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UDB Reports 5% Uptick in Borrowing and Grants with New Targeted Funding Initiatives

Mubende, Uganda, February 29, 2024: In 2023, the Uganda Development Bank (UDB) had a 21 percent increase in gross loan disbursements and an 8 percent increase in total assets. This was a year that saw the introduction of new initiatives aimed at assisting the private sector.

In 2023, the Bank authorized UGX691 billion in finance to support 201 projects throughout the nation.

According to the nation’s national Development Finance Institution, assets increased by 8% from UGX1.52 trillion in 2022 to UGX1.64 trillion last year (unaudited results were disclosed).

The rise in gross loans to clients, which increased by 24% to conclude the period at UGX1.6 trillion, was the main driver of this expansion.

We produced a solid set of results in 2023 that were in keeping with the performance trend of the previous several years and appropriate for our position as the nation’s Development Finance Institution. The Bank keeps moving forward with the execution of its plan, accomplishing our main goal of producing measurable development results that advance the nation’s socioeconomic advancement. According to Patricia Ojangole, the managing director of UDB, “We remain resolute on carefully balancing these efforts with the need to be a financially sustainable institution.”

Ms. Ojangole also mentioned a minor increase in borrowing and grants of 5%, from UGX232 billion in December 2022 to UGX245 billion. Throughout the year, loan repayments of at least UGX466.5 billion were gathered and reinvested to finance payments to different businesses.

The majority of the authorized financing, or 59%, went toward the industry sector (agro-industrialization and manufacturing), receiving UGX409 billion in investment in total. This is in line with UDB’s aim to promote the important economic sectors. UGX223 billion was allowed to support the infrastructure sector, while UGX19 billion was set aside to support primary agriculture activities.

The real amount of money distributed to different projects throughout the nation in the same year was UGX610 billion. The majority of the funds—UGX391 billion, or 65% of the total—went to the industrial sector. Primary agriculture accounted for UGX38.5 billion, or 6% of the total, and the remaining funds were used to fund infrastructure projects as well as services like tourism, health care, and education.

UDB has persisted in making noteworthy progress in enabling Uganda’s socio-economic advancement. In this regard, it is anticipated that the authorized projects will yield UGX 11.39 trillion in new output value, UGX 615.96 billion in government tax revenue, and UGX 3.3 trillion in foreign revenue earnings in addition to the creation of 18,558 employment.

The Bank continues to successfully execute a number of tactics known as special programs, which are especially designed to help the growth of the underprivileged sectors of the nation, such as SMEs, Youth, and Women.

The Bank allocated an extra UGX17 billion to these segments during the reporting period and sanctioned UGX22 billion to support 118 firms in this category.

After deploying UGX9.9 billion in private equity and venture capital for the first time in December 2022, UDB approved an additional UGX25.3 billion. These funds were given to high-impact, innovative startups in sub-sectors such as vaccine manufacturing, electric mobility, local paint manufacturing, leather value addition, and eco-friendly building materials.

The portfolio of venture capital and private equity meets the demands of SMEs and other organizations, including startups, that have trouble obtaining debt financing and need time-consuming funding.

Uganda’s populace is among the most enterprising in the world. Despite this, just 70% of Ugandan businesses survive past their second year. SMEs now confront a number of difficulties, including bookkeeping, governance, planning for sustainability, market access, financing availability, and financial literacy.

“Through our Business Accelerator for Successful Entrepreneurship (BASE) program, we extended business training to more than 500 enterprises across the country in 2023 of which 291 are to be incubated for funding in the year 2024. 61 percent of the enterprises trained were in the agriculture sector,” Ms. Ojangole said.

Adding that under the Bank’s Business Acceleration Program, the Bank has supported 40 projects across the agricultural sector (mainly farmer groups) SMEs, Youth, and Women. The supported projects represent about 5,000 beneficiaries that have benefited from business advisory support, which has enabled them to catalyse and further grow their businesses.

The Bank has to-date committed UGX5.066 billion towards the preparation of various projects and targeted funding initiatives,” Ms. Ojangole explained.

As the country continues to recover from the devastating effects of COVID-19 and other constraints, there has been a surge in economic activity culminating in the rising demand for long-term credit to catalyze investments in the country. The demand, as has been the trend recently, outstrips the resources available to the Bank.

“I am happy to report that both capitalization and funding towards the Bank grew, meaning we were enabled by the government to realize our strategic goals. The Bank’s funds inched up year-on-year by 12 percent, from UGX1.23 trillion to UGX1.38 trillion attributed to capital Injections by the government during the period and retained and reinvested profits from the prior years, with these sources complemented by additional funding from funding partners. We continue to explore all options to improve our funding base to reach more enterprises thereby expanding the impact our impact,” said Ms. Ojangole.

In 2023, the Bank rolled out several new initiatives aimed at propelling and facilitating equitable growth and working towards achieving a market-driven economy. These included a special purpose vehicle with a unique and specific focus on financing, unlocking, and catalyzing private sector investment in local green sectors that drive green impact and financial inclusion.

The Bank also launched a digital solution that offers both a savings and lending option for small-holder farmers in Uganda, and targeted financial and non-financial support to improve the competitiveness of emerging and existing Ugandan contractors.

In a bid to expand its footprint across the country, UDB set up the first regional office in Gulu City in 2023, to act as a liaison point for all the districts that constitute Northern Uganda.

To further improve efficiency and deepen financial inclusion across the country, the Bank is establishing five regional offices. These offices will be strategically located in various districts of the country, which include Mbale for Eastern Uganda, Hoima for the mid-west region, Arua for West Nile, Mbarara for Western Uganda as well as the Gulu office, which is already operational.

In 2024 In 2024, the Bank is poised to solidify the gains achieved and remains committed to advancing its ambition of supporting private sector enterprises addressing crucial societal needs. The objective is to amplify our impact in enhancing the quality of life for the people of Uganda.

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