UDB results for 2019 show that the government has only put 197 billion Shillings in the bank since 2015. The biggest contribution was in 2019 where the government put 84 billion Shillings up from 48 billion Shillings in 2018. The bank’s total capital is 375 billion as of December 31, 2019.
Uganda government has injected less than
200 billion Shillings as a capital contribution to the Uganda Development Bank
(UDB) over the last five years, the institution’s published financials show.
This is despite the fact that leaders
– including President Yoweri Museveni – have been lyrical about the need to
give the bank more money to lend to Ugandan entrepreneurs at below-market
rates. President Museveni announced in June
last year that the government had already given the bank 272 billion Shillings for recapitalization. In 2015, the government promised to give the bank 500 billion Shillings in
But UDB results for 2019 show that the government has only put 197 billion Shillings in the bank since 2015.
The biggest contribution was in 2019 where the government put 84 billion Shillings up
from 48 billion Shillings in 2018. The bank’s total capital is 375 billion as of December 31, 2019.
As businesses are ravaged by coronavirus
lockdowns, UDB is expected to play a vital role to provide affordable capital to support them
get back to normalcy. But it needs much more money to do this, analysts have said.
Dr Ezra Munyambonera, a senior
research fellow at the Economic Policy Research Centre (EPRC), said the bank
needs as much as 1 trillion Shillings in capital to play a critical role in
post-COVID-19 recovery for businesses.
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In its financials, the bank, which is
wholly-owned by the government posted a marginal increase in net profit
of 10.14 billion Shillings in 2019 up from 9.5 billion Shillings in
The bank is supposed to lend long term
to businesses at a cheaper rate compared to what commercial banks would charge.
In 2019, its report says, its loans to businesses reached 334 billion up from 276 billion in 2018.
Still, the report shows, the
institution holds a lot of money – up to 81 billion Shillings from 13 billion in 2018 – in
deposits in other banks. One can conclude that almost all the capital it got
from the government that year was not lent out.
This is an indicator UDB is struggling
to get who to lend the money to or is risk-averse and limiting on the
amount it gives out to businesses.
Patricia Onjagole, the UDB Managing Director said in a statement that the Bank has reviewed its strategic plan to
cover the next 5-year period 2020- 2024 to include a sustainability strategy.
She said this year, the bank will
support projects that have high impact goals – projects and programs that aim
to reduce poverty in Uganda, build a sustainable food system, and those that
promote Uganda’s industrialization.
do this, UDB needs to raise more capital. It says in a statement that for the
foreseeable future, the Bank plans to raise sufficient funding through a
combination of the government of Uganda capital contribution, debt, and internally
generated funds to invest in new developmental loans into the economy.