Parliament has unanimously approved an addendum allowing the government to borrow at least US $600 million (approximately Shs 2.208 trillion) to finance the Greater Kampala Metropolitan Area Urban Development Program.
The approval came after a motion was moved by Henry Musasizi, the state minister for Finance, Planning, and Economic Development (General Duties), during a plenary session chaired by Deputy Speaker Thomas Tayebwa.
“I move a motion for Parliament to approve the addendum, authorizing the government to borrow up to Special Drawing Rights (SDR) 374.8 million (US$518 million) and receive an SDR grant of 34.8 million (US$48 million) from the International Development Association (IDA) of the World Bank Group.
Also, along with a loan of €40 million (US$42.66 million) from Agence Française de Développement (AfD) to finance the Greater Kampala Metropolitan Area Urban Development Program,” Musasizi stated in his motion.
The Minister justified the loan by outlining the project’s objectives, which include strengthening the capacity of the Ministry of Kampala City and Metropolitan Affairs, KCCA, and eight Greater Kampala Metropolitan Local Governments.
The aim is to deliver coordinated and programmatic infrastructure and services to make the Greater Kampala Metropolitan Area a key driver of Uganda’s economic transformation.
“The program will contribute to the National Development Plan IV and the Greater Kampala Metropolitan Area Economic Development Strategy 2022-2030, which outlines strategic priorities to address challenges in the region,” said Musasizi.
Adding that the strategy focuses on competitive economic infrastructure, environmental conservation, support for the informal sector, tourism development, and effective service delivery.
“The total cost of the program is €40 million (US$42.66 million), with a maturity period of 25 years, including a seven-year grace period,” Musasizi continued.
On May 2, 2024, Parliament had already approved the loan, which was subsequently endorsed by the AfD Board on December 14, 2022. The Ugandan government was given until August 13, 2023, to finalize the financing agreement.
John Bosco Ikojo, Chairperson of the National Economy Committee, presented a report on the addendum, highlighting progress in the project’s implementation.
Civil works have been progressing steadily across the nine entities involved in the Greater Kampala Metropolitan Area.
“By the end of the first quarter of the 2024/2025 financial year, Kira Municipality and Mukono Municipality had started implementing road projects totalling 29.74 km.
Additionally, by September 2024, 13 lots of road projects totaling 81.25 km had been advertised, covering six entities, including Wakiso, Mpigi, Kampala, Makindye-Ssebagabo, Nansana, and Entebbe Municipalities,” Ikojo reported.
The Committee also noted that fluctuating interest rates among multinational lenders and delays in the loan approval process could lead to higher borrowing costs.
It recommended that the Ministry of Finance expedite loan acquisition procedures to avoid further complications from changing interest rates.
The Committee further expressed concerns about the traffic disruptions caused by ongoing works around Kampala, especially during rush hours, as well as the impact of dust on road users and local businesses.
In response to the Committee’s report, the Leader the of Opposition in Parliament, Joel Ssenyonyi, cautioned the government to ensure timely project completion and value for money.
“As a Member of Parliament from Kampala, I should be excited about these projects, but I am deeply concerned about delays, the rising costs, and the scope of these road works. I hope the government ensures proper appraisal and accountability,” Ssenyonyi remarked.
Deputy Speaker Thomas Tayebwa tasked the Committee with closely monitoring the progress of the project on the ground.
“I have a concern. There is a perception that the government is not funding Kampala adequately. Since 2018, over 3 trillion Shillings have been allocated to KCCA, yet there is little visible progress. The real issue lies in implementation,” Tayebwa stated.
The approval of the loan marks a significant step in the development of the Greater Kampala Metropolitan Area, with the government committed to addressing infrastructure challenges and promoting economic growth in the region.
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