Uganda risks losing roads, schools money over gay law

A project to improve urban roads and another to renovate traditional schools are among those whose funding the World Bank suspended yesterday over concerns about the Anti-Homosexuality Act, 2023.

 They are among $1.8 billion (about Shs6.7 trillion) in projects that were in the pipeline for funding consideration but have now been set aside until assurances are given that the controversial law passed earlier this year will not discriminate against people based on their gender or sexual orientation.

On-going projects that are part of the World Bank’s $5.2 billion portfolio in the country will proceed only if they are found to be inclusive and non-discriminatory.

“While new lending is on hold while we discuss measures to address the impact of the legislation, our portfolio of existing loans continues to disburse,” a bank spokesperson said in an email to this newspaper.

An earlier public statement by the bank said the Anti-Homosexuality Act, 2023 “fundamentally contradicts” its values.

Some of the projects that are not immediately affected but will now be reviewed for non-discrimination include a $355m project to make the agricultural sector more resilient to climate change and a $217m project to create economic opportunities for female entrepreneurs.

Another key project is the $566m Greater Kampala Metropolitan Area Urban Development Programme responsible for improving the roads and drainage in the heavily populated urban belt around the capital. 

Uganda has, since undertaking economic reforms in the early 90s been heralded as one of the success stories of the World Bank’s development programmes. And while bank officials have publicly and privately voiced concerns with government officials after the law was enacted, the decision to suspend discussions on pipeline projects appears to have taken officials by surprise. 

A few days earlier, for instance, Lands minister Judith Nabakooba highlighted the $510m urban roads project, Uganda Support to Municipal Infrastructure Development (USMID) II, at a public event. Another affected project, the $150m Uganda Learning Acceleration Programme meant to rehabilitate traditional schools is a flagship in the Education ministry run by the President’s wife, Janet Museveni.

While there have been no notable cases reported of the controversial law’s application, it is understood that development partners, including the World Bank, have demanded for written assurances that it will not be used to keep gender and sexual minorities from accessing the projects they fund.

Shortly after the World Bank statement was released, the Ministry of Health issued a statement guiding health workers not to turn away or refuse to treat people based on their gender or sexual orientation.

However, the ministry said statement had nothing to do with the World Bank statement on anti-gay law

It is understood that similar written assurances will be expected from the Education ministry and others whose sectors have funding from the bank. It is not clear whether these circulars, which carry less weight than enacted laws, will be reassuring enough for the bank to lift its suspension.

The Finance ministry might also be required to explicitly ask government accounting officers to ensure project funding does not include or lead to discriminatory outcomes.

As of December 31, 2022, the World Bank’s portfolio of International Development Association (IDA) -financed credits and grants stood at $5.4 billion (Shs19.4 trillion) in commitments, comprising 22 national and four regional projects.

Economists interviewed by Daily Monitor yesterday warned that the World Bank’s abrupt decision could negatively impact key development projects, jobs and economic growth, as well as weaken the shilling.

The impact could spread into the private sector that is struggling to bounce back from coronavirus effects and high inflation triggered by the war in Ukraine.

“The impact is going to be huge because there are many development projects that have been supported by the World Bank and have had great impact in our economy,” Dr Fred Muhumuza, of Makerere University School of Economics said.

Mr Paul Lakumu, a senior research fellow at the Economic Policy Research Centre Makerere University, warned of higher financing costs for development projects.

“There is a need to have a talk with the bank and fill the gaps and plug the issues where it is necessary because it is important that money continues to be provided,” he said. 

In his June 15 budget, Finance minister Matia Kasaija revealed that government would borrow Shs3.2 trillion from the domestic market and receive Shs2.8 trillion from budget support.

The minister put extremal financing for projects at Shs8.3 trillion of which Shs3.01 trillion will come from grants and loans worth Shs5.3 trillion loans.

Without World Bank financing this shortfall would expand, forcing the government to borrow more and possibly send interest rates higher.

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 The World Bank’s first project in Uganda dates back to 1964. Its funding is predominantly from the IDA, which supports the world’s poorest and most vulnerable countries with highly concessional financing.

This is not the first time Uganda’s anti-gay law draws the ire of multilateral financing institutions. On June 21, the executive board of the International Monetary Fund warned that “the recent signing could have a larger-than-anticipated impact on the availability of grants and external loans from development partners, as well as Foreign Direct Investment (FDI) flows and tourism.”

Bank’s position

“We have due diligence obligations to ensure we mitigate risks for individuals or groups who may be disadvantaged or vulnerable – meaning “by virtue of, for example, their age, gender, race, ethnicity, religion, physical, mental or other disability, social, civic or health status, sexual orientation, gender identity, economic disadvantages or indigenous status, and/or dependence on unique natural resources, may be more likely to be adversely affected by the project impacts and/or more limited than others in their ability to take advantage of a project’s benefits.”

How World Bank is changing lives in Uganda

The Uganda Skills Development Project is expanding opportunities for the development of skills that are market- and enterprise-driven, including in the informal sector.

• More than 82,000 youth (47 percent female) have benefited from the industry and enterprise-based training so far for both the formal and informal sectors.

• Standards have been set for 25 new occupational curricula and assessments in key trades and occupations, aligned with priority sectors such as agro-processing, manufacturing, construction, transport/logistics, ICT, and hospitality. The occupational standards ensure that the skills provided are in keeping with labor market demands.

The Uganda Multi-Sectoral Food Security and Nutrition Project:

• Has helped establish demonstration gardens in 1,000 government-aided primary schools to promote the production and consumption of micronutrient-rich foods and the use of community-based nutrition services. The gardens grow high-iron beans, orange-fleshed sweet potatoes, and a variety of indigenous vegetables.

• Another 2,000 demonstration gardens for lead farmers were established in surrounding communities, where beneficiary schools were established.

Through the Health Systems Strengthening Project:

• As many as 230 health facilities countrywide have received medical equipment.

• The Health Service Commission has set up an e-recruitment job bureau.

• Nine regional referral hospitals have been renovated.

•  Scholarships have been provided to 797 health workers, with most of the beneficiaries pursuing diplomas, and more than 400 have completed their studies.

The Albertine Region Sustainable Development Project

This is one of the key World Bank- funded infrastructure projects. This particular project financed the upgrading of approximately 100 kilometers of road from Kyenjojo to Fort Portal-Mubende-Kampala through Kagadi town to Kabwoya town, which forms part of the 238km Kyenjojo-Hoima-Masindi-Kigumba road connecting the districts of Kyenjojo, Kibaale, Hoima, Masindi, and Kiryandongo in Western Uganda. These are towns that fall within the oil-rich Albertine region.

Because of the road project, there has been an increase in collections from trading license fees, which grew by 19 percent from Ush112 million in FY20/21 to Shs134 million in FY21/22.

Under the Uganda Support for Municipal Development (USMID) Project, all 14 municipalities have been supported to develop modern infrastructure, including roads and street furniture; solid waste management; and the development of markets and urban transport facilities. Local government officials have also improved the management and administration, including physical planning and urban development, own source revenue, and procurement and contract management.

The Regional Communications Infrastructure Programme has helped reduce the cost of internet access from $300 to $70 per Mbps, which has increased the use of digital platforms, greatly improving the efficiency of day-to-day government operations through shared infrastructure for data storage and service delivery. Information and communications technology skills have also been improved through training programs to facilitate job creation and trade.

World Bank Projects in Uganda  

• Active  (2,711)

• Closed  (1,6718)

• Dropped  (1,795)

• Pipeline  (798)

President responds

Greetings. Things are moving well in Uganda in spite of the corruption of some Public Servants and some elements of the political class.

Last night, an official from the World Bank rang me to alert me about the statement from that Bank regarding the suspension of any new requests from Uganda for loans.

I want to inform everybody, starting with Ugandans, that Uganda will develop with or without loans.

It is, therefore, unfortunate that the World Bank and other actors dare to want to coerce us into abandoning our faith, culture, principles and sovereignty, using money. They really under-estimate all Africans.

We do not need pressure from anybody to know how to solve problems in our society. They are our problems.

We are continuing to talk to with the World Bank so that both they and we avoid this diversion if possible.

Signed:

Yoweri K. Museveni Gen(rtd)

Ssaabalwanyi