President Yoweri Museveni has encouraged business owners, especially manufacturers and agriculturalists to opt for affordable credit provided by the Uganda Development Bank (UDB).
The President made the call while launching the new 600 MW hydropower project which now takes Uganda’s installed capacity to just over 2,000MW – up from 380MW in 2005.
“Money from the banks must not attract high interest rates, because if the interest is high, how will you make profits? That’s why the government insisted on UDB. Borrow from UDB, Emyooga and PDM. Have nothing to do with money lenders. And I’m going to deal with them,” President Yoweri Museveni said during the commissioning ceremony.
“They are criminals, but they are encouraged by you people. How do you allow somebody to say he has lent you some money, but you make an agreement that he bought? In the document you say that he bought it when he just paid you UGX2 million for school fees,” the President added.
The President highlighted the issue of high cost of credit after outlining the barriers that must be addressed in order to modernize the four critical sectors – commercial agriculture, manufacturing, services and ICT – needed to unlock Uganda’s modern economy.
Through UDB, the government is supporting sectors like agriculture, manufacturing, tourism, human capital and infrastructure, which are considered as priorities towards achieving the country’s development agenda.
In the year 2023, the government capitalized on UDB to the tune of UGX65 billion to deliver high socio-economic value in terms of job creation, improved production output, tax contribution, and foreign exchange generation. The same year, the Bank disbursed UGX610 billion, the bulk of which went to agro-industrialization (Ushs 187bn), manufacturing (UGX211 billion) and primary agriculture (UGX39 billion).
President Museveni’s comments are similar to an appeal made by State Minister for Kampala and Metropolitan Affairs, Kabuye Kyofatogabye, on Saturday during a two-day trade exhibition and bazaar at Namukekera – Liao Shen Industrial Park in Kapeeka, in Nakaseke district.
The Minister advised business owners and those intending to venture into the enterprise to utilize the government’s affordable credit which is accessed through UDB.
The exhibition was characterized by manufacturers including both local and foreign investors. These ranged from ceramics, footwear, textiles, electronics, and agro-processing among others.
At the exhibition which was officially opened by President Yoweri Museveni, UDB showcased its products and services which include financial and non-financial services.
“UDB is doing remarkable work by providing cheap loans. I encourage you to get funding from UDB because their interest rates are very low,” Minister Kyofatogabye told a group of entrepreneurs who had gathered at the UDB stall to interact with the Bank’s offerings.
The Minister also cautioned borrowers who use loan facilities for purposes for which they were not intended.
He added; “It is unfortunately such programs by government which are aimed at supporting entrepreneurs that end up being abused by some individuals (borrowers). Some of them acquire funding and start making up excuses in order not to repay the loans. Do you only get problems after borrowing from the government?”
UDB extends loan facilities to the private sector at an interest rate of between 10 percent and 12 percent.
During the exhibition in Kapeka, the Bank also showcased some of the projects that it has funded, among them Maganjo Millers, Pura Organics, Ntake Bakery, Eco Plastile and Sanga Vet.
Ecoplastile which manufactures sustainable roofing tiles made from plastic waste, was supported by UDB to acquire patient capital needed to commercialize their flagship product. The investment was made in capacity enhancement, working capital and marketing. The company is projected to recycle 50 metric tonnes of plastic waste per month to produce 100,000 tiles this year.
Similarly, the Bank financed Sanga VetChem Ltd to purchase 6 manufacturing tanks with a 3,000-liter capacity each as well as 3 automated packing, sealing, labelling and coding machines to support and meet the projected demand. Sanga VetChem manufactures drugs including 5 acaricides, 1 anthelmintic and 1 would remedy. The project is estimated to create over 200 direct jobs and increase tax contributions from UGX540 million to UGX3.7 billion.
In 2023, enterprises supported by UDB contributed approximately UGX236 billion in direct domestic taxes in 2023 with manufacturing making up 47% of this, agro-processing 27.9% and primary agriculture 15%.
At least 51,841 jobs were created and maintained from the Bank-funded projects. Of these jobs, a significant share (39%) was under primary agriculture, 32% in agro-processing and 16% in manufacturing.