Parliament has authorized Government to borrow up to US$325 million (Shs1.23 trillion) from the International Development Association of the World Bank, to finance the Uganda Climate Smart Agricultural Transformation Project.
The loan will be topped up with a grant worth US$25 million (Shs94.5billion).
The House approved the loan request in a plenary sitting held on Wednesday, 06 December 2020.
The project seeks to modernize Uganda’s agricultural sector in a bid to increase productivity, and promote value addition through agro-processing in line with the Uganda Vision 2040 prospect of establishing economic lifeline industries.
While presenting a report on the loan, the Deputy Chairperson of the National Economy Committee, Hon. Robert Migadde, said the loan disbursements will be triggered only when government has prepared and adopted the legal covenants required by the World Bank.
No withdrawal of funds will be made for components like clean energy equipment, harvesting machinery and infrastructure as well as production input grants, unless government has prepared and adopted the grants manual in form and substance acceptable to the World Bank.
“The Committee recommends that the Ministry of Agriculture should ensure that the loan disbursement conditions are fulfilled in order to trigger timely release of the loan credit for the project objectives to be met as planned,” Migadde said.
He added that it is essential for government to establish incentives to strengthen private sector involvement that will enable the agriculture sector to effectively and efficiently contribute to strengthening resilience of agricultural households and ecosystems.
The Committee also noted low absorption of funds for loan-financed projects in the agricultural sector, attributed to slow pace by government to fulfill loan conditions, costly land compensation claims and inadequate project preparedness among other factors.
“The Committee recommends that Ministry of Finance and Ministry of Agriculture should ensure that all inefficiencies that affect absorption of funds for debt financed projects in the agriculture sector are mitigated,” Migadde added.
Hon. Milton Muwuma (NRM, Kigulu County South) made proposals to ensure effective utilization of the loan for its intended purpose, including clear synergies between the involved government ministries and departments, and availing extension workers.
“We have so many programmes being implemented but the technical people supposed to advise and guide beneficiaries are thin on ground. I encourage government to address this by lifting the ban on recruitment to ensure that we have the necessary extension workers on the ground,” said Muwuma.
Hon. Naome Kabasharira (Ind., Rushenyi County) urged government to provide more support to agricultural research.
“Agencies that do a lot of work to develop our agriculture like National Agricultural Research Organization and National Animal Genetic Resources Centre have been left underfunded. If we invested more money there, the country can benefit,” said Kabasharira.
She also reiterated the need to effectively implement the loan in a timely manner.
