Shs1 trillion agricultural sector loans remain unutilised

Some of the loans acquired to develop palm oil and seeds projects remain underutilised yet the projects have just a few years to close. Photo / File 

What you need to know:

  • At least three projects with an unutilised sum of Shs200b have since closed, while others are under projection

A Parliamentary report indicates that nearly a trillion shillings borrowed for various agricultural projects remained unutilised by December 2023, yet some of the beneficiary projects have since closed. 

Details contained in the Budget Committee Minority report indicate that close to Shs200b worth of borrowed funds for projects that have already closed remained unutilized, while others - which are rated as underperforming - have a few years to close. 

The report reviews utilisation of different project loans in the agricultural sector. It notes that between 2018 and 2021, government borrowed a combined sum of $522m (Shs1.97 trillion), but had by December 2023 only utilised 54.3 percent or $283.47m (Shs1.07 trillion), with at least Shs903.9b or 45.7 percent unutilised. 

The report further indicates that in 2018, government borrowed $79m (Shs299.2b) to develop the agricultural value chain, but had by December 2023 - the year of closure - only used 38 percent or $30m (Shs113.6b) of the borrowed money. 

“This loan was supposed to have been utilised by end of last year, 2023.  Unfortunately, only $30m, which is 38 percent had been utilised by the end of project time, 2023,” the report reads in part.

The report also highlights two projects - markets and agricultural trade improvement project and agriculture cluster development project – for which money was borrowed as far back as 2016 but still had unutilised funds at the time of closure.  

For instance, on January 23, 2016, government borrowed $150m (Shs568.2b) for the agriculture cluster development project but had by the time of closure on March 31, 2022, left with $2.4m as unutilised funds (Shs9b), while $84.2m borrowed for the markets and agricultural trade improvement project in 2015, had by closure on June 30, 2020, achieved a performance of 97 percent.  

The three other loans, all borrowed under the National oil and palm seeds projects are scheduled to close on varying dates in 2028 but largely have low utilisation - two below 10 percent. 

For instance, government has so far utilised only $17.66m (Shs66.9b) or 23.3 percent of the $75.82m (Shs287.2b) borrowed in 2019 ahead of the November 28, 2028 closure, while two other loans with a combined sum of $133m (Shs503.8b), all borrowed on November 12, 2021, recorded a utilisation rate of 3.9 percent and 8.3 percent, respectively, ahead of the September 30, 2028 closure.  

It was not immediately clear whether the unutilised funds had been reallocated.  

Finance Minister Matia Kasaija, at the weekend, told Monitor that any money appropriated by Parliament but not utilised is returned to the Treasury, after which the beneficiary ministry “can forget about it”.

However, he did not indicate how such money is used. 

Agriculture Minister Frank Tumwebaze, indicated at the weekend that whereas some of the projects had closed, some are new and are awaiting approvals from funders.  

Other unitilised loans in the agricultural sector are highlighted in the public debt, grants, guarantees, and other financial liabilities report. The report notes some of the loans that have been committed to agricultural development continue to perform below projection or are not utilised at all months or years after they were acquired.  

For instance, on February 27, 2024, government signed a loan of $350m to support a Climate Smart Agricultural Transformation Project, but not a single shilling had been utilised months after it was signed.

However, Mr Tumwebaze said this was a new project and was awaiting clearance from the World Bank 

The report further indicates that on October 29, 2020, government signed a $169.2m loan to fund the Irrigation for Climate Resilience Project, but the implementing ministries including Water and Agriculture have in over three years, only utilised $23.78m (14 percent), meaning that in less than two years ahead of the April 30, 2026 closure, $139.4m (85.4 percent) must be utilised by the user ministries. 

The public debt, grants, guarantees, and other financial liabilities report for the year ended March 2024, indicates that as of December 2023, the stock of unused loans stood at $3.78b (Shs14.3 trillion), which was, however, a decline from $3.83b (14.5 trillion) in 2022. 

The report further notes that unutilised debt is largely due to inability of beneficiary ministries, departments, or government agencies to implement projects due to lack of required supervision and in-built staff capacity. 

Loan purpose 




Agriculture value chain development



Closed in 2023

Markets and agricultural trade Improvement 



Closed in 2020 

Agriculture cluster development project  



Closed in 2022 

National oil palm project



Closes in 2028

National oil seed Project 



Closes in 2028

National oil seed project   



Closes in 2028 

Irrigation for climate resilience project



Closes in 2026