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Government wants Shs 852bn loan to refurbish Kampala – Malaba railway

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The Ugandan government has proposed to borrow Shs852 billion to rehabilitate the Kampala-Malaba meter gauge railway, with the loan offer from the African Development Bank (ADB) and the Corporate Internationalisation Fund of Spain including a Shs221 billion grant. In a letter to Speaker Anita Among, Acting Minister of Finance, Planning and Economic Development Hon. Henry Musasizi stated that the old running loan, approved in 2021, will be stopped since the terms of the new offer similar.

The Committees of Physical Infrastructure and National Economy have received a request to borrow Sh852 billion to repair the metre gauge railway between Kampala and Malaba. A grant of Sh221 billion is included in the new loan offer from the African Development Bank and the Corporate Internationalisation Fund of Spain.

An African Development Bank (ADB) letter informed the government that a new facility of Shs852 billion is available under the same terms as the running loan that Parliament approved in 2021 for the same purpose and in the sum of £327 million.

With the new offer, Cabinet has decided to stop the old running loan because the terms are identical and adopt the new one, according to a letter to Speaker Anita Among that was issued by Acting Minister of Finance, Planning, and Economic Development, Hon. Henry Musasizi.

Hon. Musasizi wrote in a letter to Speaker Among, “In light of the above, this ministry proceeded to Cabinet to rescind the earlier approval and authorise the Minister of Finance, Planning, and Economic Development to seek the authorisation of Parliament to approve the amended proposal and consider making changes to the Resolution of Parliament dated 11th May 2022.”

According to Mr. Augustine Ngafuan, who presented the fresh offer to Uganda on behalf of the continental lender, the ADB increased Uganda’s debt sustainability status from “low risk of debt distress” to “moderate risk of debt distress” after making the previous offer.

The new agreement was approved by the Attorney General, Hon. Kiryowa Kiwanuka, who did condition his acceptance of the loan on the Ministry of Finance gaining new parliamentary authorisation.

Due to unfavourable terms and exorbitant interest rates, the government of Uganda was unable to reach an agreement with financiers for the proposed construction of the Standard Gauge Railway. In the interim, the government decided to revive the old railway and use Lake Victoria as a viable alternative corridor for bulk transportation, especially of petroleum products and imports.

For the first time, Speaker Among stated that it was necessary to have the request examined by two committees in order to harmonise viewpoints and make the work of the entire House easier. She requested that the committees handle the request quickly.

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