Uganda Government Seeks €207m Loan for Jinja-Bukungu Road Upgrade

• The Ugandan government has sought approval for a €207.77 million loan from Citi Bank and other international financial institutions to upgrade roads in the Busoga sub-region.
• The proposed financing will cover the upgrade of 127 kilometres of the Jinja-Mbulamuti-Kamuli-Bukungu road and 10 kilometres of urban roads in Jinja City.
• The Economic Internal Rate of Return (EIRR) for the project is estimated at 16.7%, suggesting that it is economically viable and could generate returns on investment.

The project is factored into our debt sustainability analysis, and it is integrated within the fiscal framework for the FY 2026/27 budget as well as the medium-term fiscal framework.

The Ugandan government has submitted a proposal to Parliament seeking approval for a €207.77 million loan from Citi Bank and other international financial institutions to upgrade the road network in the Busoga sub-region. The proposed financing will cover the upgrade of 127 kilometres of the Jinja-Mbulamuti-Kamuli-Bukungu road, as well as 10 kilometres of urban roads in Jinja City. This brings the total length of roads covered by the project to 137 kilometres. The loan request was presented to the Parliamentary Committee on National Economy by Minister of Finance, Planning and Economic Development, Henry Musasizi, and Minister of Works and Transport, Fred Byamukama. They appeared before lawmakers alongside other officials to discuss the details of the proposal.

The proposed loan is consistent with Uganda's debt management plans, according to Musasizi. He assured lawmakers that the project is factored into the country's debt sustainability analysis and is integrated within the fiscal framework for the FY 2026/27 budget as well as the medium-term fiscal framework. The Economic Internal Rate of Return (EIRR) for the project is estimated at 16.7%, which is above the 11% economic opportunity cost of capital. This suggests that the project is economically viable and could generate returns on investment. However, lawmakers will scrutinize the loan terms before submitting their report to the full House for consideration and approval.

The upgraded road network in the Busoga sub-region is expected to improve connectivity across the area, ease the movement of goods and people, and provide an alternative transport route linking northern and southern parts of Uganda. The project has the potential to boost economic activity in the region by facilitating trade and commerce. However, lawyers should scrutinize the loan terms and ensure compliance with relevant regulations to avoid any potential pitfalls. The proposed borrowing is a significant development that could have far-reaching implications for the country's debt management plans and overall economic growth.

Lawyers should note that the proposed loan is consistent with Uganda's debt management plans, but they should scrutinize the loan terms and ensure compliance with relevant regulations.

Source: Original reporting via Nile Post