Stanbic’s East African economist Jibran Qureishi has said the delays as Uganda bids to borrow from China to finance the Standard Gauge Railway (SGR) could be a blessing in disguise. Uganda needs about sh8 trillion to construct the SGR from Malaba to Kampala.
The government of Uganda has been looking to Chinese government a to finance the multi-billion-dollar project through China Exim Bank. The Construction of the line should have been completed by June this year if finances were available.
Some have urged government to fats track the construction saying the railway will ease transportation of goods from Mombasa to Uganda.
But the regional economist for East Africa at Stanbic Bank, Jibran Qureshi says Uganda has a huge lesson to learn from Kenya’s Standard Gauge Railway projects.
He warns that if the region fails to take right decisions in infrastructure investment and borrowing, the hard working tax payers will definitely get affected over a long period of time.
Jibran says one should not get surprised in future when the governments increase taxes like Value Added Tax(VAT) and other consumption taxes. He said it only those taxes that they government will be able to repay the loans and debts.
He suggests that the ministry of finance in Uganda and e East Africa should consider employing experts to evaluate projects before they borrow.
Recently the World Bank refused to finance a railway project from Tanzania’s capital to Morogoro because the Bank’s evaluators did not see economic sense in spending over one billion dollars to connect the two cities.
Uganda has also borrowed from China and other sources to finance hydropower dams like Isimba and others. But Jibrani Qureishi like other economists have question such borrowings.
Uganda and the neighbouring countries have been beneficiaries of loans from China’s Belt and Road Initiative. Some have warned that the country has fallen into China’s “debt traps” because it has not carefully evaluated the projects for which it is borrowing.
Stanbic Bank Chief Executive Officer, Patrick Mwehiere agreed with other experts that the government needs to thoroughly evaluate the potential impacts of huge infrastructure projects before borrowing to finance their construction.
The two were speaking at Stanbic Bank’s Annual Economic Forum. The brought together experts and Stanbic Bank’s clients to discuss event that will shape 2019. Other speakers at the forum expressed optimism that 2019 will be a positive year for growth.