By Spy Uganda Investigations Desk

The World Bank is on the verge of canceling funding worth over UGX 500 billion for the Uganda Digital Acceleration Project (UDAP-GovNet, P171305) following the Government’s unilateral decision to sign another contract for the same project with a 3rd party, without the Bank’s involvement. The move, the Bank argues, jeopardizes prior agreements and undermines key principles of financing.

World Bank’s Objections

In a letter dated February 6, 2025, addressed to Finance Ministry PS Ramathan Ggoobi, which your mighty Spy Uganda has intercepted, World Bank Country Manager R. Mukami Kariuki expressed ‘serious concerns’ over the Government’s decision to shift the operations and management of key digital infrastructure—including the National Backbone Infrastructure (NBI)—to Uganda Telecommunications Corporation Limited (UTCL) in partnership with a private firm, Rowad Capital Commercial (RCC).

The Bank warned that this move violates the terms of its Financing Agreement, particularly the principle that Government funds should not displace private investment in commercially viable areas. The letter further highlights that:

1. The NBI was originally designed to be publicly owned but operated through a competitively selected private firm to ensure fair pricing, efficiency, and open access for all internet service providers (ISPs).
2. The agreement with UTCL and RCC lacks transparency and may introduce monopolistic control, increased service costs, and lower quality for end users.
3. UTCL’s role in project implementation, which was never part of the original agreement, puts Uganda at risk of breaching its obligations under the World Bank’s Financing Agreement.
4. The World Bank was never consulted about this new arrangement, raising accountability concerns.

The Bank has now demanded urgent clarification on:

• The legal agreements governing the UTCL-RCC partnership.
• The selection criteria for RCC and why it was not subjected to a competitive process.
• Assurance that digital assets financed by the Bank remain in Government control.

Failure to address these concerns could lead to the World Bank withdrawing its funding and potentially reallocating the resources elsewhere.

Museveni’s Controversial Directive

Insiders reveal that H.E President Museveni strongly backed the new contractor being fronted by his blue-eyed boy, Moses Kantu commonly known by his peers as Uncle Mo, believing they would fast-track digital infrastructure expansion. A leaked letter from the President shows that he ordered the line Minister Dr Chris Baryomunsi, in a strongly worded letter, to sign the contract within three weeks or face consequences.

However, critics argue that the selected firm lacks the necessary financial muscle, relying solely on presidential backing without injecting any capital.

This development echoes past controversies surrounding government contracts, where politically connected firms receive lucrative deals with minimal scrutiny.

UTCL’s Troubled History

The decision to entrust UTCL with the NBI comes amid a history of leadership turmoil at the company. Over the years, UTCL has been plagued by governance issues, financial mismanagement, and corruption scandals. Libya had previously injected in billions of dollars,but still it failed to take off as expected, and left with alot frustrations.

• Minister Evelyn Anite’s Confrontation: The recent past saw heated conflicts involving Minister Evelyn Anite, who clashed with officials over investor selection at UTCL. At the time, she accused certain individuals of sidelining qualified investors in favor of politically connected firms.
• Recurrent Leadership Wrangles: UTCL has frequently been embroiled in power struggles, often at the expense of service delivery and efficiency. Several high-profile executives have been dismissed over allegations of corruption, mismanagement, and failure to attract credible investors.
• Investor Uncertainty: Previous attempts to bring in international partners have been derailed by allegations of insider dealings, raising doubts about Uganda’s commitment to fair business practices.

The World Bank’s threat to pull out of the UGX 500 billion project is a wake-up call on governance and transparency in Uganda’s digital transformation agenda. If the Government fails to provide the requested clarifications, Uganda risks losing a crucial project meant to expand digital connectivity across the country.

With a history of leadership struggles at UTCL and growing concerns over politically influenced contracts, the country stands at a crossroads—either uphold accountability and ensure inclusive digital development or risk derailing a project that could bridge the digital divide. Watch the space for Part 2…

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