Kampala- Unlike in the past where it used to access loans at zero interest rate, Uganda will begin borrowing at higher cost from the African Development Bank (ADB).
This follows the country’s graduation to access loans from the bank’s window which attracts interest rate.
Uganda has always borrowed accessed loans from the bank’s window which offers interest-free loans with a repayment period of 40 years.
The development bank has been involved in supporting development efforts of Uganda since 1967 and has approved loans and grants amounting to $3.24 billion (about Shs85.212 trillion) for 123 operations.
Borrowing from the ADB window attracts interest rates of about 6 to 8 per cent because it is the bank’s commercial window which gives out loans on a commercial basis given the prevailing market interest rate.
The bank’s officer in-charge- Uganda field office, Mr Dawit Gebremedhin, told participants at the recent launch of the bank’s Economic Outlook report for Africa 2014 in Kampala, that Uganda will no longer be accessing loans through the soft window of African Fund Development Bank Fund (AfDB) which attracts zero interest rates.
“Uganda has recently graduated to the ADB window which attracts interest rates. Uganda is among the 10 African countries which ADB is working on a line of credit to support development projects,” he said.
Mr Dawit said in the current AfDB Country Strategy Paper, Uganda was allocated slightly lower amount compared to what it used to get in the past.
“The ADB is also resource-constrained so it is reducing on the number of countries borrowing from the soft window of AfDB,” he said.