Uganda's Debt Dilemma: A Heavy Burden on Citizens
The Cost of Ambition: Uganda's Rising Debt Crisis
In the quiet streets of Entebbe, Uganda, the morning commute sets the stage for a story of ambition and consequence. As David Tumusiime, a hardworking father of five, joins the daily traffic on the sleek Entebbe Expressway, he carries a weight that goes beyond the toll fees. Every day, he pays a small fortune, Shs10,000, to use this road, and it's a cost that adds up quickly, directly linked to the government's debt repayments.
The Expressway's Tale: A Symbol of Debt
The Kampala-Entebbe Expressway, a project financed by a substantial loan from China Exim Bank, stands as a symbol of Uganda's aspirations. Under the agreement, the Uganda National Roads Authority (UNRA) collects tolls for 18 long years to repay the loan. For Tumusiime, who dreams of retiring at 55, this means his children might still be paying for this road when he's long retired.
Borrowing in the Name of the People: A Controversial Move
On October 20, 2025, Uganda's Parliament took a bold step, approving new loans worth a staggering Shs8.3 trillion. While these loans are touted as funding for essential projects, they spark anxiety among many Ugandans. In the parliamentary chambers, where decisions are made, a simple vote can have profound impacts on the lives of ordinary citizens. Every loan approved echoes through the markets, farms, and small shops, where the consequences are felt in the form of rising prices and shrinking livelihoods.
A Tense Presentation: Loans and Parliamentary Scrutiny
Finance Minister Henry Musasizi presented the borrowing proposal, seeking funds from lenders like the World Bank and Standard Chartered Bank. He argued for the necessity of these loans to sustain key projects and drive economic recovery. However, the presentation was met with tension. Joel Ssenyonyi, the Leader of the Opposition, raised concerns about the process, revealing that some loans had already been signed off by authorities, bypassing parliamentary scrutiny. This revelation divided the chamber, with opposition MPs warning of eroding accountability and government MPs insisting on existing transparency mechanisms.
The Ledger's Weight: Uganda's Growing Debt
According to the Annual Debt Statistical Bulletin (June 2025), Uganda's total public debt had reached a staggering Shs116.2 trillion, approximately 51.3% of GDP. This represents a significant increase of 26.2% from the previous year. Domestic borrowing alone soared by nearly 49% in just one year, while external debt climbed to Shs55.9 trillion. Much of this domestic borrowing carries high-interest rates, straining national resources and squeezing out the private sector.
Defending the Borrowing Strategy: A Necessary Lifeline?
On October 21, Ramathan Ggoobi, the Permanent Secretary and Secretary to the Treasury, defended the borrowing strategy. He announced that Uganda would receive over $2 billion in concessional financing from the World Bank over the next three years. While Ggoobi described these loans as a "necessary lifeline" for the economy, many economists view them as a financial noose, tightening with each new agreement.
The Hidden Tax: Daily Life's Struggle
In the bustling trading hub of Kikuubo, Sarah Nabukenya, a mother of three, reflects on the rising costs of sugar, salt, and food. She connects these increases to transport costs and taxes, an invisible link between parliamentary decisions and her shrinking profits. Bank of Uganda data shows commercial lending rates hovering between 20% and 22% over the past five years, a crippling burden for small traders like John Mukasa.
The Impact on Traders and Farmers: A Crippling Effect
For Mukasa, rising operational costs and higher interest rates have led to squeezed profits and the need to lay off casual workers. In Kibaale District, the effects are felt on farms. Maize farmer Taddewo Bwambale highlights the high cost of loans, making it difficult for farmers to afford seeds and fertilizer. A district official confirms that only a small percentage of smallholder farmers access formal credit due to these high interest rates.
The Ripple Effects: Education and Health Suffer
The fiscal squeeze is visible in education and health sectors. A Kibaale district official reveals that roughly half of government-aided schools have damaged classrooms and limited facilities, with a student-to-textbook ratio of about 1:20. When debt servicing consumes nearly 40% of domestic revenue, these sectors bear the brunt of the burden.
Debt and Politics: A Complex Web
Economists argue that Uganda's rising debt is a political issue as much as an economic one. John Walugembe, head of the Federation of Small and Medium-Sized Enterprises, explains how investors view treasury bills and bonds as risk-free, helping the government raise funds but also driving up interest rates and competing with the private sector for credit. Senior economist Fred Muhumuza is more direct, stating that public investment is driven by political expediency rather than economic necessity.
The World Bank's Warning: Uganda's Debt Trap
The World Bank's 25th Uganda Economic Update reinforces these concerns, showing that Uganda's public debt now stands at nearly 53% of GDP, approaching dangerous levels. Francisca Ayodeji Akala, World Bank Country Manager, urges authorities to minimize unplanned expenditures and increase domestic revenue generation. Silver Namunane, a World Bank tax economist, highlights Uganda's low tax-to-GDP ratio, emphasizing the need for tax reforms to broaden the base and make the system more equitable.
The Human Cost: Real People, Real Stories
Uganda's debt story is the story of its people, those who bear the unseen costs. For a teacher in Kiryandongo, a trader in Kikuubo, and a farmer in Kibaale, debt is not just a statistic; it's a daily struggle. When Parliament debates loans, they might not consider the small changes it brings to family life: less sugar on the table, fewer textbooks for children, and deferred healthcare.
The Road Ahead: A Reminder of Debt's Reach
As David Tumusiime drives home along the toll road, he reflects on the invisible tax that Uganda's growing debt has become. It's not just about shillings; it's about lost opportunities. Each kilometer traveled on this road is a reminder of how deeply public debt is woven into private lives. As Uganda's lawmakers continue their debates, the question remains: At what cost are these debts being taken, and in whose name?
