Uganda’s ambition to industrialize and achieve universal access to energy hinges not just on political will but on financing. Major energy infrastructure projects, from hydropower dams and solar parks to transmission networks, require billions of dollars, often beyond the capacity of any single local lender. Syndicate lending, a mechanism where multiple banks pool resources to finance large-scale projects, presents a practical solution.
This model spreads risk across financial institutions, makes high-value projects bankable, and attracts international participation key to unlocking the capital Uganda needs to meet its energy development goals.
EACOP: SYNDICATE LENDING IN ACTION
A prime example of this financing model is the East African Crude Oil Pipeline (EACOP), valued at over $5 billion. In early 2025, a consortium of regional and international banks successfully closed the first tranche of funding through a syndicated loan structure. By distributing the risk and pooling financial strength, this syndicate made possible a project that would otherwise be unmanageable for any one bank.
Local and international legal advisors, including Ugandan firm ABMAK Associates, were instrumental in structuring the transaction and ensuring regulatory compliance. The deal was not just a financial milestone; it was a legal and institutional test that Uganda passed, though not without revealing underlying structural challenges.
WHY SYNDICATE LENDING MATTERS
With national electricity access still below 60% and rural access even lower, Uganda must attract massive investment to close its energy gap. Yet individual local banks often lack the capacity, and international lenders hesitate due to perceived risks. Syndicate lending helps solve this by:
- Pooling resources from multiple financiers;
- Spreading risk to make projects safer for all parties;
- Bringing in global expertise through cross-border partnerships;
• Offering more favorable terms through competition and shared liability. LEGAL UNCERTAINTY: A barrier to scaling syndicated finance
While syndicated lending is gaining traction in Uganda, it lacks direct mention in key statutes such as the Financial Institutions Act, Cap 57, and the Contracts Act, Cap 284. Although the Financial Institutions Act defines “merchant banking” to include participation in syndicated loans, the absence of a comprehensive legal framework leaves critical gaps, particularly around agent roles, collateral enforcement, and inter-creditor arrangements. This issue is not unique to Uganda; in Ghana, for instance, syndicated lending is supported indirectly through the Contracts Act, Borrowers and Lenders Act, and the Financial Institutions Act, without an explicit statute. Similarly, Tanzania relies on English common law principles and its Law of Contract Act to recognize agency roles in syndicates, though it lacks formal legislation. Uganda’s reliance on general contract and banking law combined with recent court decisions affirming the legality of syndicated loans offers some comfort. However, the legal ambiguity continues to pose risks for both lenders and borrowers. Introducing clear statutory provisions, either by amending existing laws or drafting a Syndicated Lending Act, would provide much-needed certainty and align Uganda with evolving financial practice in the region.
THE COURTS HAVE SPOKEN, BUT IS IT ENOUGH?
In 2023, Uganda’s Supreme Court confirmed the legality of syndicated lending in Ham Enterprises Ltd v DTB Uganda, ruling that foreign banks can lend through local institutions without violating the Financial Institutions Act. Another important judgment in 2025 is Simbamanyo Estates v Equity Bank, where the court reaffirmed the legitimacy of agent and trustee structures in cross-border syndicated loans.
While these rulings are a step in the right direction, they are based on judicial interpretation rather than explicit law. That distinction matters: for large international syndicates to participate confidently, they need legislative clarity, not just court precedent.
LOOKING ABROAD: What Uganda can learn from Russia!!
Globally, very few countries have enacted explicit legislation governing syndicated lending. However, Russia stands out as one of the rare jurisdictions that has taken a deliberate legal approach to regulating syndicated finance. Rather than leaving it to contract law or banking
regulations alone, Russia enacted a dedicated law that comprehensively governs the formation, structure, and enforcement of syndicated lending arrangements.
BENCHMARKING RUSSIA: A legislative model for Uganda
If Uganda were to benchmark countries that have taken deliberate steps to regulate syndicated lending through legislation, Russia provides a strong example. In 2018, Russia enacted FEDERAL LAW No. 486-FZ “ON SYNDICATED LENDING,” one of the few dedicated laws in the world governing such financing structures. The law clearly defines the roles of key players in a syndicated loan, such as the loan manager, collateral agent, and participating lenders.
It regulates how these parties relate to each other and to the borrower. It also addresses issues that often cause uncertainty in Uganda, such as inter-lender agreements, enforcement of collateral, agent responsibilities, and claim prioritization in the event of default. By embedding these elements in statute, Russia created a more transparent and legally secure environment for syndicated transactions, helping to attract both domestic and international financiers for large infrastructure projects.
For Uganda, this model offers a legislative benchmark. A similarly tailored law, either as a standalone Syndicated Lending Act or integrated through amendments to existing banking and contract statutes, would significantly enhance legal certainty and unlock long-term financing for the country’s energy and infrastructure sectors.
RECOMMENDATIONS FOR REFORM
To strengthen Uganda’s position as a regional hub for infrastructure finance, policymakers should consider:
- Amending the Financial Institutions Act to explicitly define and regulate syndicated lending;
- Clarifying the rights and duties of agents, arrangers and syndicated lenders;
- Reforming collateral laws to ensure predictable enforcement among multiple creditors;
- Establishing dispute resolution mechanisms, including arbitration for cross-border transactions;
• Streamlining tax and regulatory treatment of syndicate structures.
Conclusion
The successful financing of the EACOP pipeline demonstrates that syndicated lending is both viable and necessary for Uganda’s energy ambitions. But if Uganda is to replicate this model across other critical infrastructure projects, the country must move beyond case law and adopt robust legal frameworks.
By formalizing syndicate lending through legislation while learning from global examples like Russia, Uganda can position itself as a reliable destination for capital and innovation in energy finance. Such reforms are not just about law; they are about lighting up the country’s future.
