Kampala. The British government has announced a major increase in the export credit for Uganda, from £300 million (Shs1.35 trillion) to £600 million (Shs2.7 trillion).
The British Prime Minister’s Trade Envoy to Uganda, Lord Dolar Popat, who is currently visiting Uganda, revealed this on Thursday at a breakfast meeting held for United Kingdom (UK) business community in Uganda.
The new export finance support is made available through UK Export Finance (UKEF), the UK Government’s export credit agency which provides competitive finance for UK exports.
Mr Popat said: “This will provide Uganda with greater access to competitive British government trade finance, and enable more UK investors to bring their expertise, goods and services to Ugandan projects.”
He said the facility will also support Uganda to achieve its major infrastructure objectives by providing access to highly competitive long-term finance with the UK government and world-class British infrastructure expertise.
The credit is an alternative source of funding, with very flexible UK content requirements, long tenures and attractive funding costs.
Reacting to the news, the executive director Private Sector Foundation Uganda, Mr Gideon Badagawa, said: “This kind of support is what we need but we need to know how it is going to be used to benefit the value chains.”
Infrastructure is an area where UK companies are world leaders in experience and expertise and where British commercial interest is increasing.
Mr Eric Olanya, the head of department for International Trade at the British High Commission in Uganda, said: “With UKEF, what UK does is to cover for different countries based on the risk of the country to the finance. For Uganda, 15 months ago it was £60 million (Shs270 billion) this was based on the projects that were coming up streaming in Uganda.”
He added that because of the demand, this was increased to £300 million (Shs1.35 trillion) and it is from this that it has been further increased to £600 million (Shs2.7 trillion) as cover for Uganda.
Mr Olanya further said based on the demand, they have been increasing the facility and that they are ready to raise it further. What this means is that UKEF has credit available for projects in Uganda that have at least 20 per cent UK content and there must be a UK entity involved in the project.
The company does not have to be a sole entity but can be a joint venture with a Ugandan company.
The credit will not only be extended to governments but will also benefit the projects that are private sector led.
“If there was a project under construction that is part of a joint venture arrangement between a Uganda and UK company- based, on that we will loan to the government with attractive interest rates. This could also be private sector led project finance,” Mr Olanya said.
He added: “Already, there is over £200 million (Shs900 billion) towards an airport project. We have £140 million (Shs630 billion) towards roads construction; they are discussing almost £119 million (Shs535 billion) towards grain processing in the equipment and installation.”
Uganda is a small market but the UK is still one of the leading exporters and major investors in the country, with about $500 million of UK investment since 1996. British companies have been active in all sectors from agriculture and engineering to banking and consultancy. There has, however, been a slowdown in investment from the UK.
SOURCE: DAILY MONITOR