Uganda’s growing debt stock is facing renewed scrutiny following an audit that revealed that the government is sitting on Shs 16.4 trillion in undisbursed loans—despite continuing to borrow for development.

The auditor general’s report for the financial year ending 2023/24 shows that this backlog has led to the country incurring more than Shs 70 billion annually in commitment fees over the past six years. These fees, charged by lenders on the unused portions of loans, have collectively cost Uganda Shs 469.7 billion between FY 2018/19 and FY 2023/24.

The trend reflects an ongoing failure in loan absorption and execution, raising questions about public financial management, fiscal discipline and planning efficiency.

A deepening crisis of inaction

Between 2013 and 2024, Uganda secured loans amounting to $11.85 billion (about Shs 43.25 trillion) for various national development projects. However, only $7.35 billion (Shs 26.84 trillion) has been disbursed. This leaves a staggering $4.49 billion (Shs 16.4 trillion) idle—money that continues to attract penalties without yielding returns for the economy.

Sectoral analysis reveals significant underperformance across key areas. In natural resources and water, only $525 million of the $1.36 billion borrowed has been utilized. Similarly, the transport infrastructure sector has used just $2.14 billion out of $3.47 billion, and in energy development, $2.39 billion of $3.27 billion has been disbursed.

Even smaller sectors, like regional development and sustainable urbanization, show poor absorption rates, with hundreds of billions still tied up in undisbursed loans. This underutilization has been linked to a 12.95 percent increase in undisbursed loan balances over the past year alone, rising from Shs 14.6 trillion to Shs 16.4 trillion by the close of FY 2023/24.

Government defends ongoing borrowing

Despite these inefficiencies, government officials continue to defend their loan acquisition strategy, pointing to major infrastructure achievements made possible through external financing. According to the ministry of Finance, these include the doubling of Uganda’s paved national road network from 3,121km in 2012/13 to 6,133 km in 2022/23, as well as the expansion of Entebbe International Airport and the development of Kabaale International Airport in Hoima.

The government also credits loan financing for the increase in electricity generation capacity—from 595MW in 2010/11 to over 2,000MW in 2023/24—and broader electricity access across rural and urban areas. Water access infrastructure has also expanded significantly, with piped water networks growing from 14,466km to 22,668km in five years, alongside a doubling in water storage capacity.

Digital infrastructure has similarly benefited, with the national ICT backbone expanding from 1,380km to 4,300km between 2010 and 2023. Internet penetration now stands at 59 percent, up from just 0.2 percent in 2008. However, these achievements are increasingly being overshadowed by concerns that many loans remain idle and costly, undermining both Uganda’s fiscal health and its development trajectory.

Auditor General raises alarm

Auditor General Edward Akol has warned that the government’s failure to absorb loan funds promptly is driving up debt-related costs. He notes that the country paid Shs 73.9 billion in commitment fees in FY 2023/24 alone—money that could have gone toward service delivery or project implementation.

“The continued payment of commitment fees without corresponding loan utilization is inflating public debt obligations and reducing the fiscal space for priority spending,” Akol stated in the report.

The persistent trend of underperformance indicates systemic challenges in project planning, execution, and inter-agency coordination. Akol’s findings highlight that despite having the resources on paper, Uganda is not realizing the intended outcomes, and in many cases, projects are delayed or shelved altogether.

Ministry of Finance responds

In response to the auditor general’s findings, Nelson Kol, a senior official from the ministry of Finance, acknowledged that delays in disbursement are partly due to protracted negotiations between government agencies and lenders. These delays, he argued, often mean that by the time the funds are ready for release, macroeconomic circumstances have changed—resulting in implementation challenges and financial mismatches.

Kol added that while the government does not intend to accumulate idle loans, delays in feasibility studies, procurement bottlenecks, land acquisition issues, and environmental assessments frequently hamper timely disbursement. However, critics argue that these are long-standing systemic issues that should have been resolved through institutional reform.

The persistence of undisbursed loans and associated penalties, they say, points to a larger problem of weak public sector efficiency and lack of accountability in project execution. As parliament reviews the auditor general’s report and the budget for FY 2025/26, the debate around loan absorption and debt sustainability is expected to intensify.

The challenge now is not just securing funds, but using them wisely and efficiently.

 Uganda’s growing public debt: A deepening concern for the economy 

As of June 30, 2024, Uganda’s total public debt reached a staggering $25.6 billion (Shs 94.9 trillion), marking a sharp increase from $ 1.9 billion (Shs 7 trillion) in 2008/09. This growing debt burden comprises both external debt, totaling Shs 54.3 trillion, and domestic debt, amounting to Shs 40.6 trillion.

In the coming financial year, the government plans to borrow an additional Shs 13.7 trillion to finance its budget, pushing the national debt to an estimated Shs 108.6 trillion. The National Budget Framework Paper projects net external financing to rise to Shs 5.747 trillion in the 2025/26 financial year, up from Shs 4.984 trillion in 2024/25.

With total project loans estimated at Shs 9.779 trillion, of which Shs 4.966 trillion will be raised on concessional terms, the government’s borrowing spree shows no sign of slowing down.

Concerns over undisbursed loans and rising commitment fees 

One of the key issues raised in the context of Uganda’s mounting debt is the country’s ongoing struggle with undisbursed loans and the associated commitment fees. For the past six years, Uganda has paid more than Shs 70 billion annually in commitment fees—charges imposed by lenders on undisbursed loan amounts.

These fees are a reflection of inefficiencies in loan absorption, with billions of shillings locked in accounts and failing to deliver tangible development results. Busiro East MP, Medard Lubega Sseggona, has been vocal in criticizing the government’s economic management, particularly its failure to effectively utilize borrowed funds.

Sseggona argued that Uganda lacks competent economists who prioritize national interests over personal ones.

“We need skilled economists who know what they are doing. Unfortunately, those in place seem to be pursuing personal interests,” he said, adding that funds sitting idle in government accounts often generate interest for individuals rather than being utilized for the country’s development.

Similarly, Kira Municipality MP, Ssemujju Nganda, pointed out that while borrowing itself is not the problem, the lack of proper planning around loan acquisition is a significant issue. He cited the Southern Bypass Jinja Expressway project, where funds secured from the African Development Bank (AfDB) have been left idle for nearly three years due to the government’s failure to compensate affected landowners.

“Why secure a loan for road con- struction when you lack counter-funding for compensation?” he asked.

“It has been almost three years since the loan was approved, yet compensation remains unresolved.” Nganda also referenced the delayed Stan- dard Gauge Railway project, where compensation disputes have stalled progress. He argued that if the government redirected Shs 7 trillion spent annually on non-essential expenditures such as workshops, travel and allowances, it could easily fund compensation and counter-financing for these stalled projects.

Systemic issues and poor governance

Julius Mukunda, executive director of the Civil Society Budget Advocacy Group (CSBAG), attributed many of these financial inefficiencies to poor governance and a lack of discipline among accounting officers.

Mukunda highlighted several cases of mismanagement, including the Busega-Mpigi Expressway, which had to be redesigned due to poor project planning.

“About 33 per cent of projects lack clear priorities, feasibility studies, or proper planning,” he stated.

Mukunda also pointed out delays in projects like the Kyaliwajjala-Kira-Kasangati-Matugga road, which were caused by indecision over compensation disputes involving properties such as schools, hospitals and petrol stations. He emphasized that clear legislation on land acquisition for national projects is needed to prevent such delays.

Godber Tumushabe, a lawyer and policy analyst, added to the critique, blaming inefficiency within the government for its failure to properly allocate and utilize borrowed funds. Tumushabe noted that Uganda’s bureaucracy is dysfunctional, with many government  officials operating in a “sleep mode” rather than actively solving problems. He criticized the practice of borrowing funds without clear plans for execution.

“You cannot borrow money without a clear execution strategy,” he said. “The fact that loans remain undisbursed while the country incurs commitment fees shows a complete failure of governance.”

A call for reform 

Uganda’s public debt trajectory raises serious concerns for the country’s economic future. While borrowing has been instrumental in financing infrastructure development, the ongoing inefficiencies in loan absorption and project execution risk undermining the country’s fiscal health.

The failure to effectively utilize borrowed funds has not only resulted in substantial financial losses but also highlighted significant gaps in governance and accountability. As Uganda prepares for future borrowing and tackles its rising debt burden, experts stress the need for reform.

Better project planning, improved governance structures, and stronger inter-agency coordination are essential to ensure that borrowed funds are used effectively and deliver the desired outcomes. With Uganda’s public debt on track to surpass Shs 100 trillion, the time for a comprehensive fiscal overhaul is now.

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