This report evaluates the outcomes and cost effectiveness of adult literacy programs in Ugandan villages and compares government programs with those provided by nongovernmental organizations (NGOs). Part 1 describes evaluation objectives, government and NGO literacy programs and the rural socioeconomic context, and evaluation design. About 100 program graduates and control samples were tested and interviewed in each of eight districts. Instructors and village leaders were interviewed, and focus groups were conducted. Part 2 examines learner characteristics, socioeconomic indicators, access to urban areas, participation in literacy programs, attitudes, and experiences in class; literacy centers and availability of materials; instructor characteristics, training, and attitudes; and supervision quality. Parts 3-4 present program outcomes, conclusions, and recommendations. The main conclusions are: (1) since most participants are women, the programs are helping to redress the gender imbalance in educational opportunities; (2) the programs may be missing their primary clients--people with no schooling; (3) decentralization may be undermining incentives and accountability at the local level; (4) most participants had attained levels of reading, writing, and numeracy higher than grade 4, but average attainment was very limited; (5) learner attainments varied with quality of implementation; (6) graduates increased their participation in community governance, improved their health practices, and established successful income-generating activities; (7) similar outcomes were found for government and NGO programs; (8) literacy materials varied in quality and availability; (9) instructors in government programs had little schooling and training, and supervision was dismal in most places; and (10) unit costs were about $4.50 per year (U.S. dollars) but would rise to about $13.00 per year if steps were taken to ensure sustainability. A final chapter by John Oxenham discusses wider implications for the adult education profession. (Contains 53 references and 59 data tables.) (SV)