Uganda Development Bank (UDB) has revealed a new initiative that involves a financial commitment of UGX 150 billion. This initiative aims to offer affordable and patient financing to contractors in Uganda. The announcement was made on October 2 by UDB executives.
Known as the “Ugandan Contractors Financing Initiative,” this program will not only provide financial support but also offer Business Advisory and Project Management advice services. The primary goal is to help Ugandan contractors access bid bonds and guarantees with favorable terms and a faster processing time.
Patricia Ojangole, the Managing Director of UDB, expressed that one of the main challenges faced by Ugandan contractors is limited access to reasonably priced working capital. She mentioned, “Difficulties in obtaining financing and delays, along with seeking funds from unconventional sources, have a negative impact on performance and business growth. They also lead to contract delays and sometimes result in subpar work.”
UDB has issued a call for Ugandan contractors to submit their Expression of Interest for participation in this financing initiative. Eligibility criteria include being a Ugandan-registered contractor with majority Ugandan ownership, and the projects should align with the bank’s priority sectors, particularly physical infrastructure projects.
Ugandan contractors who participate in this initiative will enjoy several benefits. These include quicker access to affordable and patient capital, reduced appraisal fees, grace periods of up to 12 months, and interest rates lower than the prevailing market rates. Additionally, they will have access to bid bonds, performance guarantees, and other benefits, such as low arrangement fees of 0.25%, security cover ranging from 50% to 100% of the bond amount, unsecured bid bonds between 0.5 and 1 billion, and a low commission rate of 0.5% per quarter, among others.
UDB has partnered with the Uganda Institution of Professional Engineers (UIPE) to provide guidance on engineering-related policies and public matters. The Uganda National Association of Building and Civil Engineering Contractors (UNABCEC) will support the mobilization and due diligence processes.
The Expression Of Interest period began on October 3, 2023, and will conclude on October 30, 2023.
