Also, the loan stock grew more than half, close to 781 billion shillings.
Uganda Development Bank creates 41,000 jobs
The Uganda Development Bank, the country’s national development finance company, had loan approvals of shs 635 billion in 2021, the highest since 2011.
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The Bank’s investment activities also created and maintained 41,338 jobs during the year, growing by 72 per cent from 24,013 jobs registered in 2020.
The Ministry of Finance, Planning and Economic Development said this was down to sustained promotional activities targeted at Small and Medium Enterprises (SMEs) to access financing to get them back on their proverbial feet after the glancing blow inflicted upon them by the Covid-19 pandemic.
The good performance over the year was also reflected in the profit worth 38.8 billion shillings, a growth of 76 per cent from the previous year.
The growth in the lending levels indicated an increase of more than half in the income from interest rates and fees to 113 billion shillings. Interest and fees are the main sources of revenue for UDB and the banking industry as a whole.
The bank’s Managing Director, Patricia Ojangole, says the bank will pump fresh funds in various projects, having approved 635.5 billion shillings in new funding to different sectors. After implementation of this funding, 7.05 trillion shillings in output value will be reaped on top of jobs created.
The profit growth is partly as a consequence of continued growth in the capitalisation of the bank in glove with an increase in investment in “rest-earning assets, notably, loan disbursements to development projects,” partly reads a statement from the bank.
The government capitalised the bank with 104 billion shillings in 2021 increasing the cumulative capital contributions to 1 trillion and 15 billion shillings.
At the Annual General Meeting recently, the shareholders allowed the bank to retain 38.8 billion shillings as additional capital to be used by the bank to finance qualifying development projects in the country.
This, according to Ojangole,, will continue to strengthen the bank’s capital, which has burgeoned to more than a trillion shillings.
Over the year, the effects of COVID-19 continue to affect business operations for most of the bank’s customers, but the bank says it has ameliorative measures to roll back COVID-19’s devastating effects.
“This called for deliberate interventions to respond to the specific needs but also in alignment with the government’s priorities under the NDP III. To cater for the underserved sections of the population, UDB launched products specifically tailored for women, SMEs, and the youth,” said the Acting Board Chairman, Rita Apel.
However, as COVID-19 sinks on the horizon, the rising inflation due to the heightening costs of imports has led to a soaring cost of living upending the demand for goods and services.
The Bank’s Chief Economist, Dr Francis Mwesigye, says this happenstance will affect their customer bases as the high cost of inputs bolstered the cost of production, yet the high inflation is reducing consumer expenditure on goods and services. He, however, says they will continue finding ways of mitigating these effects militating against the household incomes of their clients.
Thereupon, the bank introduced the Business Accelerator for Successful Entrepreneurship program which aims to assist enterprises to formalise as well as to professionalise their operations, in order to access capital for growth, said the Managing Director.
On the bank’s presumed insensitivity to SMEs over their supposed inability to meet financing requirements, Ojangole says they have been improving the terms for the smaller borrowers, including helping them upgrade their operations to meet the repayment requirements.
The bank is intentional about its positive contribution to the country’s socio-economic transformation and will in 2022 and beyond through the focus on the mobilisation of adequate capital to enable UDB deliver on its programmes thereto.
In 2022 and beyond, the bank says it will unveil an industrialisation strategy aimed at accelerating industrial productivity, import replacement and export promotion while advancing the bank’s overall sustainability agenda towards deepening financial inclusion for SMEs, women and youth.
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