Private sector to benefit from cheaper World Bank credit

A cross-section of traders and customers at one of the busiest sections of Kikuubo Trading Centre in Kampala. The World Bank is supporting reforms geared towards improving the business environment. FILE PHOTO

Kampala-Uganda is one of several countries in sub-Saharan Africa that stands to benefit from a new World Bank (WB) financing facility that aims to support private sector access more affordable capital for investment.

Under the 18th replenishment of the International Development Association – the World Bank Group’s fund for low-income countries – a $2.5b financing window is now available to catalyse private sector investment.

The new facility is spearheaded by the World Bank Group’s private sector lending arm, the International Finance Corporation, and the Multilateral Investment Guarantee Agency which offers political risk insurance and credit enhancement guarantees to help companies access credit.

Speaking last week, during a workshop to brief private sector companies and Government of Uganda held in Kampala, the International Finance Cooperation director for sub-Saharan Africa, Mr Oumar Seydi, said the Private Sector Window is intended to help private companies access more affordable capital for investment by providing additional guarantees to insure against risks, particularly for countries that are affected by conflict or are politically unstable.

“Many projects in emerging markets that need capital are unable to access financing because the risks are too high and the returns are not commensurate with the level of risk. The use of blended finance allows us to fill this financing gap by addressing market barriers and attract private sector investments to areas of strategic importance with high development impact,” he said.

Blended Finance involves the use of relatively small amounts of concessional donor funds to offset specific investment risks.

Speaking on behalf of Uganda government, the Permanent Secretary/Secretary to the Treasury, Mr Keith Muhakanizi, recognised the role of the private sector in driving development, saying there is need to join hands with Government to finance public investments, including infrastructure which is critical to spur economic growth and boost shared prosperity.

Given the significant development aid Uganda has received from the World Bank over the years,Mr Muhakanizi commended it for its continued support to the government of Uganda in development programmes.