to include results of a rapid assessment of the draft Irrigation Master Plan (draft 2 at the commencement of the consultancy) and other reports provided to the Consultant. The Preliminary Report was also required to address - a/o details of the pertinent key technical, institutional, socio economic and environmental issues to be taken into consideration during the study, in addition to detailed an explicit methodology, work plan, staff organisation and schedules. The final version of this report was delivered in early June 2010 and covered:

an analytical description of the current status of the Ugandan irrigation sub sector in terms of the physical infrastructure, the institutional landscape and prevailing constraints;

a review of the National Development Plan paying particular regard to its pronouncements with respect to irrigation;

a detailed assessment of the countrys irrigation potential and its relevance to the objectives of the National Development Plan: inter-alia, this assessment discussed serious questions i) about why expanded irrigation is necessary and ii) about the nature of an appropriate development strategy for the sector;

an outline investment framework that mapped development objectives onto a sector typology over the immediate, short, medium and long terms;

and

an assessment of key issues arising from the baseline literature review.

The second deliverable comprised a First Draft National Irrigation Master Plan and was initially issued in September 2010 and as per the study ToR comprised an elaboration of the preliminary report including:

a more detailed commentary on the current status of the sector as regards crops, infrastructure, stakeholders and institutions, markets, economic contribution, constrains and current initiatives in progress;

the strategic relevance of irrigation in terms of the National Development Plan, socio-economic transformation, sectoral objectives and key strategic issues as they concern physical investments, water resources management and institutions;

a more detailed assessment of the countrys irrigation potential in terms of land, water, climate, the Nile Basin, markets and crops;

and

a more detailed version of the proposed investment framework.


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An updated version of this report was then issued in December 2010 once stakeholder comments and suggestions had been received, at which point key stakeholders defined the sectors expansion parameters (see section 9.1)

The third deliverable comprised the Draft Final Master Plan and was issued in June 2011.

This document and its supporting Annexes is the fourth deliverable and comprises the actual final master plan.


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3 THIS DOCUMENT

This document is the final deliverable and although largely based on the third it includes a lot of new material and expanded discussions of issues of particular interest. The Main Text has three parts, of which this Chapter ends the first.

PART 2 comprises a revised version of the second deliverable and presents an analysis of Ugandas irrigation potential in terms of its relevance to the Objectives of the current National development Plan and the markets for irrigated produce. In so doing, it suggests answers to several important institutional questions and closes by proposing and explaining an Investment Framework approach to plan formulation. There are four chapters as follows:

Chapter 4 examines the current status of Ugandas irrigated sub-sector in terms of the current baseline; its infrastructure and stakeholders; the market for irrigated produce; the sub-sectors contribution to the national economy; constraints and current initiatives relevant to the sector.

Chapter 5 assesses the strategic relevance of irrigation in Uganda using criteria suggested by the National Development Plan: it then goes on to propose objectives for an invigorated sub-sector before closing with a section introducing the key issues that would need to be addressed in order for those objectives to be achieved.

Chapter 6 quantifies Ugandas irrigation potential in terms of land, water, markets and crops.

Chapter 7 ends Part 2 by explaining the Investment Framework approach before defining the frameworks axes as agreed by the key stakeholders.

PART 3 presents Ugandas irrigation sector Framework Master Plan (FMP) and has 8 chapters as follows:

Chapter 8 provides a bridge from the analytical material comprising Part 2 to the FMP itself. It begins by setting out why a plan is needed in the first place before presenting an assessment of the institutional challenges and opportunities that need to be faced during and as part of FMP implementation.

Chapter 9 begins with a discussion of the Analytical Tool developed for the purpose of this study and of the sub-sector expansion model used to drive the tool. It then proceeds to enunciate certain key institutional principles before proposing institutional arrangements that respond to the institutional challenges and opportunities identified in Chapter 8 and does so in a way that is consistent with those principles. Finally the investment framework defined in Chapter 7 is applied to the Ugandan irrigation sub-sector.

Chapter 10 presents summaries of key parameters (areas and costs by type of irrigation) that illustrate the results of the irrigation expansion at district level but consolidated into catchments as is consistent with the principles of IWRM.

Chapter 11 in like manner presents the results of a catchment by catchment water audit to which the FMP was subjected.


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Chapter 12 then describes the rigorous and mandatory social and environmental impact assessments that should be carried out when developing and operating irrigation infrastructure. It closes by suggesting an assessment matrix that could be used for this purpose.

Chapter 13 summarises the implementation costs of the FMP and the benefits expected to accrue as a result. It has two sections. The first sets out the rationale and methodology used when developing the costs and benefits which are presented in consolidated form in the second.

Chapter 14 provides an indication of the expected economic performance of the FMP and does on the basis of a macro-economic and sensitivity analyses which itself is described in the chapter.

Chapter 15 ends the Main Text by recapitulating the reasons why an FMP is needed. It then goes on to present the FMP in the form of a logical framework and implementation programme, along with a financing and cost recovery plan before closing with a clear statements of i) the immediate steps to be taken at Ministerial level to generate and maintain momentum and ii) specifications for transitional studies that could usefully be undertaken during validation and approval of the FMP by Government..

The Main Text is supported by 5 Annexes.

Annex 1 comprises a Draft Irrigation Policy for the consideration of Government.

Annex 2. supports Chapters 9 and 13 by describing in detail the sample area costing methodology used for the study.

Annex 3 supports Chapter 11 by providing the detailed results of the water audit, also by catchment

Annex 4 presents the detailed cash flow derivation for the entire FMP

Annex 5 provides a generic discussion of Public Private Partnerships in irrigated production and service delivery and does so in a way that raises important questions for Uganda.


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PART 2 UNLOCKING UGANDAS IRRIGATION POTENTIAL


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4 CURRENT STATUS OF THEIRRIGATION SUB-SECTOR SECTOR

4.1 Currently Irrigated Crops

Reliable data on irrigated cropping in Uganda is not readily available; but according to field work carried out under the auspices of FAOs programme Project GCP/INT/945/ITA: Information Products for Nile Basin Water Resources Management crops currently known to be irrigated in Uganda include fruits, maize, rice sesame, sugar-cane and vegetables.

Table 4.1 lists the irrigated crops for which yield data has proved readily available; the range of reported yields; and an estimate of potential yields. In addition, it is known (as per Figure 4.1 below) that other high value crops such as flowers and horticultural crops are being grown under irrigation by the private sector for export, bringing in foreign exchange: but no productivity data is to hand at the time of writing. What is clear however, even from this cursory data if reliable, is that most of the crops irrigated on the public schemes are under-performing at least on the existing public schemes. In addition to limited serviceability at typical irrigation schemes (see next sub-section) and climate change,

other important reasons for this include loss of organic materials, low input farming and sub-optimal farming systems. If the FMP is to perform optimally these other reasons will have to be addressed.

4.2 Infrastructure

Figure 4.1 shows where Ugandas irrigation currently takes place (obtained from the NBI Trans-boundary Project 2008 data). According to the 2nd Draft Irrigation Master Plan (DNIMP) only 5% of the irrigation potential areas have been developed comprising: five government irrigation schemes and small scale irrigation of paddy rice.

According to the same source, the land under formal irrigation is 14,418 ha as shown in Table 4.2 below. This does not include the rice which is grown under an estimated 53,000 ha of informal irrigation on managed wetlands in Tororo, Buteleja, Pallisa, Budaka and Iganga where swamps around streams flowing into lake Kyoga have been developed for irrigation by local groups of farmers or commercial interests. With this in mind it should be noted that managed wetland is acknowledged to be a form of irrigation in the Common African Agricultural Development Programme and as such is appropriate for inclusion in a planning exercise such as this.

It is clear from these sources that the formal public schemes are performing sub-optimally. Reasons for this will be explored below in Section 4.6.

Table 4.1 Irrigated Yields in Uganda Compared with Potential

CROP

YIELDS (tonnes/ha)

RANGE REPORTED

ACHIEVABLE lower upper

Fruit 19.0 not known >20

maize 2.0 2.0 8

rice 1.0 5.0/1 >5

sesame 2.4 2.8 this is already high

sugar cane 18.0 18.5/2 >25

vegetables 8.5 15.6 >30

Notes :

1 The FAO data suggests 3.5, but field work carried out during the study confirmed that higher yields are being achieved on both public and private schemes

2 It is assumed that this is sucrose, not cut cane weight, and can be regarded as already high, despite the achievable level..


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Table 4.2 Summary of Existing Irrigation in Uganda

TYPE OF IRRIGATION SCHEME AREA (ha)

COMMENTS

Small-scale irrigation 300

Govt. Irrigation Schemes

Mubuku Irrigation Settlement Scheme 516 Cultivation methods, flooding, water logging.

To be rehabilitated under Farm Income Project funded by ADB

Doho Rice Scheme 830 Flooding. Siltation of canals, deterioration of headworks,


Olweny Swamp Irrigation Scheme 500 Flooding system

Pumping costs. Water control and available.


Agoro 130 Only half operational.


Kiige 60 Not yet operational

Commercial plantations 5,282

Figure 4.1 Location of Ugandas Irrigation Schemes


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Table 4.2 Summary of Existing Irrigation in Uganda

TYPE OF IRRIGATION SCHEME AREA (ha)

COMMENTS

Sub-total 7,618

Commercial, partial irrigation (Kakira) 6,800

GRAND TOTAL 14,418

4.3 Stakeholders and Institutions

Before proceeding to discuss the current institutional arrangements in the irrigation sub-sector it is necessary to establish a distinction between off-farm and on-farm irrigation infrastructure. Thus for the purposes of the DNIMP, off-farm referred to the bulk service infrastructure comprising the river works (which could be a dam, a weir or a pump station or a combination of these possibilities) and the delivery system that conveys water from the source to the edge of the scheme. On-farm refers to the distribution system within the scheme itself Figure 4.2 refers.

4.3.1 At the Centre The Ministry of Water and Environment (MWE) is the lead agency responsible for development, regulation and overall management of Ugandas water for production; as far as irrigation is concerned however, its role is limited to the off-farm functions which include:

assessments of water resources availability and economic analysis of water usage;

design/construction of off-farm infrastructure (dams, weirs, pump stations and delivery canals/pipelines and all ancillary infrastructure within the delivery system);

support to the Operation and Maintenance of off-farm hydraulic works, major water infrastructure and reservoirs

On-farm works are the responsibility of the Ministry of Agriculture, Animal Industry and Fisheries (MAAIF) and include:-

Figure 4.2 On-farm and Off-farm Irrigation Works


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the provision of technical assistance with respect to the design and construction of on-farm irrigation systems (including tertiary canals, distribution/field channels, control structures and drainage channels);

the promotion of appropriate technologies for efficient and effective use in irrigation;

the establishment of efficient and effective management structures;

support to the operation and maintenance of the on-farm systems;

the provision of extension services and provision of advice to farmers on irrigation systems and promotion of efficient water use;

the provision of support to/ for the supervision and monitoring of water use and management.

4.3.2 At the Decentralised Level As currently anticipated by the DNIMP, Local Governments will be responsible for:

scheme planning and site selection,

project monitoring,

establishment of appropriate management structures,

providing availing land for the facilities and

participating in capacity building related activities2.

4.3.3 At the Farm Level At farm level, the service beneficiaries are expected to take up responsibility for:

forming, joining and participating in water user associations

contributing to the capital costs of the on-farm works: to assist with this, NAADS is able to provide funds from Integrated Support to Farmers Groups (ISFG) for development of water for agriculture production systems on the condition that farmers are organized in groups of 20 to 30 members and where analysis confirms that the investment will be profitable for the farmers

operation and maintenance of the on-farm works; and

payment of the recurring costs, including the water service tariff.

4.4 Markets

In this sub-section we examine the markets for Uganda agricultural produce; but since the market does not generally differentiate between irrigated and rainfed crops, no distinction is made between them here - the intention being merely to

2 It is noted however, that a role in WfP project cycle management and financing is anticipated for the Water Sector

Development Facility: but this will not become relevant for some time.


12

identify trends and opportunities that could be secured better if the crops involved were irrigated.

The changing local market is characterized especially by the supermarkets and other new markets, some of which are largely supplied with fruits and vegetable imported from Kenya and South Africa, which itself confirms the potential demand that exists locally.

The most important export crop historically, namely coffee, remains the most important income earner for rural households in addition to cotton, tea and tobacco. But, as a result of increasing diversification, a number of other crops are emerging as key export commodities and consequently as potential sources of increased household income. Included among these non-traditional crops are cut-flowers, cocoa, vanilla pods and vegetables and these are being grown by both small scale farmers and the large scale commercial farmers. Table 4.3 provides statistics with respect to selected export crops.

The prime destination of all fresh produce exported from Uganda is reportedly the United Kingdom (UK); but other important international markets include Holland, Switzerland, Belgium, Germany, and the United Arab Emirates, among others. Produce for such markets tends to be dominated by high value horticultural commodities such as hot pepper, chillies, bananas (Ugandas largest crop by area and which does especially well in niche markets particularly in the UK), beans, avocado and pineapples. About 60 small and medium companies are active exporters in this sector (especially fresh fruits, vegetables and cut flowers).

Table 4.3 Exports of selected crops (values expressed in US$ million actual)

CROP PARAMETER 2004 2005 2006 2007 2008

Maize tonnes 90.58 92.79 115.26 101.23 66.67

value 17.90 21.26 24.11 23.82 18.25

Beans & other legumes tonnes 26.23 28.33 27.09 22.53 37.21

value 8.97 8.69 8.16 10.10 17.63

Soya beans tonnes 0.47 0.57 3.05 5.80 3.25

value 0.12 0.13 0.61 1.33 1.54

Groundnuts tonnes 0.00 0.02 0.06 0.10 0.03

value 0.00 0.02 0.01 0.15 0.03

Bananas tonnes 1.79 2.20 0.49 1.15 0.40

value 0.85 0.81 0.13 0.43 0.21

Bell Pepper tonnes 0.39 0.82 0.22 0.19 0.30

value 0.37 0.59 0.19 0.26 0.58

Vanilla tonnes 0.07 0.23 0.20 0.42 0.19

value 6.12 6.14 4.81 6.26 3.04

Fruits tonnes 1.30 3.06 7.82 7.36 3.11

value 0.92 1.16 1.17 1.98 5.33

TOTAL VALUE ('000 $US) 35.24 38.8 39.18 44.32 46.61

Source: Uganda Bureau of Statistics (UBOS)


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However, data from the Uganda Bureau of Statistics (UBOS) concerning formal trade also shows that Ugandas agricultural exports are destined for the East African Community markets (Kenya, Rwanda, Tanzania and Burundi) and other COMESA member countries. In addition, Uganda is becoming a transit point for food commodities destined for Sudan and the DRC: although many are grown elsewhere in the region and increasing quantity is already grown in Uganda. But the sector engages in very little value addition as yet and most fruits are exported fresh and unprocessed. Nonetheless some fruits are dried - apples, bananas, pineapples, papaya and mangoes being the most significant.

Informal cross border trade statistics confirm that Kenya is the major market for Ugandas informal agricultural exports. So far maize and beans have been the most important of these exports, although the opening up of the East African market has seen some farmers take advantage of new niches, especially for fresh fruit and fruit juices. Most of the informal cross border trade of agricultural commodities to Kenya passes through the Malaba & Busia border posts, Table 4.4 refers.

All this confirms that local and regional markets are not only clearly in place and understood already, but they are also expanding and diversifying.

Table 4.4 Informal cross border trade by value (US$ million) at Busia and Mutukula customs points

CROP

BUSIA MUTUKULA TOTALS

2005 2006 2007 2005 2006 2007 2005 2006 2007

Beans 29.36 16.35 6.63 0.08 0.80 1.40 29.44 17.15 8.03

Maize 22.74 14.97 6.51 0.64 5.77 1.23 23.38 20.74 7.74

Others 3.95 2.87 6.02 0.01 0.05 0.09 3.96 2.92 6.11

Groundnuts 2.79 4.54 4.45 - 0.15 0.05 2.79 4.69 4.50

Millet 3.23 2.22 3.57 - 0.01 0.13 3.23 2.23 3.70

Tomatoes 0.01 2.05 1.85 - - - 0.01 2.05 1.85

Water Melons 0.29 - 1.37 - - - 0.29 - 1.37

Bananas - - - - 0.04 0.34 - 0.04 0.34

Coffee - - - - 0.06 0.04 - 0.06 0.04

Sorghum - - - -

0.06 - - 0.06

TOTALS 62.37 43.00 30.40 0.73 6.88 3.34 63.10 49.88 33.74

Regional markets are expected to expand moreover as a result i) of the new opportunities for trade as represented by the East African (and other) economic communities; and ii) the expected participation of new countries such as South Sudan in the regional economic block. In addition, according to one component carried out in the context of a major study recently completed by a consortium comprising the AfDB, FAO, IFAD, IWMI and the World Bank3, by 2015, the regional market for irrigated produce could be equivalent to production at a level requiring some 700,000 ha of equipped irrigation added to which is the

3 Investment in Agricultural Water for Poverty Reduction and Economic Growth in Sub-Saharan Africa synthesis report

published in July 2007: the component study, which was published by FAO as N 31 in its Water Report series, was Demand for the Products of Irrigated Agriculture in Sub-Saharan Africa.


14

expected emergence of countries around the Western Indian Ocean rim as a market for East African produce!

Many commentators believe moreover, that the route to global food security passes through Sub-Saharan Africa. Traditional global food suppliers are beginning to reach resource limits (Vietnam for instance); others (such as Australia) are declining in importance due to the local effects of climate change; while others still (China and India) are undergoing major economic and land use changes. Add to this, the land loss due to increasing salinity and rising sea levels and not only will other producing areas decline in relevance, but also an estimated 1 billion people who have traditionally depended on marine food chains for their subsistence will have to be fed from new terrestrial sources. There is also overall population growth at the global level which suggests that at least 2 billion more people will need feeding within the lifetime of this FMP.

Since traditional producer bases are declining, this all means that new areas will have to be brought into production. Sub-Saharan Africa given its surplus of land, water and (usually) labour4 is particularly well placed to fill the looming gap in global food supply. This likelihood has already been seen by members of the investment community in North America, Europe and parts of S/SE Asia. Funds and other investment instruments targeted at commercial investment in African agriculture are right now being established or mobilised as appropriate, with potentially billions of dollars lining up for investment, even in staple food production (because of the high prices that are expected to continue more or less indefinitely5).

The only conclusion that can be drawn from this, is that a tremendous agricultural commodity market is developing at the local, regional and global level for any Sub-Saharan country intending to intensify and expand production, especially if the development strategy anticipates both public and private participation, as this one does.

The success of Ugandan exports is not always good news for the local market however. As a result of the high regional demand and the associated rising food prices, crops that were mainly for household consumption are now being sold or exported to regional markets such as Southern Sudan, DRC, Kenya and Rwanda.

Even so, a better organised, larger and more productive irrigation sector has high potential to contribute to poverty alleviation through income generation activities in both rural and urban areas (not least because of the highly lucrative potential of peri-urban production of high value horticulture). In fact, income from high value fruits and vegetables is already being realized by small holder farmers in the rural areas as a result of their high value crops being sold in the local, regional and international markets.

It will be obvious that if it is to have the greatest effect on both poverty alleviation and economic growth (as per section 5.2), the FMP should:

increase the supply of produce in local markets

4 Often taken as the three determinants of investment success in agriculture 5 Warner, Kahan and Lehel: Market-oriented Agricultural Infrastructure: appraisal of public-private partnerships FAO, 2008


15

take advantage of the rapidly changing markets at the regional and global levels.

include crops with added value potential for Uganda.

4.5 Contribution of the Sub-Sector

As already stated, it has not proved possible to isolate data concerning the specifics of irrigated agriculture. This section is accordingly concerned with the contribution to the Ugandan economy of the agricultural sector as a whole.

The Ugandan economy is predominantly supported by agriculture, which contributes almost 24 % of the National Gross Domestic Product (GDP see table 4.5) and accounts for over 73 % of exports, (MFPED, 2010). The sector is central to economic growth, food security, income enhancement and employment in Uganda. And although the sectors share of total GDP has declined from over 50 % in the early 1990s to about 23.9 % in 2008/09, (UBOS, 2010)6 because of faster growth in the services and industrial sectors, agriculture nonetheless remains the most important sector in social terms because it is where most Ugandans derive their livelihoods. The 2005/06 Uganda National Household Survey estimated that there were 4.2 million agricultural households, constituting 78.8 % of all households in the country and representing over 70% of the labour force (UBOS, 2007)7.

Table 4.5 GDP by economic activity at current prices, percentage share

Sector 2005/06 2006/07 2007/08 2008/09 2009/10

Agriculture 24.1 22.3 21.4 23.1 23.9

Industry 22.8 25.1 25.8 24.7 24.6

Services 47.2 47.0 46.9 46.4 45.4

Source: UBOS 2010, Statistical Abstract

Basic food crop production dominates the agriculture sector contributing over 55% of the agricultural GDP, while cash crops contribute 17%, livestock sub-sector 15%, fisheries 10% and forestry 4%. (MFPED, 2007). But as indicated in table 4.6, shares of both monetary and non-monetary agriculture in GDP have been trending downwards, although the decrease in the non-monetary sub-sector is higher than that in the monetary category. The increased monetization of agriculture indicates a shift from subsistence to commercial agriculture with more households producing for the market: this is a clear indicator of early structural change in the sector.

Table 4.6 Agriculture Sector contribution to GDP (%)

2001/02 2002/03 2003/4 2004/05 2005/06 2006/07

Monetary Agriculture 20.7 20.6 19.7 18.7 17.6 16.8

Cash Crops 3.9 3.9 3.7 3.6 3.0 2.8

Food Crops 11.3 11.2 10.8 10.1 9.6 9.2

Livestock 3.0 3.0 2.7 2.6 2.6 2.5

6 Uganda Bureau of Statistics (UBOS), 2008. 2009 Statistical Abstract. 7 Uganda Bureau of Statistics, 2010. Uganda National Household Survey 2005/2006. Report on the Agricultural Module. April

2007.


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Table 4.6 Agriculture Sector contribution to GDP (%)

2001/02 2002/03 2003/4 2004/05 2005/06 2006/07

Forestry 0.6 0.6 0.6 0.6 0.6 0.6

Fisheries 1.9 1.9 1.8 1.8 1.7 1.7

Non-Monetary Agriculture 15.8 15.1 14.4 13.3 12.7 12.2

Food Crops 12.9 12.2 11.7 10.8 10.1 9.7

Livestock 1.7 1.7 1.5 1.4 1.4 1.3

Forestry 1.0 1.0 1.0 0.9 0.9 0.9

Fisheries 0.2 02 0.2 0.2 0.2 0.2

Source: UBOS Statistical Abstract 2007 and Background to the Budget 2008/2009

The decline in the agricultural share of GDP is also attributed to changes in the terms of trade between agriculture and other sectors of the economy. Since 1999, the agricultural terms of trade have declined relative to other goods and services such as manufacturers and services (Deinenger and Okidi, 2003).

Another factor explaining the poor agricultural performance is the continued dominance of a few agricultural products as the main income earners (Bahigwa et al, 2005). For example cash crops are dominated by coffee while bananas account for the bulk of the food crops. Consequently, in cases where these specific products perform poorly, this has adverse effects on the overall production sector.

Additionally, productivity has been affected by various factors such as weather conditions, pests and diseases, low access to production inputs, low prices offered, declining soil fertility among others

BUT, the decline in the agricultural sectors contribution to GDP has not reduced the overall importance of the sector given that the sector still represents the largest employer in the economy (UNDP, 2007).

4.6 Constraints

We have already noted that Ugandas public irrigation schemes tend to be in poor condition and in most cases characterized by sub-optimal crop yields. Reasons given in the baseline literature for this are indicated in Table 4.7.

Table 4.7 Constraints on Agricultural Production in General and Irrigated Production in Particular

GENERAL AGRICULTURAL PRODUCTION IRRIGATED PRODUCTION

weak policy and legal framework

high risk and cost of investment

high cost and limited availability of farm inputs

limited human resource capacity

weak institutions and structures

traditional cultural attitudes

poor management of natural resources

inadequate physical infrastructure

absence of data and information

land tenure and access to farmland

uncoordinated planning and links between water facilities and production

inappropriate institutional arrangements

inadequate capacity of District Local Governments involved in the sub-sector

poor service delivery

high unit development costs and inadequate funding (capital and recurring)

unclear land ownership arrangements

inadequate attention to sustainability issues during scheme formulation


17

Table 4.7 Constraints on Agricultural Production in General and Irrigated Production in Particular

GENERAL AGRICULTURAL PRODUCTION IRRIGATED PRODUCTION

standards, food safety and quality assurance infrastructure

inadequate meteorological services

inadequate pest and disease control

inadequate production and post harvest facilities

weak extension support

weak value chain linkages

inadequate operation and maintenance capacity at the grass roots.

4.7 Current Initiatives

The Consultant identified the following initiatives as being underway during the course of this study.

4.7.1 Integration of Climate Change Issues Into Sustainable Agricultural Advisory Services The objective of this Project is to provide adequate, sustainable water supplies to enhance agricultural productivity and reduce poverty thereby enabling the farmers to adapt better to climatic variability of rainfall. To this end, the Project supports the National Agricultural Advisory Services (NAADS) and local governments in building institutional capacity with respect to sustainable farming and is aimed at a balanced, beneficial impact on poverty and water use to adapt to climate variability. The Project, with a focus on poverty reduction and the establishment of local capacity, will test and amend methodologies and procedures to reduce the impact of climate variability and develop sustainable farming systems.

The Project will i) enable farmers to develop structures to help them manage scarce water resources in an appropriate fashion, a

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Imp_Irrigation Master Plan 2010-2035

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