By Aggrey Baba
In a decisive move to boost Uganda’s economic growth, Members of Parliament have approved the government’s request to borrow $150 million (UGX 550 billion) from the Arab Bank for Economic Development in Africa (BADEA) and an additional $25 million (UGX 91.6 billion) from the OPEC Fund for International Development.
These funds will be used to capitalize the Uganda Development Bank (UDB), ensuring long-term, affordable financing for businesses.
Additionally, Parliament granted the government permission to guarantee a UGX 110 billion loan for UDB from the Islamic Corporation for the Development of the Private Sector. In total, the direct loans and guarantees amount to approximately UGX 751 billion.
Presenting the loan request recently, Minister of State for Finance, general duties, Henry Musasizi emphasized the critical role UDB plays in financing Uganda’s economic development.
He noted that the bank’s funding needs have grown significantly over the past two years due to increased demand for long-term financing.
“UDB is uniquely positioned to support Uganda’s businesses with affordable capital,” Musasizi said. “With interest rates as low as 12% per annum and loan repayment periods extending up to 15 years, the bank offers competitive financial solutions to entrepreneurs.”
The approval process faced delays last week after MPs deferred the decision, citing the absence of draft financing agreements and BADEA board approval letters.
However, John Bosco Ikojo, Chairperson of the National Economy Committee, later recommended approval, stating that despite the missing documents, the funding was necessary for Uganda’s development.
A minority report presented by MP Hassan Kirumira of Katikamu South raised concerns over the proposed 12% interest rate, suggesting it should be lowered to below 10% to make borrowing more accessible for Ugandan businesses. Some MPs also called for a review of UDB’s previous loan beneficiaries to assess the impact of such
Several legislators, including MPs Godfrey Onzima of Aringa North), Geoffrey Ekanya (Tororo North, and Fredrick Angura of Tororo South, called for the funds to be fairly distributed, ensuring businesses in rural areas also benefit.
However, concerns over transparency arose when Musasizi declined to publicly disclose the list of UDB loan beneficiaries, citing confidentiality clauses. He assured MPs that the details would be shared with the Speaker but not made available to the public.
Uganda’s rising debt remains a pressing issue. As of last year, the country’s total public debt stood at UGX 94.9 trillion, with external debt accounting for 57.2% and domestic debt making up 42.8%.
Many MPs warned that excessive borrowing could strain the economy and divert resources from essential services.
Despite the concerns, Parliament’s approval paves the way for UDB to access much-needed funds to support businesses, stimulate economic growth, and create employment opportunities.
Whether the bank will deliver on its promise to provide affordable financing remains to be seen. As the saying goes, “Only time will tell.” (For comments on this story, get back to us on 0705579994 [WhatsApp line], 0779411734 & 041 4674611 or email us at mulengeranews@gmail.com).
