What you need to know:
- Mr Hannington Wasswa, director commercial banking, Bank of Uganda (BoU), said that Central Bank is coming up with a policy and regulations on green finance means that can be used to guide the financial sector on how to implement green financing.
The Central Bank of Uganda will soon issue guidelines for green financing to support Small and Medium Enterprises (SMEs) as the country strives to achieve sustainable development.
Mr Hannington Wasswa, director commercial banking, Bank of Uganda (BoU), said that Central Bank is coming up with a policy and regulations on green finance means that can be used to guide the financial sector on how to implement green financing.
“Commercial banks have been unable to extend credit facilities to green SMEs, yet the latter could play a crucial role in averting the climate change and its related negative risks and ascertain the country’s micro and macro-economic conditions,” Mr Wasswa said.
He noted that banks have not been able to finance green SME’s due to lack of guidance according to the bank’s recent survey.
“One of the issues that came out very clearly in our recent survey was that banks did not know what to do in relation to green finance applications and were waiting for (our) guidance,” he said.
Currently, the Central Bank is designing a policy on green finance and will create regulations that will guide the financial sector on how to implement green financing.
During the Uganda Green Enterprise Finance Accelerator (UGEFA) Green Finance Dialogue held last year, issues such as enterprise support organisations and green businesses to explore pathways for expanding access to finance and capacity building for green SMEs across sectors.
The Uganda Vision 2040, Uganda Green Growth Development Strategy (2017) and Third National Development Plan (NDPIII) 2020/21 – 2024/25 outline clear commitments to environmentally sustainable and socially inclusive growth that prioritises green job creation, low carbon emissions, and climate resilience with a target of $1.8 billion per year. This presents opportunities for banks to align their products and services to the evolving needs of green SMEs that are expanding.
Green SMEs are innovating products, services, and processes that place environmental sustainability and social inclusion at their core – offering electric vehicles, transforming waste into energy or textiles, and preserving nature for future generations. This is exemplified by the more than 120 green SMEs that are being supported by the Uganda Green Enterprise Finance Accelerator during its second-year programme.