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Ojangole on Acceleration of Economic Recovery: UDB Approves Shs402Bn, Disburses Shs257Bn

Uganda Development Bank Ltd (UDB) is pleased to share its Year-to-Date performance. The numbers in this report indicate the Bank's complete commitment to assisting Uganda's economic recovery and are proof that the country's economy is on the mend.

Uganda Development Bank Ltd (UDB) is pleased to share its Year-to-Date performance. The numbers in this report indicate the Bank’s complete commitment to assisting Uganda’s economic recovery and are proof that the country’s economy is on the mend.

The impact of the COVID-19 Pandemic and the resulting disruption of global supply chains has taught us that local production of strategic commodities, as well as national self-supply to meet demand in certain commodities, can help to sustain economic production, job creation, the use of domestically sourced raw materials, efficient technology use, and market access within the East African Community and COMESA.

UDB increased its capacity to offer loans rapidly and efficiently from January to May 2022. Approval times for loan requests have improved, and the Bank has introduced ground-breaking services such as Special Programs, a dedicated lending service for small, medium-sized, and growing businesses, and Business Advisory Services, which help applicants become credit-ready and improve the long-term viability of their businesses. The Year-to-Date figures, when combined with other facilities such as the Tourism Facility being implemented in collaboration with the European Union, show growth across the Bank’s portfolio while also indicating a positive outlook for the government’s import substitution, manufacturing for export, and increased emphasis on agro-processing policies.

Patricia Ojangole, UDB’s Managing Director, answers questions in the following Q&A.

Question: The economy is currently slowing, partly as a result of the knock-on consequences of Covid-19 and the ongoing Ukraine-Russia conflict. Many areas of the economy have suffered as a result, and prices have risen. What exactly does UDB mean when it says the economy is on the mend?

The response of important sectors such as primary agriculture, agro-processing, and industry shows indicative of recovery. In the Year-to-Date numbers, for example, we can observe that Agriculture and Industry projects account for the majority of the Bank’s funding; primary agriculture received the most approvals, followed by agro-processing and manufacturing. These frequently constitute one interconnected value chain in which farm produce (primary agriculture) is expanded, providing raw materials for processed and finished products (agro-processing and manufacturing). These three sectors received a total of UGX176 billion in funding (representing 69 percent of disbursements in the period). Increased output in these areas has the greatest impact on job creation and support for other economic sectors such as trade, marketing, and so on. Uganda currently has a trade surplus with all East African countries, primarily in these areas.

QN: Can you explain the distinction between approval and disbursement?

Approvals refer to money that has been set aside for a project. Disbursements, on the other hand, refer to the portion of these approvals that has been made available to the borrower in accordance with the Bank’s timetable. Some projects with a staggered implementation cycle may involve accessing and utilizing approved funds in phases. As a result, the amounts released may be lower than those approved. Nonetheless, the whole amount sanctioned will be made available to the borrower in accordance with agreed-upon implementation and distribution schedules, as well as following Bank project supervision.

QN: What is the direct impact of UDB lending on development?

Answer: UDB is a development finance agency entrusted with generating economic activity by providing financial services, particularly in places where other financial institutions are unable or unwilling to lend, or when the private sector has a demand that is not being met by the banking industry. As a result, development is judged by the economic impact of the money provided by UDB. The projects approved between January and May 2022 (YTD) will have a substantial impact on development, as shown below. These projects are estimated to create a total of 13,238 new direct employment over their lifetime, with the enterprises financed having a combined output/turnover of UGX4.0 trillion. These are also projected to generate UGX 40.59 billion in tax revenue for the government, as well as UGX 129 billion in foreign exchange revenues.
Amount of the Loan (UGX Bn)
Taxes on job output (UGX Bn) (UGX Bn)
Foreign exchange (forex) (UGX Bn)


QN: How does UDB ensure that the benefit of these projects is spread across the country rather than focused in a few areas?

Answer: Lending by region is determined by a number of criteria, the most important of which is economic activity. UDB, on the other hand, has a policy of prioritizing projects by region. To expand economic development, UDB employees endeavor to discover, prepare, and fund deserving initiatives from all parts of the country. The Bank is particularly interested in areas outside of Kampala and industries dominated by youth and women. The YTD approvals demonstrate a wide range of lending by region, which is consistent with this goal. For example, Acholi received UGX30 billion, Ankole received UGX20 billion, Karamoja received UGX18 billion, and Teso received UGX11 billion. North Buganda, on the other side, received UGX45 billion in permissions in the economically active core areas.

QN: UDB has been accused in the past of having delayed processes or withholding cash. Some investors have expressed dissatisfaction with the Bank. What is your reaction?

Answer: To ensure that the projects can repay the loans, UDB carefully adheres to the terms and conditions outlined in the mandate and strategy. While we strive to meet our clients’ diverse requirements and applications, the Bank also has a responsibility to preserve taxpayer funds by ensuring that funds lent out are repaid. As a result, we conduct a thorough review of all applications to guarantee that the Bank invests only those enterprises that show not just financial viability but also the potential to have a positive socioeconomic influence on the economy. This examination can take longer than the Bank’s desired standard, depending on the promoters’ readiness. The Bank primarily invests long-term initiatives, including start-ups, whose evaluations differ from those of traditional commercial bank loans, which can take less time. However, the bank is nearing completion of its customer experience plan, which will enable it to give improved service in all areas, including response speed. Despite the fact that the Bank disburses cash on a daily basis, it also collects monies through its banks on a daily basis because it is not a deposit-taking organization. The Bank’s cash is primarily collections that will be redeployed. The amount of cash on hand is also within the Bank’s liquidity ratios.

QN: Is it possible for everyone to apply for UDB funding?

Answer: If the business falls under the UDB policy, strategy, and priority sectors, every Ugandan registered business enterprise involved in an existing or start-up business qualifies for UDB products and services. Applicants must be corporations, cooperatives, or registered farmer organizations.

QN: Ugandans express dissatisfaction with the high expense of living. The interest rates are extremely high. Inflation has soared, and input prices have risen as well. According to the government, this is due in part to the conflict between Ukraine and Russia. What is UDB doing to guarantee that low-cost financing is available?

Answer: UDB is a Development Finance Institution, which means it’s a Policy Bank that the government uses to fill certain market holes in the financial system. The present policy direction through UDB is to lower the cost of lending to the private sector in order to stimulate growth, provide long-term financing, finance critical economic sectors that are considered hazardous by other lenders, and finance start-ups that may not be funded by other lenders. The Bank’s lending rate has dropped dramatically over time, from highs of 21% to the present level of 10–12%. In addition, the Bank is looking into partnerships and measures to de-risk lending to some of the main sectors, which will result in lower credit costs. Due to the existing conditions, UDB will not raise its loan rates.

QN: Do you have any final thoughts?

Answer: We have a broad mandate at UDB, but we are committed to completing each work with the utmost expertise. To do so, we’ll keep acting with agility, resilience, and innovation as we develop long-term financial solutions for Ugandans. As we do so, we stay committed to our mandate of improving Ugandans’ quality of life while also standing firm in our defense of what makes us Uganda Development Bank. Allow me to use this opportunity to express my gratitude to the Government of Uganda for its continued support and commitment to enhancing the Bank’s capital base as it fulfills its mission of improving Ugandans’ quality of life. To date, the government has contributed UGX1.073 trillion in capital contributions. This support is the solid foundation upon which the Bank has grown into a regional and global model for development financing. UDB was named “The Sustainability Leader of the Year Award” at the Karlsruhe Sustainable Awards in December 2021, recognizing it as the continent’s most reformed national development bank.

I reaffirm the Bank’s Board of Directors, Management, and Staff’s resolve to continue making a significant contribution to our country’s development.


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