The Independent Uganda: You get the Truth we Pay the Price
As Uganda’s development bank posts strong results, calls grow for sustainable government support to meet rising demand
Kampala, Uganda | JULIUS BUSINGE | Uganda Development Bank (UDB), the country’s leading state-owned development finance institution, has reported a robust net profit of Shs 57.8 billion ($15.4 million) for the year ending 2024—an increase of 16% compared to the previous year.
The announcement was made during the Bank’s Annual General Meeting held on June 18 at the Ministry of Finance headquarters in Kampala. The performance underscores UDB’s continued relevance as a critical enabler of inclusive, industrial-led economic growth.
But while the Bank’s financials were strong, the meeting was overshadowed by a key policy question: is the government doing enough to sustainably capitalise its national development bank?
In the upcoming 2025/2026 financial year budget, the government has committed UGX 1 trillion to UDB. Finance Minister Matia Kasaija, while acknowledging the Bank’s strategic importance, was candid about fiscal limitations.
“If you have two goats—one big and one small—you eat the one you can manage now, and explain why you can’t eat the big one yet,” Kasaija said, using a familiar proverb to rationalize the allocation. The metaphor reflected the broader budget dilemma facing the country: how to fund critical development institutions amid widening budget deficits and competing national priorities.
Despite the constrained allocation, UDB Managing Director Patricia Ojangole reiterated the Bank’s readiness to absorb and effectively deploy significantly more capital. She stressed that demand for development finance remains high, particularly among enterprises in strategic sectors such as manufacturing, agro-industrialisation, and innovation.
“We often deal with applicants who have viable projects but are delayed or excluded due to capital access limitations,” she said. “With additional capital, UDB could significantly deepen its developmental footprint.”
In 2024, UDB’s total assets grew by 7% to Shs 1.78 trillion, driven by retained earnings and fresh government capital. Net loans and advances increased by 9% to Shs 1.53 trillion, as the Bank approved UGX 454 billion in new financing to over 170 enterprises across 67 districts. These projects are projected to generate Shs 9.7 trillion in total economic output, Shs 1.8 trillion in foreign exchange earnings, and more than 17,800 new jobs.
The Bank disbursed Shs 388 billion in new funding during the year and maintained a loan portfolio of 770 active projects in 103 districts. UDB’s concessional interest rate of 12%—far below the commercial bank average of 19–20%—makes it an indispensable partner for Uganda’s productive sectors.
Industrial sector remains priority focus
UDB’s industrial portfolio continues to dominate, accounting for 50% of its total investments. Within this, manufacturing makes up 50%, agro-processing 46.8%, and mineral-based industries 3.2%. These sectors are widely seen as engines for sustainable job creation, value addition, and export growth—particularly important as Uganda seeks to shift from a largely subsistence economy to a more diversified, export-driven model.
Complementing its core lending, UDB also invested Shs 5.1 billion in project development and innovation. These included support for early-stage feasibility studies, research into high-yield sunflower seed varieties, and a range of initiatives under its Project Preparation Facility.
Supporting youth, women, and local enterprises
Beyond enterprise financing, UDB continued to expand its role as a catalyst for inclusive growth. The Bank supported 450 businesses through training programs and incubated 71 early-stage ventures in 2024 under initiatives such as the Business Accelerator for Successful Entrepreneurs (BASE). It also expanded access to underserved groups through tailored schemes such as the hybrid electricity connection program and funding initiatives for Ugandan contractors—impacting more than 42,000 households and businesses.
Results on the ground were clear: UDB-supported enterprises reported a combined Shs 1.03 trillion in profits, up from Shs 869 billion in 2023. Foreign exchange earnings jumped to Shs 1.1 trillion—up 17%—while employment reached 55,553 jobs, with youth accounting for nearly 60% and women 31%. Tax contributions by these enterprises also rose from Shs 236 billion to UGX 316 billion.
Yet as the Bank’s impact grows, so does the urgency for sustainable and predictable funding. Analysts warn that without a shift toward long-term capital solutions, UDB’s capacity to scale may stall. Recommendations include the issuance of government-backed development bonds, attracting concessional credit lines from global development partners, and greater use of blended finance or co-financing with the private sector.
Patricia Ojangole confirmed the Bank is actively exploring such options. “We are positioning UDB to maximise resource efficiency—financially, institutionally, and operationally. This includes identifying alternative financing channels that align with our long-term development goals,” she said.
Board Chairman Geoffrey Kihuguru praised UDB’s operational discipline and its ability to achieve strong returns while staying true to its mandate. Finance Minister Kasaija reaffirmed the Bank’s strategic alignment with Uganda’s Vision 2040 and the National Development Plan III.
“Through UDB, the government is supporting businesses with patient, long-term capital—a cornerstone of our transformation agenda,” Kasaija said. “If they continue doing a good job, we shall increase their funding.”
