MPs Clash Over Shs 2 trillion Loan Approval Amid Claims of Mismanagement

The Ugandan Parliament has approved a government proposal to borrow up to €270 million (Shs 111.1 billion) from the African Export-Import Bank (Afreximbank) and €230 million (Shs 947.billion) from Ecobank Uganda Limited and the Development Bank of Southern Africa (DBSA) to support the 2024/2025 national budget. The approval came despite strong opposition from several Members of Parliament (MPs) who raised concerns over Uganda’s growing debt burden and the legality of the borrowing process.

As of June 2024, Uganda’s public debt stood at US$25.55 billion (Shs 92.8 trillion).

While tabling the motion during a plenary session, Finance Minister Matia Kasaija defended the move, citing urgent financial obligations and pending contractor payments.

“We have a number of pending invoices. The contractor is on the road. He has to be paid, and we do not want to carry this into the next financial year when the opportunity is available,” Kasaija told the House.

He warned that Uganda could risk defaulting if the loans were not approved, attributing delays to protracted negotiations with the lenders.

Opposition MPs, however, criticised the government’s approach. Muhammad Muwanga Kivumbi (NUP, Butambala County) accused the administration of mismanagement and violating legislative procedures.

“This is a post-mortem kind of approval. It is unconstitutional,” Kivumbi said. “You’re speaking to a minister who has undisbursed funds — 16 trillion shillings — just sitting there, yet we’re paying interest.”

He further challenged the loans’ intended use, referencing President Museveni’s own directive that borrowing should fund security, infrastructure, and human capital—not recurrent expenditures such as salaries.

“The minister says the money will pay wages. Is he serious?” Kivumbi asked, also noting that the Bank of Uganda holds unused disbursed funds.

Theodore Ssekikubo (NRM, Lwemiyaga County) expressed concern about hidden fees and lack of transparency.

“We are facing conditions like management fees, agency fees, commitment fees, and others. Can we unpack this loan?” he demanded. “We are ready to support, but if you stampede Parliament at the last minute, who is really to blame?”

He also warned about intermediaries profiting from the loan arrangements. “There is a middle entity called the agent who is going to get free money. He is there to arrange the loan and walk away with a cut.”

Karim Masaba (Independent, Industrial Division, Mbale City) raised legal objections, citing violations of the Public Finance Management Act (PFMA).

“This loan should have been brought before the approval of the annual budget. Passing it now is breaking the law,” Masaba said.

Despite the criticisms, government officials defended the urgency of the loans. Government Chief Whip Denis Hamson Obua explained that delays were caused by prolonged negotiations with lenders, and part of the loan would finance Supplementary Schedule No. 3, already approved by Parliament.

Eddie Kwizera (NRM, Bukimbiri County) questioned the Ministry of Finance’s strategic foresight: “This is a ministry responsible for economic planning. Do they actually plan? If they did, they would have come to us earlier.”

Speaker Anita Among acknowledged the MPs’ concerns but emphasised the immediate funding needs: “There is no money. So can we agree that since we don’t have money, no one should be paid salary? Should we stop working on roads?”

According to the motion, the Afreximbank loan carries an effective interest rate of 7.33%, while the Ecobank and DBSA loans are set at 7.28% and 7.18%, respectively.

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