Govt moves to borrow Shs 852bn loan to rehabilitate Kampala-Malaba railway

The two parliamentary committees on national economy and physical infrastructure have been tasked to scrutinize government’s proposal to borrow Shs 852 billion loan to rehabilitate the Kampala-Malaba meter gauge railway.

Parliament had earlier in 2021 approved a running loan of £327 million (about Shs 1.5 trillion) for the same purpose. However, a letter from the African Development Bank (ADB) informed the government that a new facility worth Shs 852 billion is available under the same terms and conditions.

It’s on the basis of this guidance that the ministry of Finance, Planning, and Economic Development presented a proposal to seek parliament’s approval. Amos Lugoloobi, the state minister for Finance and Planning said the new loan offer from ADB and the Corporate Internationalization Fund of Spain also comes with a Shs 221 billion grant.

“This particular loan proposal was actually approved, what we’re having now is a favourable adjustment in the loan with a grant element that was not there before, to reconsider a proposal to borrow the African Development Fund (ADF) and the African Development Bank (ADB), Cooperate Internationalisation Fund of Spain for the refurbishment of the Kampala-Malaba metre gauge railway project,” said Lugolobi.

In a letter written to the speaker of parliament by Henry Musasizi, the acting minister of Finance, the old running loan is to be stopped since the terms are similar, and the new one adopted and asked parliament to consider changes to the resolution of parliament dated May 11, 2022.

Speaker of parliament Anita Among said the House can only approve the new loan upon thorough and expeditious examination by the two committees for harmonization.

The African Development Bank (AfDB) Group country manager in Uganda, Augustine Kpehe Ngafuan said the new loan offer comes after the bank upped Uganda’s debt sustainability status from low risk to “moderate risk of debt distress.”

Government recently hit a deadlock with financiers over the proposed construction of the Standard Gauge Railway (SGR) due to exorbitant interest rates and thus chose to revive the old railway in the interim.

Refurbishment of the Kampala–Malaba Meter Gauge Railway project is part of the infrastructural improvement program that seeks to meet the government’s long-term development strategy as outlined in the National Development Plan III.

The strategy aims at increasing the stock and quality of productive infrastructure to support trade, industrialization, exports, and efficient urbanization as well as increasing the productivity, inclusiveness, and well-being of the population in the Northern Corridor route of East African Community (EAC) bloc.