How UDB is contributing to the country’s socio-economic development

by Business Times
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The National Development Plans (NDPs) identify priority sectors and key public and private implementation partners that should drive the achievement of the country’s strategic goal of attaining middle-income status by 2040. As a national development bank, it is recognised by the Government that Uganda Development Bank (UDB) is one of the key entities in supporting the interventions outlined in the NDPs, particularly those that relate to the provision of affordable finance to facilitate and catalyse private sector investments.

The contributions to the socio-economic outcomes, according to UDB are realised through the various projects funded in the five sectors that include: Manufacturing, Agriculture, Tourism and Hospitality, Infrastructure and Human Capital Development.

Ownership, Governance and Management of the Enterprises

UDB recognises that gender is not tied to a sector or geography, but is instead a cross-cutting issue across all aspects of society. UDB has developed a gender financing strategy that adopts the Development Finance Institutions’ approach to gender assessment.

Over 30% of companies funded by UDB are owned by women, however, the Bank appreciates the need to grow this further through its special programme that targets women entrepreneurs. In terms of job distribution, 23% share of the jobs created are held by women, and 67% share of the jobs are held by the youth.

To close the gender gap, UDB intends to take a deliberate approach to foster gender inclusion for companies to be considered for financing. This could take the form of a minimum gender scores cap in terms of company ownership, representation on the board, share allocation, senior management position and all organisation’s hierarchies where key decisions are taken.

Raw Material Sourcing

To save the country’s foreign exchange, the Bank’s strategy is to encourage enterprises to reduce imported raw materials and diversify options for local alternatives. This has been the case for all except import substitution industries

Statistics from the bank indicate that between 2018 and 2021, the use of locally sourced raw materials grew by five percentage points.

Major Export Destinations

In 2021, 60% of the enterprises financed by UDB mainly export to East African Community (EAC) countries, 10% export to COMESA countries, and 8% export to UAE. Others include 4% to Asia and 2% to America.

Installed and Utilisation Capacity

Most enterprises funded by the Bank are operating below the installed capacity during the periods 2018-21. Some of the reasons advanced for this include inadequate working capital, limited access to raw materials, high cost of raw materials, the impact of COVID-19, market restrictions, and demand fluctuations. This gap can be closed by the Bank’s continued support of primary agriculture to enhance production and productivity.

Jobs created and maintained

According to a 2021 report, a total of 41,338 jobs were created and maintained from the funded enterprises and a total output value of UGX 2.445 trillion was produced. This output value generated by companies financed by UDB earned a total profit of UGX314 billion, which contributed to UGX84 billion in form of tax revenue to the government, and forex earnings of UGX 405 billion.

From the Bank’s funded projects in the different sectors, the share of jobs created and maintained per sector was highest in Agro-processing at 41%, followed by Primary Agriculture at 30%. The manufacturing, infrastructure and tourism sectors contributed 17%, 6%, and 3% respectively. The health sector contributed 2%, the education sector 0.3% and other sectors 1%.

Of the total output value reported in 2021, the Agro-processing sector contributed 42%, followed by the manufacturing sector at 33%, and Primary Agriculture at 17%. Other sectors contributed; infrastructure – 3%, health – 3% and Tourism – 2%.

UDB Annual General Meeting

Profitability of firms

The highest profits posted by enterprises financed were in the manufacturing sector at 39%, followed by Agro-processing at 32%, and 21% from Primary Agriculture sectors respectively. The infrastructure, tourism and health sectors registered a profitability level of 4% and 2% for both tourism and health sectors respectively.

Corporation tax

Of the tax revenue contributions reported in 2021, the manufacturing sector contributed the highest share of 45%. This was followed by Agro-processing at 25%, Primary agriculture at 23% and 3% for both infrastructure and Tourism respectively. The health sector contributed 1% of the total share of tax revenue reported whereas the Education sector had no contribution because of the prolonged effect of the Covid-19 pandemic lockdown measures.

Foreign exchange earnings

The share of foreign exchange earnings among the enterprises was highest in the Agro-processing sector at 50%, followed by the manufacturing sector at 33%. The health sector showed improvement this year with 14% forex earnings contributions. The forex earnings from the health sector were those from health tourism as some of the services offered at the medical facilities financed attract foreign patients. Tourism which has for a long time been the traditional forex earner for the country and primary agriculture contributed 2% respectively.

Business Times Uganda

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