Uganda to Borrow $400 Million for Transport and Agriculture Projects

Kampala, Sept 4 (Reuters): Uganda has announced plans to borrow $400 million from multiple lenders, including the African Development Bank (AfDB) and the United Nations’ International Fund for Agricultural Development (IFAD), to finance key transport and agriculture projects.

The government says the borrowing is necessary to accelerate infrastructure and economic development, though critics have raised concerns over rising debt levels.

Breakdown of the Borrowing

According to State Minister for Finance Henry Musasizi, the loans will come from:

• AfDB → $253 million (the largest share)
• IFAD (United Nations)
• Islamic Development Bank
• UniCredit Bank Austria

While Musasizi did not provide a timeline for the disbursement, he said the funds would primarily support:

• Stalled construction works on a new toll road, part of a major highway linking Uganda to Rwanda, Burundi, and the Democratic Republic of Congo
• New health sector facilities
• Agriculture-focused development projects

Uganda’s Debt Situation

Uganda’s public debt stock reached $29.1 billion in 2024, an 18% increase from the previous year, according to the Finance Ministry.

The central bank has warned that the cost of servicing debt is straining public revenues, raising concerns among economists and opposition leaders.

Opposition parties have criticized the government for excessive borrowing, arguing that rising debt levels risk crowding out spending on essential social services.

Government’s Justification

Despite the criticisms, the government maintains that borrowing is essential to fund transformative projects that will boost:

• Economic growth through improved regional trade connectivity
• Agricultural development, enhancing productivity and food security
• Healthcare infrastructure, improving service delivery

Musasizi emphasized that without these loans, many critical projects would remain stalled, delaying Uganda’s long-term growth ambitions.

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📊 Key Takeaways

• Uganda plans to borrow $400M from AfDB, IFAD, Islamic Development Bank, and UniCredit Austria.
• $253M from AfDB will finance road construction.
• Funds also earmarked for agriculture and health facilities.
• Uganda’s public debt stands at $29.1B, raising sustainability concerns.