Parliament has accepted the government’s request to secure a loan of approximately $518 million (equivalent to around Shs 1.923 trillion) from the World Bank to fund the Greater Kampala Metropolitan Area Urban Development program.
This decision follows the examination of a report submitted by John Bosco Ikojo, the head of the national economy committee, during a plenary session presided over by deputy speaker, Thomas Tayebwa, on Wednesday.
During a plenary session on May 24, 2023, the Minister of Finance, Planning, and Economic Development presented a proposal to parliament members.
The proposal included borrowing up to special drawing rights (SDR) 34.8 million (about $48 million) from the World Bank’s International Development Association (IDA) and up to €40 million (around $42.66 million) from Agence Francaise De Development (AFD).
The Greater Kampala Metropolitan Area comprises Kampala city and eight Local Government entities: Entebbe, Kira, Makindye-Ssebagabo, Mukono, Nansana Municipalities, and Mukono, Mpigi, and Wakiso districts. With an estimated population of 5.8 million, the project aims to enhance the area’s development.
The funding distribution is projected to range from $4.4 million (approximately Shs 16.244 billion) to $23.38 million (around Shs 86.317 billion) per year for each entity, based on minimum conditions plus performance incentives.
This borrowing initiative aligns with Uganda Vision 2040, aiming to elevate the Greater Kampala Metropolitan Area to upper-middle-income status, focusing on its transformation into a productive, resilient, and livable city.
The program encompasses various elements like road rehabilitation, drainage systems, markets, and artisan parks, in addition to strengthening institutions.
The total cost of the project over a five-year span, as outlined in the GKMA Economic Development Strategy (2020-2030), is approximately $1.179 million (about Shs 4.380 trillion).
The Cabinet sanctioned the Development Framework 2040 in 2013, adopted in 2019, to enhance the economic significance and competitiveness of GKMA. This led to its classification as a special planning area, with an investment portfolio of $2,995 million.
The funding structure involves co-financing by KCCA and the eight entities amounting to $571.31 million (about Shs 2.109 trillion) from their current budget.
The World Bank will contribute a total of $566 million (around Shs 2.089 trillion), with a credit of $518 million (about Shs 1.912 trillion) and a grant of $48 million (approximately Shs 177.213 billion).
Agence Francaise De Development (AFD) will provide an additional $42.66 million (about Shs 157.498 billion) through credit for the GKMA Economic Development Strategy.
The Greater Kampala Metropolitan Area faces substantial infrastructural challenges, including road degradation, inadequate drainage systems causing floods, and insufficient reliable transportation, resulting in severe traffic congestion.
For instance, only about 300km of Kampala’s 2,100km road network is in good condition, leading to congestion and significant economic losses.
The allocated funds will be received by Kampala and the eight local government entities upon fulfilling infrastructure investments evaluated annually by the Office of the Auditor General (OAG). Assessment parameters include quality, efficiency, and effectiveness.
Frequent floods cause over $49.6 million (about Shs 183.129 billion) in damage annually to buildings, affecting more than 170,000 people. Furthermore, over 10% of jobs and key roads in Kampala are situated in flood-prone areas.
A survey conducted by Kampala Capital City Authority (KCCA) in 2012 revealed a daily loss of 24,000 man-hours due to traffic jams, translating to an estimated yearly loss of around $800 million (about Shs 2.953 billion).
The daily cost of congestion in GKMA is currently estimated at $1.5 million (about Shs 5.537 billion), accounting for 4.2% of GKMA’s daily GDP.