{UAH} World Bank cancels $265m Uganda road project - FT.com

The World Bank has taken the rare step of cancelling a $265m road project in Uganda amid allegations of mismanagement by the government and sexual abuse of minors by employees working for its contractors.

The bank's internal watchdog launched an investigation in September into the project to upgrade a dirt road linking communities in the rural west into a paved one. But in a statementreleased on Monday, Jim Yong Kim, the World Bank's president, said a preliminary review had found serious failures by the bank and Ugandan government and that there was no need to wait for that probe to conclude to move ahead with cancelling funding. 

"The multiple failures we've seen in this project on the part of the World Bank, the government of Uganda, and a government contractor are unacceptable," Mr Kim said.

While the bank occasionally suspends work on projects after allegations of wrongdoing are made, it is more unusual for it to cancel projects outright. As a result the move raises the possibility of wider sanctions against Uganda where the National Roads Authority has been the subject of a probe that has uncovered allegations of widespread corruption. 

The bank says it has already paid out more than two-thirds of the $265m in loans pledged for the project. 

The move comes at a sensitive time for the World Bank as it tries to finalise an update of new social and environmental safeguards amid a vigorous debate between shareholders such as China and the US over just what they should contain. 

The Uganda project has been seized upon by activists as part of a campaign to have child rights included in the new safeguards. 

In a report released in April, campaigners from Joy for Children Uganda, backed by the Washington-based Bank Information Center, documented repeated cases of contractors sexually abusing children in the area of the road project. At least nine school-age girls became pregnant.

The multiple failures we've seen in this project on the part of the World Bank, the government of Uganda, and a government contractor are unacceptable

- Jim Yong Kim

They also found an increase in the prevalence of HIV/Aids, increases in underage sex work near the project, and a rise in school absences as a result of pregnancy and trauma associated with sexual abuse by road workers.

Besides the sexual abuse allegations, the project has been the subject of wider allegations of mismanagement and poor performance. It also has been caught up in the broader probe of the Ugandan National Roads Authority. 

While the World Bank on Monday sought to portray the move to cancel the project as a case of it trying to deal swiftly with allegations of misconduct, activists said this follows repeated missed warnings. 

When the bank was first told about the allegations in December last year, staff on the ground in Uganda responded by convening a large community meeting and asking anyone who had been the victim of sexual abuse to raise their hands, said Elana Berger, who worked on the case for the Bank Information Center, a campaign group. When no one raised their hands in the meeting the World Bank staff used that as evidence that the allegations were false, Ms Berger said. 

"That is obviously not how you handle something like that, especially when underage girls are involved," she said. 

In his statement, Mr Kim said the World Bank had failed to properly supervise the project and monitor its impact on surrounding communities. The bank decided to cancel the project after both the government and contractors did not properly address concerns raised by the bank when it suspended financing in October. The bank had also launched a separate internal review of the project, asking why staff had failed to properly supervise what was happening.

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