In the 2026/27 financial year, Uganda is projected to spend Shs33.4 trillion on debt obligations, accounting for about 30-35 percent of the budget.
This places debt servicing at the centre of fiscal planning, with critical sectors such as health, education, and infrastructure competing for the remaining fiscal space.
It is a stark reminder that debt has shifted from being a development instrument to becoming one of the country’s largest expenditure drivers.
Yet beyond the headline figures lies a deeper structural concern. Borrowing itself has become unevenly priced and globally skewed, shaping who develops and who struggles even before projects begin.
In Uganda and much of Africa, debt is no longer about repayment discipline. It is increasingly influenced by an international financial system in which interest rates, credit ratings, and loan conditions determine development outcomes long before implementation starts.
Julius Mukunda, the Civil Society Budget Advocacy Group executive director, says the current debt challenge is rooted in a global financial architecture that disadvantages developing economies from the outset.
He argues that while developed countries often access credit at interest rates below 2 percent, African countries typically borrow at rates ranging from 8 to 15 percent.
Mukunda notes that international credit rating systems further compound the problem by assigning lower ratings to many African economies, which brings about contradictions in climate financing.
Another concern, he says, is the growing burden of commitment fees charged on undisbursed loans.
Uganda is expected to spend about Shs185b on such fees, a trend he believes reflects a debt system that increasingly benefits lenders more than development outcomes.
The impact of debt extends beyond financial markets and into public services, particularly health systems.
Henry Magala, AHF Uganda Cares country program director, observes that debt servicing is increasingly competing with social sectors for scarce public resources.
Magala argues that this trend represents a reverse flow of resources from poorer nations to wealthier creditors, widening global inequality rather than reducing it.
In his view, debt justice is not only an economic concern but also a human rights issue because it affects governments’ ability to provide services.
He warns that failure to meet commitments such as the Abuja Declaration continues to weaken health systems across Africa, with staffing levels in some areas remaining critically low.
To address these challenges, Magala supports the creation of coordinated negotiation platforms for debtor nations.
He believes African countries would secure fairer lending terms if they negotiated collectively rather than individually.
While debt is often presented as a tool for development, questions remain about whether borrowed funds generate sufficient economic returns.
Hilda Tumuhe, the Seatini programme officer for debt and aid, argues that inefficient debt-funded projects can undermine trade and industrialisation.
She notes that delays, cost overruns, and weak implementation systems often reduce the returns generated from public investments.
According to Tumuhe, projects designed to be completed within five years frequently extend to 10 years or more, slowing economic transformation.
Tumuhe also identifies Uganda’s narrow tax base as a key structural challenge.
With tax revenue estimated at only 13 to 15 percent of GDP, the country struggles to finance its development ambitions through domestic resources alone, increasing reliance on borrowing.
Concerns about governance and accountability further complicate the debt debate.
Peninah Nayiga, a Uganda Debt Network research fellow, highlights how procurement inefficiencies and weak project management increase the cost of debt-funded projects.
She notes that infrastructure projects frequently exceed their original budgets, sometimes costing double the initial estimates by completion, which she blames on delays in project execution and weak procurement discipline.
She warns that this cycle creates long-term pressure on public finances, limiting government’s ability to finance new priorities while increasing dependence on debt.
Thus, debt is no longer merely a fiscal instrument. It has become a complex system shaped by global financial inequalities, domestic implementation challenges, and governance weaknesses.
The debate is therefore not simply about reducing borrowing. Rather, it is about rethinking how debt is priced, negotiated, managed, and justified.