When Uganda’s capital city floods, it is often framed as a natural disaster. The skies open up in fury, the drains overflow, and Kampala drowns under its own chaos.
But the truth, stark and uncomfortable, is that our floods are man-made.
They are not the wrath of the heavens; they are the consequence of greed, negligence, and broken governance.
And at the centre of it all stand institutions we once believed were different, Uganda’s banks.
As political will falters and environmental enforcement collapses under the weight of corruption and patronage, banks have become crucial. They are the last institutions still capable of enforcing discipline in Uganda’s economic system.
Their lending decisions shape our landscapes as surely as bulldozers do. Their financing choices determine whether wetlands live or die.
Yet, as we count the costs of unprecedented flooding in Acholi Quarters, Nakivubo, and Kinawataka, banks are not innocent bystanders.
They are often financiers of destruction. Meanwhile, they market themselves as champions of “green finance” and ESG (Environmental, Social, and Governance) responsibility.
Kampala’s floods are a mirror, not an accident
The recent flooding of Nakivubo Channel and its surrounding areas has been described as a tragedy waiting to happen.
Entire sections of the drainage corridor have been paved, built over, or narrowed. Malls, factories, and residential complexes have emerged that should never have been approved or financed.
According to the National Environment Management Authority (NEMA) 2024 State of the Environment Report, Uganda faces challenges.
Industrialisation and urban real estate remain the largest sources of pollution and wetland encroachment. Over 40% of Kampala’s wetlands were lost between 1999 and 2023.
The report explicitly names manufacturing, construction, and waste management as the leading sources of urban environmental degradation.
These sectors are precisely the ones fueling Kampala’s transformation into a concrete bowl. They are also among the top five recipients of commercial bank credit, according to the Bank of Uganda State of the Economy Report (September 2025).
Trade and real estate alone absorb over one-third of all commercial bank lending. Manufacturing and construction together account for another 25%.
In contrast, agriculture employs 65% of Ugandans and sustains national food security. Yet, it receives just 10–11% of total bank lending.
The same economy that has financed warehouses and malls atop wetlands has starved sectors. These are the sectors that protect the land and feed people.
The result? The city floods, rivers choke, and the very ground beneath us is vanishing.
Nakivubo’s crisis is simply the most visible face of a nationwide malaise, one bank-financed project at a time.
The ESG mirage: Uganda’s banks speak green but lend grey
In glossy sustainability reports and social media campaigns, Uganda’s banks are fluent in the language of ESG.
They sponsor clean-up campaigns, plant trees, and publish annual sustainability statements.
But ESG, in its true sense, is not about public relations.
It is about embedding environmental and social accountability into core decision-making, especially credit allocation.
According to the Uganda Bankers’ Association (UBA) ESG Framework (January 2024), all commercial banks have new requirements. They must integrate ESG considerations into lending decisions, particularly in “high-risk sectors” such as real estate, manufacturing, and energy.
The framework calls for environmental and social impact assessments (ESIAs) to be conducted, verified, and monitored for all major projects.
Yet, the gap between principle and practice remains vast.
While the framework is commendable, enforcement is weak, particularly in smaller banks and locally owned financial institutions.
In several cases, ESIAs have been manipulated, procured through collusion, or falsified entirely.
Recent investigative audits by NEMA and Parliament’s Committee on Natural Resources have shown.
The result is ESG fraud, a phenomenon PwC Uganda described in a 2023 press release. It is titled “The Rise of ESG Fraud,” and considered one of the most dangerous emerging economic crimes in East Africa.
PwC defines ESG fraud as “the intentional misrepresentation of environmental and social performance by organisations. This misrepresentation is done to secure financing, regulatory approvals, or reputational gain.”
Uganda’s experience is a textbook case. Projects are built on wetlands but certified as “environmentally compliant.” Companies receive green financing for sustainable manufacturing while dumping effluent into rivers. Developers obtain carbon credits for reforestation while clearing natural forests elsewhere.
Such deception is not only an environmental crime, it is financial malpractice. It undermines the credibility of the entire banking sector’s ESG commitments.
Financing the floods: The cost of complicity
Keeping Agents Open for Business: Inside the dfcu Weekend Agent Float Loan.The uncomfortable truth is that banks are not merely passive conduits of capital. They are gatekeepers, and gatekeepers who fail to guard become accomplices.
Consider the scale of financial exposure: as of mid-2025, Uganda’s banking sector had issued over UGX 25 trillion in private-sector credit.
Nearly 50% of it was directed to urban-based projects concentrated in Kampala, Wakiso, Mukono, and Jinja.
Within these corridors lie the Nakivubo, Lubigi, Kinawataka, and Nsooba wetlands. NEMA has repeatedly identified these wetlands as critical drainage systems under severe threat.
Satellite data from a NEMA 2024 report shows significant changes. Kampala lost 15% of its remaining wetland cover between 2018 and 2023 alone. This was largely due to construction of industrial facilities, shopping malls, and housing estates.
Over 60% of these developments were financed through commercial bank loans or developer-backed mortgages.
This pattern has consequences. Between 2019 and 2024, the frequency of urban flooding in Kampala increased by more than 200%. This is according to data compiled by the Uganda Meteorological Authority (UMA) and Kampala Capital City Authority (KCCA).
What used to be a once-a-year phenomenon is now a monthly crisis.
Each rainfall season leaves new casualties, property damage, and uninsurable losses.
Yet, the very banks funding these projects continue to position themselves as ESG leaders, touting green bonds and sustainability-linked loans.
It is the perfect paradox: the financiers of environmental destruction branding themselves as its saviours.
The political vacuum and the rise of financial responsibility
Uganda’s environmental governance framework has become a casualty of political patronage.
The NEMA Act, which once empowered the agency to halt illegal projects, now faces issues. It is undermined by executive overrides, selective enforcement, and what insiders bluntly describe as “environmental capture.”
Developers with political connections routinely bypass due process, and enforcement officers fear retaliation.
In this vacuum, banks are the last remaining institutions with a critical role. They have both the financial leverage and the fiduciary obligation to demand accountability.
Internationally, this principle is not new. Under the Equator Principles and IFC Performance Standards, global banks are required to conduct environmental and social due diligence before financing large projects.
Many of Uganda’s leading banks, including Stanbic, Absa, Citi, and Standard Chartered, are signatories to these frameworks.
Yet domestically, compliance is often voluntary and unmonitored.
A 2024 UBA review found that only eight of 25 banks conducted environmental audits before approving large construction loans.
Most relied on documentation provided by developers, often the same developers who are violating environmental laws.
This laissez-faire attitude cannot continue. If the government will not enforce environmental law, the banks must.
They have the power to choke off financing to destructive projects before a single brick is laid.
What banks must do now
The floods of Nakivubo and the chaos around the Hamis Kiggundu redevelopment saga should be a wake-up call. Not just to regulators but to lenders.
Uganda’s banks must reclaim moral authority. They need to prove that ESG is not a marketing slogan but a line in the sand.
Here is what genuine responsibility looks like:
- Mandatory environmental audits before lending: No project that involves land reclamation, wetland drainage, or industrial discharge should receive financing. This must be without an independently verified Environmental and Social Impact Assessment.
- Post-financing ESG monitoring: Banks must treat ESG like financial covenants, monitor them quarterly, and enforce them rigorously. If a borrower violates environmental commitments, credit should be suspended or called in.
- Disclosure and transparency: Banks should publicly disclose which sectors and projects they finance under ESG criteria. The UBA framework provides a template. It must now be enforced as an annual, audited disclosure.
- Whistleblower protection and internal accountability: ESG officers within banks must be protected from executive pressure. In too many cases, sustainability departments have been relegated to corporate PR units.
- Refuse to fund wetland-based projects: This should be absolute. No exceptions, no political pressure, no short-term profit justification.
Our last hope
Uganda cannot afford another decade of reckless construction and environmental deceit.
The floods that submerged Nakivubo are not isolated incidents; they are symptoms of systemic rot. Weak governance, corporate hypocrisy, and moral indifference are the issues.
But even now, not all hope is lost. The banking sector still has credibility, capacity, and influence.
If banks enforce ESG compliance as strictly as they enforce loan repayment, Uganda can change. The country could reverse its environmental trajectory within a decade.
The question is whether they will act, not as financiers of short-term profit, but as custodians of long-term survival.
Because if banks too look away, then truly, there will be no line of defence left.
