Museveni pushes for local financing, questions ‘costly’ Western models

President Yoweri Museveni has urged the government to channel more resources into homegrown financial institutions such as the Uganda Development Bank (UDB), warning that overreliance on Western models of development financing is costly and unsustainable.

Speaking at the 2025 Uganda Development Summit in Kampala, Museveni compared Uganda’s hydropower projects to highlight the stark differences in financing costs. He noted that the Isimba and Karuma dams, built and financed by Chinese companies, supply electricity at just 4.7 US cents per kilowatt hour (about Shs 170).

In contrast, power from the Bujagali Dam, funded by Western financiers, costs nearly double at 8 cents (about Shs 283), despite falling from an initial 16 cents.

“That is the difference,” Museveni stressed, adding that Uganda must empower UDB to finance major infrastructure and private sector projects in order to cut dependence on expensive foreign loans.

He further challenged Western lenders to back “hard” projects such as railways, dams, and water transport, instead of focusing mainly on softer social sectors. The president also called on UDB to lower lending rates from the current 10-15 per cent to around 10 per cent across the board, warning that commercial banks’ rates of up to 22 per cent make meaningful investment nearly impossible.

“UDB was set up to support development, not to make profit,” Museveni emphasized.

The summit, which brought together policymakers, financiers, and private sector leaders, examined how global disruptions including COVID-19, the Russia-Ukraine war, Middle East instability, shifting tariffs, and climate change have intensified Africa’s financing challenges.

UDB board chair Geoffrey Kihuguru noted that with Africa’s rapidly growing youth population, governments must urgently expand access to capital to create jobs.

“National development banks must help remove barriers and open up financing for the private sector,” he said.

UDB managing director Patricia Ojangole credited government’s continued capital injections for sustaining UDB during turbulent times when other banks collapsed. She highlighted the bank’s growing role in driving inclusive, resilient, and locally anchored financial systems.

Delivering the keynote address, Arshad Rab, CEO of the European Organisation for Sustainable Development, urged African institutions to align infrastructure investment with technology and education reforms.

Without that balance, he warned, “economic sovereignty will remain out of reach.” The two-day summit closed with a joint call for stronger partnerships to mobilize resources that can accelerate Africa’s long-term transformation.