AfDB Threatens to Suspend Funding for Kampala Roads

The African Development Bank Group (AfDB) has threatened to suspend disbursement of almost US$ 288m to Uganda meant for the rehabilitation of Kampala’s dilapidated road infrastructure system. 

The loan was effective July 2021.

However, the bank said Uganda has failed to provide counterpart funding and non-compliance to environmental and social safeguards. 

“In line with section VI of the General Conditions applicable to Loan, Guarantee, and Grant Agreements of the African Development Bank and the African Development Fund and, the Financing agreement between the Republic of Uganda and the AfDB, we regret to inform you that disbursement under the KCRRP will be suspended effective 1 February 2024 should the Executing Agency continue disregarding safeguards requirements under the project,” AfDB said in a letter dated December 17, 2023 to Treasury Secretary, Ramathan Ggoobi.

AfDB said it conducted transport sector supervision missions in April 2023 and November 2023 respectively, “during which a number of environmental and social safeguards issues were raised and duly discussed with the management of Kampala Capital City Authority (KCCA) for immediate action on the ongoing Bank funded Kampala City Roads Rehabilitation Project (KCRRP).”

The letter added: “During the recently concluded mission, the Bank found that none of the remedial activities earlier agreed upon had been undertaken. Hence, Bank’s assessment of KCRRP’s E&S (environmental and social) performance has been found to be unsatisfactory.”

The development is bad news for the people of Kampala struggling with traffic congestion and bad air quality.

The average speed of vehicles in the Greater Kampala Metropolitan Area is 25.9 km/h. 

Due to poorly planned road networks, and poor traffic management that result in traffic congestion, it is estimated that over 24,000 man-hours are lost in traffic jams each year.

Some of the causes of recurring traffic congestion are workplace reporting time expectations, school schedules, the increasing number of vehicles and residents and commuters in the cities as all key services are in Kampala, inadequate and poorly acclimatised infrastructure ranging from narrow roads, roads with potholes etc, inadequate traffic management resources such as traffic personnel and traffic lights especially at traffic junctions, non-existent regulated public transport system.

The AfDB loan is meant to enhance transport efficiency thereby enabling the City of Kampala to maximise agglomerative benefits of access and improved attractiveness resulting from reduced traffic congestion through upgrade and expansion of road network; and to improve air quality in the city through implementation of Scheduled Eco-Bus transit Services and broadening travel choices for non-vehicular movements within Kampala by expanding networks of walkways and cycling tracks.

The first component of the project is the construction of 69.70km of roads complete with associated drainage works including improvement to 22 traffic junctions, 123 km of Non-Motorised Transport facilities, commercial vehicles parking places, Bus depots, 30 public toilets, 6  markets along project roads for women vendors, installation of 1,600 energy efficient streetlights, and tree planting.

Other components include capacity building and the purchase of 50 Eco-buses and road maintenance equipment among others. 

AfDB cited the main areas of noncompliance identified that warrant suspension of disbursement in accordance with the Financing Agreement and the Bank’s integrated safeguards systems (ISS).

The bank said although the ESIA (Environment and Social Impact Assessment) for the project has been updated, the ESIA of the newly expanded scope has not been finalised. 

“This is a concern since contractors are already on site and works are ongoing and/or about to commence in breach of section 4.03 of the signed financing agreement,” said the Bank.

The Project Environmental Expert left the project at the beginning of August 2023 and the project has since been under implementation without an environmental specialist, according to AfDB.

Warning

Moreso, the lender said KCCA is acquiring the right-of-way (RoW through consent agreements signed with Project Affected Persons (PAPs) which lack full disclosure of the PAPs entitlement contrary to Bank’s policy on the same and that KCCA is continuing to acquire the RoW without a RAP that is approved by the Chief Government Valuer (CGV) which is contrary to in country statutory requirements on the same.

At project appraisal and approval in 2019, the Government had indicated in the RAP report availed to the Bank that it will avail up to Shs 41 billion towards compensation and resettlement. 

AfBD said these funds have not been availed since project commencement. 

During the recent AfDB supervision missions, KCCA confirmed that they will have to pay some PAPs yet there is no indication of availability of funds from the Government and timeframe for effecting the compensations.

AfDB has since appealed to the Government to cause the Executing Agency (KCCA) to remedy the wider risks under the project to avoid consequential disruption to project implementation and suspension of project disbursement activities.

“The suspension, once effected under the project, will not be lifted until all E&S non-compliance issues have been fully addressed.”