Uganda Development Bank earmarks Ugx150billion for Ugandan Contractors

Uganda Development Bank, the country’s development finance institution, has announced Ugx150 billion financial commitment earmarked to provide affordable and patient financing to Ugandan contractors, it said on Oct.2.

Dubbed the Ugandan Contractors Financing Initiative, the financing complemented by Business Advisory and Project Management advice services will support Ugandan contractors to access bid bonds and guarantees at favorable terms and in a timely manner.

Patricia Ojangole, the UDB Managing Director said limited access to patient and favorably priced working capital remains a key challenge to Ugandan contractors.

“The financing difficulties and delays coupled with sourcing funds from unconventional financing sources negatively affects performance and business growth, causes contract delays, and often leads to poor quality work among other challenges,” Ojangole said.

“UDB has identified the need to provide targeted financial support to emerging and existing Ugandan contractors to aid performance and contractor growth, a testament to the Bank’s commitment to champion development impact activities that are consistent with our mandate.”

The Bank has made a call for Ugandan contractors to submit their Expression of Interest to participate in the Ugandan Contractors Financing Initiative.

The call is open to Ugandan-registered contractors where Ugandans have majority shareholding.

Eligible firms shall be those that undertake physical infrastructure projects within the Bank’s key priority sectors.

Ugandan contractors will enjoy benefits including timely access to cheaper and patient capital, lower appraisal fees, grace periods of up to 12 months as well as lower than prevailing market interest rates.

The others are access to bid bonds, performance, and other guarantees at favorable terms and conditions, such as arrangement fees of 0.25%, security cover of between 50 – 100% of the bond amount, unsecured bid bonds of between 0.5 – 1 Billion, and low commission rates of 0.5% per quarter and more.

The Bank has partnered with the Uganda Institution of Professional Engineers (UIPE) which will provide leadership and direction in all policies and matters of public interest that are of an engineering nature.

On the other hand, the Uganda National Association of Building and Civil Engineering Contractors (UNABCEC) will support mobilization and the due diligence processes.

Expression Of Interest opened on October 3, 2023, and will close on October 30, 2023.

An evaluation committee will review the applications against the minimum requirements. 

Applicants who meet the minimum requirements will be served accordingly.