Parliament Approves Shs734 Billion Loan for Solar-Powered Irrigation Expansion

By Skika Reporter.

Parliament has approved a government request to borrow up to €168.9 million (approximately Shs734.2 billion) to finance the second phase of a nationwide solar-powered irrigation project aimed at boosting agricultural productivity and rural incomes.

The loan, to be secured from UK Export Finance and Citi Bank, was approved during the fourth sitting of the 12th Parliament on Wednesday, chaired by Speaker Marksons Jacob Oboth-Oboth.

Finance Minister Henry Musasizi, who tabled the motion, said the funding will facilitate the development of 427 solar-powered irrigation systems across Uganda, with a particular focus on supporting coffee-growing households.

“The project seeks to enhance rural incomes through increased production and productivity arising from irrigated agriculture,” Musasizi told Parliament.

According to the minister, the project is expected to directly benefit 2,562 households, translating into approximately 11,785 beneficiaries nationwide.

The borrowing proposal forms part of the financing framework for the 2026/27 financial year, which begins on July 1.

MPs Raise Concerns Over Phase I Performance

Despite Parliament’s approval, several legislators expressed concerns about the implementation and effectiveness of Phase I of the project.

Leader of Opposition Joel Ssenyonyi called for greater accountability regarding funds previously invested in the programme, urging government to demonstrate tangible results before embarking on another borrowing cycle.

Katikamu South MP Hassan Kirumira was particularly critical, describing the irrigation initiative as one of the country’s poorest-performing government projects.

“In Phase I, many projects remained incomplete, and as we speak now, some of the infrastructure is redundant and not contributing to productivity,” Kirumira told Parliament.

The concerns highlight growing scrutiny over public investments amid rising national debt and demands for value for money in government-funded programmes.

Government Defends Project Achievements

Government officials, however, maintain that the first phase of the project has delivered substantial results.

According to documents presented to Parliament, Phase I has achieved more than 99 percent physical completion, with 434 systems established across the country.

The Ministry of Finance reported that the completed infrastructure includes:

• 148 rural water supply systems serving 98,521 households and 433,492 people;
• 83 urban water supply systems benefiting 107,390 households and 472,519 people; and
• 203 irrigation systems covering approximately 2,000 acres and supporting 554 households and 2,436 individuals.

Government estimates indicate that the interventions have improved water security and agricultural productivity for more than 206,000 households and approximately 908,000 people nationwide.

The project was originally cleared for implementation by President Yoweri Museveni in December 2021 through a directive addressed to the Ministries of Finance and Water and Environment.

Uganda’s Debt Remains Under Watch

The approval comes against the backdrop of Uganda’s growing public debt burden.

According to the Ministry of Finance, Uganda’s total public debt stood at USD34.86 billion by the end of December 2025, equivalent to 52.7 percent of the country’s Gross Domestic Product (GDP).

However, under the Debt Sustainability Analysis for the 2024/25 financial year, the debt stock is reported at USD32.24 billion (approximately Shs116 trillion), comprising USD15.46 billion in external debt and USD16.79 billion in domestic debt.

The ministry insists that the country’s debt remains within sustainable limits, with public debt estimated at 50.86 percent of GDP and still within the thresholds established under the Charter for Fiscal Responsibility.

Officials further noted that the proposed irrigation loan has already been incorporated into the government’s medium-term fiscal framework and debt sustainability projections, meaning it is not expected to breach Uganda’s long-term borrowing limits.

Focus on Agricultural Transformation

Government argues that expanding irrigation infrastructure is critical for increasing agricultural resilience amid changing weather patterns and recurring droughts.

By extending solar-powered irrigation systems to more farming communities, officials hope to increase crop yields, improve household incomes, and accelerate the commercialisation of agriculture, particularly in coffee-growing areas.

As implementation of Phase II begins, attention will now shift to ensuring transparency, accountability, and effective utilisation of the borrowed funds to deliver measurable benefits to farmers across the country.