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Uganda Development Bank to focus on agriculture market

Charles Byaruhanga (R), a bank board member, flanked by CEO Patricia Ojangole (2nd R) and boad chairman Samuel Ssejjaaka (2nd L) explains the bank's rebranding

The Uganda Development Bank (UDB) has rebranded with the aim of focusing on financing agriculture, where three out of four Ugandans earn a living.

Speaking at the unveiling of the bank’s new corporate image at Sheraton hotel recently, Prime Minister Ruhakana Rugunda said that as the sole shareholder in UDB, government would, through a phased process, recapitalise the bank starting this financial year, to enable it fund development projects in the country.

Rugunda said his office was following up on the recommendations of a recent proposal presented to the Presidential Economic Council on how best the bank could be strengthened, adding that  as government they recognize the importance of injecting  more money into  the bank for it to execute its development mandate.

“Government is committed to revamping Uganda Development Bank to bring it to its rightful position as a key player in financing development projects that can promote employment, value addition, industrialisation and development of local entrepreneur skills for self-sustainability of the economy,” he said.

Samuel Ssejjaaka, the chairman of UDB, said the bank was taking strategic strides to achieve their mandate of offering the type of development finance that offered special interventions to bridge the gap in access to financing economic growth.

Rugunda said the recapitalisation would be sustained through the annual budgeting process, but added that government’s interest was to ensure that the funds allocated for recapitalisation were properly utilized and directed to the priority areas that brought and delivered the greatest benefit to the people.

“We recognize the efforts put into the reform process that the bank has been undergoing, which are aimed at realigning its operations and practices to meet modern-day expectations of a development finance institution.

These reforms should bring in efficiency and enable the bank to deliver on its mandate even more effectively, top amongst these reforms is rebranding of the bank to reposition it in the competitive financial market,” Rugunda noted. 

Noting that most commercial banks consider agricultural financing as risky, Ssejjaaka says such fears and attitude have denied the sector the opportunity to meet its potential.

“This is why UDB considers venturing into it [agriculture] because of its importance in developing economies like Uganda,” Ssejjaaka said recently during a media breakfast meeting at Sheraton hotel as UDB announced its successful rebranding exercise. Ssejjaaka is optimistic that UDB will have deeper impact on the sector.

According to statistics, Uganda’s agriculture grows between three and four per cent annually. Those numbers would go higher with more investment in agriculture. Agriculture contributes about 23 per cent to Uganda’s gross domestic product (GDP), but Ssejjaaka says the sector can be more productive if increased financing is available.

Accordingly, UDB has come up with interventions in financing the value chain in agriculture and agro-processing, supporting farmer groups in crop and livestock farming and irrigation to increase productivity.

Patricia Ojangole, the bank’s chief executive officer, said UDB, with funds worth more than Shs 500bn, remained the only institution that offered flexible development loans. For instance, she said some of UDB’s lending rates were as low as 12.5 per cent, compared to the current rate of 22 per cent that most commercial banks charge.

Last year, the bank formed a collection and loan recovery unit with the responsibility of recovering principal and interest due from borrowers and recovery of outstanding debts.

Ojangole says in so doing, they reduced the size of the non-performing loans from 60 per cent in 2012 to 24 per cent as at end of last year.

mugalu@observer.ug

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