Kampala, Monday – October 2, 2023: Uganda Development Bank, the country’s development finance institution, has today announced a UGX150 Billion financial commitment earmarked to provide affordable and patient financing to Ugandan contractors.
Dubbed the Ugandan Contractors Financing Initiative, the financing complemented by Business Advisory and Project Management advice services will support Ugandan contractors to access bid bonds and guarantees at favourable terms and in a timely manner.
Addressing the press at the UDB Head office at Rwenzori Towers, Nakasero today, Patricia Ojangole, the UDB Managing Director said limited access to patient and favourably priced working capital remains a key challenge to Ugandan contractors.
“The financing difficulties and delays coupled with sourcing funds from unconventional financing sources negatively affects performance and business growth, causes contract delays, and often leads to poor quality work among other challenges,” Ojangole said. “UDB has identified the need to provide targeted financial support to emerging and existing Ugandan contractors to aid performance and contractor growth, a testament to the Bank’s commitment to champion development impact activities that are consistent with our mandate.”
Ugandan contractors have long been recognized as a vital segment of national development, responsible for turning plans and investments into tangible infrastructure, services, and facilities that benefit communities and the nation. UDB acknowledges the pivotal role they play in Uganda’s growth and development, hence creating a platform where contractors can be guided on how to capitalize on the existing opportunities.
On this basis, the Bank has made a call for Ugandan contractors to submit their Expression of Interest to participate in the Ugandan Contractors Financing Initiative. The call is open to Ugandan-registered contractors where Ugandans have majority shareholding. Eligible firms shall be those that undertake physical infrastructure projects within the Bank’s key priority sectors.
Under this initiative, Ugandan contractors will enjoy the following benefits: Timely access to cheaper and patient capital, Lower appraisal fees, grace periods of up to 12 months as well as lower than prevailing market interest rates at favourable terms and conditions, such as arrangement fees of 0.25%, security cover of between 50 – 100% of the bond amount, unsecured bid bonds of between 0.5 – 1 Billion, and low commission rates of 0.5% per quarter, to enable access of up to 70% of the required credit, consideration of security at market value as opposed to forced sale value – where required, Business Advisory on technical and project management skills to enable capacity building for the contractors.
For the seamless execution of the initiative, the Bank has partnered with the Uganda Institution of Professional Engineers (UIPE) which will provide leadership and direction in all policies and matters of public interest that are of an engineering nature and the Uganda National Association of Building and Civil Engineering Contractors (UNABCEC) which will support in mobilization and the due-diligence processes.
“We remain firmly committed to the development agenda of Uganda and we believe the Ugandan Contractors Financing Initiative is a new dawn and anchor to infrastructure development in Uganda. I call upon all Ugandan contractors to embrace the initiative as we reshape financing for development in the country,” Ojangole concluded.
Expression Of Interest is open starting tomorrow October 3, 2023, and will close on October 30, 2023. An evaluation committee will review the applications against the minimum requirements. Applicant(s) who meet the minimum requirements will be categorized according to pre-approved credit limits.