Banks offer one trillion to finance exports to the region
Ugandan manufacturers have a reason to smile after commercial banks under their umbrella body the Uganda Bankers Association (UBA) offered to lend to them money at low interest rates.
Ugandan Bankers Association (UBA) through its members on Tuesday October 16, 2022 unveiled a special credit facility dubbed Regional Export Facility (REF) through which member banks will offer loans at a maximum interest rate of 12% to manufacturers with the aim of boosting exports to the East African community member states.
UBA said in a Twitter thread that the REX will be accessible to manufacturers at a maximum interest rate of 12 percent per annum for UGX loans and 6 % for US Dollar denominated loans.
Wilbrod Owor, the UBA Chief Executive Officer said the REF is a specialized financing regime that will give borrowers access to low interest rates.
“The Financing will come through repayment periods ranging from 3 months to five years, depending on the purpose and structure of the facility.
UBA says: “The facility is intended for use as a direct working capital support in form of loans and overdrafts to fulfill an export order, support for receivables management mainly through discounting as well as indirect support through letters of credit and guarantees.
The regional markets include South Sudan, DRC, Rwanda, Burundi, Kenya and Tanzania among others.
Speaking at the ceremony, Uganda Bankers Association Chairperson Sarah Arapta, who is also the Chief Executive Officer of Citi Bank, said the REF initiative had been developed as a special intervention to support economic recovery given the post COVID effects that saw global, regional and local markets locked down for at least 2 years.
Arapta said: “Uganda has a strong manufacturing and trading hub capable of serving the regional markets which if well leveraged could be a key engine of growth.
The head of the Private Sector Foundation Uganda Stephen Asiimwe hailed the package as a timely intervention that will support, finance and promote regional trade for our business community and private sector.
Asiimwe said: “This is very good news for the private sector; this facility is a timely intervention which will support, finance and promote regional trade for our business community and private sector.”
Asiimwe added: “One of the biggest challenges to trade in the region has been financing. 12% is a good start and we need to improve this and even scale up. The markets in Burundi, South Sudan and DRC are a huge potential for us as East Africans.”
He added: “Uganda shares 850Km of border with South Sudan, another 900hkm with DRC. We are an exporter of everything with the DRC . But the DRC needs a lot more than we are presently giving them.”
aBi Development Finance, one of the partner institutions pooling the resources, offered to offer credit to SMEs with book value of between one billion and 4 billion.
“They should also have 20 to 100 employees, with annual sales above UGX4bn and not more that UGX8bn and total assets of between UGX2.5bn to UGX5bn.