Saudi Arabia extends Shs 1.1 trillion funding to Uganda

The IDB yesterday signed a loan agreement with the government to fund road construction and other projects.

This marks an effort by Uganda to diversify funding sources as discussions with the World Bank, traditionally the country’s biggest lender, remain stalled.

This diversification strategy stems from the World Bank's suspension of new loans to Uganda in response to the country's passing of the anti-homosexuality law.

Posting on X on Tuesday, Finance Minister Matia Kasaija confirmed that he signed the loan agreement with IDB president Muhammad Al Jassar in Saudi Arabia's capital Riyadh.

The money will finance the construction of a bridge crossing the River Nile in northwest Uganda and roads totalling 105 kilometres, according to the ministry.

Islamic banking

The loan comes just weeks after Uganda took a big step to embrace Islamic banking with the launch of national operations of the country's first interest-free commercial Islamic bank.

President Museveni said at the launch ceremony for the Salaam Bank in the capital Kampala that Islamic banking has the potential to significantly contribute to the development of Uganda's financial sector and attract more Muslims to invest in the country's economy.