Challenges of using government subvention approach in financing large scale development projects in Uganda: a case of Kira motors corporation (KMC)

Abstract

The study aims to examine the challenges of using government subvention approach in financing large development projects in Uganda while using a case of Kira Motors Corporation project. Specifically, to examine the effectiveness of government subvention approach in financing large scale government projects in Uganda; to assess the challenges faced in using government subvention approach in financing large scale government projects in Uganda and to propose an appropriate financing model for large scale development projects in Uganda. The study used the stratified random sampling from a total population of 88 KMC project officials, KMC board members and MoSTI staff and used the SPSS (Statistical Package for Social Scientist) to analyze the results. The study findings indicated that government subvention approach has been largely ineffective in financing KMC project. This has been associated with several challenges including late approval of government grants; limited funding; corruption tendencies; political interferences; inadequate technology, expertise and capacity due to limited financing; unfavorable regulatory framework and attracting several public oppositions. To deal with the above, it has been established that an appropriate financing model for KMC project needs to entail private public partnership, revenue-based financing, concessional financing and hybrid financing. This thus recommends that lobbying needs to be done to ensure that required and significant budget is apportioned for innovative projects. It is further recommended that efficient allocation of resources needs to be done. Thirdly, there is a need to involve all stakeholders in the project implementation, monitoring and evaluation. Lastly, there is a need to adopt a more appropriate financing model which promotes community engagement, risk sharing, reducing taxpayer’s burden, enhancing rewards on the side of employees, enables capacity building, and technological development.