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Government, banks form export insurance scheme
Fruits at the Soroti Fruit factory. The Uganda Bankers Association has committed Shs1 trillion for region export credit facility. PHOTO / FILE
What you need to know:
The export insurance guarantee fund will support exporters in a public private partnership to the tune of Shs1.8 trillion.
An export insurance scheme of up to Shs1.8 trillion in insurance cover will be available after the government and Uganda Bankers Association put together the fund that will provide export guarantees to Ugandan exporters.
According to export sector analysts, the fund will substitute the approach where exporters run to banks seeking underwriting for their export deals.
While giving an update of the economy during the presidential chief executive officer (CEO) forum on Wednesday in Kampala, Mr Ramathan Ggoobi, Permanent secretary to the treasury, Ministry of Finance, said a national export insurance guarantee fund is in the final stages of being created to support exporters in a public private partnership to the tune of Shs1.8 trillion.
“The Ministry of Finance has through the investment for industrial transformation and employment project working with Uganda Bankers Association (UBA) which has also dedicated Shs1 trillion for a regional export credit facility with government providing $218 million as financed by the World Bank and we have finalised this now; that is around Shs815 billion starting this financial year; We are going to provide support for private sector to export,” Mr Ggoobi said.
On the decision by the Finance Ministry and its update through the CEO forum to support businesses and one of the things mentioned was the export guarantee fund saying they were in partnership with Uganda Bankers Association (UBA).
Mr Wilbrod Owor, executive director, UBA said they have been in negotiations with government for the export guarantee scheme for a long time.
He added: “We would very much welcome that development. It is very good because it speaks to support the exports and once we get the details, we will issue and speak formally.”
The fund will support the growth of export volumes by de-risking regional export markets to unlock market access.
It will also provide financial loans to export-oriented businesses that have suffered financial distress.
But borrowers should provide enough collateral whose adequacy will be determined with existing lending policies.
To date, markets like Democratic Republic of Congo earns Uganda nearly a trillion shillings annually with potential for more growth.
