World Bank Postpones US$90m Loan to Uganda

The World Bank has postponed a US$90m loan to Uganda’s health system in response to the country’s punitive new laws targeted against gays.

The money was to have supplemented a 2010 health loan that focused on maternal health, newborn care and family planning.

“We have postponed the project for further review to ensure that the development objectives would not be adversely affected by the enactment of this new law,” World Bank spokesman David Theis said in an email.

The World Bank, a poverty alleviation institution based in Washington, usually refrains from any involvement in countries’ internal politics, or in issues such as gay rights to avoid antagonising any of its 188 member countries.

However, its president Jim Yong Kim, emailed to staff to say the bank opposes discrimination, and would protect the safety of all employees.

“In the coming months, we will have a broad discussion about discrimination with staff, management, and our board on these issues,” Kim said. “Now is the right moment for this conversation.”

Despite worldwide criticism, Ugandan president Yoweri Museveni signed an anti-gay bill earlier this week that intensifies already harsh laws against homosexuals by imposing a life sentence for certain actions and making it a crime to not report anyone who breaks the law.

The loan postponement follows an announcement by Norway, the Netherlands and Denmark that they would suspend donations to Uganda because of the law. Other donors have also threatened to follow suit, and the US -the World Bank’s biggest member – said it was reviewing ties.
  

“In the long run, foreign direct investment could be withdrawn, which will have a bigger impact than the donor aid,” said Jacques Nel, an economist at NKC Independent Economists in Paarl, South Africa. The law “creates increased risk that companies may no longer invest in the country or invest less.”

Western anger over the law has triggered a sharp fall in the Ugandan shilling (USh), leading the central bank to intervene for two days in a row. The country is Africa’s biggest exporter of coffee.

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