Shs6 trillion World Bank loan halt could extend to next year

Uganda State Minister for Planning Mr David Bahati (left) with World Bank, Uganda country representative Ms Christina Malmberg Clavo during the launch of World Bank report on Uganda poverty at Serena Hotel on September 20, 2016. Photo by Stephen Wandera

What you need to know:

  • The World Bank is the largest financer of development projects in Uganda constituting close to 60 per cent.
  • The bank attributed the halt to the slow pace of implementation of projects.
  • Currently, the government is negotiating with the World Bank to reduce delays in project implementation.

Kampala. The decision by the World Bank halt $1.8b (Shs6.1 trillion) loans to Uganda could span beyond the Financial Year 2017 if the government does not quickly address the weaknesses in implementation gaps.
A source familiar with the matter told Daily Monitor on Wednesday that the decision by the World Bank to temporarily withhold loans meant to finance projects in Uganda is open-ended.

This means that the decision can be revised basing on how the government acts to address the weaknesses raised by the World Bank.
The World Bank is the largest financer of development projects in Uganda constituting close to 60 per cent.
Unfortunately, on September 13, the bank decided to withhold new lending to Uganda effective August 22, this year while reviewing the country’s portfolio in consultation with the government.
The bank attributed the halt to the slow pace of implementation of projects.

In an interview with Daily Monitor, the World Bank country manager, Ms Christina Clavo Malmberg, said the current financial institution’s total portfolio to Uganda is $2.5b (Shs8.5 trillion), of this, about $200m (Shs677b) is grants, while the rest $1.8b (Shs6.1 trillion) is a loan, which is being withheld.
Ms Malmberg said the current portfolio also includes grants.
“Uganda’s current IDA loans are interest-free and attract only an administrative service charge of 0.75 per cent on the disbursed amount. Loans are repayable over 38 years with a grace period of six years,” she said.

“There are delays in approving the loans for the projects by Parliament, for example, the Agriculture Cluster Development Project which totals $150 million (Shs508 billion) took Uganda Parliament 17 months to approve,” she added.
Comparing Uganda with other African countries who are borrowing from the World Bank, Ms Malamberg said they implement 25 per cent of the project in four years while Uganda implements 10 per cent and a project that would have taken four years to implement takes years because the agencies implementing projects are not ready.
Currently, the government is negotiating with the World Bank to reduce delays in project implementation.

“We are going to make sure that social and environmental issues are fully taken into consideration and implemented in accordance with project cycle,” Ms Malmberg said.
All World Bank-funded projects are implemented by the government through its ministries, agencies and departments.
When Daily Monitor tried to conduct them, none of them answered their phones. Finance minister Matia Kasaija was reportedly in a meeting.
The chairperson of the Standing Committee on National Economy in Parliament and the chairperson Budget Committee did not respond to this newspaper’s phone calls.

Some WB projects

Uganda Reproductive, Maternal and Child Health Services Improvement Project ($110million)
Uganda Clean Cooking Supply Chain Expansion Project ($2.2m)
Northern Uganda Business Support Programme ($2.86m)
Uganda Energy for Rural Transformation III ($135 million)
Third Northern Uganda Social Action Fund (NUSAF 3) ($130 million)
Skills Development Project ($100 million)

Agriculture Cluster Development Project $150.00

Uganda Multisectoral Food Security and Nutrition Project $27.64 million

Uganda Reproductive Health Voucher Project$ 13.30 million

UG Teacher and School Effectiveness Project $100.00 million

Uganda Leasing Project (ULeP) $45 million

Support to Preparation of the Second NDP $37 million

UGANDA North Eastern Road-corridor Asset Management Project (NERAMP) $243.80 million

Uganda: Albertine Region Sustainable Development Project$145.00 million

Uganda Grid Expansion and Reinforcement Project (GERP) $100.00 million

Uganda Clean Cooking Supply Chain Expansion Project cost $2.20 million
Second Kampala Institutional and Infrastructure Development Project$ 175.00 million
IDA Guarantee for Renewable Energy Development Program $50 million
Public Investment Management$50 million.