Uganda Development Bank (UDB) has announced a financial commitment of Shs150 billion to offer affordable and patient financing to Ugandan contractors.
The program dubbed the Ugandan Contractors Financing Initiative, financing complemented by Business Advisory and Project Management advice services will support Ugandan contractors to access bid bonds and guarantees at favourable terms and promptly.
Addressing the press on Monday at the UDB Head office at Rwenzori Towers, Nakasero Patricia Ojangole, the UDB Managing Director said limited patient access 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.
She added, “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.”
According to Ojangole, 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.
“Therefore UDB acknowledges their pivotal role in Uganda’s growth and development, hence creating a platform where contractors can be guided on how to capitalize on the existing opportunities,” she added.
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.
She added that 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. Access to bid bonds, performance, and other guarantees at favourable terms and conditions, such as arrangement fees of 0.25 per cent, security cover of between 50 – 100 per cent of the bond amount, unsecured bid bonds of between 0.5 – 1 Billion, and low commission rates of 0.5 per cent per quarter.
They will also have a consideration of outstanding payment certificates as security to enable access to up to 70 per cent of the required credit. Consideration of security at market value as opposed to forced sale value – where required and will have 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.
Meanwhile, Uganda Development Bank Limited (UDB) is the country’s national Development Finance Institution (DFI) with a mandate to accelerate socio-economic development in Uganda through sustainable financial interventions.
Consistent with this mandate, the Bank supports projects within the private sector that demonstrate the potential to deliver high socio-economic value, in terms of job creation, improved production output, tax contribution, and foreign exchange generation, among other outcomes. These projects fall within the key priority sectors of our economy and are in line with Uganda’s development priorities.
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