Uganda Development Bank to Raise $500 Million from International Markets for Key Sector Development

Strategic Funding for Economic Growth

The state-owned Uganda Development Bank (UDB) has announced plans to raise $500 million in debt from international capital markets. This significant fundraising effort is intended to bolster the bank's capacity to provide long-term financing to key sectors of the Ugandan economy over a four-year period. The announcement was made on Monday, September 29, by Thaib Lubega, UDB's Treasury head.

The funds are expected to be raised in tranches, with the initial issuance of between $100 million and $150 million potentially occurring as early as next year. UDB is collaborating with the Paris-based Global Sovereign Advisory to identify the most suitable debt instruments for this endeavor, considering options such as a green bond or a syndicated loan. This strategic move underscores the Ugandan government's commitment, led by President Yoweri Museveni, to expand UDB's capital base and enhance access to affordable, long-term financing for businesses within the East African nation.

Targeted Sectors for Investment

The $500 million capital injection is specifically earmarked to boost lending across a diverse range of sectors deemed crucial for Uganda's socio-economic transformation. These include:

• Mining
• Energy
• Manufacturing
• Agro-processing
• Tourism
• Infrastructure
• Climate change initiatives
• Education
• Health

These sectors align with Uganda's broader economic development agenda, including a '500 Billion Dollar Growth Strategy' that prioritizes agro-industrialization, tourism, mineral development (including oil and gas), and science, technology, and innovation. The aim is to stimulate industrial growth, create employment opportunities, and enhance the country's productive capacity.

UDB's Role and Recent Performance

As Uganda's national development finance institution, UDB plays a pivotal role in supporting and catalyzing investments that contribute to the country's socio-economic development. The bank currently holds assets valued at approximately 1.82 trillion Ugandan shillings, equivalent to about $520 million.

In 2023, UDB demonstrated its commitment to these objectives by disbursing UGX 610 billion (approximately $160 million) to various projects nationwide. A significant portion of these disbursements, 65%, was directed towards the industry sector, primarily agro-industrialization and manufacturing. These investments are projected to create 18,558 new jobs, generate UGX 11.39 trillion in additional output value, and contribute UGX 615.96 billion in tax revenue to the government. The planned fundraising from international capital markets is expected to further amplify UDB's impact and reach in driving sustainable development across Uganda.