Context and Justification

Uganda is particularly vulnerable to the impacts of climate change, with rising temperatures, unpredictable rainfall, and an increase in extreme weather events. These challenges directly threaten its agricultural economy, which is a key source of employment and livelihood for the population.

To address this, the Ugandan government has implemented a series of five-year National Development Plans (NDPs) aimed at boosting economic growth, improving quality of life, and achieving the Sustainable Development Goals (SDGs). The fourth NDP highlights a commitment to prioritizing climate-resilient investments, in line with Vision 2040, the national roadmap promoting a transition towards green and sustainable growth.

Uganda is committed to integrating climate and environmental priorities into its national development framework, aligning with several international agreements and initiatives, including:

-          The United Nations Framework Convention on Climate Change (UNFCCC), particularly through the REDD+ mechanism, which aims to reduce greenhouse gas (GHG) emissions linked to deforestation and forest degradation;

-          The Kyoto Protocol;

-          The Paris Agreement, through the NDC Partnership, a global initiative supporting the implementation of Nationally Determined Contributions (NDCs);

-          The Commonwealth Climate Finance Access Hub, which helps member countries mobilize climate funding for adaptation and mitigation actions.

This project will primarily target the National Planning Authority (NPA), under the Ministry of Finance, Planning, and Economic Development (MoFPED). As the lead institution, it is responsible for coordinating and monitoring long-term development policies, particularly regarding climate investments. It also manages the Public Investment Management System (PIMS), the central system for planning and managing public investments in the country. This system includes policies, guidelines, and tools designed to ensure that public investment projects are properly planned, assessed, selected, and implemented, ensuring the efficient use of public resources. PIMS serves as a mechanism to translate Uganda’s NDC

commitments into concrete actions through public investments aligned with national sustainable development goals.

The NDCs represent Uganda’s commitments to reducing greenhouse gas emissions and adapting to climate change in accordance with the Paris Agreement. In its 2022 update, Uganda set a target to reduce emissions by 24.7% by 2030 compared to the "Business as Usual" scenario.

To achieve this goal, it is crucial that PIMS integrates the actions and strategies outlined in the NDCs, ensuring that every project contributes to the country’s climate objectives.

Challenges and Opportunities

• Green Public Investments: Uganda has established a Public Investment Management System (PIMS), which requires improvements to include climate-resilient projects and enhance coordination across key sectors like agriculture, energy, water, and the environment.
• Carbon Market:. Analyzing and identifying financing mechanisms for the carbon market would allow the country to tap into its potential in agroforestry and energy transition. This would help Uganda, in particular, to attract international financial resources for this market.
• Stakeholder Engagement: Uganda’s green transition relies on strong coordination between:

-          The National Planning Authority (NPA), which plays a central role in national planning and coordinates government efforts and international partnerships to achieve national development goals. It is attached to the Ministry of Finance, Planning, and Economic Development.

-          Sectoral ministries, including the Ministry of Agriculture, Animal Industry and Fisheries (MAAIF), the Ministry of Energy and Mineral Development (MoEMD), the Ministry of Water and Environment, and the Ministry of Works and Transport.

-          Local governments.

The project, titled “SUPPORTING UGANDA’S GREEN TRANSITION AND PUBLIC INVESTMENTS MANAGEMENT FOR SUSTAINABLE GROWTH", aims to incorporate climate and environmental criteria into Uganda's budget policies and public investment management while exploring carbon market financing mechanisms for key economic sectors. This initiative contributes to Uganda's strategic objectives outlined in its National Development Plan IV (NDP IV).

The French Development Agency (AFD) has contracted Expertise France as the technical assistance program operator. The contract was designed based on a proposed activity program agreed upon with the Ugandan Ministry of Finance and the National Planning Authority (NPA).

To implement this support, Expertise France has recruited a Resident Project Manager, who is based at the National Planning Authority (NPA). The field project team will also include a Project Assistant, who will work closely with Expertise France’s team in Paris.

Objectives

• General Objective (GO):  The Ugandan government strengthens its capacity to invest in the green transition to achieve its national targets set in the Nationally Determined Contribution (NDC).
• Specific Objectives (SO):
  1. The Ugandan government implements effective management and governance of green public investments, in line with the climate and environmental priorities outlined in the National Development Plan (NDP).
  2. The development of carbon market financing mechanisms is supported to facilitate the low-carbon transition of key sectors in Uganda’s economy.

Expected Results

1. The capacities of key institutions are strengthened to prepare and manage bankable climate projects, with improved intersectoral coordination.
2. Green financing sources are identified to support climate-resilient projects in Uganda.
3. Existing guidelines are revised, and new guidelines are developed within the Public Investment Management System (PIMS) to promote bankable and climate-resilient projects.
4. An analysis of carbon market governance and financing mechanisms is conducted, ensuring complementarity with other ongoing efforts, including those by the World Bank.
5. The capacities of relevant authorities are enhanced regarding carbon pricing policies and revenue management in the agriculture and energy sectors, in a complementary manner to existing initiatives.