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Kampala, Uganda | THE INDEPENDENT | The Government has directed the Uganda Development Bank Ltd (UDB) to start the process of expanding to rural areas to cater for the growing economic activity around the country. Currently, the bank, the only local and government-owned development finance institution in the country, has, in addition to the headquarters in Kampala, five regional branches: Arua, Gulu, Hoima, Mbale, and Mbarara.
However, the Minister of Finance, Planning and Economic Development, Matiya Kasaija, said that, with the growing activity, boosted by government interventions through wealth creation funds, there is a need for the bank to extend closer, especially to the rural communities. He has asked the bank’s management and board to present a plan to the ministry on how they expect to implement the directive.
He was speaking at the unveiling of the 2024 performance of the Uganda Development Bank after its Annual General Meeting in Kampala. In the next financial year, the government has budgeted for a new 1 Trillion-Shilling capitalization for UDB to enhance its financing of the private sector.
The Minister, however, said one of the challenges the government financing programmes face is the unwillingness by some beneficiaries to pay back the funds lent to them. He advised that managers of the government institutions are always willing to listen to an entrepreneur whose enterprise has run into performance challenges and is finding it hard to continue paying off the loan.
In the year under review, the bank’s loan portfolio grew from 1.47 trillion to 1.53 Trillion Shillings, with 389 billion disbursed during the year. It also reports that during the year, it strategically reinvested 437 Billion Shillings collected as loan repayments, alongside 80.7 billion in additional capital contributions from the Government of Uganda.
“This capital injection significantly strengthened the Bank’s capital base, raising cumulative capitalization from 1.32 trillion to 1.46 Trillion Shillings, and thereby enhancing the Bank’s capacity to deliver on its development mandate,” SAID Patricia Ojangole, the UDBL Managing Director.
The bank approved 454 Billion Shillings in new loans to more than 170 enterprises across 67 districts countrywide, projecting them to deliver a range of development outcomes, including the creation of 17,832 new jobs and 9.7 Trillion Shillings in additional output. The funded projects are also expected to create 1.8 Trillion Shillings in foreign exchange earnings, 1.7 trillion in profits, and 455 billion in tax contributions to the Government.
According to Ojangole, the industrial sector continued to dominate the Bank’s portfolio, accounting for 50 percent of UDB’s total investments. Of the 822 Billion Shillings allocated to industrial activities, 46.8 percent is directed toward agro-industrialization, 50 percent to manufacturing, and 3.2 percent toward mineral-based industries.
Ojangole said 80 percent of their clients are small and medium enterprises, challenging the public attitude that that segment of businesses finds it hard to get financing from UDB.
She says that the bank has put in place interventions aimed at easing access to finance by SMEs, including collateral and documentation requirements.
The bank boasts of having the lowest interest rate to private sector borrowers at 12 percent per annum. In 2024, UDBL-financed enterprises posted annual output growth of 3.2 percent 5.86 trillion in 2023 to 6.05 Trillion Shillings, while profitability surged past the 1 trillion-shilling mark, up from 869 billion.
The supported businesses contributed 316 Billion Shillings, up from 236 billion, to government tax revenues. In 2024, UDB stood resilient and responsive in a recovering economy, capitalising on Uganda’s GDP growth of 6.4% to deepen impact across all regions.
Geoffrey Kihuguru, Chairman, Board of Directors, called it “a year of prudent stewardship, strategic momentum, and transformational outcomes”, hailing the government contributions through capitalization. He, however, said that the capacity to meet the needs of the country was still low due to the high demand for credit from the public.
In 2024, enterprises supported by Uganda Development Bank posted profits exceeding 1 Trillion Shillings, surpassing the 869 billion registered in 2023. According to the report, the Bank-supported enterprises created and maintained a total of 55,553 jobs in 2024, representing a 7.2 percent increase from 51,841 jobs in 2023, with 59.9 percent of these jobs taken up by youth and 31.3 percent held by women.
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