The European Investment Bank (EIB) signed a EUR 10 million credit line agreement with DFCU Ltd. of Uganda, for the financing of leasing transactions in Ugandan Shillings. The first tranche covering leases for about 50 small enterprises has now been released.
Launched in 1964 as a Ugandan development finance institution, DFCU Ltd. has since transformed itself successfully into a commercial provider of term finance, focussing in particular on smaller and medium sized enterprises, many of which are in up-country locations. Its products include loans, leasing and mortgage finance. It has been the forerunner in developing lease transactions in Uganda since 1994. DFCU Ltd. was taken public in 2004.
The EIB's credit line provides DFCU with long-term financial resources enabling it to provide lease finance in Ugandan Shillings. The lack of long term UGX funding is one of the challenges the leasing industry in Uganda is facing. Through this operation, the EIB contributes to investment in the Ugandan private sector.
This is the EIB's second credit line granted to DFCU in the framework of the Cotonou Agreement, under which the EIB finances private investment and provides long-term finance to the financial sector. It marks a further step in the close cooperation between EIB and DFCU developed since the early1990s in financing SMEs.
The EIB, established in 1958 by the Treaty of Rome, finances capital investment projects that further the European Union (EU) policy objectives. It also participates in the implementation of the EU's co-operation policy towards third countries that have co-operation or association agreements with the Union.
Financing in Africa, the Caribbean and the Pacific (ACP) is carried out under the provisions of the Investment Facility, set up by the ACP-EU Partnership Agreement, signed in Cotonou in June 2000. Under the Cotonou agreement the total financial aid available amounts to EUR 15.2 billion for 2002-2006, of which EUR 11.3 billion is grant aid from the EU member states, EUR 2.2 billion is managed by the EIB under the Investment Facility and up to EUR 1.7 billion is in the form of loans from the EIB's own resources. The Investment Facility is a revolving facility (loan amortizations will be invested in new operations), aiming at supporting technically, environmentally, financially and economically sound projects in the private or the commercially run public sector.