UDB bosses quizzed over loan distribution

KAMPALA, February 11, 2025 –– Members of Parliament on the Committee of National Economy are concerned about distribution of the Uganda Development Bank [UDB] financing as the government seeks loans totalling US$ 275 million to recapitalise the bank that has been tasked to provide loans to investors in the agriculture and other sectors in the country.

The Minister of State for Finance, Planning and Economic Development [General Duties], Henry Musasizi who appeared before the committee alongside officials from UDB on Monday had informed the meeting that the bank had supported beneficiaries in 95 districts.

However, legislators pressed for specifics on the distribution of funds and their alignment with national priorities.

The Soroti West Division MP, Jonathan Ebwalu questioned whether the reported 95 districts truly represented the entire country. “Which are these 95 districts? Does it represent the whole country? How many people have benefitted and from which districts?” Ebwalu said.

Ebwalu stated that MPs were skeptical about the authenticity of the list of benefitting districts.
“We have seen ghost soldiers and teachers being paid in Uganda. We have seen ghost projects being funded in Uganda. By writing that these are the districts on paper, and we don’t know these projects, how are we going to be convinced that these districts benefitted?” he asked.

Committee Chairperson, John Bosco Ikojo highlighted discrepancies in the 2023 report from the Ministry of Finance noting that only 76 districts were recorded as beneficiaries with regions such as Karamoja being underrepresented.

Ikojo assured MPs that further engagements with UDB would be held to assess the bank’s impact.
“I think we are still interacting. This is not a one-off. We are going to assess the physical performance, and we shall request UDB to take us to some of these benefiting enterprises,” he said.

The Bukanga North County MP, Nathan Byanyima expressed frustration over UDB’s failure to follow through on previous commitments on funded projects. “You took us through all the projects you are doing and made a commitment. The good team promised us to take us out to some of these projects. We have never seen any of your projects,” Byanyima said.

He also shared a personal experience of a farmer in his constituency who struggled to access UDB funding despite fulfilling all requirements.
“I had a farmer in my constituency who wanted money. They took the title, registered everything. It took him a year. But when I walked into their offices, and threatened to come on the floor, the money was released. I am happy for that. At least I got a positive,” he said.

The Koboko County legislator, James Baba stressed the need for transparency regarding individual beneficiaries and alignment with national economic priorities.
“There is a serious concern about the beneficiaries of this financing. It is important that we know the individuals who have benefited in each one of those districts,” Baba said.

He further questioned how UDB’s disbursements reflected government priorities under the National Development Plan III and IV.
“This government has prioritised some key projects both in NDP III and NDP IV on where we must invest money to turn the economy around and to improve household incomes. Taking the priorities this government has set up in coffee, tea, fishing and cocoa, where is that reflected in the disbursement of the loans?” he asked.

Defending her institution, the UDB Managing Director, Patricia Ojangole said that the bank does not receive government funding for its operations and maintains a cost-to-income ratio below 30 percent ensuring competitive interest rates.

She highlighted efforts to expand access by establishing regional offices in Gulu, Mbale, Hoima, Arua, and Mbarara.

Ojangole noted that UDB supports various borrowers, including farmer groups, SMEs, and large enterprises, with special programmes easing access for youth and women. She reaffirmed the bank’s commitment to keeping interest rates below 12 percent while ensuring financial sustainability.
“Our cost-to-income ratio is currently less than 30 percent, the lowest in the market allowing us to offer competitive interest rates while ensuring affordability for borrowers,” Ojangole added.

Minister Musasizi committed to providing a detailed breakdown of the benefiting districts and beneficiaries.  “We can provide the names of the districts as an annex. And also, this report which we have presented, I’m sure if we get time to read it, and we can also make extracts,” he said.

The committee resolved to continue engaging with UDB and conduct field visits to verify the existence and impact of funded enterprises across different regions.

According to minister Musasizi once the loans are secured from different banks, UDBL will be able to realise and accelerate it strategic plan in Uganda, through various interventions drawn from Uganda’s current economic and social challenges.

The bank’s capitalisation by November 2024, Musasizi noted stood at Shs1.5 trillion, which he said is too low thus limiting the bank’s ability to carry out its mandate.

He said the loans being sought are justified as UDBL is the only bank in the country that offers favourable and long-term capital, lending at no more than 15 percent interest per annum. The bank’s investment is focused on agro-industry, primary agriculture, tourism and hospitality, human capital, Infrastructure, manufacturing and services sub sector.

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