Syda Bbumba, Uganda's finance minister

27 July 2010 - The Ministry of Energy is to start implementation of a new rural electrification project in March 2011, officials have said.

This follows the signing of a US$10million loan agreement between the government and the Arab Bank for Economic Development in Africa (BADEA) in Kampala last week.

"Most of our investors have not been going to the rural areas because electricity is not available in the villages. Rural electrification will now help in industrialization of rural areas, reduce on rural-urban migration and create jobs," noted Syda Bbumba, Uganda's finance minister during the signing ceremony.

"The spillover effect of such connection will also see support to other socio economic activities like health centres and rural schools," Bbumba noted. The minister said 112 villages are expected to benefit from the eight selected districts.

The project will cost $24.6million and is anticipated to take 10 years to complete, will be implemented in eight areas in Uganda in the districts of Kapchorwa, Mayuge, Kamuli in eastern Uganda, Lake Victoria Free Trade Zone in Masaka, Kitgum, Mityana in central Uganda, Hoima, Kibale in western Uganda.

Of the $24.6million, Arab Bank for Economic Development in Africa will contribute $10million; the Saudi Fund will contribute $11million while the rest will be met by the government of Uganda.

Mr Fred Kabagambe Kaliisa, the Permanent Secretary Ministry of Energy and Mineral Development, said currently rural electrification in Uganda is 7%. "Over 5,000 customers will be connected and this will represent a 2.5% increment. With the completion of the project this will bring the percentage to 10," Kabagambe noted. The Director General of BADEA Mr Abdelaziz Khelef said the loan will be paid over a period of ten year at 1% interest rate.