finance 3 September 2026 The Observer (Uganda)
Uganda Boosts UDB Capital to Shs 5 Trillion for Cheaper Business Loans
The Ugandan government has significantly increased the Uganda Development Bank's (UDB) capital base to Shs 5 trillion, including a Shs 63 billion allocation from its profits, to facilitate access to more affordable credit for local businesses. Source: https://observer.ug/news/government-moves-to-strengthen-udb-capital-base
The Ugandan government is taking steps to bolster the Uganda Development Bank (UDB), raising its authorised share capital to Shs 5 trillion from Shs 2 trillion. This move is part of a broader strategy to enhance access to cheaper, long-term financing for local enterprises, particularly those in priority sectors crucial for economic growth.
Finance Minister Henry Musasizi announced that Shs 63 billion, derived from UDB’s 2025 profits, will be retained as additional capital. This infusion aims to strengthen the bank’s capacity to offer development finance at interest rates below the current 12%, with a medium-term goal of reaching single digits. This is significantly lower than the typical 18% charged by commercial banks.
UDB’s increased capitalisation is expected to support key sectors identified in the National Development Plan IV and the government’s Ten-Fold Growth Strategy. These include manufacturing, agro-industrialisation, tourism, and mineral development, areas where long-term investment is vital for economic transformation.
The bank reported a strong performance in 2025, with loan disbursements totalling Shs 502.2 billion and contributing to the creation and maintenance of over 69,000 jobs. UDB’s Managing Director, Dr. Patricia Ojangole, highlighted that a significant portion of loan approvals, between 65-70%, are directed towards agriculture, manufacturing, and industry, reflecting the country’s economic priorities.
UDB is also expanding its reach beyond Kampala, establishing a presence in regional areas and introducing specific financing programs for SMEs, youth, and women entrepreneurs. The government’s intervention, including capital allocations and guarantees, aims to improve the bank’s efficiency and its ability to meet the growing demand for productive investments.
This initiative underscores the government’s commitment to supporting the private sector by reducing the cost of borrowing, thereby fostering job creation, boosting exports, and expanding domestic production.
Source: The Observer (Uganda)