The Speaker of Parlaiment, Jacob Oulanyah has urged Uganda Development Bank (UDB) to reduce its lending rate from 12 per cent saying that access to affordable loans by majority of Ugandans is a key driver of socio-economic transformation.
He made the remarks while meeting with the Board of the Bank at Parliament on 13 October 2021.
“12 per cent is still high for long term investment. We are not blaming UDB but can we be more creative to ensure the rate is lowered,” he said.
He said that majority of Ugandans fail to sustain businesses because they spend all their earnings paying back loans occasioned by high interest rates.
“The framework for lending by UDB should be different from commercial banks. Borrowing money now is a death warrant for the company and owner. We have buried prospective business people because their properties were taken. It is not sustainable, you do not earn from borrowing,” he said.
According to Oulanyah, such challenges can be addressed by a deliberate effort the Bank to invest enabling access to cheap loans.
“We want to wipe away the informal sector and see everybody earning and saving. People have access to land but how will they make use of their land without capital,” said Oulanyah.
He also asked the Bank to spread investments countrywide saying that currently, investments are centred in Kampala and surrounding areas.
“This should be a matter of concern to you. Are your disbursements high in other places because people are not aware? You may want to spread out the outreach,” Oulanyah said.
The Managing Director, UDB, Patricia Ojangole said that the bank has a deliberate strategy to create and support investment opportunities in other regions.
“A lot of money has been invested in industries in Kampala like in Namanve Industrial Park but moving forward, we intend to go to other regions,” she said.
She added that the bank will start providing business advisory to Small and Medium Enterprises (SMEs) to enable them access financing.
“We shall support the entire value chain from the demand to supply of credit. UDB has previously been accused by the public of financing only established businesses but we have now done a specific strategy for SMEs,” she said.
UDB is a development finance institution focused on accelerating socio-economic development through sustainable financial interventions in line with the country’s development priorities.