Summary:

• The Ugandan government has invested sh1.4 trillion in the Uganda Development Bank and other initiatives to accelerate socio-economic development, addressing concerns and emphasizing the goal of integrating individuals into the economic system, while the Uganda Development Bank faces criticism for alleged limitations in lending to SMEs.

On Tuesday, Ramathan Ggoobi, the Permanent Secretary of the finance ministry, announced that the Government has injected sh1.4 trillion into the Uganda Development Bank Ltd (UDB) to expedite socio-economic development in the country. Speaking at the 7th Economic Summit held at Kampala Serena Hotel, Ggoobi revealed that this investment complements other financial commitments in entities such as the Uganda Development Corporation (UDC), the Emyooga initiative, and the Parish Development Model (PDM), all aimed at facilitating capital accessibility and uplifting people from poverty.

Ggoobi emphasized that investing in people represents a pragmatic strategy for addressing inequalities. He countered critics of the Emyooga initiative, stating that skepticism often arises from those who are not beneficiaries themselves or are unaware of the challenges faced by some Ugandans in their daily lives. The overarching goal is to integrate individuals who are not part of the monetary economy into the economic system.

UDB, as Uganda’s national development finance institution, has a mandate to foster socio-economic development through sustainable financial interventions. In line with this mission, the bank supports private sector projects demonstrating potential for high socio-economic impact, including job creation, enhanced production output, tax contribution, and foreign exchange generation.

As of June 2023, UDB’s total assets have reached sh1.58 trillion, marking a 19% increase since the beginning of 2022, according to Patricia Ojangole, the managing director. Ojangole attributed this growth to increased funding, primarily from government capital allocations and credit lines from funding partners, enabling the bank to disburse credit. The bank’s gross loan portfolio as of April 2023 stands at sh1.384 trillion.

Despite its successes, UDB has faced criticism for allegedly not extending loans to struggling small and medium enterprises (SMEs) and imposing conditions that are challenging for most SMEs to meet in order to access affordable capital. Denis Dokoria, the public relations officer of UDC, clarified at the summit that UDC is not a competitor to the private sector but actively supports it, especially in agro-manufacturing sectors such as tea, sugar, coffee, fruit processing, cassava value addition, and the cotton industry.

Anne Juuko, the CEO of Stanbic Bank Uganda, noted that many Ugandans are willing to pay taxes but emphasized the importance of accountability for public expenditure, expecting better service delivery in return.