Uganda Development Bank is set to lend slightly over Shs300bn in the coming six months to support businesses to overcome the current economic shocks, characterized by high commodity prices.
The lender’s Chief Executive Officer, Patricia Ojangole, revealed on June.24 immediately after the Annual General Meeting that the development bank has planned to lend Shs 612bn, with Shs 300bn already disbursed, this year.
UDB lends to qualifying enterprises in different sectors at between 10-12% interest rate, which is lower than the current average lending rate of 20% per annum.
Ojangole said the lender has a special focus on small and medium enterprises as they play a critical role of creating jobs and other opportunities in the economy.
She said, the 2021 annual performance for the bank was strong, with a vibrant balance sheet. The bank approved Shs635bn for lending to businesses, the highest since 2011.The bank’s net loans grew by 53% during the year to Shs 781.7 billion, up from Shs511.9 billion in 2020.
Its balance sheet amounted to Shs1.2 trillion, having increased by 12% from approx. Shs1trillion registered in 2020.
The bank realized Shs 38.8 billion in post-tax profit, representing a 76% growth from the Shs 22.1 billion in 2020 citing continued growth in the capitalization of the bank coupled with an increase in investment in interest-earning assets, notably, loan disbursements to development projects. Interest and fee income improved to Shs 112.9 billion, up by 57% from Shs 72.1 billion in 2020.
The government capitalized the bank with Shs 104billion in 2021 increasing the cumulative capital contributions to approx. Shs 1trillion.
In order to boost capitalisation to finance qualifying development projects, the shareholders have allowed the lender to retain the Shs.38.8billion profit.
The bank’s investment activities created and maintained 41,338 jobs during the year, growing by 72% from 24,013 jobs registered in 2020. Foreign exchange earnings from businesses supported by the bank grew by 131% year-on-year to close at Shs 405 Billion in 2021.
The lender’s executives said the growth in forex was occasioned by the increasing share of forex earnings from agro-processing and manufacturing sectors at 50% and 33% respectively. Enterprises funded by the bank generated Shs2.4trillion in output value and Shs 84billion in taxes to the government during the year.
During the year, the bank introduced several initiatives to buttress businesses from the devastating effects of Covid-19 targeting mainly women, SMEs, and the youth.
“We introduced the Business Accelerator for Successful Entrepreneurship program which aims to assist enterprises to formalize as well as professionalize their operations, in order to access capital for growth,” Ojangole said.
Ojangole said going forward, the bank remains resolute on making a significant contribution to the country’s socio-economic transformation, and will in 2022 and beyond, focus on the mobilization of adequate capital to continue delivering to its mandate, undertake the implementation of an industrialization strategy to accelerate industrial productivity, import replacement and export promotion; advance the bank’s holistic sustainability agenda; and deepen financial inclusion for SMEs, women and youth.