KCCA scrambles for new funding sources amid World Bank exit



Several weeks ago, the World Bank suspended new projects in Uganda due to concerns over the newly enacted Anti-Homosexuality Act, which discriminates against individuals based on gender, or sexuality.


The World Bank clarified, however, that all existing projects and those with prior commitments would continue as planned until their completion. As of now, $1.7 billion out of the $4 billion allocated to Uganda for healthcare, agriculture, roads, energy infrastructure, and education has been earmarked for disbursement between 2024 and 2029.


This raises questions about Uganda’s self-sustainability and how the country will secure the remaining funds needed to meet its development goals. The Kampala Capital City Authority (KCCA) is one of the largest beneficiaries of World Bank funding, with $450 million (approximately Shs 1.7 trillion) already committed from 2012 to 2029.


Given that KCCA receives an average of Shs 100 billion per year from the World Bank, the suspension could significantly impact Kampala’s development. Eng DAVID LUYIMBAZI SSALI, the deputy executive director of KCCA, expressed optimism in a conversation with David Lumu. He is hopeful that the World Bank’s suspension will be lifted by the time the authority seeks additional funding for projects planned after 2029.


What do you make of the World Bank's withdrawal from new projects in Uganda?


We have limited options for concessional loans in the country, unlike the abundant resources provided by the World Bank. Concessional funding features near-zero interest rates, making it affordable for almost every nation. The World Bank’s withdrawal is undoubtedly a setback for Uganda.


However, there are other sources for both concessional and non-concessional loans that can help fill the gap. It’s worth noting that interest rates from non-concessional lenders are generally less favorable than those offered by the World Bank.


Some alternative concessional lenders include the International Monetary Fund (IMF), African Development Bank (AfDB), African Development Fund (ADF), Japan International Cooperation Agency (JICA), and the Islamic Development Bank (IsDB). On the non-concessional side, export credit agencies like the United Kingdom Export Finance (UKEF) are available.


The impact of the World Bank’s withdrawal is significant because each country is allocated a specific quota from these concessional financing institutions. Losing out on our quota from the World Bank is concerning. However, there’s a silver lining for the Kampala Capital City Authority (KCCA); our funding for the years 2024–2029 has already been committed.


As a result, we can proceed with implementing the Greater Kampala Metropolitan Area - Urban Development Strategy (GKMA–UDS), a $650 million project, around $150 million of which is allocated to KCCA. This commitment, made in May 2022, ensures our funding is secure.


At KCCA, we don’t anticipate the need for new World Bank loans in the immediate five-year window. We are planning for new projects from 2029 to 2034 and hope that by then, the World Bank’s suspension will have been lifted. While we may be secure for the next five years, the broader country may face challenges, especially for institutions needing allocations in the months following the World Bank’s withdrawal announcement.

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