Uganda Government Seeks Over 101 Billion Loan to Boost Uganda Development Bank

The Government of Uganda has tabled a proposal to borrow US$275 million to enhance the capital base of the Uganda Development Bank Limited (UDBL), a move aimed at driving socio-economic progress and addressing the country’s development challenges. 

The request was presented by the Minister of State for Finance, Planning, and Economic Development (General Duties), Hon. Henry Musasizi, in a parliamentary session on Wednesday, 5th February 2025.

Musasizi explained that the funding would help UDBL scale up its ability to provide long-term development finance, facilitate trade, and support small and medium-sized enterprises (SMEs) as well as large infrastructure projects across Uganda.

The Minister detailed the funding sources, which include:

• US$150 million from the Arab Bank for Economic Development in Africa (BADEA)
• US$25 million from the OPEC Fund for International Development
• US$30 million from the International Islamic Trade Finance Corporation

Moreover, the government is seeking guarantees to enable UDBL to borrow:

• US$40 million from the Islamic Development Bank Ltd
• US$30 million from the Islamic Corporation for the Development of the Private Sector

Musasizi emphasized the urgent need for this loan to address the significant financing gap faced by UDBL. “Over the last two years, UDBL's funding needs have skyrocketed. 

The bank now requires an average of Shs1 trillion annually in new disbursements to meet its targets,” he said. The current capital of UDBL, which stands at Shs1.5 trillion as of November 2024, has proven insufficient for the bank to fulfill its development mandate effectively.

^{Minister Henry Musasizi Presenting} 

The proposed loans will be used to address various economic challenges and facilitate UDBL's strategic plan, which includes focusing on critical sectors such as agro-industry, infrastructure development, tourism, and human capital.

The government’s investment strategy through UDBL will focus on the following key sectors:

• Agro-Industry and Primary Agriculture: Strengthening food security, supporting value addition, and enhancing Uganda’s export capacity.
• Tourism and Hospitality: Revitalizing the sector post-pandemic and boosting Uganda’s position as a top tourist destination.
• Human Capital Development: Financing education, skills development, and healthcare services to build a competitive workforce.
• Infrastructure Development: Supporting critical projects in energy, transport, and communication to drive economic transformation.
• Manufacturing and Services: Promoting industrialization and expanding the services sector to create jobs and foster economic growth.

According to Musasizi, UDBL offers long-term financing at favorable terms, with an interest rate not exceeding 15% per annum, making it a viable option for businesses and projects in need of substantial capital.

The Deputy Speaker of Parliament, Thomas Tayebwa, directed the Committee on National Economy to review the loan proposal and assess its implications for Uganda’s financial health. The committee will evaluate the feasibility of the funding and report back to Parliament for further debate and approval.

If approved, the additional funding will enable UDBL to play a pivotal role in Uganda's economic recovery and growth, particularly in sectors critical to poverty alleviation, job creation, and long-term development.

The proposal to capitalize Uganda Development Bank is part of the government’s broader efforts to strengthen financial institutions and stimulate sustainable economic growth in line with Uganda’s Vision 2040.

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