A recent IMF report predicted that Uganda’s public debt will have moved into the danger zone of debt to GDP ratio of over 50% in the next financial year
The government borrowing to finance infrastructure development is aimed at economic development, the minister of state for works Gen. Katumba Wamala has said.
"If you want the economy to grow, you must develop the infrastructure. That way, the economy will thrive. Loans secured for this purpose should not worry you. You should instead worry about the duration of the infrastructure being put in place," Katumba said.
The minister justified the continued government's borrowing for roads, railways construction and airport expansion insisting that a well-developed infrastructure network is a driver to economic development.
"Roads have been built and facilities are in place. It takes about six hours for a farmer to transport their produce from Bundibugyo to Entebbe Airport for export. Infrastructure development is now a regional effort undertaken by all East African Community member States," Katumba said.
Katumba made the remarks at a stakeholder's engagement forum organised by Uganda National Association of Building and Civil Engineering Contractors (UNABCEC) at Kingdom Kampala Hotel on Thursday. The meeting was held under theme: Capacity Building for Uganda's Physical Construction Sub-Sector.
A recent IMF report predicted that Uganda's public debt will have moved into the danger zone of debt to GDP ratio of over 50% in the next financial year.
According to the latest reports from the ministry of finance, Uganda's public debt has reached $12b (sh45.6trillion), which represents a debt to GDP ratio of 42%.
According to the American ambassador to Uganda, Deborah Malac, infrastructure projects tend to be very expensive. She advised the government to adopt the Public Private Partnership model which will enable private companies to undertake infrastructure projects.
The envoy referred to the consortium of American private companies that will be building Uganda's refinery as an example of how useful private companies can be in helping a country get financing for big infrastructure projects.
Katumba implored the contractors to build capacity for satisfactory works to enable the government to ringfence some contracts for local firms.
"You must demonstrate capacity because some of the funders for these projects are strict on which company should do the works based on the quality of work," Katumba said.
UNABCEC president Francis Karuhanga noted that construction sector requires sh1.2 trillion worth of equipment for works of local contractors in the roads sector in the next five year is so huge that no single banker and equipment supplier can satisfy the need.
He expressed dissatisfaction with the government's failure to listen to their demands geared towards streamlining the industry.
"We are over a million voters in this industry, I find it extremely irritating and frustrating when the government turns a deaf ear. Let the voice of our constituency be on a national agenda," he submitted.
• Entrench sub-contracting of up to 30% of actual works on all development projects to ensure that foreign service providers ought to partner with domestic service providers through sub-contracting or joint venture on all infrastructure projects whose value are above national reservation threshold.
• Initiate a 10-year strategic program with a total of 1000km as affirmative Road Development pilot projects to prime national providers for the execution of real paved works to reduce the unit cost of paved roads.
• Entrench mandatory placement of graduate interns to transfer skills to Ugandan youth by all construction companies operating in Uganda.
• Facilitate acquisition of a revolving equipment lease fund of sh104b.
• Classify and register all works contractors in Uganda and adapt an enterprise development program to incubate and promote all small and medium local contractors from grade 1 to 7 based on performance
• To establish a specialized training centre for plant operators and mechanics.