Parliament has approved the Government’s request to borrow up to 842.6 billion shillings (207.745 million euros) from Citi Bank and other financial institutions to finance the construction of the 127-kilometre Jinja-Mbulamuti-Kamuli-Bukungu Road and ten kilometres of roads in Jinja City.
The approval follows a recommendation by the Committee on National Economy, which found the project economically viable despite concerns over the commercial cost of the borrowing and delays in preparing the project for implementation.
The loan proposal was initially presented to Parliament on August 6, 2026, after the Government renegotiated the financing arrangement following the withdrawal of the China Export and Credit Insurance Corporation, commonly known as Sinosure, from the earlier financing structure. The revised financing reduced the borrowing requirement from about 934.2 billion shillings (230.45 million euros) to 842.7 billion shillings (207.77 million euros), a reduction of about 91.5 billion shillings (22.68 million euros).
The road project is being implemented under a contract signed in March 2023 between the Uganda National Roads Authority and PowerChina International Group Limited. The contract is valued at about 649.6 billion shillings and covers the 127-kilometre Jinja-Mbulamuti-Kamuli-Bukungu road and ten kilometres of roads in Jinja City.
The financing will cover civil works, land acquisition, construction supervision and design review, as well as an insurance premium. Under the financing structure, about 727 billion shillings (179.24 million euros) will be provided through an ATIDI-backed facility, while about 116 billion shillings (28.51 million euros) will come through Citi Bank.
The ATIDI facility has a ten-year maturity, while the Citi Bank facility matures in six years. Both facilities carry three-year grace periods. The committee, however, warned that the borrowing is commercial rather than concessional, with an effective interest rate of about 7.1 percent.
This is above the benchmark of approximately 5.27 percent under the Public Debt Management Framework. The committee urged the Government to fast-track implementation of the project to ensure Uganda derives benefits from the expensive borrowing.
The project is expected to upgrade the existing gravel road to a Class Two paved road with a 20-year design life. The committee said the improved road will reduce transport and trade costs, improve access to social and economic services and open up tourism opportunities.
It also highlighted the road’s strategic importance beyond the Busoga sub-region. The road will terminate at Bukungu on Lake Kyoga, providing a gateway to Amolatar, Kaberamaido, Soroti, Nakasongola and Karunga.
According to the committee, this will create an alternative transport link between northern and southern Uganda. However, the committee cautioned that slow improvement of ferry services at Bukungu could undermine the anticipated benefits of the road. The approval comes amid wider concerns over Uganda’s growing public debt.
The committee reported that public debt stood at 34.86 billion US dollars, equivalent to 126.18 trillion shillings, at the end of December 2025.Debt-to-GDP stood at 52.7 percent. Although the committee said the proposed borrowing remains within sustainable levels, Uganda is classified as being at moderate risk of debt distress.
The committee also warned that land acquisition could delay implementation of the project. It recommended that the Resettlement Action Plan be finalised and all affected persons identified and compensated before the financing agreement is signed.
Despite these concerns, the National Economy Committee recommended that Parliament approve the borrowing, subject to the implementation of its recommendations. Finance, Planning and Economic Development Minister Henry Musasizi said the Government will consider the recommendations made by the committee and Members of Parliament during Thursday’s debate on the floor of Parliament-URN. Give us feedback on this story through our email: kamwokyatimes@gmail.com
