Uganda’s appetite for loans continues to grow even as the country struggles to utilize the money it has already borrowed. Over the past eleven years, government figures show that about 43.25 trillion shillings was borrowed to finance development projects, but 16.4 trillion of that remains undisbursed.
This means the country is paying interest and commitment fees on funds that have never reached the intended projects. It is an uncomfortable reality for taxpayers who continue to shoulder the burden of debt that produces little visible progress.
The Ministry of Finance records indicate that Uganda’s total public debt as of June 2025, was UGX 116.2 trillion beyond half of the nation’s Gross Domestic Product (GDP). The justification for continuous borrowing has always been the need to build infrastructure, improve service delivery and stimulate economic growth. Yet many of the projects for which money was secured years ago remain stalled or unimplemented. The country’s debt stock continues to grow, while the tangible results lag behind.
One of the most glaring examples is the Mbarara Masaka power transmission line project. A loan of €35 million, equivalent to about 134 billion shillings, was signed in June 2018 to improve electricity reliability in western Uganda. By June 2024, only €0.112 million less than one percent had been used, according to a Daily Monitor report published on May 3, 2024.
The project’s implementation period has since expired, but the country continues to pay commitment charges on the unused funds.
The same pattern can be observed in the Kampala City Roads Rehabilitation Project. A loan worth 224 million dollars, roughly 825 billion shillings, was secured to upgrade 31 city roads and drainage channels. Years after the signing, less than a quarter of that money has been spent. The project has been delayed by procurement bottlenecks and coordination challenges within Kampala Capital City Authority.
Meanwhile, the loan continues to accumulate fees, adding pressure to the national debt service budget.
The agriculture sector has not been spared either. Between 2018 and 2021, government secured 522 million dollars (1.97 trillion shillings) to boost value chain development, irrigation and mechanization.
By the end of 2023, just over half of the money had been utilized, leaving nearly a trillion shillings idle. These examples show that Uganda’s problem is not the absence of funding but a chronic inability to spend borrowed resources effectively.
The financial implications are severe. Uganda spends more than 70 billion shillings annually on commitment fees for loans that are not being used, as reported by The Observer on August 18, 2023.
Over a five-year period, this has amounted to nearly 470 billion shillings money that could have built classrooms, equipped hospitals, or improved rural health centers. It is a painful paradox that while schools go without textbooks and health centers lack essential drugs, the country continues to pay for loans that sit idle in foreign accounts.
This borrowing trend raises fundamental questions about government planning and fiscal discipline. Borrowing should only occur when the country has the capacity to absorb and use the funds efficiently.
In Uganda’s case, loans are often signed before project feasibility studies, environmental assessments, or compensation processes are complete. This leads to prolonged delays and unused credit facilities. When projects stall, the economy gains nothing, yet citizens must repay the debt with interest.
Continuing to borrow under such conditions is not a wise economic move. It undermines the government’s credibility in financial management and risks pushing the country toward debt distress.
It also crowds out critical spending on health, education, and social services, as a growing share of the national budget goes to debt repayment rather than development. The country is, in effect, mortgaging its future without building the foundations that could sustain it.
Uganda must learn to plan before borrowing. Every loan should have a clear timeline, measurable outcomes, and accountable managers. Ministries and agencies responsible for delays must face consequences, not continued budget allocations. A system that rewards inefficiency only perpetuates waste. Parliament, too, should exercise stricter oversight before approving new loans and demand reports on the utilization of existing ones.
The issue is not that Uganda borrows, but that it borrows more than it can effectively spend. A loan should be a tool for development, not an ornament of policy. The 16.4 trillion shillings lying idle represents lost opportunities roads that could have been built, hospitals that could have been equipped, and farmers who could have been empowered. The time has come for government to focus less on signing new loan agreements and more on delivering results from the money already in its hands.
Uganda’s progress will not come from the volume of its debt, but from the value it creates out of every shilling borrowed. Until that lesson is embraced, the country will continue to pay heavily for loans that never left the page.
The author, is a Social Development specialist and CEO Bridge Your Mind Centre.
Email; bwani.jose@gmail.com
Do you have a story in your community or an opinion to share with us: Email us at Submit an Article
