CSOs predict doom after World Bank fund halt
CSBAG executive director Julius Mukunda accompanied with other officials from CSOs addressing the media at CSBAG offices in Kampala on August 14, 2023. PHOTO/BUSEIN SAMIR
What you need to know:
- CSOs now say “Uganda might economically deteriorate since the WB currently dominates 55 per cent of the country's public debt stock.”
A section of Civil Society Organisations led by the Civil Society Budget Advocacy Group (CSBAG) have predicted doom in the near future if government fails to handle the fund gap that is likely to be created following the August 1 announcement by the World Bank Group (WB) on halting loans for Uganda's development projects over the anti-gay law.
Over 30 projects worth $1.8billion (Shs6.7tn) are set to be affected by the World Bank’s move that also disrupts grants estimated at ShsShs3.01trillion.
CSOs now say “Uganda might economically deteriorate since the WB currently dominates 55 per cent of the country's public debt stock.”
"We are concerned its decision is likely to increase economic inequality. This is amidst the rise in poverty as reported by the Africa Development Bank, Economic Outlook report, 2023, where poverty in Uganda increased by 4.2 percent in 2022 from 15.61 million Ugandans to 16.36 million," said CSBAG executive director Julius Mukunda observed on August 13 while addressing a press conference in Kampala.
"The World Bank contributes significantly Foreign Direct Investment (FDI) and funding social sector projects that impact the livelihoods of people living in Uganda. FDIs play a significant role in the economic development and growth of a country," he noted.
Angela Kasule Nabwowe, the executive director of Initiative for Social and Economic Rights said that the education sector is also likely to be hit hard because majority of the seed secondary schools are being constructed with support from the WB.
"The World Bank decision will have two likely implications on the private sector growth. First, the investors investing in the country are likely to pull out which will create scarcity of expertise in areas where we don’t have a competitive advantage for the few companies. Second, local companies that have been subcontracted by international companies to provide services in roads, water and electricity to these companies are going also to lose out," she explained on Sunday.
Speaking at the same conference, the Quality Assurance Manager at the Uganda Debt Network (UDN), Gilbert Musinguzi, advised government to reverse anticipated doom by implementing good financial measures.
These he said include reducing public administration costs by reviewing public service salaries, restructuring Uganda's debt financing, and renegotiating funding priorities by the WB.
"Government should request other lenders for a moratorium on debt servicing for at least three years and renegotiate with the bond holders to increase the bond maturity periods," he emphasized.
He added that: "There are certain programs that if not implemented, will dent our development outcomes. For example, roads maintenance and repair if not done will likely increase the cost of production."
Finance state minister Henry Musasizi last week said government is planning to revise its budget downwards to close any gaps in case ongoing negotiations with the WB do not yield positive results.
