Financing Manufacturing Growth: Uganda Development Bank Limited Lending Process to Large, Medium, and Small-Sized Enterprises in Uganda (East African Journal of Business and Economics)

Summary

• Uganda Development Bank Limited offers long-term lending terms with repayment periods of up to 15 years and a 3-year grace period.p.4
• Interest rates for UDB lending facilities are capped at a maximum of 12% in Ugandan shillings.p.4
• Between 2014 and 2019, UDB approved UGX 360.5 billion for the manufacturing sector, disbursing UGX 236.21 billion by December 2019.p.4
• Financing interventions by UDB contributed to an increase in industrial capacity utilisation from 50% in 2018 to 61% in 2022.p.4
• Under its asset financing model, UDB funds up to 80% of asset costs, requiring the borrower to cover the remaining balance.p.4
• Uganda's construction sub-sector GDP contribution grew from about 5% in the 1990s to approximately 12% by the early 2000s.p.5
• Establishments in the construction materials sub-sector are heavily concentrated in Kampala, representing over 60% of firms.p.5

Key insights

1. Uganda Development Bank Limited addresses critical industrial financing gaps by providing patient capital with loan tenures extending up to 15 years.p.4
2. Short-term credit facilities with tenures up to 3 years are structured specifically to meet working capital needs of qualifying enterprises.p.4
3. Medium-term credit facilities ranging from 4 to 8 years target capital expenditures for corporate expansion and technological modernisations.p.4
4. A majority of construction materials producers in Uganda are small- and medium-sized enterprises employing fewer than 20 workers.p.5
5. UDB's loan acquisition process requires sequential progression through 7 distinct steps from application submission to final disbursement.p.9
6. Extensive documentation and compliance requirements can disproportionately hinder smaller enterprises with limited administrative resources from securing funding.p.10