Henry Musasizi, Uganda’s Minister of FinanceBy Prisca WanyenyaThe Minister of Finance, Henry Musasizi, has challenged MPs complaining about Government borrowing from commercial banks to show him where cheap loans are available.He made the remarks during consideration of a report by Parliament’s Committee on National Economy on Government’s proposal to borrow up to Euro 207.75 million (Shs909.4 billion) from Citibank and other financial institutions to finance the design and build of the Jinja-Mbulamuti-Kamuli-Bukungu Road (127km) and Jinja City Roads (10km) during the September 3, 2026 plenary.“If there is any cheap money in the world and any colleague knows where it is, I am here to look for it. This is the cheapest money we can find in the market at the moment. Unless you go to World Bank, and World Bank already has a quota. We don’t just go to World Bank and say we want this money,” Musasizi said.He was responding to a minority report by Hassan Kirumira (Katikamu South) and Yusuf Kiruluuta Junior Nkeretanyi (Kalungu East) who objected to the loan, citing continued reliance on commercial loans with high interest compared to concessional loans from multilateral lenders like the World Bank.“Our desire is to get concessional loans, which normally have long maturity of 10 to 20 years or more, long enough to reduce refinancing pressure. Part of this loan is commercial with a very short maturity of just six years. We are not sure whether Government will be forced to borrow again just to settle maturing debt,” Kirumira said.“Our proposal is for Government and Parliament to pause non-concessional borrowing and prioritise concessional loans. Commercial loans like Citibank should be left for self-liquidating capital projects with immediate economic returns,” he added.Fears about the commercial terms followed details from the Ministry indicating the loan amount is Euro 179.24 million including Euro 17.47 million insurance at 9.75% per annum.Parliament was informed that maturity is 10 years including a 3-year grace period, with interest at 6-month Euribor of 2.55% as at July 1, 2026 plus a margin of 2.5%, totalling 5.05% per annum. Arrangement fees are 1.4%, agency fees Euro 20,000 per annum, while commitment fees are 0.75% on undisbursed balances. Another document indicated maturity of 6 years including 3-year grace.Patrick Nsamba (Kassanda North) criticised design-and-build road loans, saying they increase costs and cause delays.“We have a Ministry of Works that could design all these roads, then you look for funding for those that are ready. But every time, Build and Design. At the end of the day, we are paying huge amounts,” Nsamba said.Committee Chairperson Jane Avur, while presenting the majority report, also raised concern over commercial terms for a social development project.“The Minister of Finance should adhere to the Public Debt Management Framework 2023 to ensure minimised borrowing and debt servicing costs and to safeguard debt sustainability. The project should be fast-tracked to ensure timely realisation of its economic benefits given the high cost of borrowing,” Avur said.MPs also queried agency fees, with Kirumira noting Euro 2.34 million earmarked for supervision and design review and Euro 26 million for land acquisition.“There is an arrangement fee of Shs1.6 billion, an agent’s fee of Shs2.40 billion, there is compounded interest of Shs8 billion,” Kirumira said.Kalungu West MP Joseph Ssewungu said agency fees were unnecessary when the Ministry and banks have staff to monitor the loan.Musasizi responded that agency fees are standard for sovereign commercial borrowing.“It is not me borrowing, it is Government of Uganda borrowing from an external source. The practice is, I must go through an arranger whom I must pay some fees. I cannot go to Citibank UK and say I am here to borrow on behalf of Government. This is standard practice,” he said.According to the Ministry, the road will act as a gateway to Amolatar, Soroti, Nakasongola and Kayunga by providing an alternative route between north and south, linking eastern region and Busoga to Lake Kyoga.“Upgrading to paved standard will reduce transit times, lower vehicle operating costs and enhance trade. Intervening in 10km of urban roads within Jinja City supports urban mobility, facilitates industrial transport within Uganda’s primary industrial city and boosts local trade,” Musasizi said.Moses Walyomu Muwanika (Kagoma County) backed the loan, saying Busoga has waited long and the road will spur tourism to sites like Itanda Falls known for Nyege Nyege.“This was one of President Museveni’s pledges when he visited my constituency in 2017,” Muwanika said.Julius Nakiyi (Budadiri East) also supported it, saying Busoga should share in Uganda’s debt burden.“The burden of that payment is on all Ugandans, including Busoga. It is important that Busoga also receives this loan so that they shoulder the burden after they have also enjoyed the service,” he said.The minority report also raised delayed compensation for Project Affected Persons assessed in 2021 and verified on March 30, 2023 but never paid despite being barred from using the land.“The guidelines require payment not to exceed six months from approval of the final report. It is now three years since evaluation. It is risky to proceed, already PAPs are asking whether Government will adjust compensation considering land has appreciated,” Kirumira argued.The Opposition warned the project will incur commitment fees due to undisbursed loans given Uganda’s history, and asked Government to delay until resettlement plans are ready.The post Show Me Where Cheap Loans Are – Finance Minister Fires Back at MPs Over Shs909Bn Commercial Loan appeared first on Business Focus.