Uganda secures Shs514 bn for construction of Lusalira-Nkonge-Lumegere-Ssembabule Road 

This agreement marks Uganda’s first loan arrangement with Citibank, which served as the Mandated Lead Arranger. It includes a consortium of financial partners, such as Absa Bank (Mauritius), and support from the Development Bank of Southern Africa (DBSA) and African Trade and Investment Development Insurance (ATIDI).

While speaking during the signing ceremony on Friday at the Ministry of Finance headquarters, Minister of State for General Duties Henry Musasizi1 who represented the Finance Minister revealed that a joint venture between M/sS.A and Technovia Angola will execute the project.

“The Lusalira-Nkonge-Lumegere-Ssembabule Road project is set to transform local infrastructure by linking the Mubende and Ssembabule districts, creating an alternative route to the Northern Corridor’s critical pathways. This strategic road will provide access to the Albertine region, reduce travel time and vehicle operating costs, and boost socio-economic development by enhancing access to economically productive areas,” he said.

He emphasized the project’s potential to stimulate the Central region’s economy, fostering trade and mobility across major economic zones. Additionally, the government underlined its commitment to maintaining debt sustainability.

“This is the first loan to be signed between Citibank and the Government of Uganda. The Bank has also successfully expressed interest in financing various pipeline projects and has so far been mandated to mobilize financing for the following projects: The Standard Gauge Railway (50% of the financing). Design and Build of Jinja-Mbulamuti-Kamuli, Bukungu Road (127km) Project. Enhancing Agricultural Production, Quality And Standards to Market Access Project. Rehabilitation and Upgrade of Urban Roads and Construction of Flyovers and Pedestrian Bridges. Construction and Upgrading of Four Roads in Uganda (Bubulo-Bududa Road, Mbale-Nkonkonjeru Road, Lugazi-Buikwe-Kiyindi Road, and Kampala-Gayaza-Kalagi Road); and The Construction of the Hamurwa-Kerere-Kanungu (47km) and Kanyantorogo-Butogota-Ruhija (32km) Road Project,” he said.

Ms. Ebru Pakcan, Middle East and Africa Cluster Head expressed deep gratitude to the Ministry of Finance and key partners African Trade and Investment Development Insurance (ATIDI) and the Development Bank of Southern Africa (DBSA) for collaborating with Citi Bank on this significant infrastructure project.

Acknowledging the vision and commitment of the Government of Uganda, Ms Pakcan highlighted the importance of strategic partnerships in advancing large-scale infrastructure projects that drive economic and social transformation.

“This road will link the national road network to the western parts of the country, enhancing accessibility and mobility for local communities,” she said and emphasized socio-economic benefits, particularly in the agricultural sector, where improved road infrastructure will provide critical links for farmers, allowing them to transport their produce to urban markets more efficiently. “This is expected to foster rural economic growth by reducing transport costs and increasing market access.”

“The project is also seen as a foundational investment in boosting regional connectivity, aligning with the broader goals of the East African Community to create a more integrated economy. By reducing trade barriers and facilitating the movement of people and goods, the road upgrade aims to support a prosperous, interconnected region.”

The Minister of Transport and Works Gen Katumba Wamala called on the contractors to ensure that local contractors benefit from the project. “This is a timely project and I understand its timeline is three years, however, I also ask the contractors to ensure the issue of local content that’s in within our laws. Ugandans must also benefit from this.”

 The loan is being provided by Citi Bank Maturity time 10 years including 3 year grace period. Interest Rate: 6 months Euribor + Margin of 5.0% per annum of which Insurance premium is 2.25%) per annum.

Insurance is provided by ATIDI (African Trade and Investment Development Insurance) which covers 100% of the loan. Arrangement / Upfront Fee: 1.4% calculated on the loan amount (paid upfront).

  Commitment Fee: 1.75% on undisbursed balances of the loan. Agency Fee: EUR 15,000 per annum. Repayment: Semi-annual Instalments. Default Interest Interest rate plus 2.0% per annum Effective interest rate 9.08. The Default interest mentioned will only be paid if the Government defaults on servicing the loan.

Meanwhile, Uganda’s fiscal outlook remains promising, with projected economic growth of 6% in 2024, fueled by increased investments in the oil sector, favorable weather, and advancements under the Parish Development Model. Inflation is also expected to fall to 3.2%, thanks to declining food prices and fiscal consolidation efforts, while public debt remains manageable at 46.86% of GDP.

This financing arrangement aligns with Uganda’s 2024/25 fiscal year theme of “Full Monetisation of Uganda’s Economy,” focusing on sectors like industrialization, digital transformation, and market access.

The government pledged to ensure that all funds are effectively used and that the Ministry of Works and Transport and the Uganda National Roads Authority will oversee the project’s timely execution.