Uganda is seeking to borrow up to €207.7 million ($242.55 million) from Citibank to finance the construction of a major road project aimed at strengthening transport connections across the East African country.
According to Reuters, Uganda’s Minister of State for Finance Henry Musasizi told lawmakers that the planned road is expected to improve connectivity and provide an alternative transport link between northern and southern Uganda.
The proposed financing reflects Uganda’s continued push to expand critical infrastructure, although it comes as the country’s growing public debt and debt-servicing costs remain under scrutiny.
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The road project is expected to strengthen movement through eastern Uganda and provide another connection between the country’s northern and southern regions, potentially supporting the movement of people, goods and economic activity.
However, the proposed borrowing would add to Uganda’s public debt burden. The country’s central bank has previously warned that growing debt-servicing obligations are consuming resources that could otherwise support important social sectors, including education and healthcare.
The International Monetary Fund has also highlighted Uganda’s debt trajectory. In its latest Article IV Consultation report, the IMF projected that the country’s debt-to-GDP ratio would rise to 55.5% during the fiscal year that began in July and approach 60% by the 2030/31 fiscal year.
The Fund said Uganda was facing a high debt-service burden, placing additional attention on how the government balances infrastructure investment with longer-term fiscal sustainability.
Uganda’s borrowing position has also drawn attention from international ratings agencies. Fitch Ratings this month affirmed the country’s sovereign rating at “B” with a stable outlook, while identifying rising public debt and a high interest burden as constraints on the rating.
The proposed Citibank financing therefore presents Uganda with a familiar development challenge — securing capital for infrastructure capable of supporting economic activity while ensuring that additional borrowing does not place excessive pressure on government finances.
What This Means For Africa
Uganda’s proposed financing highlights the wider challenge facing many African economies as governments seek substantial investment in roads, energy and other infrastructure while simultaneously managing growing debt obligations.
Improved transport infrastructure can strengthen domestic connectivity and reduce barriers to economic activity, particularly when projects connect different regions and improve the movement of goods and people.
For Uganda, however, the financial structure of the project will be important. With debt servicing already placing pressure on public resources, the economic benefits generated by new infrastructure will need to justify the additional financing obligations.
The IMF’s projections and Fitch’s assessment mean Uganda’s debt trajectory will remain closely watched as the government pursues further infrastructure development. How Kampala balances these priorities could also offer lessons for other African countries confronting similar infrastructure financing pressures.
Uganda’s pursuit of up to $242.55 million from Citibank could strengthen a key transport corridor, but the additional borrowing comes as rising debt and interest costs place greater pressure on the country’s public finances.
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Image Credit: Ministry of Finance, Planning & Economic Development
