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At a time when post-Covid-19 private sector credit growth remains constrained with mild growth in a select few sectors, Uganda Development Bank (UDB) has reported a 52% gross loan portfolio growth from UGX851 billion in December 2021 to UGX1,298 billion in December 2022.
This was, on the back of a 40% growth in the value of new loan applications approved to receive funding that grew from UGX635 billion to UGX894 billion and an 81% growth in total disbursements from UGX428 billion to UGX776.6 billion in the same period. The industry sector (comprising of manufacturing and agro-industry) received the highest number of approvals worth UGX454.75 billion with primary agriculture receiving UGX96.75 billion. 76% of all disbursements went to agriculture, agro-processing and manufacturing projects.
The newly approved projects are, according to the bank, expected to generate 35,372 new direct jobs and UGX9.35 trillion worth of output value/turnover from the financed firms. These are further expected to generate UGX393.79 billion in tax revenue for the government and attract foreign exchange earnings of UGX1.58 trillion.
This was revealed by Patricia Ojangole, the bank’s Chief Executive Officer in a speech read for her by Allan Joshua Mwesiga, the bank’s Director, Strategy & Corporate Affairs during the bank’s 2023 Annual Press Briefing, held on 10th February 2023. The event was held at Bwendero Dairy Farm in Hoima City. Bwendero Farm, an indigenously family-owned business conglomerate is one of the businesses funded by the bank.
The event, was among others grace by Hon. Janepher Namuyangu, the Minister of State for Bunyoro Affairs.
“This performance is anchored on the Bank’s deliberate efforts towards the revitalisation and transformation of Uganda’s economy. This gives usconfidence that we are on track to achieve our strategic objectives,” said Ojangole.
“Our product portfolio has been designed to support key priority sectors to achieve their full potential which aligns with the country’s strategic direction and National Development Plan III,” she further remarked.
Ms. Ojangole said that the bank in 2022, launched the special program’s intervention which has effectively implemented several strategies, with a focus on channelling interventions to promote small and medium-sized firms (SMEs), as well as businesses run by women and youth within the Bank’s supported sectors.
After a year of implementation, the Bank approved over UGX31.5 billion, with 128 enterprises (including 42 women-owned) benefitting from this program. To further support these businesses, the bank further launched a Business Accelerator for Successful Entrepreneurship (BASE) aimed at preparing entrepreneurs for financing through enhanced business practices.
“In 2022 alone, 08 regional training sessions targeting 1,130 SMEs were conducted in Kampala, Mbarara, Fort Portal, Lira, Gulu, Arua, Masaka, and Mbale districts. As a result of these sessions, the Bank identified funding prospects amounting to UGX147.3 billion. Additionally, 77 hitherto informal enterprises undertook various business formalisation processes – with 45 registering their business names and 37 others formally registering as new taxpayers or for tax certification,” Ojangole says,
“Conversely, the Bank earmarked 274 enterprises to participate in the inaugural UDB Business Incubation Program to be held this year, the aim of which is to facilitate the incubatees to be credit-ready, and potentially prospective customers of UDB,“ she reiterated.
According to the Bank of Uganda State of the Economy Report for December 2022, while private sector credit grew, the growth rates remained weak and below historical trends. Total PSC growth fell to 10.5 percent year-on-year in the quarter to October 2022, compared to 10.8 percent in the quarter to July 2022. Excluding the exchange rate depreciation and capitalised interest, PSC grew at 8.2 percent in the quarter to October 2022 compared to 8.6 percent in the quarter to July 2022.
Credit growth, according to the central bank remains constrained in most sectors notably, agriculture, building, mortgage, construction and real estate sectors, and business services except for mild increases in trade, manufacturing and personal & household loans.
Speaking at the event, Hon. Jenepher Namuyangu, Minister of State for Bunyoro Affairs lauded the management and staff of UDB for extending support to all regions of the country and specifically to the agriculture sector which is the heart of the economy.
“Government recognises the efforts of stakeholders like UDB who intervene in accelerating the growth for key sectors like; agriculture, tourism, human capital development, among others which are in line with the governments National Development Plan 3 (NDP III),” she said, adding: “I am pleased to know that Bwendero Dairy Farm is a beneficiary of funding from UDB, and I believe the support has enabled them to expand their operations and, in the end, improve the livelihoods of our people in Hoima and the surrounding areas who are directly or indirectly impacted by the existence of Bwendero Dairy farm.”
Mr. John Magara, the proprietor of Bwendero Dairy Farm, appreciated the Bank for the support which has enabled them to install a sugar plant in Kitoba Village Hoima District which operated at 38.6% in 2021 and whose performance has since greatly improved doubling to 77.3%, producing 580 tons per day in 2022.
“The farm has been able to diversify its operations to sugar processing, distillery, and milling, hence producing brown sugar, maize flour, and pharmaceutical ethanol, among others,” Magara disclosed.