Uganda’s Parliament has approved a US $395.5m loan the refurbishment of the Kampala-Malaba Meter Gauge Railway (MGR). The approval in a plenary sitting Chaired by Speaker Rebecca Kadaga came after the approval of a report by the National Economy Committee presented by Nakaseke North MP Syda Bbumba.
According to Hon Bbumba, the Kampala- Malaba project is part of the bigger proposed Meter Gauge Railway (MGR) project, which will entail the rehabilitation of the 8.3km Kampala-Port Bell section and the 12.3km Kampala-Nalukolongo-Kyengera section, purchase and rehabilitation of coaches, wagons and locomotives, creation of a railway training school to equip Uganda Railways Corporation (URC) Management and Staff with modern railway skills, and stock new spares for the workshop.
“If the Meter Gauge Railway Project (MGR) is implemented, the cost of transport by rail will improve from the current average of between US Dollars 0.09 – US $0.13 (per NTK-net tone kilometre) to US $0.05, hence reducing the cost of doing business,” said the MP.
The 250km Kampala-Malaba MGR connects Uganda’s capital with Kenya at the Malaba border. Money for the project will be sourced from the African Development Fund (ADF) which will provide US $100.7m, the African Development Bank (AfDB) which will provide US $233.2m and the Corporate Internationalization Fund of Spain which will provide US $31.3m.
The new loan requests by the government imply that Uganda’s debt portfolio will swell in the coming financial year 2021/2022 and that the country is moving closer to its threshold set by the International Monetary Fund at 50% debt-to-GDP ratio for developing countries.