Uganda: Road Sector Support Project

20 December 2006
African Development Bank (Abidjan)

Supplementary ADF Loan of US$ 50 million Tunis, 20 December 2006 - The Board of Directors of the African Development Fund (ADF) today approved in Tunis a supplementary loan of 32.99 million Units of account* (approximately US$ 50 million or 88.9 billion Ugandan Shillings) to finance a road sector support project in Uganda.

The Kabale - Kisoro - Bunagana/Kyanika road project (98.7 Km) was approved in April 2005 to the tune of US$ 43 million (comprising a loan of US$ 40.80 million and a grant of US$ 2.25 million) and entered into force in July 2006. The project is facing an important increase in works prices. This is mainly due to a considerable global increase in the prices of various inputs required for road construction such as bitumen, cement and steel, as the manufacture of these items is highly dependent on oil. Having realized that the financing gap could not be closed using its own resources, the government of Uganda requested a supplementary loan from the ADF in order to implement the project as initially conceived.

Although the re-evaluated unit cost of the road is significantly higher than the appraisal estimate, it is still within the range for similar African road projects in regions of difficult access tendered in recent time.

The main components of the project are: * the upgrading of Kabale-Kisoro Bunagana/Kyanika road to a paved standard.

* the Nyakahita-Ibanda-Fort Portal Road study and District Roads Rehabilitation study in the southern region of the country.

The project will provide all-weather access for the supply of farm inputs and evacuation of produce to major market centres. It will also promote regional integration and economic co-operation with the neighbouring countries, such as the Democratic Republic of Congo and Rwanda, and reinforce the level of service and efficiency of the road network. The project will impact on various sectors such as agricultural and industrial production, trade, tourism as well as the social and administrative services.

The Bank Group's operations in Uganda started in 1968. To date, the cumulative commitment of the Group in the country amounts to US$ 1.2 billion (2,200 billion Ugandan Shillings) in 99 operations.

* 1 UA = USD 1.50773 = UGX 2,693.32 as at 26/12/2006

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