By Mulengera Reporters
Via the newly-published 160-page impact assessment report, the top management at Uganda Development Bank (UDB) will be required to strengthen end-to-end project accountability and corporate governance measures by deploying the relevant staff and managers to ensure compliance with financing loan terms relating to procurement of large-scale and high value equipment.
The authors of the impact assessment, who came from National Planning Authority (NPA) which was instructed to carry out the evaluation by the Finance Ministry, established that one of the reasons why private business projects which borrow billions of shillings from UDB end up defaulting and failing to pay back has to do with diversion of funds, which quite often see them spend on other things outside the specific purpose, for which the money was borrowed in the first place.
As a mitigation measure, the report, whose contents were meant to coincide with the commencement of NDP4 (July 2025-July 2030), recommends that staff teams from UDB begin to participate in all the procurement decisions to ensure that such colossal sums of money lent out under the Bank’s “asset financing portfolio” are put to the appropriate use without a fraction of the same ever being diverted to some other things.
There is need to ensure that the equipment procured delivers value for money besides adhering to Uganda’s national quality standards-and the NPA report asserts that all this can be guaranteed through ensuring that UDB staff, managers or representatives are enabled to participate in technical verification, vetting of suppliers and enforcement of the approved GoU standards.
The participation of such UDB representatives can be relied upon to safeguard against misallocation of funds, inflated prices and procurement or purchase of substandard machinery and other equipment.
The report reads in part: “This oversight would help to ensure that the disbursed funds are applied directly to their intended purpose and that the financed assets meet performance, safety and durability standards.”
That this is all part of the governance oversight for UDB’s large scale and strategic borrowers, which the impact assessment report by NPA proposes the borrower should be compelled to accept during the loan application appraisal phase. Enforcement of the same should be prioritized as part of the monitoring processes of the large-scale, long-term and strategic enterprises funded by UDB.
Speaking broadly, the NPA report recommends that minimum corporate governance rules and practices should be inculcated as well so that UDB-funded private business projects are compelled to have functional governing boards and to hold regular meetings while adhering to all corporate governance best practices.
UDB should also be adequately resourced to be able to provide such borrowers with tailored capacity-building and advisory support “to enhance governance systems in the funded enterprises in order to reinforce transparency, prudent risk management and sustainable business performance in order to maximise long-term development impact.”
The Bank must also ensure that export volumes and revenues plus women, youth and PWDs-centric jobs (at the enterprises it supports) are created in an inclusive manner that is consistent with the GoU’s long-term development aspirations while delivering on the desired socio-economic transformation indicators in a measurable way. (For comments on this story, get back to us on 0705579994 [WhatsApp line], 0779411734 & 041 4674611 or email us at mulengeranews@gmail.com).
