Africa, Business, Farmer, Finance, Financial Services, Government, Invesments, Islamic Development Bank, Private sector, Uganda, Uganda Development Bank, Uncategorized

UDB lowers interest rates on agricultural loans

Reflex Eco Group – Uganda News

by Stephen Otage (Local Journalist)

sotage@ug.nationmedia.com

This Blog is sponsored by http://www.reflexecogroup.com

The recapitalized Uganda Development Bank has announced its revised long term financing lending rates that take effect beginning 1st October so as to promote its mandate of transforming Uganda.

In an interview last week, Patricia Adongo Ojangole announced that the bank is lowering its interest rates by 26%. The long term financing has been reduced to 12.5% from 17%, the medium term financing from 18% to 13% while the short term financing is falling to 14% from 19%.

She said the bank was forced to cut the interest rates because of absence of cheaper development finance in the country which has been identified as a hindrance to the growth of private-sector led development to support development of industries for the private sector to play part in key development sectors like agriculture, value addition, industry and health.

She said the bank has identified crops like sorghum, Irish potatoes, tea and sugar cane where organized farmer groups which are adding value to the crops can be bank rolled by managing their risks through crop insurance by ensuring where the farmers will sign contracts with off takers.

“We must collect the money back because we are not only banking the farmer groups but also the off-taker by creating the market for the farmer through the off taker who in this case is the person involved in value addition,” she said.

According to Daniel Kaggwa the director finance, government early this year committed a 400% shareholder capital to the bank by increasing the funding from Shs.100bn to Shs. 500bn.”Government negotiates cheap funding from different lines of credit through the ministry fo finance and because the bank understands the current economic climate where businesses are not accessing appropriate finance, that is why there is need for more cheaper financing,” he said.

He said currently the source of funding is mainly from Arab Bank for African Economic Development, Islamic Development Bank, Afri-Exim Bank through which the bank hopes to cover its mandate which stretches across all Uganda.

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