Uganda: Parliament Approves Shs750bn Loan for Water and Sanitation Project

Parliament has authorized government to borrow Shs 751.5 billion (€183.3 million) from Standard Chartered Bank and an additional Shs120.4 billion from the domestic market through a six-month Treasury Bill to finance the Strategic Towns Water Supply and Sanitation Project - Phase II.

The loan approval was passed during a plenary sitting chaired by Deputy Speaker Thomas Tayebwa on Wednesday, September 17, 2025.

The project seeks to expand access to clean water and sanitation for rapidly growing urban populations, in line with government's goal of ensuring sustainable provision of safe water and hygienic sanitation for all urban residents by 2030.

Minister of State for Finance, Henry Musasizi, emphasized that the initiative will boost water supply and sanitation infrastructure, improve service quality, and strengthen management systems in targeted towns.

However, the loan terms have stirred unease among lawmakers.

The Committee on National Economy warned that repayment of the €183.3 million loan (about Shs751.5 billion) will balloon to €311.5 million (about Shs1.28 trillion) over 14 years, reflecting a heavy debt burden.

The committee also queried the cost of domestic borrowing at a 12.1 percent interest rate and the €15.7 million (about Shs64.4 billion) insurance premium to SINOSURE.

"The loan is highly commercial, with a grant element of only seven percent -- far below the 35 percent concessionality threshold recommended by the IMF and World Bank," said MP John Bosco Ikojo, Chairperson of the National Economy Committee.

The project will be implemented in four clusters: Nakasongola District, Kasambira in Kamuli District, Bugadde in Mayuge District, Idudi-Buseesa in Bugweri District, and Alebtong District, covering 51 towns across 115 parishes.

It is expected to benefit at least 740,000 people by 2030 and one million by 2050, while also supporting industries such as the cassava processing plant in Nakasongola and the proposed industrial park in Kakooge.

"It will contribute to improved health and productivity, provide employment during construction, and empower women and youths through skills development," Musasizi added.

Read the original article on Nile Post.