Parliament has approved the Government’s request to borrow USD 15.22 million (56.28 billion Shillings) and USD 73.15 million (270.49 billion) from the African Development Bank Group for the construction of the Laropi-Moyo-Afoji Road, including the Laropi bridge, and the Katuna-Muko-Kamuganguzi Road.
The approval followed a motion presented by the Minister of State for Finance, Planning, and Economic Development (General Duties), Henry Musasizi, during a plenary session chaired by Speaker Anita Among on Thursday.
The decision originated from a government proposal presented on September 18, 2024, seeking additional funding from the African Development Fund for the same projects. The proposal was referred to the Committee on National Economy for further scrutiny.
Hon. Musasizi explained that the project aims to provide all-weather roads to boost tourism flows from South Western Uganda and improve access to ore mines. It will also enhance regional connectivity through a permanent bridge at Laropi and a one-stop Uganda-South Sudan border post.
“Madam Speaker, the required amount is for additional funding. The project scope remains the same as initially approved in August 2020. It includes four components: road and bridge civil works, project implementation support services, institutional support, and compensation for project-affected persons,” Musasizi stated.
Parliament had previously authorized the government in August 2020 to borrow USD 235.46 million (870.66 billion Shillings) for the construction of Namagumba-Budadiri-Nalugugu Road (29 km), Katuna-Muko-Kamuganguzi Road (104 km), and Laropi-Moyo-Afoji Road (37 km). The total project cost was USD 263.54 million, including a government counterpart funding of USD 28.08 million.
On May 31, 2023, the government signed a financing agreement of USD 71 million with the African Development Bank for the Namagumba-Budadiri-Nalugugu Road project, with an additional USD 4.96 million provided by the Government.
John Bosco Ikojo, Chairperson of the National Economy Committee, described the loan facility as beneficial due to its national reach, covering three country regions. The USD 73.15 million loan from the African Development Fund will be repaid over 50 years with a 10-year grace period.
It carries no interest but includes a 0.1% annual service charge on the disbursed balance.
During the same plenary session, Parliament also approved a government request to borrow EUR 45 million (171.63 billion Shillings) from Agence Française de Développement (AFD) for the Kampala Water Lake Victoria Water and Sanitation Project.
Musasizi said the funding aims to expand the distribution network, enhance the New Katosi Water System, and increase clean water access in the Greater Kampala Metropolitan Area (GKMA).
However, Nathan Byanyima, MP for Bukanga North, raised concerns about the absence of the Ministers of Water and Environment during the debate, despite the loan’s significance. “This is an important loan, but I am at a loss seeing no Minister of Water present while we pass such a critical resolution,” Byanyima remarked.
Robert Migadde, Vice Chairperson of the National Economy Committee, recommended reducing water tariffs, noting that the current UGX 5000 per unit charge is prohibitive for many urban poor residents.
Uganda’s public debt stood at USD 25.55 billion (94.71 trillion Shillings) as of June 2024, up from USD 23.67 billion (86.81 trillion Shillings) in June 2023, a 9.17% increase. The debt comprises 57.1% external debt and 42.9% domestic debt.
While still considered sustainable with a public debt-to-GDP ratio of 46.90%, Uganda remains at moderate risk of debt distress.
The loan approval increases Uganda’s external debt exposure by USD 252.83 million and raises the public debt share of GDP by 0.13%. However, Musasizi assured Parliament that the debt remains manageable under the Charter of Fiscal Responsibility.
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