Uganda to Borrow €500 Million for Infrastructure Amid Rising Debt Concerns

Uganda has announced plans to borrow €500 million (about $568 million) from three financial institutions to fund major infrastructure projects. The lenders include Afreximbank (€270 million), Ecobank Uganda, and the Development Bank of Southern Africa (€230 million combined). The announcement has sparked debate in parliament and among economists about the country’s rising debt levels.

Finance Minister Matia Kasaija defended the decision, stating that the loan is essential for supporting economic growth and improving infrastructure, particularly in transportation and energy. He emphasized that Uganda’s infrastructure gap is one of the biggest barriers to achieving long-term development goals.

However, critics argue that the country is over-leveraging itself. Uganda’s total public debt stood at approximately $29.1 billion in 2024 — an 18% increase from the previous year. This has raised alarms about the risk of debt distress, especially as debt servicing consumes a growing portion of the national budget.

Opposition lawmakers and independent analysts have urged the government to prioritize domestic revenue generation and reduce reliance on foreign loans. They also called for more transparency in how the borrowed funds are used, citing past issues with accountability and project delivery.

Despite these concerns, the government insists the borrowing is strategic. The funds are expected to improve roads, power supply, and trade corridors, which could help stimulate investment and job creation. Still, Uganda will need to balance growth with fiscal responsibility to avoid long-term economic strain.