The Uganda Development Bank UDB says that once it secures Shs 1trillion shillings in capitalisation, its lending rates will equally move downwards the current 14%.
Dr Samuel Sejaaka, the Chairman of UDB’s board of directors, says that the additional capital injection above its current threshold of Shs200 billion would see a 9% lending to agriculture according to report carried by NTV.
Most of the money will probably have to be raised using international long-term financiers such as the Islamic Development Bank, African Development Bank, and Kuwait Special Fund, among others.
UDB’s interest rate stands at 12.5 per cent for long term financing, 13 per cent medium and 14 per cent for short term loans which is cheaper compared to between 18 to 23 per cent charged by commercial banks.
The bank’s assets are projected to grow at an average annual rate of 36 per cent increasing from Shs198 billion in 2013 to Shs1.2 trillion by 2017.
Government experts recently indicated that the proposed Shs. 50 billion planned for additional capitalization of the Bank will be prioritized on production for exports.
However according to Finance minister Matia Kasaija blamed the poor performance of the economy for low capitalisation.
“The economy is not doing well enough for us to give UDB the capitalization it requires. If it grows faster than this, maybe we shall increase the amount for the bank to be capitalised,” Kasaija said in an earlier interview.
