Owners of small and medium enterprises (SMEs) have a chance to borrow at lower interest rates from the Uganda Development Bank (UDB), thanks to a multi-billion shilling project signed yesterday.
UDB has secured a loan worth $20m (sh75b) from the African Development Bank (AfDB) to help SMEs access financial credit to expand their businesses.
This follows Parliament’s approval early this year, allowing UDB to secure the funds. The SMEs will apply either as individuals or in groups, such as associations and Savings and Credit Cooperative Organisations (SACCOs).
The funds, according to UDB, will be used by SMEs to either buy equipment or procure other inputs. UDB, however, did not mention the interest rates at which business owners will borrow but said they would be lower than current commercial banks rates.
As of March 2019, commercial banks had varying interest rates, ranging from 24% to 26%. The Government has also shortlisted target sectors that will access the funds. These include agriculture, manufacturing, infrastructure, tourism, human capital.