Summary:
Mwijukye, in the 2025/26 Alternative Policy Statement for the Works and Transport Sector, cautioned that commercial banks have lost confidence in financing government projects.
KAMPALA: The Shadow Minister for Works and Transport, Mwijukye Francis, has warned that the government’s continued delay in clearing UGX 1.351 trillion in arrears owed to road contractors is straining the construction sector and eroding trust with financial institutions.
In the recently approved supplementary budget, UGX 500 billion was allocated to the Ministry of Works to pay for national road project certificates. However, Mwijukye, in the 2025/26 Alternative Policy Statement for the Works and Transport Sector, cautioned that commercial banks have lost confidence in financing government projects.
This has put local contractors already burdened with high borrowing costs at a severe disadvantage compared to foreign contractors, who secure loans at just 2% interest rates in their home countries, while local firms face rates as high as 23%.
“Delayed payments to contractors have long been a major issue in the construction industry. Before streamlining, UNRA had accumulated arrears exceeding UGX 1.3 trillion. Such long-standing payables indicate poor budgeting and expose the government to litigation risks and penalties for delayed payments,” Mwijukye stated.
He emphasized that the high cost of financing in Uganda makes it difficult for local firms with the necessary technical capacity to secure work, invest in equipment, or retain skilled personnel. With contractors struggling to manage expensive loans and penalties from financial institutions, over 80% of civil works contracts in Uganda continue to be dominated by foreign companies.
Mwijukye further noted that while the Alternative Policy Statement FY 2025/26 recognizes the transport sector as a key driver of economic growth, several challenges hinder its full potential. These include:
- Disjointed transport modes
- Over-reliance on road transport
- Slow absorption of development partner loans
- Delayed completion of government projects
- Inefficiencies in ferry services
“Efficient sector performance requires strategic planning, clear work plans, and proper prioritization of critical areas,” he said. “While we acknowledge other sector challenges such as irregular data collection on transport infrastructure the identified priority areas are crucial for delivering effective and efficient services in the Works and Transport sector.”
