Parliament has granted approval to the government’s request to secure a loan of up to $518 million (equivalent to approximately Shs1.923 trillion) from the World Bank.
The funds are intended to drive forward the ambitious Greater Kampala Metropolitan Area Urban Development program, aimed at transforming and upgrading the urban landscape.
The decision came following the comprehensive evaluation of the request presented to the House by John Bosco Ikojo, the Chairperson of the Committee on National Economy.
The multifaceted program encompasses a range of essential components including the rehabilitation and enhancement of road networks, the establishment of efficient drainage systems, development of markets and artisan parks, as well as the reinforcement of institutional capacities. The comprehensive project carries a total estimated cost of $1.179 billion (approximately Shs4.380 trillion) over a span of five years, in alignment with the Greater Kampala Metropolitan Area (GKMA) Economic Development Strategy (2020-2030).
Under the outlined financing structure, the Kampala Capital City Authority (KCCA) and eight associated entities are set to jointly contribute $571.31 million (about Shs 2.109 trillion) from their existing budgets.
The World Bank, on the other hand, will extend substantial support through a combination of means. This comprises a credit of $518 million (Shs1.912 trillion) and a grant of $48 million (Shs177.213 billion).
Additionally, the Agence Francaise De Development (AFD), the French Development Agency, is set to provide supplementary funding amounting to $42.66 million (approximately Shs 157.498 billion) through a credit mechanism aligned with the GKMA Economic Development Strategy.
The significance of the project is influenced by the pressing infrastructural challenges faced by the Kampala Metropolitan area. These include deteriorating road conditions, inadequate drainage systems resulting in recurrent destructive floods, and an insufficient and unreliable transportation network that has led to debilitating traffic congestion, hampering economic activities.
The funds will be disbursed to Kampala and the eight local government entities upon successful implementation of infrastructure investments. These investments will undergo an annual evaluation by the Office of the Auditor General (OAG), with a focus on key parameters: quality, efficiency, and effectiveness.
The committee highlighted that the current annual losses due to flood damage to buildings alone amount to $49.6 million (Shs 183.129 billion), impacting over 170,000 individuals and over 10% of local employment opportunities. Furthermore, a notable portion of major roads in Kampala are situated in flood-prone zones.
It’s important to note that this funding initiative might be the final disbursement of its kind to Uganda. This follows the World Bank Group’s announcement on August 8, 2023, to suspend new public financing to the country as a response to the Anti-Homosexuality Act passed by the parliament in May. The act was deemed to be in direct contradiction to the core values upheld by the World Bank Group.