Parliament Approves Sh168.9 Billion Loan for Solar Irrigation Project

Members of Parliament have given their nod to a substantial loan amounting to €168.9 million, intended to finance the second phase of the Solar Powered Irrigation Systems Project. This initiative aims to significantly enhance coffee production across Uganda and build greater resilience against the impacts of climate change.

The loan, approved during a parliamentary session on June 10, 2026, will facilitate the installation of solar-powered irrigation systems across approximately 4,768 acres, directly benefiting an estimated 2,562 farming households.

Parliament waived certain procedural rules to expedite the loan’s consideration, citing the urgency of the financing terms which were set to expire imminently. Speaker Jacob Marksons Oboth highlighted the critical need for the project, stating, “this loan is as important as water itself.”

However, some Members of Parliament raised concerns, including Hon. Patrick Nsamba, who lamented the lack of functional committees for proper oversight. Another MP, Hon. Karim Masaba, questioned the high interest rate of the loan, particularly from Citi Bank, and suggested that alternative, lower-interest financing options should have been explored and presented by the government.

Finance Minister Hon. Henry Musasizi explained that the project will establish 427 solar-powered irrigation systems in key coffee-growing regions. This intervention is crucial to protect farmers’ crops from the detrimental effects of prolonged dry spells, a growing concern due to changing weather patterns.

Coffee remains a cornerstone of Uganda’s economy, being the country’s top foreign exchange earner. The project anticipates a substantial increase in coffee yields, potentially boosting returns per tree significantly under irrigated conditions. The approved financing package includes a €148.5 million facility from UKEF at a 3.65% interest rate and a €20.5 million facility from Citi Bank at an estimated 7.5% interest rate.

Supporters of the loan emphasized the necessity of borrowing to fund essential development projects like irrigation, given current national budget constraints. The Minister of Agriculture, Animal Industry and Fisheries, Hon. Frank Tumwebaze, stressed the changing weather patterns and the critical need for irrigation to support smallholder farmers who cannot afford large-scale systems.

Source: Parliament of Uganda