Government moves to strengthen UDB capital base

What the report says

The Ugandan government has approved a new Shs 63 billion capital allocation for Uganda Development Bank (UDB) and increased the lender’s authorised share capital to Shs 5 trillion from Shs 2 trillion, according to The Observer. The move was announced by Finance minister Henry Musasizi at UDB’s annual general meeting and is intended to help the state-owned bank expand access to lower-cost credit for local businesses.

The Observer reported that the additional capital will come from UDB’s 2025 profit after tax, which the government has allowed the bank to retain. Musasizi said the aim is to strengthen UDB so it can provide longer-term and more affordable financing, especially for sectors such as manufacturing, agro-processing, tourism and other priorities under Uganda’s development plans. He also said government wants UDB’s lending rate to fall below 10 per cent over time, from about 12 per cent currently, still below the average commercial bank rate cited in the article.

UDB Managing Director Patricia Ojangole said the bank’s performance improved in 2025, with loan disbursements of Shs 502.2 billion and support that helped create and maintain 69,202 jobs. The bank also reported growth in total assets and net loans, while maintaining non-performing loans within its risk limits. The article said UDB is expanding beyond Kampala and has financing products for small firms, youth and women entrepreneurs.

More broadly, the development underscores the government’s reliance on UDB as a vehicle for cheaper development finance, at a time when businesses still face relatively high borrowing costs from commercial lenders.