Shs1 trillion agricultural sector loans remain unutilised

The report reviews utilisation of different project loans in the agricultural sector. It notes that between 2018 and 2021, government borrowed a combined sum of $522m (Shs1.97 trillion), but had by December 2023 only utilised 54.3 percent or $283.47m (Shs1.07 trillion), with at least Shs903.9b or 45.7 percent unutilised. 

The report further indicates that in 2018, government borrowed $79m (Shs299.2b) to develop the agricultural value chain, but had by December 2023 - the year of closure - only used 38 percent or $30m (Shs113.6b) of the borrowed money. 

“This loan was supposed to have been utilised by end of last year, 2023.  Unfortunately, only $30m, which is 38 percent had been utilised by the end of project time, 2023,” the report reads in part.

The report also highlights two projects - markets and agricultural trade improvement project and agriculture cluster development project – for which money was borrowed as far back as 2016 but still had unutilised funds at the time of closure.  

For instance, on January 23, 2016, government borrowed $150m (Shs568.2b) for the agriculture cluster development project but had by the time of closure on March 31, 2022, left with $2.4m as unutilised funds (Shs9b), while $84.2m borrowed for the markets and agricultural trade improvement project in 2015, had by closure on June 30, 2020, achieved a performance of 97 percent.  

The three other loans, all borrowed under the National oil and palm seeds projects are scheduled to close on varying dates in 2028 but largely have low utilisation - two below 10 percent. 

For instance, government has so far utilised only $17.66m (Shs66.9b) or 23.3 percent of the $75.82m (Shs287.2b) borrowed in 2019 ahead of the November 28, 2028 closure, while two other loans with a combined sum of $133m (Shs503.8b), all borrowed on November 12, 2021, recorded a utilisation rate of 3.9 percent and 8.3 percent, respectively, ahead of the September 30, 2028 closure.  

It was not immediately clear whether the unutilised funds had been reallocated.  

Finance Minister Matia Kasaija, at the weekend, told Monitor that any money appropriated by Parliament but not utilised is returned to the Treasury, after which the beneficiary ministry “can forget about it”.

However, he did not indicate how such money is used. 

Agriculture Minister Frank Tumwebaze, indicated at the weekend that whereas some of the projects had closed, some are new and are awaiting approvals from funders.  

Other unitilised loans in the agricultural sector are highlighted in the public debt, grants, guarantees, and other financial liabilities report. The report notes some of the loans that have been committed to agricultural development continue to perform below projection or are not utilised at all months or years after they were acquired.  

For instance, on February 27, 2024, government signed a loan of $350m to support a Climate Smart Agricultural Transformation Project, but not a single shilling had been utilised months after it was signed.

However, Mr Tumwebaze said this was a new project and was awaiting clearance from the World Bank 

The report further indicates that on October 29, 2020, government signed a $169.2m loan to fund the Irrigation for Climate Resilience Project, but the implementing ministries including Water and Agriculture have in over three years, only utilised $23.78m (14 percent), meaning that in less than two years ahead of the April 30, 2026 closure, $139.4m (85.4 percent) must be utilised by the user ministries. 

The public debt, grants, guarantees, and other financial liabilities report for the year ended March 2024, indicates that as of December 2023, the stock of unused loans stood at $3.78b (Shs14.3 trillion), which was, however, a decline from $3.83b (14.5 trillion) in 2022. 

The report further notes that unutilised debt is largely due to inability of beneficiary ministries, departments, or government agencies to implement projects due to lack of required supervision and in-built staff capacity. 

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