The World Bank has ended its two-year freeze on new loans to Uganda, marking a significant shift in its stance following the country’s controversial Anti-Homosexuality Act. The decision comes as a major relief for Uganda, which has faced increasing financial isolation since the law was passed in 2023. The Bank had initially suspended funding, arguing that its programs could unintentionally support discrimination under the new legislation. However, after months of negotiations, the institution now says it is satisfied with measures put in place to protect vulnerable groups.

The World Bank announced on Thursday that it had approved new funding for Uganda, focusing on education, social protection, and refugee support. A spokesperson for the Bank stated that its mission to reduce poverty and promote shared prosperity cannot be achieved unless all people, including marginalized groups, benefit from its projects. The decision to resume lending follows discussions with the Ugandan government and other stakeholders to ensure future programs do not exclude or harm LGBTQ individuals.

For Uganda, the return of World Bank funding is a crucial lifeline. The country has struggled with budget shortfalls after the United States suspended significant aid, including programs under the President’s Emergency Plan for AIDS Relief (Pepfar) and other USAID-backed initiatives. The Finance Ministry reported a sharp decline in donor support for the 2024/25 fiscal year, putting pressure on essential services. As one of Uganda’s largest multilateral lenders, the World Bank’s renewed involvement will help ease some of these financial strains.

Despite the Bank’s decision, the broader aid landscape for Uganda remains uncertain. Since the Anti-Homosexuality Act was signed into law, Western nations have imposed sanctions, cut funding, and increased scrutiny of partnerships with the country. President Yoweri Museveni has remained defiant, dismissing criticism as foreign interference. In a meeting with World Bank officials during the funding freeze, he accused the institution of trying to impose foreign values on Uganda.

“It is unfortunate that the World Bank and others dare to coerce us into abandoning our faith, culture, and sovereignty using money,” Museveni said. “We don’t need pressure from anybody to solve our society’s problems.” He defended the anti-gay law as necessary to prevent the LGBTQ community from “recruiting” others, describing homosexuality as a “psychological disorientation.” While he claimed the law does not target those who keep their sexuality private, it includes severe penalties, including the death sentence for aggravated homosexuality.

Museveni’s stance has been echoed by other Ugandan leaders, including Speaker of Parliament Anita Among, a vocal supporter of the law. Last month, the United Kingdom sanctioned Among over corruption allegations tied to a relief program. She dismissed the sanctions as politically motivated, linking them to her backing of the Anti-Homosexuality Act. “This is because I stood firm to protect our culture and values,” she told Parliament. She has repeatedly accused Western nations of trying to undermine Uganda’s sovereignty by pushing LGBTQ rights.

The financial consequences of the law have been significant. A report by Open for Business estimated that Uganda lost between $470 million and $1.7 billion in investment, tourism, and aid within the first year of the law’s enactment. The U.S. and European Union have also tightened oversight of development projects and civil society funding in Uganda. Information Minister Chris Baryomunsi, however, defended the law, calling the World Bank’s initial suspension unnecessary. “The Anti-Homosexuality Act reflects the will of our people and preserves our cultural values,” he said. “It is not discriminatory.”

The World Bank’s decision to resume lending suggests a balancing act between its commitment to inclusion and the practical need to support development in politically complex environments. Uganda now joins other African nations, including Ghana, Nigeria, and Kenya, where anti-LGBTQ laws have created tensions with international donors. The debate over where development assistance ends and cultural values begin continues to shape relations between African governments and foreign institutions.

For now, Uganda’s government sees the World Bank’s reversal as a victory. But with Western nations maintaining sanctions and aid restrictions, the long-term economic impact of the Anti-Homosexuality Act remains uncertain. As the country navigates these challenges, the World Bank’s return may offer some stability but the broader clash of values between Uganda and its critics is far from over.