Financial support for Ugandan small and medium sized companies will be dramatically improved following a EUR 40 million finance agreement signed today between the European Investment Bank, the long-term lending institution of the European Union, and five leading Ugandan Banks. Under the Private Enterprise Finance Facility II Bank of Africa (Uganda), Centenary Rural Development Bank, Crane Bank, DFCU Bank and Housing Finance Bank will receive long-term funds in Ugandan Shillings, US dollars and Euros from the European Investment Bank to assist their lending operations to local businesses seeking to expand or invest in new activities. This new facility follows the precursor Private Enterprise Finance Facility I in the amount of EUR 30m which has been largely used before its final phase out in 2011 and which created 1,700 new jobs across the tourism, manufacturing, agribusiness, construction and education sectors.

Speaking at the signature ceremony in Kampala, Plutarchos Sakellaris, European Investment Bank Vice President for Africa said “The European Investment Bank looks forward to working closely with five leading Ugandan banks to support small and medium sized companies across the country. By providing long-term funds for investment projects we help the Ugandan financial sector contribute to sustainable economic growth and job creation in Uganda.”

“EIB and Bank of Africa recognize that the SME sector has a very important role to play in creating sustainable economic growth in Uganda. This sector has potential for long-term growth and as such SME development needs have special focus in Bank of Africa. The Private Enterprise Finance Facility will enhance our lending capacity to SMEs, provide for more flexibility in pricing and reimbursement periods with customers, and consequently help Bank of Africa deepen its participation in the sector. With EIB, we have the perfect partner for the future and are extremely proud to be associated with this financing facility that will no doubt be a stimulus for wealth creation in Uganda” said Edigold Monday, Managing Director, Bank of Africa.

“SMEs sit at the heart of the economic development of this country. They are a vehicle through which the rural poor and the jobless Ugandans can transform themselves into the middle and industrial class of tomorrow. PEFF funds will certainly be a great boost to Centenary Bank's attempts to help SMEs navigate the various financial and structural challenges that are holding back the immense potential wielded by Ugandan SMEs. For this we are grateful to EIB" said Mr. Fabian Kasi, Managing Director of Centenary Rural Development Bank.

“The EIB’s PEFF I answered our customer’s need for long-term funds. Encouraged by this experience we pledge to be at the forefront in channelling PEFF II fund to the beneficiaries it is meant for. Our special thanks to EIB for committing larger funds under PEFF II, which is sure to catalyse economic growth for the nation” said Mr. A.R. Kalan, Managing Director of Crane Bank Ltd.

“The funds from the European Investment Bank strengthen our ability to respond to the unique and growing needs of our customers by availing long-term foreign exchange denominated loans. The facility is a sign of confidence in us and particularly the role we play in the growth and development of SMEs but more importantly is a show of confidence in the Ugandan economy by international players such as EIB” said DFCU Bank Managing Director, Mr. Juma Kisaame.

“As we have done with the provision of mortgage financing over the last 40 years, we pledge our continued financial support to the growth of the SME sector as a major pillar of our country’s economic development. Thus, Housing Finance Bank is delighted to join this scheme which will provide a facility that will go a long way in enhancing our business footprint in Uganda” said Mr. Nicholas Okwir, Managing Director of Housing Finance Bank.

The Private Enterprise Finance Facility II programme will provide new sources of finance for Ugandan companies seeking long-term loans and will reduce the risk of interest rate fluctuations. Providing funding in Euros and US Dollars to export-oriented enterprises, alongside Ugandan Shillings for firms targeting local sector demand and generating revenues in Shillings, will benefit a broad range of companies. The tenor of the facility ranges between four an ten years. Small companies, a crucial segment essential for growth in Uganda, will be able to make use of three-year loans.

The European Investment Bank funding will be supported by a technical assistance programme for capacity building of the final beneficiaries of the facility. Companies seeking loans or existing SME clients of the bank will be able to receive training in workshops and individual counselling to improve their management skills and enable them to prepare bankable loan applications and business plans. This will increase the potential number of qualifying projects that could be financed by the Private Enterprise Finance Facility II programme and reduce the credit risk of the financial intermediaries.

Over the last 20 years the European Investment Bank has played a crucial role in promoting long-term lending to private sector companies in Uganda, including micro, small and medium sized companies, and has provided more than EUR 190m through 14 different credit lines.

Notes for Editors:

  • The European Investment Bank is the world’s largest multinational financial institution and last year lent EUR 72 billion for 460 projects around the world, including over EUR 3.3 billion for projects in Africa. The European Investment Bank, the long-term lending institution of the European Union, whose shareholders are the 27 European Union member states, has been active across Africa for over 40 years. The European Investment Bank operates in sub-Saharan Africa under the Cotonou Agreement and supports regional development and infrastructure that contributes to economic growth and achieving Millennium Development Goals.
  • The high-level European Investment Bank delegation will also be meeting Uganda’s President Museveni, Ministers of Finance, Works and Transport, and Water as well as business and banking leaders. The European Investment Bank has provided EUR 890m for projects in East Africa over the last five years, including EUR 227m in Uganda.
  • The European Investment Bank has had a permanent office in Nairobi, responsible for the East and Central Africa region since 2005.
  • Bank of Africa Uganda Ltd. is a member of the Bank of Africa (BoA) Group, which is an International and Pan-African bank with a strong presence in West and East Africa. The Group has operated in Africa for more than 25 years. It currently has over 2,600 employees working in over 170 operational and production sites spread in thirteen countries. It has thirteen commercial banks, three leasing companies, one stock brokerage company, an IT subsidiary and a representative office in Paris, France. The Group’s consolidated asset base is over €2.5 billion. Bank of Africa Uganda’s largest single shareholder is Bank of Africa Kenya, a principle member of the BOA Group. Other share holders include: Aureos East Africa Fund LLC, Netherlands Development Finance Company (FMO), Central Holdings Uganda Ltd and AFH Ocean Indien.
  • Centenary Rural Development Bank, is the leading microfinance bank. Currently with 39 branches and 78 ATM’s country wide, the bank is serving over 1,000,000 customers, which is a third of the total banking population in the country. It is lending over 120,000 families and over 80% of the clientele are microfinance. The banks mission is to provide appropriate financial services especially microfinance to all people in Uganda, particularly in rural areas, in a sustainable manner and in accordance with the law. Centenary bank has the lowest fees structure in the market and is venturing into areas that are regarded as expensive and risky to operate (agricultural loans), without compromising on quality. The bank operates in the mass market mainly and has gained a reputation as the only local bank that meets the ordinary person’s banking and credit requirements, hence the tagline – “Our Bank.”
  • Crane Bank is based in Kampala, Uganda with the network of branches spread across the country (Kampala, Nakivubo, Kyambogo, Kireka, Jinja, Iganga, Mbale, Lira, Gulu, Kabale and Mbarara). We offer a wide range of banking and financial services designed to offer solutions that meet ones financial needs. Services now include Online Internet Banking . Our services are uniquely tailored to suit all business financial needs from sole proprietors, partnerships to large corporations. In addition, we provide financing to businesses operating in key sectors of the economy, focusing on providing solutions that will stimulate economic activities.
  • DFCU Bank Limited was established in 1964 as a development finance institution providing long-term finance for industrial & other long-term investments. Later, lease finance and mortgage finance were made available allowing DFCU to contribute to infrastructural development, a key driver of economic growth. In 2000, DFCU bought Gold Trust Bank and started commercial banking renaming it DFCU Bank. Today, the bank has a network of 26 branches across the country and is on an interbank switch, allowing its customers access to their money through other interbank switch member ATMs. The bank business is currently divided into three streams namely; Development & Institutional Banking, Consumer Banking and Treasury & Trade Finance with a major focus on providing medium and long-term finance to Small and Medium Enterprises (SMEs) operating in key sectors of the economy that stimulate economic growth such as transport, education, agriculture, manufacturing and agro-processing. Funding for the several projects that we undertake is made possible through credit lines and managed funds from our development partners such as the European Investment Bank (EIB)
  • Housing Finance Bank is an indigenous bank whose shareholders are the Government of Uganda and NSSF. It is a market leader in offering Mortgage financing in Uganda and has done so for the last forty three years. The bank commenced the commercial banking business from January 2008 and has since increased its physical presence in the major towns in the country growing its branch network from four to 15 over the last two years.