By Mulengera Reporters
A recently-published impact assessment report authored by National Planning Authority (NPA), at the direction of the Finance Ministry, has established several areas that require urgent reform in the way business is run and conducted at Uganda Development Bank (UDB).
The impact assessment research was meant to coincide with the commencement of National Development Plan (NDP) 4; covering a five-year period between July 2025 and July 2030.
The Finance Ministry, which supervises both NPA and UDB, wanted an evidence-based document guiding on areas that can be reformed to make the Bank become more aligned to the country’s long-term development objectives as articulated under the NDP4 and Vision 2040.
One of the many recommendations contained in the 160 page report is on the need to institutionalize independent impact assessment evaluations and reviews on the performance of UDB.
The report, whose contents the Finance Ministry will be implementing with necessary modifications, calls for imposition of mandatory and periodic independent reviews whose findings are be relied upon to assess the Bank’s effectiveness and the extent to which its lending, staff development and capacity building programs or decisions are aligned to Uganda’s national priorities enshrined in NDP4 and Vision 2040.
The NPA report proposes that such independent reviews comprehensively evaluating or assessing the Bank should be made formal and made to mandatorily happen every three years. That this will promote “evidence-based planning and enhance accountability for capitalisation while ensuring sustained alignment with Uganda’s long-term development agenda.”
Some of the indicators on which the performance of UDB is to be assessed or reviewed every three years will include: the proportion of the Bank’s overall loan portfolio that has ceased to perform as expected (non-performing loans in case of default of more than 90 days), debt recovery/collection rates, prudence of debt recovery processes, effectiveness of credit risk management systems, the extent to which the realized profits are reinvested to facilitate new lending and the extent of UDB’s macroeconomic impact (in terms of jobs created, export earnings registered, tax contribution etc).
Others include the extent of adherence with the inclusivity metrics (in terms of impacting the youths, women & PWDs in the resultant jobs created under projects funded by UDB), portfolio at risk metrics (enabling the tracking of loan quality & detection of early signs of financial distress), the fraction of the loan book that is potentially at risk, tracking the growth of long-term debt financing, long-term loans as a share of total disbursements, tracking of regional distribution of UDB funding to achieve spatial equity and assessing the Bank’s ability to sustain lending activities using repaid loans while strengthening the revolving fund growth.
Such regular/periodic independent reviews will also focus on the extent to which the recovered debt is reinvested to facilitate and enable new lending. The overall idea is to ensure that measurable development KPIs are in place and are directly linked to the capitalisation requirements of the Bank. (For comments on this story, get back to us on 0705579994 [WhatsApp line], 0779411734 & 041 4674611 or email us at mulengeranews@gmail.com).
