Uganda Development Bank (UDB), the country’s national Development Finance Institution, on Wednesday signed a Loan Portfolio Guarantee agreement with the African Guarantee Fund (AGF), to scale up lending to SMEs, Women, Youth-affiliated businesses, and green projects in Uganda with credit worth UGX16 Billion (approx. USD5 million).
The announcement was made in a joint press statement, during an agreement signing ceremony that was held at the Sheraton Kampala Hotel.
Patricia Ojangole, the UDB Managing Director while re-affirming the partnership, said UDB and AGF are working as strategic partners to facilitate and accelerate the development of underserved business segments in key growth sectors including agriculture, manufacturing, and tourism among others.
“SMEs, Youth, and Women play a crucial role in Uganda as catalysts of socio-economic development. They make tangible contributions to solving the country’s most complex and intractable challenges like unemployment and expansion of the tax base. However, access to affordable financing remains one of their major challenges. As actors charged with the responsibility to appreciate our challenges and to design appropriate interventions that address them, we have today formed this formidable partnership with AGF to establish a sustainable solution that responds to these challenges,” she said.
As a Development Bank, UDB is one of the key entities involved in implementing the interventions outlined in Uganda’s National Development Plans (NDPs), particularly those that relate to the provision of affordable finance to facilitate and catalyze private sector investment and support the growth and development of SMEs.
Speaking during the signing ceremony, Jules Ngankam, AGF Group CEO hailed UDB as a key player in promoting private sector development. “Our partnership with Uganda Development Bank further increases our footprint and impact in the country. By supporting UDB to accelerate SME financing, we envision several development impact indicators, including increasing the number of people employed/engaged in businesses directly or indirectly and growth of enterprises from one stage to another: e.g., from Small to Medium enterprises, through financing and impact of capacity development on their operations and governance,” he said.
Mr. Ngankam further highlighted the positive impact expected from the partnership to include; increase in number of SMEs receiving credit, increase number of jobs created by SMEs and increase Uganda’s Gross Domestic Product (GDP).
Under the arrangement, AGF will also provide tailored facilities, specifically the green guarantee for SMEs investing in low carbon and climate resilient businesses; and the African Development Bank’s Affirmative Finance Action for Women in Africa (AFAWA) Guarantee for Growth program to support women-led and owned businesses. To accompany the guarantee partnership, AGF is at an advanced stage in structuring a Capacity Development support that will enhance UDB’s capacity to foster financial inclusion for the youth, women, and green SME projects.
In 2021, UBD tailor-made a specific intervention aimed at supporting the growth of SMEs, women-led/owned enterprises, and youth entrepreneurs through bespoke financial and non-financial solutions. Given that the SME sector accounts for about 90 percent of Uganda’s private sector and generates over 75% of the country’s GDP, the Bank’s value proposition seeks to propel these groups in all sub-regions of the country towards higher business assets and revenues, while also creating new employment opportunities and redistributing wealth for balanced development.
African Guarantee Fund (AGF) is a specialized guarantee provider whose mission is to facilitate economic development and poverty reduction in Africa. To achieve this, AGF increases access to finance for Small and Medium-sized Enterprises (SMEs) across key economic sectors through an array of guarantee products and capacity development assistance. Since inception, AGF has unlocked more than USD 3.5 billion in SME financing, through partnerships with 200 partner financial institutions across 40 African countries.
AGF is backed by the following shareholders and sponsors: The Government of Denmark through the Danish International Development Agency (DANIDA), the Government of Spain through the Spanish Agency for International Cooperation (AECID), the African Development Bank (AfDB), French Development Agency (AFD), Nordic Development Fund (NDF), Investment Fund for Developing Countries (IFU), German Development Bank (KfW), French Agency for Private Sector (PROPARCO), West African Development Bank (BOAD), Global Affairs Canada (GAC), USAID’s West Africa Trade & Investment Hub (WATIH), TechnoServe and Mastercard Foundation.
Uganda Development Bank Limited (UDB) Uganda’s national Development Finance Institution (DFI) with a mandate to accelerate socio-economic development in Uganda through sustainable financial interventions.
These projects fall within Uganda’s priority sectors of the economy and in line with Uganda’s development priorities. The Bank’s financing interventions are mainly in Primary Agriculture, Agro-processing, and manufacturing which account for about 80 percent of its investment portfolio.
The Affirmative Finance Action for Women in Africa (AFAWA), is a pan-African initiative of the African Development Bank Group that aims to close the USD$42 billion financing gap for women in Africa through comprehensive support. AFAWA aims to unlock USD$5 billion in financing for women-owned and women-led small and medium enterprises by 2026.
AFAWA is supported by the African Development Bank’s partners and donors, the G7 countries, the Netherlands and Sweden, and the Women’s Enterprise Finance Initiative (We-Fi). Through AFAWA, the African Development Bank has approved USD$1.5 billion of investment for women entrepreneurs in 32 countries, channeled through 96 financial institutions.
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