In effort to stimulate economic growth and support wealth creation in Uganda, the government has decided to inject shs55 billion into the Uganda Development Bank (UDB).
This capital infusion, announced by Finance Minister Matia Kasaija, is aimed at enhancing the bank’s ability to provide more accessible and affordable financing options for businesses and individuals aiming to invest and expand their operations.
The Uganda Development Bank has played a big role in the country's economic development, with a diverse loan portfolio that spans several key sectors.
In recent years, UDB has allocated funds to primary agriculture, infrastructure, and industrial projects. For instance, in a recent period, the bank disbursed shs610 billion, with the industry sector receiving the largest share of shs391 billion.
These investments are expected to generate over 18,000 jobs and greatly boost the country’s economic output and tax revenues.
The additional shs55 billion capitalization is a response to the rising demand for long-term credit to support investments across various sectors. This funding aims to address the financial challenges faced by SMEs, which constitute a substantial part of Uganda's private sector but often struggle with sustainability and growth.
Only about 30% of SMEs in Uganda survive beyond their third year due to issues like poor bookkeeping, governance, and limited access to markets and credit.
To further enhance support for SMEs, UDB has introduced several initiatives, including a business incubation program in collaboration with Makerere Business School Entrepreneurship Innovation and Incubation Center (MUBS EIIC).
This program provides capacity-building training and technical support to help businesses develop sustainable practices and become investor-ready. Such efforts are important in a country where SMEs contribute greatly to manufacturing output and job creation but face substantial challenges in scaling their operations.
UDB has also been active in addressing the needs of underserved segments, such as youth and women, through special programs tailored to support their development. In 2023, the bank approved shs22 billion to support 118 enterprises in these segments and disbursed an additional shs17 billion.
These initiatives have helped bridge the gap between SMEs and access to finance, thereby promoting socio-economic development.
The additional funding will enable UDB to extend its reach and impact further. It will support initiatives that drive green impact and financial inclusion, particularly in local green sectors.
UDB's recent establishment of a regional office in Gulu City is part of its strategy to enhance its presence and support across different regions of Uganda.
Overall, the government's move to boost UDB's capitalization emphasizes its commitment to creating an enabling environment for business growth and economic development.
By providing much better financial support to businesses, particularly SMEs, the government aims to drive job creation, increase economic output, and improve the overall quality of life for Ugandans.
