The Uganda Development Bank has announced the commitment of shs150 billion towards supporting and enabling the growth of Ugandan contractors through the Ugandan Contractors Financing Initiative.
This initiative is complemented by Business Advisory and Project Management advice services which 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 that limited access to capital remains a key challenge faced by our private sector including local contractors , prompting the development financing bank to come to their help.
"UDB has a role in trying to identify what the challenges are and providing solutions within the specific role and mandate of the bank. To this end, the bank identified a need to provide targeted financial support to emerging and existing Ugandan contractors so as to aid performance and contractor growth,” Ojangole said.
“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.”
According to the UDBL Managing Director, contractors will enjoy benefits like timely access to cheaper and patient capital and Business Advisory on technical and project management skills to enable capacity building for the contractors.
"Lower appraisal fees, grace periods of up to 12 months as well as lower than prevailing market interest rates, 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 consideration of outstanding payment certificates as security to enable access of up to 70% of the required credit consideration of security at market value as opposed to forced sale value - where required."
Elizabeth Muhebwa, the Executive Director of UNABCEC one of the partners hailed UDBL for the initiative that aims at alleviating challenges faced by local contractors through providing technical assistance.
"This partnership with UDB exemplifies the shared vision of driving the economic development through construction excellency. This finance initiative stands as a testament to our dedication to the development of the construction industry,”Muhebwa said.
Andrew Muhwezi the president of Uganda Institute Of professional Engineers(UIPE) said that this initiative will help in transformation of the infrastructure sector.
"With this affirmative action in place, we anticipate a positive transformation within the infrastructure sector and with ongoing projects in the country managed by local contractors, the opportunity to cultivate the next value chain of skills becomes even more attainable."
Muhwezi pledged that UIPE will provide leadership and direction in all policies and matters of public interest of engineering nature.
He assured full commitment and delivery on all its obligations in UDB partnership.
According to UDB’s Patricia Ojangole, the Ugandan Contractors Financing Initiative is a new dawn and anchor to infrastructure development in Uganda.
“ I call upon all Ugandan contractors to embrace the initiative as we reshape financing for development in the country.”
According to UDB, expression of interest starts today, October, 3, 2023 and will close on October 30 and an evaluation committee will review the applications against the minimum requirements.
Applicant(s) who meet the minimum requirements will be categorized according to pre-approved credit limits.