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By Spy Uganda
Parliament has approved a government request to borrow up to €168.9 million from the United Kingdom Export Finance (UKEF) and Citi Bank to finance Phase II of the Solar Powered Irrigation Systems Project aimed at boosting coffee production and strengthening climate resilience.
The loan approved on Wednesday, 10 June 2026 during a sitting chaired by Speaker Jacob Marksons Oboth will bolster the project whose irrigation systems will cover about 4,768 acres and directly benefit an estimated 2,562 households.
Parliament suspended Rule 162(2), (3) and (4) of its Rules of Procedure to allow consideration of the request without scrutiny by the Committee on National Economy and relevant sectoral committees, which have not yet been constituted.
Invoking Rule 8 (1), the Speaker defended the move, saying the urgency of the matter justified immediate consideration.
“We do not have the committees; that is a reality of fact, and this loan is as important as water itself,” he said.
However, Hon. Patrick Nsamba (NUP, Kassanda County North) criticised Parliament for operating without committees despite earlier promises by the leadership of the12th Parliament to strengthen oversight.
“It’s not sufficient to just tell us that we do not have committees and yet the people who are supposed to do that are available,” Nsamba said.
The suspension of the rules was prompted by the impending expiry of the financing terms on June 13, 2026.
Tabling the motion, finance minister, Hon. Henry Musasizi, said the project will establish 427 solar-powered irrigation systems in coffee-growing areas across the country to cushion farmers against prolonged dry spells and climate change.
“Currently, farmers are losing a lot of crops due to prolonged dry seasons and this in turn affects their livelihoods,” Musasizi said.
The minister noted that the project had initially targeted 700 irrigation sites but was scaled down to 427 to fit within the available fiscal space.
Coffee remains Uganda’s leading foreign exchange earner, generating nearly US$1 billion from exports of 6.06 million bags between March 2023 and February 2024, while directly supporting about 1.8 million Ugandans.
Statistics from the Ministry of Finance, Planning and Economic Development show that Uganda has only 23,595 hectares under irrigation out of an estimated potential of 3.03 million hectares nationwide.
Government projects that coffee yields could rise from an average of 1.3 kilogrammes of dried cherries per tree to 6.5 kilogrammes under irrigation.
The financing package includes a €148.5 million facility backed by UKEF at a fixed interest rate of 3.65 per cent repayable over 13 years, including a three-year grace period, and a €20.5 million commercial facility from Citi Bank with a seven-year tenor and an estimated interest rate of 7.5 per cent.
Hon. Karim Masaba, the Mbale Industrial Division MP, stated that the interest rate of the loan is very high and yet the Government had not presented other options as required by the law.
“We have an option at a lower rate than 7.5 percent. We needed to know what options government had with their interest rates and terms and conditions,” he said before proposing that the loan be reviewed.
Supporting the motion, Hon. Julius Muntu (NRM, Budadiri County East) said that the resource envelope cannot fund the budget and therefore there is need to borrow for irrigation.
Muntu said: “Our budget is Shs84 trillion, Shs33 trillion is going into debt, Shs50 trillion is what will be left to public service. We have a deficit of about Shs38 trillion, we have to get it through borrowing.”
The Minister of Agriculture, Animal Industry and Fisheries, Hon. Frank Tumwebaze, said the weather pattern in Uganda has changed and therefore, there was need for irrigation.
“I appeal to you to make an exception and pass a loan that will support the small holder farmers, because the 10-20 acre farmers are for farmers who are not able to borrow from Uganda Development Bank to invest in massive irrigation systems,” he said.
The Minister of Trade, Industry and Cooperatives, Hon. Sanjay Tanna, supported the proposal to borrow noting that it is a favourable time to borrow since the country has a stable inflation rate.
The Leader of Opposition, Hon. Joel Ssenyonyi, called for accountability for the first phase of the loan.
, https://www.spyuganda.com/new-term-new-loans-uganda-to-borrow-e168-9-million-for-solar-irrigation-project/
