Uganda's debt crisis deepens ahead of elections

Uganda's national debt stands at $32.3 billion (€27.5 billion), with the government recently approving a loan of 9 trillion Ugandan shillings ($2.5 billion, €2.1 billion), fueling concern over the country's spiraling finances.

For many Ugandans, the direct impact of this borrowing is invisible because the promised benefits never seem to materialize.

But for economist Steven Alor, the public is paying a heavy price for the government's fiscal indiscipline.

He explains that potential consequences include unbuilt roads, neglected health facilities, and unfinished or delayed infrastructure projects.

"The government is always saying the debt-to-GDP is sustainable. It is just about 51% of the of the GDP, which is really not that sustainable," Alor told DW. "Borrowing is not bad if the money is put into good use. But we're seeing time and time again, money has not been put into good use."

The Ugandan government has publicly attempted to reduce domestic debt. In December, Reuters reported Ugandan plans to cut domestic debt issuance by 21.1% in the financial year starting July 2025.

The 9 trillion shillings will be issued in the 2026-2027 financial year, down from 11.4 trillion shillings worth of debt issuance in 2025-2026.

According to Reuters, the ministry said this was to "avoid crowding out of the private sector, curb the rising debt-to-GDP ratio, and address the growing burden of interest payments relative to revenues."

Alor says there have been examples where government borrowing has been effective, such as during the COVID pandemic.

"A lot of money was generated from the public. But the public can only give you that if they know the money is not going to go into someone's pocket," he said. "You cannot borrow forever."

Jacob Nuwa, a Kampala resident, said that Ugandans know money has been lost "under the guise of money borrowed to improve service delivery."

"If you go and look at the individuals who are supposed to do this work, their bank balances are fattening, their assets are increasing, and somehow they're living large," he told DW.

Ramathan Mudde, a retired economics lecturer from Kampala International University, told DW that while borrowing in itself was not bad, "selfish interests" were causing financial problems for the future.

"When you look at these MPs, they will always approve money to be borrowed. Why? Because they know they are beneficiaries in one way or the other," Mudde told DW.

"If there are no reforms, Parliament will keep on approving, and government will keep on abusing it."

Servicing Uganda's public debt could eat into almost a third of all domestic revenues in the 2026-2027 fiscal year, according to the Ugandan Ministry of Finance.

Debt is expensive, too — domestic borrowing, for instance, comes with 15%–17% interest rates. The ministry acknowledged public debt rose to 51% in June 2025, as a percentage of gross domestic product.

Lawrence Kooko, a Kampala-based business reporter, told DW: "We are now having a debt of more than 100 trillion shillings out there in borrowing. So where have they put the money? We cannot go on borrowing more money that we can't account for."

Kooko added that while the public was not fully benefittng from government borrowing, it would be "the local person who pays the tax, who in the end term pays back these loans to these big people, to these big borrowers."

To view this video please enable JavaScript, and consider upgrading to a web browser that supports HTML5 video

While Uganda's total public debt stood at $32.3 billion as of June, up 26.2% from the same period 12 months earlier, the state believes oil-related growth will "generate substantial revenue and stimulate productivity."

The state plans to start commercial crude oil production this year. As a result, economic growth is projected to reach 10.4% in 2026-2027.

However, Alor is not convinced this will be the silver bullet to Uganda's debt problems.

"They think when oil comes, they will be able to sell the oil and generate money and pay the debt, which is true in theory," he told DW. "But in practice, we need to stop the corruption. We need to be systematic. We need to negotiate good deals for Uganda."

For Kampala resident Jacob Nuwa, the equation is even more blunt: "We've reached that point where government needs to stop borrowing and get back to the basics of how money is managed. And for those that are found guilty, they should pay back. It's just as simple as that."

This article was adapted from an episode of DW's AfricaLink podcast