UDB launches new round of tourism recovery financing

Credit Director at Uganda Development Bank, Samuel Edem. PHOTO/FILE

What you need to know:

  • Tourism employs close to 605,500 Ugandans with a contribution of 7.7 per cent to gross domestic product. 

Businesses in the tourism value chain will benefit from a grant from European Union and soft loans from Uganda Development Bank (UDB), which seek to fast track post-Covid 19 recovery. 

The grant, amounting to Shs21.8b will be non-repayable for those who qualify while the Shs40b contributed by UDB will carry a lower than market interest rate. 

This is the second time such a facility has been provided to operators in the tourism value chain to support the sector with post-Covid-19 recovery through greening activities as well as mitigating job losses. 
At least a combined sum of Shs61.8b will be available to support the initiative that as well as seeks to offer tourism operators working capital. 

Speaking at the launch of the facility in Kampala, Mr Samuel Edem, the UDB director for credit, said the facility seeks to support companies in the tourism value to attain stability following the impact of Covid-19 disruptions. 

The facility, he said, will be accessible to companies that will ensure that they retain 75 per cent of employees at the time of the signing of the contract as well as demonstrate that the retained staff are paid 100 per cent of their gross salaries for at least two years. 

Applicants, Mr Edem also indicated, must be registered contributors of National Social Security Funder as well as show proof of tax compliance for certain tax votes such pay as you earn for a minimum of five staff. 

The facility gives applicants in the tourism value chain the possibility of accessing capital for investment of between Shs100m and Shs1b.

Speaking at the same event, Ms Caroline Adriaensen, the European Union head of cooperation, said the Shs21.8b grant, which is non-repayable, is intended at uplifting tourism given its contribution to the larger economy. 

Tourism employs close to 605,500 Ugandans with a contribution of 7.7 per cent to gross domestic product. 
During 2019, tourism arrivals grew steadily, increasing to 1.5 million visitors, before slowing due to Covid-19. 

Ms Patricia Ojongole, the UDB managing director, said the Shs40b is ring fenced funds from UDB but will carry an interest repayment. 

However, she did not indicate what interest applicants will be expected to repay. 

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