The African Development Bank (AfDB) has suspended funding to the Kampala Capital City Authority (KCCA) due to its failure to comply with environmental and social safeguards, following discussions with KCCA management urging immediate action.
This decision, announced in a letter dated December 2023 to Permanent Secretary and Secretary to the Treasury, Ramathan Ggoobi, highlighted KCCA’s failure to implement agreed-upon remedial activities, leading to the bank’s assessment of the project’s performance as “unsatisfactory.”
The letter, authored by AfDB Country Manager Augustine Mpehe Ngafua, pointed out that an environmental expert assigned to the project had left at the beginning of August 2023, after which the project continued without a replacement environmental specialist.
This critical gap in environmental oversight contravened key project requirements.
In addition, KCCA was reported to have acquired rights of way through consent agreements with affected persons, but these agreements were found to lack full disclosure, raising concerns about the transparency and fairness of the process.
Moreover, KCCA’s acquisition of the Right of Way occurred without an approved Resettlement Action Plan (RAP) from the Chief Valuer, violating Uganda’s statutory requirements.
At the project’s inception, the government had committed to providing 41 billion shillings towards compensation and resettlement.
However, by the time the AfDB suspended the project, these funds had not yet been released, further compounding the project’s compliance issues.
The African Development Bank’s decision to suspend funding signals a major setback for KCCA and underscores the importance of adhering to environmental and social safeguards in development projects.
The suspension may lead to delays in ongoing projects and necessitates immediate corrective action to restore funding.
KCCA management is yet to respond to the AfDB’s decision, but the Authority faces significant challenges in addressing these compliance issues.
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