Parliament Approves Sh168.9 Million Loan for Solar Irrigation Project Targeting Coffee Boost

Lawmakers in Uganda’s Parliament have approved a significant loan amounting to €168.9 million, secured from the United Kingdom Export Finance (UKEF) and Citi Bank. This funding is earmarked for Phase II of the Solar Powered Irrigation Systems Project, an initiative designed to significantly boost coffee production and bolster the nation’s resilience against climate change impacts.

The approved loan will facilitate the establishment of 427 solar-powered irrigation systems across coffee-growing regions, expected to cover approximately 4,768 acres and directly benefit an estimated 2,562 households. The project aims to mitigate crop losses farmers currently face due to prolonged dry spells, which negatively impact livelihoods.

Parliament controversially suspended specific rules of procedure to expedite the loan’s approval, citing the urgency of the financing terms, which were set to expire shortly after the vote. Speaker Jacob Marksons Oboth defended this decision by highlighting the critical need for the loan, especially in the absence of newly constituted parliamentary committees for oversight.

However, the decision wasn’t without criticism. Some Members of Parliament raised concerns about the high interest rates on portions of the loan, with one MP questioning the government’s process of exploring alternative financing options. The Leader of Opposition also echoed sentiments for accountability regarding the project’s first phase.

Financing officials noted that the project was initially envisioned with more irrigation sites but was scaled down to fit within the available budget. Coffee remains a vital export for Uganda, contributing significantly to foreign exchange earnings and supporting millions of livelihoods. The implementation of these irrigation systems is projected to dramatically increase coffee yields, potentially raising output from an average of 1.3 to 6.5 kilogrammes of dried cherries per tree.

Officials emphasized the changing weather patterns in Uganda, underscoring the necessity of irrigation for agricultural stability and supporting smallholder farmers who cannot afford large-scale irrigation investments independently. The government also pointed to Uganda’s stable inflation rate as a favourable condition for borrowing at this time.

This parliamentary approval of a €168.9 million loan from UKEF and Citi Bank will finance the second phase of the Solar Powered Irrigation Systems Project. More details can be found at https://www.howwe.ug/news/national/43110/parliament-approves-168.9m-loan-for-mega-solar-irrigation