Museveni pushes for stronger local financing as Uganda seeks affordable capital

President Yoweri Museveni has called for strengthening local financial institutions such as the Uganda Development Bank (UDB), arguing that they hold the key to unlocking Africa’s infrastructure and private sector growth.

Speaking at the Uganda Development Summit 2025 in Kampala, Museveni said African economies must reduce dependence on costly foreign financing models and instead build institutions capable of providing affordable long-term capital. He noted that interest rates charged by commercial banks, averaging 22 per cent, make serious investments nearly impossible.

“Twenty-two per cent? You can’t do any serious investment at that rate. UDB should lower its rates to around 10 per cent because its purpose is not to make a profit but to develop the economy,” Museveni said.

The President contrasted Uganda’s hydropower projects to illustrate the financing gap. He cited Isimba and Karuma dams, developed with Chinese support, which produce electricity at 4.7 US cents per kilowatt hour. By comparison, Bujagali, financed by Western investors, sells power to government at 8 cents, down from 16 cents at the start.

While he acknowledged the importance of human capital development, Museveni stressed that physical infrastructure—railways, power, and water transport—remains the backbone of economic transformation. Yet, securing financing for such projects, he said, remains “a big battle,” as international lenders often prefer softer investments.

The summit underscored the urgency of financing innovation in Africa, where a young and rapidly growing population demands jobs and opportunities. UDB Board Chairman Geoffrey Kihuguru warned that global shocks—from COVID-19 to geopolitical conflicts and climate change—are reshaping the international financial landscape, leaving countries like Uganda vulnerable.

“National Development Banks must step up, remove barriers to private sector capital, and avoid crowding out private investments,” Kihuguru said.

UDB Managing Director Patricia Ojangole credited government support for keeping the Bank alive at times when similar institutions collapsed. She said recent capital injections have positioned UDB to play a central role in financing inclusive and locally anchored growth.

In his keynote, Arshad Rab, CEO of the European Organisation for Sustainable Development, urged DFIs to prioritise financing technology and innovation. He emphasised that infrastructure projects must go hand in hand with education and human capital development to create sustainable jobs.

The two-day summit brought together policymakers, financiers, and private sector leaders to explore solutions for accelerating Africa’s socio-economic transformation.