Uganda Development Bank Ltd (UDB), the country’s national Development Finance Institution and the Best Bank in East Africa 2024, has today announced its 2023 annual performance, highlighting its continued pivotal role in fostering economic resilience and sustainable growth across key sectors of the economy.
UDB’s net loans expanded to UGX1.47 trillion in 2023, reflecting robust support to the private sector. The Bank strengthened its commitment to providing affordable and patient capital, achieving significant milestones amidst economic challenges.
The results, released during the Annual General Meeting held at the Ministry of Finance, Planning, and Economic Development, reflect a sustained effort to facilitate economic recovery.
The meeting was attended by the Bank’s shareholders, the Finance Minister, Hon. Matia Kasaija, and the Minister of State Planning, Hon. Amos Lugoloobi, who was appointed proxy to represent the Minister of State for Privatization and Investment, Hon. Evelyn Anite.
Also in attendance were officials from the Office of the Auditor-General and the Ministry of Finance, the Bank’s Board of Directors, and Executive Management.
Growth
According to the UDB Managing Director Ms. Patricia Ojangole, in 2023, the Bank approved UGX691.8 billion and disbursed UGX610 billion, demonstrating a dedicated approach to supporting private business growth.
“UDB remains committed to fostering inclusive economic growth through strategic investments in sectors that drive sustainable development and job creation across Uganda. Our focus on key priority sectors underpins our mission to deliver high socio-economic value and support Uganda’s long-term development goals,” she said.
Scaling Up Investment
In 2023, the Bank approved funding of UGX692 billion in new loans to over 200 enterprises in 63 districts nationwide.
“These projects, upon full implementation, are expected to create 18,558 new jobs and generate an output value of UGX11.4 trillion, from which UGX616 billion will be generated as tax revenue to the Government, and UGX3.34 trillion in foreign exchange earnings,” the Bank’s Annual Report reads in part.
Additionally, the Bank implemented various institutional initiatives to expand its support to various vital sectors and address systemic growth constraints in the economy, including the following:
Access to Clean Water: Through a multi-stakeholder partnership, the Bank extended UGX27 billion in funding to enhance water supply and improve water infrastructure, especially in scarcity-prone areas; under the program, up to 774 Kms in new water mains extension was realized, 27,307 new water connections realized, and 1,619 new public standpipes constructed to cater for 858 villages across the country.
Access to Electricity: Through a multi-stakeholder partnership, UGX8.1 billion was deployed through the Hybrid Electricity Customer Connection Credit Framework, facilitating 38,833 new connections to the electricity grid nationwide.
Supporting Local Content: The Bank launched a UGX150 billion funding allocation to support Ugandan contractors participating in infrastructure projects, a testament to our belief in the potential of local businesses.
Serving the underserved segments: Under its Special Programs proposition, the Bank continued to focus on expanding its support to the Youth, Women, and SME segments – with an additional allocation (approval) of UGX21.2 billion in 2023 and disbursement of an additional UGX13 billion to support various enterprises across the country, demonstrating our commitment to inclusivity and equality.
To enhance business resilience and formalization, through its Business Accelerator for Successful Entrepreneurship (BASE), the Bank provided business development and coaching programs to 450 enterprises nationwide, of which 291 were identified to undergo business incubation in 2024.
The program also supported 24 farmer groups, consisting of 444 households and 330 women-led enterprises. This support is aimed at empowering and fostering the growth of these businesses.
Expanding Reach
UDB Service Centers: The Bank began operationalizing its regional representative offices. The inaugural office was opened in Gulu in 2023, and plans are underway to open four more offices—in Mbale, Hoima, Mbarara, and Arua by mid-2025.
Digital Finance: The Bank is optimizing technology to enhance access to finance. In 2023, in collaboration with partners including UNCDF, FAO, and Ensibuuko (a FinTech), the Bank launched the UDB AgriConnect.
This novel digital lending solution facilitates smallholder farmers arranged in Village Saving and Loans Associations (VSLAs) in rural Uganda to access finance from the Bank. Under the initiative, smallholder farmers save and access micro-loans to support essential production activities, including purchasing seeds and other key farm inputs.
Employment
51,841 jobs were created/maintained amongst the enterprises that the Bank financed, compared to 51,439 jobs realized in 2022.
“64% of the jobs created and maintained were filled by the youth, 27% by women, and 0.25% by Persons With Disabilities (PWDs). Additionally, 33%, 39%, and 0.2% of the youth, women, and PWDs, respectively, are among the shareholders,’ the report reads.
Supporting Private Sector Performance
This output value grew 71% year-on-year, from UGX3.4 trillion in 2022 to UGX5.8 trillion in 2023, supported by improved production mainly in agriculture and industry.
Tax Contribution
Similarly, the profitability of these businesses improved to UGX869 billion from Ugx492 billion in 2022.
Because of improved output, performance, and profitability amongst the companies financed by the Bank, their total contribution to government tax revenue grew by 60%, to Ugx236.1 billion from the Ugx147.5 billion registered in 2022.
Other Impact indicators
Conversely, the earnings from locally produced destined products (exports) improved by 47% from UGX649 billion to UGX953 billion because of increased production, particularly in the manufacturing and agro-processing sectors.
Notably, up to 66% of all raw materials utilized in enterprises funded by the Bank were locally produced during the year.
“Prioritizing social inclusion in the Bank’s development agenda is fundamental in fostering a resilient, inclusive, and sustainable society where no one is left behind. To the Bank, social inclusion symbolizes diversity and social cohesion, unlocking the full potential of individuals and societal segments where everyone can fully participate, contribute, and thrive,” said Ms Ojangole.
Financial Performance
The Board and Management continue to ensure that the Bank remains sustainable, exercising due care and prudence over resource (asset) deployment and ensuring the efficiency of the Bank’s operations.
In 2023, the Bank realized a post-tax (net) profit of UGX 49.8 billion, a 17% uplift from UGX 42.6 billion registered in 2022. This resulted from the sustained growth in the Bank’s balance sheet, matched by prudent investment in interest-earning assets while ensuring lean operations.
Bank Size
The Bank continued to grow, with total assets closing at UGX1.67 trillion in 2023, a 10% uplift from UGX1.52 trillion the previous year. Loans and advances (net) stood at UGX1.47 trillion, growing 20% from UGX1.22 trillion, underpinned by the UGX610 billion new loan disbursements realized during the reporting period.
To fund the creation of these assets, the Bank reinvested UGX467 billion it collected as repayments from its borrowing customers and deployed UGX97.3 billion received from the Government as additional capital contributions, complemented by an additional UGX120.5 billion in drawdowns from various lines of credit held with its funding partners.
Efficient Operations
The Bank continues to focus on delivering results using lean and efficient operations. In 2023, the cost-to-income ratio (without impairment) remained subdued at 30.6%.
Relatedly, the return on asset ratio improved to 3.12%, while the return on equity also improved to 3.82%.
The Bank continues to leverage its equity to diversify its funding sources to achieve scale while undertaking interventions to optimize its financial, human, technology, and other resources with the view to bolstering operational efficiency.
Similarly, to protect shareholder value, the Bank continues to exercise prudence at business sourcing to manage its credit risk proactively.
Recognition and Awards
In acknowledgment of the Bank’s accomplishments in enhancing its operations, governance, and several other parameters, UDB received both local and international recognition in 2023.
For three consecutive years, the Bank and its Managing Director emerged the Sustainability Leader of the Year at the Karlsruhe Sustainability Awards in Germany, to recognize the MD’s exceptional leadership in driving the business performance of UDBL through creating social, economic, and environmental values and globally advancing sustainable finance.
Credit Ratings
UDB secured a ‘AAA (Uga)’ National Long-term Rating with a Stable Outlook, the highest rating on Uganda’s national scale.
This designation, assigned by Fitch Ratings, a globally renowned credit rating agency, was accompanied by a ‘B+’ Long-Term Issuer Default Rating (IDR) with a negative outlook – the same pegged to Uganda’s Sovereign rating, reflecting the Bank’s ownership by the Government.
These ratings lend credence to the Bank’s operations and governance and bolster its borrowing initiatives.
UDB achieved an A+ rating from the Association of African Development Finance Institutions (AADFI), affirming its leading status as a best-performing Development Finance Institution (DFI) in Africa.
This recognition is awarded to AADFI member-DFIs demonstrating excellence in compliance with various prudential standards, particularly in governance, operational efficiency, and financial and institutional performance.
The Minister of Finance, Planning, and Economic Development, Hon. Matia Kasaija, lauded the Bank for its exceptional contribution towards the realization of the Country’s National Development Plan III and Vision 2024.
“The Government has played a pivotal role in significantly contributing to the country’s socio-economic transformation. In 2024 and beyond, the focus will be on mobilizing adequate resources to enable UDB to continue to deliver its mandate. The Bank will also undertake the implementation aiming to accelerate productivity, import replacement, and export promotion. Additionally, the Bank will advance its holistic sustainability agenda and deepen financial inclusion for SMEs, women, and youth,” he said.
In his conclusion, the Chairman of the Board of Directors Uganda Development Bank, Mr Felix Okoboi, pledged the Bank’s continued commitment towards catalyzing socio-economic development within the country.
“UDB remains resolute to driving inclusive economic growth through innovative financing solutions and leveraging strategic partnerships, reinforcing its role as a catalyst for sustainable development in Uganda,” Mr. Okoboi said.