AfDB lauds UDB over improved absorption capacity

Thursday April 22 2021
By Stephen Otage

The African Development Bank has said Uganda Development Bank (UDB) has now built enough capacity through which it can manage onward lending to sectors that impact the wider economy.

Speaking during a fact-finding tour of AfDB-funded projects, Mr Amos Cheptoo, the AfDB Uganda executive director, said UDB has over the years developed capacity to absorb money as well as managing loans, especially to small and medium enterprises that impact real growth.

This was during a tour of the Afroplast Factory in Luzira, Kampala, one of the projects that benefited from AfDB’s $20m that had been advanced to SMEs through UDB.
“We are happy with UDB’s performance because we gave them $20m as capital to lend to SMEs and all of it has been lent out to increase investments,” Mr Cheptoo said, noting that AfDB has been partnering with development banks across Africa through which money is channeled to SMEs.

AfDB, he said, has been partnering with such banks to support growth as it concentrates on larger projects such as infrastructure and roads that impact the national economy.
The partnerships, Mr Cheptoo said, was the only way through which SMEs can access patient capital that is repaid over a longer period of time at low interest rates.

Mr Cheptoo, who was in the country for a week-long tour, visited the Luzira based Afroplast Enterprises, which manufactures packaging materials.

Mr Mahamoud Andama, the UDB director investments, said Afroplast Enterprises had been advanced $5m of $20m to buy modern equipment to improve on its production capacity.


“This is money we got in the last six months. $5m was for SMEs and $15m for large enterprises. We wish we could get an additional $50m, we would be able to absorb it within a year,” he said.

Mr V. M Shah, the Afroplast Enterprises chairman, said the money had afforded them an opportunity to improve production, which has now grown to 1.5 tonnes of plastic and packaging materials per day.

The plastics, which are mainly used for agro processed packaging, is sold locally and some exported to DR Congo and South Sudan.