Uganda Bankers Association (UBA) has unveiled a Regional Export Facility (REF) to bolster Uganda’s Balance Of Payment (BOP) through supporting local exporters and manufacturers.
The special financial package of UGX. 1 trillion was launched yesterday at Serena Hotel Kampala, with a prime aim of increasing local industrial productivity to shower up export volumes to regional markets in South Sudan, DRC, Rwanda, Burundi, Kenya, Tanzania among others.
The facility is open to Ugandan Manufacturers and traders legally operating businesses in the country who export to the region and need to revamp internal production, trading capacities and recover lost regional markets, to regenerate and grow export volumes to these markets.
It is also intended for use as direct working capital support in form of loans and overdrafts to fulfil export orders, support for receivable management mainly through discounting, as well as indirect support through letters of credit, guarantees, among others.
The financing will be provided at 12% per annum and will come with a tenure of between 3 months to 5 years depending on the purpose and structure of the facility.
While officiating the launch of the facility, the Executive Director for UBA, Wilbrod Owor Humphreys said the financing will be so instrumental in bolstering the production of fast moving consumer goods which include; scholastic materials, personal care products like cosmetics, textiles, foam products, as well as construction products like cement, steel bars, iron sheets, paint and others. The comprehensive financial package will also bolster Uganda’s huge agro-processing sector in areas of food and agricultural products.
Mr. Owor added that the facility is a specialized financing regime supported by a payment and settlement mechanism that will be availed at a maximum interest rate of 12% per annum for shillings, and 6% per annum for dollars.
This grand financing program will also work as short to medium-term capital expenditure (CAPEX) investment to bolster export capabilities of local traders and manufacturers, by alleviating financial-oriented challenges in value addition and supply chains, a view shared by Mr. Owor.
“We have exporters who fall in a number of categories. We need to work on the warehousing and the logistics companies, if we are to make the market in DR Congo, South Sudan and Burundi viable. We have the Ugandan cargo if it needs to make 10 flights a day, so be it,” remarked Owor.
Also while speaking during the launch, chairperson for UBA Sarah Arapta said Uganda has a strong manufacturing and trading hub capable of serving the regional markets which if well leveraged could be a key engine of economic growth.
She explained that the initiative has been developed as a special intervention to support economic recovery given the post covid effects, that saw global, regional and local markets locked down for at least two years.
It is important to note that the interest rate for the UGX. 1 trillion facility is 12% per annum, which includes a 1% per month if one is borrowing in Ugandan shillings and 6% per annum for those borrowing in US dollars, for a period of 3 months to 5 years.
The financial investments are responsible for the due diligence of awarding these loans, something that will take effect on November 1st.
Uganda Bankers Association (UBA) is an umbrella entity that envelopes all financial institutions licensed and supervised by the Bank of Uganda.
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