Lending Institutions, Human Capital, and Health Care in Uganda

LendingInstitutions, Human Capital, and Health Care in Uganda

LendingInstitutions, Human Capital, and Health Care in Uganda

Mostof the developing countries rely on foreign aids and donations tofinance their long-term strategies and achieve the desired economicgrowth. Lending institutions are forced by circumstances to givetough conditions in order to ensure that loans and foreign aids areused in projects that benefit the majority of the population (Regan,2014). This paper will focus on the contribution of World Bank loansin the social, political and economic development. The paper willalso address the role of a healthy population in strengthening theUgandan economy, and the assessment of how the leadership of Ugandahas used foreign aids to enhance the health care system.

Thecontribution of World Bank’s lending to social, economic, andpolitical development

TheWorld Bank has influenced the social development in Uganda trough thedirect effect of its finances and indirectly through the effect ofthe terms and conditions given to the country before it receives theloans. For example, the World Bank have been financing the healthprograms in Uganda that are intended to prevent and treat sexuallytransmitted diseases, with a special focus on the LGBT groups (Regan,2014). One of the conditions given by the World Bank for the loansgiven to finance these health care projects is that the governmentmust avoid discriminating against persons on the basis of theirsocial characteristics, such as social orientation. For example, the2-14 Anti-Homosexuality Act passed by Ugandan Parliament resulted inthe postponement of a $ 90 million loan, until the government couldconvince the world bank that the health care system and the societycould not discriminate against members of the LGBT groups (Regan,2014). This has promoted equality in the Ugandan society, which is apositive aspect of social development.

TheWorld Bank promotes the development of the political system of Ugandaby financing civic education on the need as well as the benefits ofgood governance and making good governance as one of the keyconditions for getting loans. For example, the World Bank Groupdeveloped a corruption monitoring tool in 2013, which helps the bankdetect incidents of corruption on the World Bank’s financedprojects (the World Bank Group (2015). This has created a platformfor political reforms and good governance.

TheWorld Bank has contributed towards economic development in Uganda byfinancing poverty reduction projects. For example, the World BankGroup loaned the Ugandan government a total of $ 81.9 million in 2012to improve the agricultural infrastructure (IFAD, 2013). Theobjective of this loan was to empower the poor local people to fightpoverty through agricultural projects and small entrepreneurshipprojects.

Healthypopulation and the strength of the national economy

Agood health has contributed towards the growth of Uganda’s economyin four different ways. First, the good health of the workforce isdirectly correlated with the overall labor productivity. According toUganda’s Ministry of Health (Uganda Ministry of Health, 2009)improving the health of the population increases economicproductivity by reducing absenteeism of employees and their rampantdualism. However, an effective health program focused, not just onthe physical capability of the workforce, but also on their reasoningability and cognitive functioning of employees.

Secondly,better population health improves the impetus and the ability to saveand invest. One of the key factors that have sustained a continuousGDP growth in Uganda is a healthy population, which has contributedtowards the accumulation of capital and investment (Uganda Ministryof Health, 2009). In addition, good health increases the lifespan ofUgandans, which in turn elicits a greater savings and investment.This implies that the heavy investment made by the government ofUganda towards the health care programs has played a role towards theincrease in savings and investment.

Third,a better population health determines attendance to school, which inturns promotes the effectiveness of the education system in producingcompetent graduates. Healthy teachers and students are able to attendschool as required (Uganda Ministry of Health, 2009). In addition, alonger and prospective lifespan increases the parents’ incentive toinvest in the education of their children, which improves the qualityof the workforce as well as the nation’s economic growth.

Forth,a better health system improves the nation’s demography in severalways. For example, a good population health reduce child mortality,which means parents do not have to use trial and error to ensure thatat least some children survive (Ogbobine, 2012). This has helped manyfamilies to go for family sizes that they can manage. A suitablefamily size does not tax the mother’s health, increases the percapital income, and enhances the demographic dividend.

Theuse of foreign aid to enhance the health care system

Althoughthe government of Uganda has been using local funds to finance healthcare projects, studies have shown that close to a quarter of allresources used to improve the health care system come from donors.According to Kontargyris (2010) the government of Uganda contributedabout 71.3 % and foreign donors contributed about 28.7 % of thenation’s health strategic plan in the financial year 2008/2009.Other trends indicated that foreign donations have been increasing by51 % per annum while local funds intended for health care improvementprojects have been increasing by 44 % (Kontargyris, 2010). Some ofthe key aspects of health that the government of Uganda has beenfinancing using the foreign aids include the prevention as well astreatment of sexually transmitted diseases, health issues affectingwomen, and children. These funds come from different agencies (suchas the IMF and the World Bank) and countries, including the U.S.,Germany, and the UK among others.


Foreignaid has played a major role in the social, political, and economicdevelopment in Uganda. Some of these developments (including equalityin the Ugandan society and good governance) are achieved as a resultof pressure from donors and lenders. In addition, appropriate use offoreign aids has enabled the government of Uganda to improve thehealth of its population, which has in turn contributed towardseconomic development.


IFAD(2013). Enablingpoor rural people to overcome poverty in Uganda.Rome: IFAD.

Kontargyris,J. (2010). HealthSpending In Uganda the Impact of Current Aid Structures and AidEffectiveness.Berlin: German Foundation for World Population.

Ogbobine,R. (2012). Therole of health in economic growth and development.Lagos: University of Lagos.

Regan,T. (2014). Uganda’s Anti-homosexual Act 2014: A perspective on thedevelopmental consequences. HumanRights Law Review,8 (2).

TheWorld Bank Group (2015). Use of AGIs to track corruption trends inUganda. TheWorld Bank Group.Retrieved August 24, 2015, fromhttp://web.worldbank.org/WBSITE/EXTERNAL/TOPICS/EXTPUBLICSECTORANDGOVERNANCE/0,,contentMDK:22999348~pagePK:148956~piPK:216618~theSitePK:286305,00.html

UgandaMinistry of Health (2009). National&nbsphealth&nbsppolicy:reducing poverty through&nbsppromoting&nbsppeople’s&nbsphealth.Kampala: Uganda Ministry of Health. &nbsp