Uganda Development Bank has earmarked 150 billion shillings under the Contractor Financing Initiative that is intended to build the capacity of local engineering contractors to enable them to contribute towards the country’s development through construction.
Announcing a call for the Contractors Financing Initiative, Patricia Ojangole the Managing Director Uganda Development Bank says limited access to capital remains to be a key challenge to the private sector.
Ojangole says to address the financing gap, the bank has identified a need to provide targeted financial support to emerging and exiting Ugandan contractors so as to aid performance and contractor growth.
She says that starting today, eligible experienced local contractors have a chance of accessing a maximum of 15 billion shillings while those with technical and legal limitations will have a chance of accessing up to a maximum of 5 billion shilling.
The UDBL Managing director explains that the contractors will be getting the money at a 12% Interest rate per year, which is far cheaper as compared to other credit facility in market because we are a policy bank so government policy around providing private sector cheap credit is currently being implemented through UDBL.
“The bank through the contractors financing initiative has committed 150 billion shillings towards deliberately supporting and enabling the growth of Ugandan contractors, the initiative aims at providing timely cheap financing as we as favorable terms for accessing bid bonds and guarantees,” Ojangole said.
She added that the bank will also offer technical and advisory services to these engineering companies to ensure success in the local construction industry.
“We shall also offer alongside this; business advisory and project management advise where this is required, and all this will be providing to emerging and existing contractors”-Ojangole adds.
Welcoming the initiative, Elizabeth Muherwa the Executive Director Uganda National Association of Building and Civil Engineering Contractors (UNABCEC) expressed optimism that the Ugandan contractor will grow their capacity and be able to compete with other foreign Construction companies.
“The financing initiative has come timely when the Ugandan contractors space is dwindling consistently due to limited financing capacity to compete with their foreign counterparts who are privileged to come through to operate in this construction specie with all the support from their countries of origin”-Muherwa.
Applauding the bank for coming up with the initiative, Muherwa said that it is important because its aim is to alleviate the challenges faced by Ugandan contractors by providing financing and technical assistance solutions.
Andrew Muhwezi, the President of Professional Uganda Institute of Professional Engineers saluted the UDB Limited for what he called a partocratic act to remove the key constraint which has been the bother of the Ugandan contractor -financing.
Muhwezi says that this is going to give a very big mileage to bring up many of the contractors. As you have been reading the issues of delayed payments, failure to perform contracts even doing substandard work because of inadequate financing. so, with this enabler in place we believe a lot of good things are going to happen in terms of the infrastructure space.
It is a double win for us because the initiative considers human capital development.
“In fact UDB Limited should make it clear that as local contractors get this money they should provide space for capacity building within the framework of the contract so that we maintain a steady chain of skills growth and that is when we can have each of the contractors having competent and skilled engineers, technicians in their work forces instead of poaching from each other which can be a big disincentive”-Muhwezi notes.
The local contractors have up to 30th of October 2023 to express interest for this financing under this initiative that was opened on the 3rd October 2023.