KAMPALA, Uganda — The government has allocated 422 billion shillings to Uganda Development Bank for the 2026/2027 financial year, a sharp increase from the 50 billion to 100 billion shillings the bank typically received annually in past budgets, as officials position the state-owned lender to play a bigger role in financing Uganda’s push toward a $500 billion economy.
Finance Minister Henry Musasizi announced the allocation in last week’s national budget reading. UDB Managing Director Dr. Patricia Ojangole said in an interview that the increase reflects high demand for financing from the private sector.
“We thank government for increasing funding to UDB because the demand for funds from the private sector is very high,” Ojangole said.
The bank organizes its lending around three priority areas: building a sustainable agrifood system through primary agriculture and agro-processing; promoting industrialization through manufacturing, agro-based industries, mineral value addition and local content in the oil and gas sector; and growing a services sector spanning health, education, tourism, science and technology and the creative industry. Infrastructure, small and medium enterprises, women, youth and climate action cut across all three. Ojangole said businesses operating in those sectors, and able to demonstrate development impact and the capacity to repay loans, are eligible to apply. The bank offers both debt and equity financing alongside non-financial support such as project development, investor support and enterprise advisory services, with application requirements, including company registration documents and audited accounts for existing businesses, available on UDB’s website.
To reach historically underserved borrowers, UDB has introduced three targeted loan products. SME Kazi Loans serve registered small enterprises with annual turnover of up to 100 million shillings and medium enterprises with turnover up to 360 million shillings. Women Prosper Loans target businesses that are at least half women-owned, have boards or leadership that are at least 30% women, or primarily employ women or serve women customers. Youth Step-Up Loans go to businesses that are at least 30% youth-owned, have workforces that are at least 35% youth, or focus on skilling and mentorship. Each product can fund working capital, asset acquisition or business expansion, with loan sizes ranging from 50 million to 900 million shillings, flexible repayment terms, grace periods and interest rates of 10% to 12% a year.
Ojangole said the bank’s funding base grew substantially in the just-ended 2025/26 financial year. Government provided an additional 85 billion shillings toward capitalization, while UDB received fresh capital contributions of 311.2 billion shillings during the year. Shareholders also approved converting 328.7 billion shillings of accumulated capital contributions into issued share capital, lifting the bank’s total issued share capital to 1.21 trillion shillings by year-end. All funds received were deployed to eligible projects, she said.
The bank disbursed 502.2 billion shillings during the year, a 29% increase from 388.7 billion shillings in 2024, and expanded its client base to 689 active clients across 105 districts, up from 524 clients in 92 districts the previous year. Its gross loan portfolio stood at 1.77 trillion shillings at year-end, with 60%, or 1.1 trillion shillings, financing primary agriculture, agro-industry and manufacturing enterprises.
Asked about complaints from the Uganda Manufacturers Association that demand for UDB financing far outstrips supply among its members, Ojangole said government has responded by steadily increasing capitalization and other funding support. She said total approved funding to the bank in 2025, including capital injections, sovereign borrowing for recapitalization and government-guaranteed credit lines, reached 1.21 trillion shillings. The bank has also recovered 49.4 billion shillings in loans over the past three years, money it recycles into new lending.
Ojangole said UDB’s mandate as a development finance institution is to offer concessional, patient capital that private commercial banks do not provide. The bank lends at 12%, about half the typical market rate, with repayment tenors of up to 15 years, and applies softer terms for small and medium enterprises seeking credit.
On UDB’s geographic reach, Ojangole pushed back on the perception that the bank operates mainly in Kampala, saying it has financed 681 projects across 104 districts and serves 671 active borrowers, both directly and through mechanisms such as financial technology partnerships, farmer group models and electricity and water connection financing. The bank opened a regional office in Hoima last year to serve the Bunyoro sub-region, adding to existing offices in Kampala and Gulu, and this year opened an office in Mbale to serve eastern Uganda. Offices in Arua and Mbarara, to serve the West Nile and western regions, are planned.
The bank’s broader 2025 performance showed approved financing of 518.4 billion shillings for 120 projects nationwide, half of which, 261 billion shillings, went to primary agriculture, agro-industrialization and manufacturing. Tourism, education, health, the creative sector and science and technology received 60 billion shillings, while 124.2 billion shillings was disbursed as working capital to Ugandan contractors on strategic infrastructure projects. The bank’s gross loan portfolio grew 7.7% to 1.77 trillion shillings from 1.6 trillion shillings the prior year, and net loans and advances rose 6.6% to 1.63 trillion shillings. Total assets grew 24% to 2.28 trillion shillings from 1.75 trillion shillings, supported by 438 billion shillings in new funding from credit lines and government capital contributions.
Lending targeted at youth, women, SMEs and other underserved groups reached a cumulative portfolio of 68.4 billion shillings by year-end, with 18.6 billion shillings disbursed and a further 21.1 billion shillings approved during the year. The bank said it had reached 112,405 beneficiaries by December, either directly through financed projects or through indirect mechanisms.
Jobs created and sustained by UDB-supported enterprises reached 69,202 last year, up 25%, or 13,649 jobs, from 55,553 in 2024. Women held 39% of those jobs and youth held 73%.
Ojangole said enterprises financed by the bank have grown steadily more profitable and productive, with combined profitability rising from 314 billion shillings in 2021 to 1.158 trillion shillings last year. Tax contributions from those enterprises climbed from 84 billion shillings in 2021 to 387 billion shillings last year, passing through 148 billion shillings in 2022, 236 billion shillings in 2023 and 316 billion shillings in 2024. Foreign exchange earnings from UDB-backed businesses rose from 405 billion shillings in 2021 to 1.847 trillion shillings last year, having reached 694 billion shillings in 2022, 953 billion shillings in 2023 and 1.109 trillion shillings in 2024.
The bank also collected several awards during the year. Fitch Ratings assigned UDB a national long-term rating of AA+ (Uga) with a stable outlook and a B long-term issuer default rating. The bank won the Outstanding Business Sustainability Achievement Award at the Karlsruhe Sustainable Finance Awards in Germany, and Ojangole was named Banker of the Year at the Africa Banker Awards. The Association of African Development Finance Institutions maintained UDB’s A+ rating, placing it among the top five development finance institutions on the continent, and the bank achieved Level 5, the highest tier, of the Sustainability Standards and Certification Initiative.
Ojangole said UDB began implementing a five-year strategic plan in 2025, running through 2029 and aligned with Uganda’s National Development Plan and its 10-fold growth strategy. The plan shifts the bank from reactive project financing toward a programme-based model that identifies sector bottlenecks, such as infrastructure gaps and limited access to long-term capital, and builds integrated financing programs around them. The bank intends to scale investment in agro-industrialization, tourism, mineral development including oil and gas, and science, technology and innovation, while expanding its role in project preparation, transaction advisory and capital mobilization.
The post Inside UDB’s Shs422b War Chest: Who qualifies and how appeared first on UG Standard – Latest News.
