UDB launches SMEs equity fund
Awards. The UDB board chairman, Dr Samuel Sejjaaka (left) and the State Minister for Finance in-charge of General Duties, Dr Gabriel Ajedra (centre) and Dr Gudula Basaza from Orgapesticides (right) during the “I-Growth Accelerator Survey 2017” event in Kampala last week. PHOTO BY Rainher Ojon.
What you need to know:
- We are putting forward Shs6 billion out of our capital and we will invest it as equity in viable projects. This is not debt. We have skills in the game and will work with [qualifying] small and medium enterprises until we make profit,” Dr Samuel Sejjaaka, udb board chairman.
- Tasked Government has been advised to start up an interest free loan programme for selected enterprises in the agricultural sector.
Uganda Development Bank (UDB) has launched a Shs6 billion Small and Medium Enterprises (SMEs), Equity and Venture fund aimed at addressing challenges of affordable credit.
The UDB board chairman, Dr Samuel Sejjaaka, said the bank now wants to leverage part of its available credit alongside its expertise in ventures with formidable local SMEs over the mid-term. This, he said could also help the bank further reduce on its non-performing loans currently standing at 14 per cent.
He made the remarks at the end of the “I-Growth Accelerator Survey 2017” last week where eight SME projects in agriculture and manufacturing were awarded millions of shillings upon presenting highly innovative and bankable business ideas.
“We are putting forward Shs6 billion out of our capital and we will invest it as equity in viable projects. This is not debt. We have skills in the game and will work with [qualifying] small and medium enterprises until we make profit,” Dr Sejjaaka, announced.
Spreading risks
He added: “We shall also take some risks, by deploying Shs1 billion in venture capital as we spread our risks further. This will give these innovative SMEs capital to expand their businesses and grow jobs in the economy.”
UDB’s revelation comes on the heels of the I-Growth Accelerator Survey 2017, which indicates that limited innovations inclusive of technologies are contributing to Uganda’s large import-bill by way of machinery and equipment.
Dr Gabriel Ajedra, the State Minister for Finance in-charge of General Duties, said: “without sounding to be protectionist in our policies, its only prudent that we protect our local industries from outside competition.”
He added: “Ministry of Finance will impose higher taxes on imports, where we have products available on the local market.”
The minister noted that despite being a smaller economy than
Kenya and Tanzania, the cost of raw materials in Uganda remains expensive for most enterprises to easily break even. Dr Ajedra revealed that the ministry is making provisions in the budget to give competitive advantage to local manufacturers.
Prof William Bazeeyo, the Chief of Party at Resilient Africa Network, however asked government to start up an interest free loan programme for selected enterprises in value addition which are linked to agriculture.
“This interest free loans over a short cycle, could help the qualifying and innovative SMEs, break even and then pay back over period of time. Some emerging economies across the world have successfully piloted such incentives,” he advised.
