By KT Reporter
President Yoweri Museveni has criticised the Western model of financing African development, urging greater support for local public institutions such as the Uganda Development Bank (UDB).
Speaking at the Uganda Development Summit 2025 in Kampala, Museveni argued that, contrary to popular belief, financing from private Western investors can often be far more expensive than loans from Chinese partners.
He cited Uganda’s hydropower projects as examples: Isimba and Karuma dams, funded and constructed by Chinese partners, produce electricity at 4.7 US cents per kilowatt per hour (about 170 Ugandan shillings), whereas Bujagali, financed by Western investors, sells electricity to the government at 8 cents (283 shillings), down from an initial 16 cents.
Museveni emphasised that the government will continue supporting the Uganda Development Bank to empower it to finance both private sector initiatives and government infrastructure projects. He also challenged Western financiers to bring capital into Africa and invest directly in infrastructure if lending is not an option.
On infrastructure financing, the president noted that while human capital development is important, economic growth relies more heavily on physical infrastructure. However, securing financing for projects such as railways, water transport, and electricity is challenging.
According to Museveni, international lenders and providers of patient capital often prefer funding “soft” infrastructure, making infrastructure financing “a big battle.”
He urged UDB to reduce its interest rates from 15 per cent to 10 per cent to provide the private sector with more affordable capital. Currently, UDB loans range between 10 per cent and 12 per cent per annum for Uganda Shilling-denominated products, while commercial banks charge an average of 22 per cent.
Museveni emphasised that while a lower interest rate would lead to a cut in profits, the Bank was established to develop the private sector, and not to make a profit, adding that at 22 per cent, one cannot make a serious investment.
The summit highlighted the increasingly complex international financial landscape, influenced by the lingering effects of COVID-19, geopolitical tensions in Russia, the Middle East, and the US-China conflict, US tariff adjustments, and climate change. UDB Board Chairman Geoffrey Kihuguru noted that these challenges, which affect food security and trade performance in agriculture-dependent countries, make it imperative for Africa to urgently create jobs for its rapidly growing, youth-dominated population.
He stressed the need for development finance institutions (DFIs) and policymakers to find solutions to the barriers limiting private sector access to capital.
The two-day summit brought together stakeholders from diverse sectors to deliberate on Africa’s development challenges and explore innovative solutions for accelerating socio-economic transformation.
Patricia Ojangole, Managing Director of UDB, praised the government for keeping UDB operational during periods when other institutions were closing, and for continued support through capital injections. She stressed the importance of building resilient, inclusive, and locally anchored financial systems.
In his keynote speech, Arshad Rab, the CEO of the European Organisation for Sustainable Development and Chairman of the International Sustainability Council, emphasised that DFIs must prioritise financing technology and innovation to achieve economic sovereignty. He noted that infrastructure development must be accompanied by human capital development through education systems that create meaningful employment opportunities.
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