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The National Economy Committee on Friday started processing a proposal by Government to borrow $325m (sh1.2trillion) from the World Bank (WB).

The loan request which also is expected to come with Special Drawing Rights (SDR) of $19.5m (sh73.4b) seeks to finance the Uganda Climate Smart Agricultural Transformation Project (UCSATP). 

The SDR is not a currency but rather a potential claim on the freely usable currencies of IMF members.

The request was on October 10, this year tabled in Parliament by the finance minister and subsequently referred to the committee chaired by John Bosco Ikojo (Bukedea County, NRM) for perusal in consonance with Rule 155 of the Rules of Procedure.

Target areas

According to Finance Minister Matia Kasaija, the project objective is to increase: production, market access, resilience of selected value chains in selected areas and facilitate prompt response to a crisis or emergence.

At the core, these funds target address agro-ecological areas that have high levels of poverty and low value production areas.

Areas under focus include; North-Eastern Dry lands (Karamoja), North Eastern Savannah grass lands in Eastern Acholi and Northern Lango, Kyoga Plains in South Eastern Lango, Teso, Bukedi and Northern Busoga.

Others are; Eastern, Southern, Southern Dry lands, Lake Albert Crescent, Eastern Elgon and Central Region.

Selection was based on climate change vulnerability of water sheds, poverty at sub-regional levels to mention but a few.

“The Project targets to benefit about 760,000 households translating into 3,900,000 individuals as direct beneficiaries. 

About 60,000 refugee households are expected to directly benefit from the project along 80,000 refugee hosting households.

The total project cost is $354.7m which includes $325m IDA credit of which $25m is from the IDA window for host communities and refugees and $25m grant,” Kasaija explained.

In response to concerns of huge debt burden, Kasaija defended this move on the pretext that Uganda’s debt situation raises no cause for worry.  

“At the end of June 2023, the total public debt stock stood at $23.66b (sh86,779.9b) increasing from $20.97b (sh78.78 trillion) as at end of June 2022. Of the total public debt stock as at June 2023, external debt constituted 60.2% (14.24/sh52,206.1b) while domestic debt constituted 39.8% ($9.4b/sh34, 573.8b),” he cited.

The new agriculture loan will be supplemented by Government of Uganda (GOU) counterpart funding amounting to $4.7m (sh17.7b) which will cater for resettlement of Project Affected Persons (PAPs), civil works and project implementation.

Project funds shall facilitate research, breeding centers, construction of 19 zonal mechanization centers, disease and vector control, irrigation and water for agriculture, support in the fisheries sector to say.

Minister for Agriculture, Animal Husbandry and Fisheries, Frank Tumwebaze, said one of the components is revamping research and breeding centers, apparently, National Agricultural Research Organization (NARO) and National Animal Genetics Resources Center and Data Bank (NAGRC & DB).

Frank Tumwebaze, Minister for Agriculture, Animal Industry and Fisheries presents before the National Economy committee at Parliament on November 9, 2023. Looking on is Matia Kasaija, Minister for Finance, Planning and Economic Development. (Photo by Miriam Namutebi).

NARO has 16 public research institutions comprising seven National Agricultural Research Institutes (NARIs) and nine Zonal Agricultural Research and Development Institutes (ZARDIs) while NAGRC and DB on the other hand has over sixteen satellite centers.

Under this programme, Tumwebaze pointed out that they are also planning to construct:  seed storage facilities in Nabuin, Serere, Abi, Rwebitaba, Kacwekano, Ngetta, Bulindi, Mbazardi and Buginyanya.

“All this seed you see being sold by seed companies, they buy the foundational seed from NARO and multiply it.

So, if NARO at various centers does not have enough storage capacity, it will not be able to produce enough seeds for multiplication. And that is how you end up getting imported seeds on the market whether legal or illegal,” Tumwebaze argued.

Under the second component, Tumwebaze stated that these funds will support investments geared at upscaling and adopting climate smart agriculture and technologies.

Under this, they plan to equip 19 zonal mechanization centers in Dokolo, Moroto, Kiruhura, Kiryandongo, Soroti and Gulu among others.

At each of these centers, heavy earth moving equipment, excavators, self-loading trucks, bulldozers, mobile mechanization workshop trucks and double axel tractors shall be put in place for hire by farmers at subsidized rates.

“We will have about $66.9m (sh252b) to support strengthening climate smart agricultural research, seed and agro-climatic information systems. Of course, according to the World Bank terminologies, the activities, I have described above many of them fall under this climate smart component.

Frank Tumwebaze, Minister for Agriculture, Animal Industry and Fisheries presents before the National Economy committee at Parliament on November 9, 2023. Looking on is Matia Kasaija, Minister for Finance, Planning and Economic Development. (Photo by Miriam Namutebi).

Promotion and adoption of climate smart technologies and practices. This is where we shall be rolling to farmer’s machinery, greenhouse, irrigation and that is where the big money is,” he elaborated.  

That said, Government plans to rehabilitate specific bottlenecks and trouble spots on uncoded farm road sections or chokepoints of about 3957 kilometers under the market development component.

MPs react

However, Upper Madi Okollo MP Joakino Etuka (NRM) disagreed with the move by the Agriculture Ministry to indulge in road construction.

“When we were processing the Agriculture Cluster Project loans, it was the same thing but when we look at the performance, in Madi Okollo of all the nine road projects which we submitted to the Ministry, not one is done" Etuka complained.

“The Ministry of Agriculture sometimes doesn’t take our advice seriously. We advised the Ministry to let go of the project of road construction to the Ministry of Works and Transport, we realize they don’t have capacity to manage funds under road construction,” he added.

On his part, Nathan Byanyima (Bukanga North, NRM) said that this money should instead be channeled to other productive areas instead of a bottomless pit.

“How can you have a project running, you don’t go back to see how it is going. This is a project where we would have loved to see a report of what were the challenges. Coming to us for another loan, I shudder to believe. I don’t believe this because the performance was dismal. Your minister, Bright Rwamirama, testified in the committee that the performance was dismal, where did money go?” Byanyima posed.

Duplication

In light of this, Denis Lee Oguzu Lee (Maracha County, FDC) who had earlier decried what he described as duplication of activities hypothesized that this specific component must be an alleyway that officials want to use to steal public funds.

“Some people are trying to get a cash cow to eat money. There is a lot of duplication and lack of coordination in conceiving this project. What you are encouraging here is waste, we have seen in the management of these projects, projects under the Ministry of Agriculture in total are performing at 40% looking at the proposed management structures,” Oguzu stated.

On his part, National Economy Chairperson, John Bosco Ikojo, expressed reservation on provisions in contingency and emergency response component.

“The operation of this seems a little bit ambiguous and is subject to abuse as it encourages reallocation of funds of the project component to handle these emergencies.

Since the funds will go through the annual budget, this provision is contrary to Section 22 of Public Finance Management Act (PFMA 2016) which prohibits viament because the component is at zero cost, but it encourages that in the event there is an emergency, the funds have to be allocated from other components,” Ikojo noted.