The recent discovery of oil reserves in Uganda has been cause for optimism. With economic growth slowing, disappointing performance on key development indicators, and heavy reliance on foreign aid, a new source of wealth is highly welcome. The Ugandan government expects oil-related revenue to account for 0.5-4% of annual GDP once production begins, and the International Monetary Fund (IMF) predicts that infrastructure and oil-sector investments can drive growth to 6-6.5% in the medium term. With production expected to begin in 2020, the government has already put in place institutional mechanisms to manage the impending revenue inflow. Importantly, the 2015 Public Finance Management Act (PFMA) created a Petroleum Fund into which all oil-related revenues are to be deposited and only withdrawn for spending on infrastructure and development projects, with parliamentary approval.
Meanwhile, trends in HIV/AIDS are less encouraging. While the number of new infections in 2016 fell to 52,000 from 110,000 in 2005, the number of people living with HIV rose to 1,400,000 from 1,200,000. This rise began in 2004, a devastating reversal of the previous decade of decline. Even as Uganda moves closer to its 90-90-90 target, only 74% of people living with HIV know their status, while just 67% of infected persons are on treatment. Moreover, the stigma that remains attached to HIV renders infected persons severely marginalized in their communities and even within their families. Women, whose inferior status in Uganda’s patriarchal society already inhibits their access to economic opportunities, justice, personal security, and a range of other rights, are disproportionately affected; as HIV-positive women, they face, as some call it, “double discrimination.”
Furthermore, while access to anti-retroviral treatment (ART) has been improving in Uganda, only 67% of adults and 47% of children eligible for ART were enrolled in 2016. Various factors explain this gap, including lack of education about treatment; social and economic barriers to healthcare; and drug shortages. Stock-outs, which have affected hundreds of thousands of patients, might seem surprising given the vast amounts of funding that the Ugandan government receives for its HIV/AIDS response. In 2018, disbursements from the multilateral Global Fund to Fight AIDS, Tuberculosis and Malaria reached US $966,181,861 in Uganda, with almost half going to HIV/AIDS. The United States bilaterally provided US $371 million to address HIV/AIDS through the President's Emergency Plan for AIDS Relief (PEPFAR). In fact, over 85% of Uganda’s national HIV response is provided by PEPFAR while just 11% of funding comes from the government. The government’s contribution to its total national health budget is estimated at around 7% and is trending downward, away from the 15% target set by the Abuja Declaration.
Meanwhile, AVERT reports that implementation of the current US $3.647 million National HIV and AIDS Strategic Plan (2015/16-2019/20) will face a funding gap of about US $918 million by 2019/20. Uganda’s dependence on donors – who may reduce or end funding as they wish – thus leaves its HIV-positive population highly vulnerable. Asked what impact it would have if the Trump Administration follows through on threats to cut foreign aid, one medical officer at the Rakai Health Sciences Program (RHSP) warned of a “death sentence.”
In light of this, the government’s proposed National HIV Trust Fund seems paramount. The creation of the Fund was a bright spot in the problematic HIV and AIDS Prevention and Control Act passed in July 2014. Acknowledging the need to reduce donor dependence, the government called for a 2% tax on alcohol and soft drinks that would finance the Fund at a rate of USD $2 million each year. Almost four years later, however, parliament has yet to approve regulations for the Trust Fund.
Even were the Trust Fund to become operational soon, it is clear that the current financing plan is grossly inadequate. This is where the promise of petroleum revenue would fit – a commitment by the government to allocate a portion of oil-related revenue to the HIV Trust Fund could go a long way in reducing its foreign aid dependence and expanding the reach of interventions. Language in the PFMA should make it clear that investments in the country’s healthcare infrastructure are an acceptable use of monies in the Petroleum Fund. Indeed, though not one of the four priority areas for infrastructure development identified in the current National Development Plan (NDP II), such spending will promote development and is consistent with the 2008 National Oil and Gas Policy’s guiding principles of “using finite resources to create lasting benefits to society.” Indeed, HIV/AIDS experts at PEPFAR, GOAL Uganda and RHSP described the positive spillover effects of HIV/AIDS interventions, particularly as a result of deliberate dual-use policies.
Of course, seemingly obvious solutions usually are, in fact, simplistic. This is no exception. Uganda has many pressing development needs; a loose interpretation of allowable uses for oil revenues under the PFMA could open the floodgates to innumerable requests. Moreover, the pieces of this puzzle are not just moving – they are not all yet fully formed. Beginning oil production in 2020 is an ambitious goal, as much of the necessary infrastructure, capacity, and regulatory frameworks are still missing; whether revenue will reach the expected levels once production starts remains to be seen; and agreement on regulation of the HIV Trust Fund continues to languish. Moreover, as officials at the UN Development Programme (UNDP) warned, weak institutions and high levels of corruption put into question whether this funding would actually be used efficiently and responsibly. In its assessment of the first National Development Plan, Uganda’s own National Planning Authority cited significant flaws in public sector management. In January 2017, news broke that President Museveni and the cabinet approved a Shs6 billion payout from the Uganda Revenue Authority (URA) budget to public officials who handled a successful case against two foreign oil companies. And the Global Fund has previously suspended grants to Uganda over evidence of mismanagement and unspent funds, even as drug stock-outs soared.
Nevertheless, the HIV epidemic continues to destroy lives and impede Uganda’s development as foreign aid becomes more unreliable. The situation demands a solution. In both domestic policy and international legal regimes, the Ugandan government has set goals to reduce the spread of HIV/AIDS; committed to protecting the right to health; and pursued greater domestic revenue mobilization. It could take a significant step towards fulfilling all these commitments by apportioning a percentage of funds to be transferred annually from the Petroleum Fund to the HIV Trust Fund. Parliamentary approval for the latter should move forward, informed by consultations with civil society representatives, who have called for an independent agency to host and manage the Fund. Indeed, mechanisms for civil society monitoring of public revenue allocation and distribution will be essential to create accountability and ensure proper use of resources. The government has an opportunity now – before oil production begins, foreign aid coffers dwindle, and infections reach new heights – to put in place strong institutions that will endure and advance the fight against HIV/AIDS in Uganda.
