The World Bank has suspended a $90 million (£54m) loan for health services to Uganda over its passing of an anti-gay law that has drawn widespread international condemnation.
President Yoweri Museveni signed a bill on Monday, saying he wanted to deter western groups from promoting homosexuality in Africa.
The act calls for life in prison for those convicted of engaging in gay sex.
Officials insisted yesterday that the health project does not face an immediate shortage of money, allaying concerns that work to improve maternal and child health services could stall because of reaction to the discriminatory legislation.
The Ugandan government’s decision to strengthen anti-gay laws has upset its relationship with a range of partners in development.
At least three European countries are withholding millions in aid. The United States is warning of similar action, and the Ugandan shilling has been losing its value amid reports of substantial aid cuts.
The move by the World Bank to delay its loan to Uganda’s health ministry comes amid criticism of Mr Museveni’s anti-gay stance from the United Nations and human rights groups.
The $144m project focuses on maternal health, newborn care and family planning – public health areas whose grim figures have long attracted the attention of foreign donors.
At least 16 Ugandan women die in childbirth every day, a shocking statistic that made the project critical in a country that depends on donors for about 20 per cent of its budget.
Announcing the project in 2010, the World Bank noted that without “significant investments” Uganda was “unlikely to achieve the Millennium Development Goal targets related to reducing child mortality and improving maternal mortality.”
The project is set to close in 2015.
Sheila Gashishiri, a spokeswoman for the World Bank in Uganda, said yesterday that the project would continue despite the postponement.
Mr Museveni, who enacted the law despite western pressure to veto it, may have anticipated the international backlash his government now faces.
Days before he signed the bill, he said he was ready to fight what he called “the homosexual lobby” and urged Uganda members of parliament with the ruling party to support him.
In signing the law, he said he wanted to stop the West from promoting homosexuality in Africa.
Critics say Mr Museveni, who has held power since 1986 and is up for re-election in 2016, may have calculated that the political benefits of enacting the bill outweighed any losses on the international front.
Homosexuality has been criminalised in many parts of Africa, where fundamentalist Christianity and Islam are influential.
Nigeria last month passed an anti-gay law. But the Ugandan law – an earlier version of which included the death penalty for some homosexual acts – has become notorious around the world for its severe punishment of gay sex. It sets a life term for those convicted of engaging in homosexual acts. It also creates the offences of “conspiracy to commit homosexuality” and “aiding and abetting homosexuality,” both of which are punishable by seven years in prison.
Those convicted of “promoting homosexuality” also face similar punishment.