Sound management of environmental and social (E&S) risks protects the environment and safeguards project-affected people and workers. Sound risk management also secures a social licence to operate for a project developer, a broad social acceptance within the project communities and among other stakeholders. This acceptance guards against a variety of social risks during construction and operation and saves costs in the long run.
Projects supported by GET FiT are required to comply with Ugandan regulations and international standards, particularly the environmental and social performance standards (PS) of the International Finance Corporation (IFC). The IFC PS act as a global benchmark and are widely applied by international financing institutions and private investors, also making these a convenient common reference point in multi-donor funded initiatives like GET FiT. Unfortunately, several international lenders and owners did not ensure full compliance with international E&S standards, thereby increasing the supervision efforts by GET FiT. It is important to note that the Ugandan regulations and the IFC PS have many similarities, though there are also some important differences. For example, the IFC PS require that compensation for loss of assets during displacement is based on full replacement cost (market value + transaction costs) rather than Uganda’s requirement of using the lower depreciated value. The IFC PS also require biodiversity offsets when a project impacts a protected area such as a national park. The current Ugandan legislation does not require such offsets but proposals for inclusion of offsets in new Ugandan legislation have been made.