By Mulengera Reporters
Buganda Kingdom’s radio CBS used its news bulletin of 9am on Tuesday to incite millions of Kabaka’s subjects against Uganda Development Bank (UDB)’s top management’s desire to secure Parliamentary approval to borrow up to a total of $155m for recapitalisation.
Well aware that Parliament would that same Tuesday afternoon be debating and voting on a report on the proposed borrowing of $100m from Arab Bank for Developing Africa (BADEA), $25m from Opec Fund for International Development and $30m from International Islamic Trade Finance Corporation (ITFC); CBS aired a very hostile news story that same Tuesday morning.
UDB is 100% GoU-owned and specializes on long term development financing of projects, which commercial banks have no apetitte to do or go into. They lend at 12% with a repayment period of 12-15 years. However, they have for years been undercapitalised yet it’s only them that can play that role.
As of November 2023, their capital stood at Shs1.5trn of which Shs1.3trn came from the GoU as the remaining Shs211bn was raised from retained earnings. 29% of their lending in the 7 years preceding the year 2023 went into manufacturing projects which is one of the major areas it prioritizes; the others being agriculture and industry.
During the same 7 years period, UDB’s loan portfolio stood at Shs2.5trn; 70% of which went into agriculture and industry-based projects. The Shs2.5trn lent out during that same period culminated into 51,841 jobs being created. In the first week of February, the Finance Minister tendered documents imploring Parliament to authorize the Executive branch of government to guarantee the borrowing of $100m besides the other two loan requests which required Parliamentary approval for UDB to go for them.
In their news story, CBS carried voices of MPs opposed to such recapitalisation of UDB and their argument was that UDB management had let down ordinary Ugandans by prioritizing disbursement of loans in favor of the powerful business entities with political godfathers in government while ignoring the needs of SMEs businesses.
Available documentation indicates that the UDB management is working on an SMEs’ package under which up to Shs1trn will soon be available exclusively for SMEs.
The CBS story also created an impression that UDB is unworthy because their management inappropriately only advances money to connected individuals who end up being allowed to access and borrow UDB money meant to finance long term business undertakings, which they use to fund short term trading activities. As a big media platform, CBS’ negativity towards the proposed borrowing of money to recapitalise UDB will most likely influence many people to begin looking at UDB top management less favorably. (For comments on this story, get back to us on 0705579994 [WhatsApp line], 0779411734 & 041 4674611 or email us at mulengeranews@gmail.com).
