Ugandan businesses in the manufacturing and export trade will starting on 1st November 2022 have access to Shs1 trillion worth of financing.
The good news comes after Uganda Bankers’ Association (UBA) unveiled a special Regional Export Facility (REF) of an initial amount of Shs1 trillion as a package to support exporters from Uganda.
This money will regenerate & grow export volumes to regional markets including South Sudan, DRC, Rwanda, Burundi, Kenya and Tanzania among others, UBA said at the launch on Tuesday in Kampala.
The Chairperson of UBA, Sarah Arapta, said the REF initiative is a special intervention to support economic recovery given the post-covid effects that saw global, regional & local markets locked down for at least two years.
“Uganda has a strong manufacturing & trading hub capable of serving the regional markets which, if well leveraged, could be a key engine of growth,” Sarah Arapta said in her speech.
According to Arapta, goods manufactured in Uganda for regional export include construction products like cement, steel bars, iron sheets, paint, and others.
“Fast-moving consumer goods include scholastic materials, personal care products like cosmetics, textiles, foam products etc,” she revealed. She added that the facility will also be intended for use as short to medium-term CAPEX investment to boost manufacturing and value-add capacity for export.
“The facility is intended for use as direct working capital support in form of loans and overdrafts to fulfil an export order, support for receivables management mainly through discounting as well as indirect support through letters of credit, guarantees etc,” she explained.
The financing will come with a tenure of between three months to five years depending on the purpose and structure of the facility.
Wilbrod Owor, the Executive Director of UBA, said the facility was a specialised financing regime supported by a payment and settlement mechanism that will be availed at a maximum interest rate of 12% p.a for shillings and 6% p.a in dollars.
“We have exporters who fall in a number of categories. We need to work on the warehousing and the logistics companies if we are to make the market in Congo, South Sudan & Burundi viable. We have the Uganda air cargo, if it needs to make 10 flights a day, so be it,”
Businessman Odrek Rwabwogo called on the business community to focus on issues of compliance and think through food safety laws.
“For instance, if we want to compete, let’s develop a commercial strategy to approach export markets, run border facilities to ease trade for the other side, not Uganda, & export credit financing,” Rwabwogo said.
Mona B M Ssebuliba, the Chief Executive Officer of Agricultural Business Initiative (aBi) committed to supporting SMEs that range from Shs1billion to Shs4bn. This financing will, however, come with terms and conditions. She said: “They should also have 20 to 100 employees, with annual sales above Shs4billion and not more than Shs8billion, and total assets of between Shs2.5bn to Shs5bn.”
Stephen Asiimwe, the Chief Executive Officer of Private Sector Foundation Uganda, said REF was good news for the private sector and that the facility is timely.