Uganda to Borrow $90m for Secondary School Project

The Ugandan parliament has given the Federal Government clearance to borrow 65.6 million special drawing rights valued at approximately $90 million to finance the Uganda Secondary School Education Expansion Project (USSEEP).

Project objectives include improving access to lower secondary education by targeting underserved populations, including refugees, girls, and people with limited access to public lower secondary schools in targeted areas.

House members approved the loan being provided by the International Development Association of the World Bank Group due to its consistency with the principle that requires concessional borrowing for social sectors.

During a presentation of the Committee on National Economy report regarding the loan on Wednesday, 01 December 2021, Committee Chairperson Hon. Ikojo John Bosco told the House the loan is concessional in nature and includes a significant grant component.

According to him, the loan is consistent with the medium term debt strategy for the financial year 2020/201, which prioritizes external funding over domestic financing and prefers concessional borrowing.

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“This project is economically viable given the merits that will accrue from enhanced access to lower secondary education…as well as the improvement in the education system,” said Ikojo.

Hon. Mathias Mpuuga, Leader of the Opposition in Parliament, said the country ranked last in sub-Saharan Africa in funding education with a percentage of GDP of only 2.4.

“In the third year of the project, the government is supposed to offer counter-funding the equivalent of Shs75 billion. The Minister of Education and that of Finance should confirm to Parliament that this money will be tabled in the budget framework paper later this month so that we have a yearly report on it until its financing,” said Mpuuga.

Kiboga East County MP, Hon. Keefa Kiwanuka said his major concern is the government’s ability to implement the project because the loan has a commitment fee where money set aside, if it is not used, will increase the commitment fee. The MP asked the government to assure parliament that the project is ready for start-up.

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Finance Minister Hon. Matia Kasaija informed the lawmakers that the $90 million loan is accompanied by a $60 million grant. According to him, if the loan were not taken up, then both would be withdrawn.

According to the Committee’s report, the tax-to-GDP ratio stagnated at 12 per cent and the public debt ratio increased to 35.6% in recent years. In addition to revising tax exemptions and tax holidays, the Committee recommended that government enhance domestic revenue mobilization.

The Committee also recommended that Government continues reviewing operations with a view to eliminating wasteful or inefficient expenditure, so as to reduce spending pressures.

In addition, the Committee observed that most of the designs for school projects are implemented without the involvement of Local Governments during the planning level, which caused designs to be defective.

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The report by the Committee on National Economy follows a directive by the Speaker of Parliament made on 01 September 2021, to study the loan request and report back to the House on its viability.

The loan is expected to fill the gap of 116 schools and absorb the growing number of school-going children in Uganda, and thus achieve the national goal of universal secondary education by 2025.

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