Parliament approves €169 million loan for solar irrigation expansion to boost coffee production

Parliament has approved a government proposal to borrow up to €168.98 million from the United Kingdom Export Finance (UKEF) and Citi Bank to finance Phase II of the Solar Powered Irrigation System Project, a major agricultural investment aimed at increasing coffee production and strengthening climate resilience across Uganda.

The financing will support the development of 427 solar-powered irrigation systems in 126 districts, expanding access to reliable water for agricultural production and helping farmers mitigate the effects of increasingly unpredictable weather patterns.

Presenting the proposal before Parliament, Finance Minister Henry Musasizi said the project is designed to enhance rural incomes by increasing agricultural productivity through irrigation, with a particular focus on Uganda’s coffee sector.

“The goal of this project is to contribute to increased yields of coffee production through the provision of water for irrigation in 126 districts,” Musasizi told legislators.

The approval comes as Uganda intensifies efforts to grow coffee exports and achieve its target of earning billions of dollars from the sector, which remains one of the country’s leading foreign exchange earners.
Building on Success of Phase I.

Government officials justified the new borrowing by pointing to the achievements of Phase I of the project, which has already delivered substantial benefits to farming communities across the country.

According to Musasizi, the first phase has achieved more than 99 percent physical completion, with 434 irrigation systems installed and operational.

The minister said the project has generated measurable economic benefits by improving water availability and agricultural productivity in participating communities.

“Collectively, these initiatives have enhanced water security and productivity for 206,465 households and a total population of 908,447 across Uganda,” he said.

The success of the first phase has strengthened the government’s confidence that expanding irrigation infrastructure can play a critical role in supporting agricultural transformation and food security.

Climate Change Driving Irrigation Demand

The approval of Phase II reflects growing concern about the impact of climate change on Uganda’s agriculture-dependent economy.
Musasizi noted that prolonged dry spells and declining water availability continue to affect agricultural production, exposing farmers to significant losses and threatening rural livelihoods.

“The effects of climate change are continuing to escalate and the available water resources for agricultural production are constantly decreasing,” he said.

Agriculture employs the majority of Uganda’s population and contributes significantly to export earnings, making climate adaptation investments increasingly important for economic stability.

Experts argue that irrigation infrastructure is becoming a necessity rather than a luxury as rainfall patterns become more erratic and drought conditions more frequent.

By providing farmers with reliable access to water throughout the year, the project is expected to reduce vulnerability to weather shocks and improve crop yields.

Boosting Coffee Sector Competitiveness

A key objective of the project is to support Uganda’s rapidly growing coffee industry.
Coffee remains Uganda’s top agricultural export and a cornerstone of rural livelihoods, with millions of households depending directly or indirectly on the crop for income.

The new irrigation systems are expected to improve productivity by ensuring that coffee farmers can maintain production even during extended dry periods.

Improved irrigation could also enhance the quality and consistency of coffee output, strengthening Uganda’s competitiveness in international markets.

The project aligns with the government’s broader strategy of increasing agricultural value addition and export earnings while raising household incomes.

Direct Benefits for Rural Communities
Government estimates indicate that Phase II will directly benefit approximately 2,562 households, representing around 11,785 individuals.

Beyond the immediate beneficiaries, officials expect broader economic spillover effects through increased agricultural production, job creation and enhanced market activity in rural areas.

The project will leverage existing agricultural extension structures at district, sub-county and parish levels to support implementation and farmer training.

According to the Ministry of Finance, the initiative will be implemented in collaboration with the Ministry of Agriculture, Animal Industry and Fisheries (MAAIF), utilizing existing extension programmes and the ministry’s Coffee Department.

This approach is expected to improve project sustainability by ensuring farmers receive technical support on irrigation management, coffee production and climate-smart agricultural practices.

Strategic Investment in Agricultural Transformation

The approval of the €168.98 million facility highlights government’s continued commitment to investing in agricultural infrastructure as a catalyst for economic growth and rural development.

As Uganda seeks to transform its agricultural sector from subsistence-based production to commercially oriented farming, irrigation is increasingly viewed as a critical enabler of productivity and resilience.

With climate change posing growing challenges to food production and rural incomes, policymakers see investments in water management infrastructure as essential to safeguarding future agricultural growth.

If successfully implemented, the second phase of the Solar Powered Irrigation System Project could further strengthen Uganda’s position as a leading coffee producer while helping thousands of farming households adapt to changing climatic conditions and improve their economic prospects.