What you need to know:
Deal. Some of the businesses to be considered for financing are in the agricultural, education and health sectors.
Kampala. The Uganda Development Bank Limited (UDBL) has concluded negotiations with The Arab Bank for Economic Development in Africa (BADEA) to secure Shs54.08b ($16m) for financing several projects.
The BADEA team concluded the agreement with UDBL on Tuesday with the facility focusing on projects in the agribusiness, manufacturing, education and health sectors.
“We are happy with the tremendous job UDBL is doing for Uganda. We believe we have the right partner with them and this facility will go a long way in concretising our long working relationship while helping businesses to prosper,” Dr H A Elbashir, the BADEA team leader, told the management of UDBL.
UDBL, the only wholly owned government development bank, is now at the forefront of the ambitions of the government to provide lower interest financing to several strategic sectors in the economy.
Recently, the government committed to giving UDBL an additional Shs50b for capitalisation in order to enable it to lend at more favourable rates.
Five years ago, UDBL had become one of the inefficient government agencies that were riddled with controversy, unable to attract long-term funds to lend from international agencies. Ms Patricia Ojangole, the UDBL managing director, said the funding would boost extension of more affordable financing to Uganda’s private sector entities.
“BADEA has been a committed development partner of UDBL and Uganda at large. I can confidently assure you that this partnership will benefit Ugandan entrepreneurs by providing affordable credit which will go a long way in helping the Bank execute its mandate of ‘profitably financing enterprises in the key growth sectors of the economy,” she said at the meeting with BADEA officials.
UDBL also has lines of credit from institutions such as the Kuwait Fund and Japan Bank from International Corporation.
The working theory is that UDBL will be the go-to bank for long-term financing for private sector projects that can’t be sustainably financed by short-term high-interest loans from commercial banks.
UDBL track record
In its 2015 Annual Report, UDBL revealed that it had entered several Memoranda of Understanding with various development partners who provided technical support and assistance in form of training and farm inputs to ensure the various farmers’ projects were successfully executed.
Its credit lines from development partners increased by Shs11.372b, representing a 232.69 per cent growth in 2015 compared to a 3 per cent growth in 2014 of Shs135million.
“The line of credit from Arab Bank of Economic Development in Africa was fully utilised in 2015 to finance the growth of the loan book with a Shs10.30 billion draw done during the year,” the annual report reads.