World Bank Reverses Course, Lifts Loan Suspension on Uganda Despite Anti-LGBTQ+ Laws

World Bank Reverses Loan Ban on Uganda Despite Anti-LGBTQ+ Law

By GlobaNow.com Staff Writer

In a significant policy shift, the World Bank has announced it is lifting a two-year lending freeze on Uganda, despite the country’s controversial anti-LGBTQ+ legislation. The decision has sparked a renewed debate about the role of international financial institutions in promoting human rights versus driving development in countries with discriminatory laws.

A Controversial Law and Global Backlash

In 2023, Uganda passed one of the most draconian anti-homosexuality laws in the world. The legislation allows for the death penalty for individuals convicted of “aggravated homosexuality” and imposes a 20-year prison sentence for those found guilty of “promoting” homosexuality. The law triggered international outrage and led to widespread condemnation from human rights organizations, foreign governments, and multilateral institutions.

Shortly after the law came into force, the World Bank suspended all new lending to Uganda, citing concerns about potential discrimination and human rights violations. The institution emphasized that it could not fund projects in environments where all citizens could not safely benefit. The move was seen as a strong stand for LGBTQ+ rights and a signal to other nations considering similar laws.

Since the law’s enactment, human rights groups such as the Uganda-based Human Rights Awareness and Promotion Forum have reported a surge in evictions, arbitrary arrests, and violent assaults against LGBTQ+ individuals. Dozens have been forced into hiding, while others have fled the country entirely.

A Surprising U-Turn

Despite these ongoing concerns, the World Bank has now decided to resume funding in Uganda, stating that it has implemented “mitigation measures” to ensure that its projects do not harm or exclude LGBTQ+ individuals.

“The World Bank cannot deliver on its mission to end poverty and boost shared prosperity on a liveable planet unless all people can participate in, and benefit from, the projects we finance,” a spokesperson told AFP. The institution said it had worked closely with the Ugandan government and other stakeholders to design and test anti-discrimination safeguards that would be integrated into future funding programs.

These measures reportedly include the introduction of new oversight mechanisms and training for implementing partners. The Bank also confirmed it has approved funding for new programs focused on social protection, education, refugee support, and infrastructure—areas considered less prone to discriminatory misuse.

The global business news platform GlobaNow.com reached out to both the Ugandan government and the World Bank for further comment on the nature and enforcement of these mitigation measures, but has not yet received a response.

Financial Stakes for Uganda

The World Bank plays a critical role in Uganda’s economic development. As one of the country’s largest external financiers, it supports essential infrastructure such as roads, electricity access, education, and healthcare. The pause in lending that followed the 2023 law reportedly cost Uganda between $470 million and $1.7 billion in potential financing, according to estimates by the UK-based advocacy group Open for Business.

This funding freeze put pressure on the Ugandan government, though authorities have largely remained defiant. Uganda’s Information Minister, Chris Baryomunsi, told AFP on Thursday that the law does not target or discriminate against any individuals and defended the legislation as a reflection of Uganda’s traditional values.

“Homosexuality is allowed in private, but promoting it is where the law draws the line,” he said. Baryomunsi also dismissed the World Bank’s previous stance as “uncalled for,” though he welcomed its decision to restore financial cooperation.

A Divisive Decision

The World Bank’s change of heart has reignited debate among development experts and human rights advocates. Some see the return of lending as a betrayal of the LGBTQ+ community and a weakening of the Bank’s stance on human rights. Others argue that continued engagement is the only way to influence change from within.

“It’s a classic development dilemma,” said one Kampala-based political analyst. “Do you punish a population—most of whom are poor and have no say in national policy—for the actions of a political elite? Or do you keep funding essential services while quietly working behind the scenes to push for reform?”

Critics of the World Bank and International Monetary Fund (IMF) funding models have long argued that such institutions perpetuate economic dependency through stringent loan conditions and limited national agency. They point out that even without explicit discrimination, projects in countries with oppressive laws can still reinforce exclusion, whether intentionally or not.

Regional Trends

Uganda is not alone in its legislative crackdown on LGBTQ+ rights. Several other African nations—including Ghana, Nigeria, and Kenya—have recently introduced or debated similar laws. These developments reflect a growing regional trend toward conservative social values, often framed by politicians as a defense against “Western influence.”

According to Oryem Nyeko of Human Rights Watch, Uganda’s anti-gay legislation is as much about political distraction as it is about ideology. “It’s low-hanging fruit,” Nyeko told CBC in 2023. “It’s being framed as something foreign and threatening to people’s children, while diverting attention from real domestic challenges like unemployment, corruption, and political repression.”

This framing has made the law popular among some segments of Uganda’s population, which complicates efforts by international actors to apply pressure without appearing neocolonial or out of touch with local sentiment.

Human Rights Versus Development Goals

The World Bank’s decision highlights the tension between its twin goals: promoting development while upholding human rights. Can the Bank deliver on its poverty reduction mission without compromising its stated commitment to inclusion?

On the ground in Uganda, LGBTQ+ individuals remain skeptical. Many say that the climate of fear created by the 2023 law persists, regardless of international assurances or new funding conditions. Some worry that reintroducing funds without meaningful change could send the wrong message to lawmakers across the continent.

Still, others see a silver lining. “At the very least, the World Bank’s involvement brings visibility,” one Kampala-based activist told GlobaNow.com on condition of anonymity. “With the right pressure, maybe we can turn that visibility into protection.”

The Road Ahead

For now, the World Bank’s loans are flowing again, and Uganda’s development projects are back on track. Whether this new funding model can truly shield marginalized communities from harm remains to be seen. What is clear is that balancing economic support with human rights advocacy is an increasingly delicate act for global institutions.

As the world watches, Uganda may become the test case for how far development finance can go in holding governments accountable—without walking away altogether.

Read more global development news at GlobaNow.com

Conclusion

The World Bank’s decision to lift its loan ban on Uganda marks a controversial and complex turning point in the intersection of global development and human rights. While the return of funding may accelerate critical infrastructure and social programs, it also raises difficult questions about accountability, values, and the limits of influence in countries with repressive laws.

By choosing engagement over isolation, the Bank hopes that newly implemented safeguards will protect vulnerable communities without halting progress for the broader population. However, activists and analysts remain divided—some seeing this as a pragmatic path forward, others as a concession that may embolden anti-LGBTQ+ policies.

Ultimately, Uganda now sits at the crossroads of financial investment and human rights scrutiny. Whether this renewed partnership fosters positive change—or further entrenches discrimination—will depend on vigilance, transparency, and continued pressure from civil society and the global community.