Small and medium Enterprises (SMEs) are set to benefit from easy access to lending facilities from KCB Bank Uganda after the bank got an extended 10M euros (about Shs38b) loan facility from the European Investment Bank (EIB).
The credit line will be available to sectors across all the SMEs with the exception of areas such as tobacco, military equipment and mining.
In a statement issued on Tuesday, Mathias Muhimbisa, the Executive Director at KCB Bank Uganda said that SMEs will now have access to loans ranging from Shs50M to Shs1bn to fund expansion of their business in terms of additional projects.
“Small and Medium Enterprises will benefit from the reduced interest rate for fairly long term borrowing of 5-7 years and tailor made SME workshops covering the vital must-knows of SME management,” Muhimbisa said.
According to the bank, the credit facility will benefit over 380 SMEs across the country with an average loan limit of Shs100 Million. “This therefore extends our current foot print across the SME sector as we avail the much-needed funding to the segment to ensure economic growth,” noted Muhimbisa.
In a statement from the EIB website, Catherine Collin, Regional Representative of the European Investment Bank in East Africa and Robert Schofield, responsible for European Investment Bank lending for small and medium sized companies throughout East Africa highlighted the “crucial role of entrepreneurs to create jobs, improve lives and ensure sustainable long-term economic growth.”
The statement confirmed the EIB extending its support to companies in East Africa through a EUR 250 million credit facility to be channelled through local banks. KCB bank is the biggest conduit of the funds handling Shs108.4 billion to be disbursed to entrepreneurs in Rwanda, Tanzania and Uganda
Lack of long term Uganda Shilling funding is one of the challenges the leasing industry in Uganda is facing this, coupled with high interest rates has hampered the growth of SMEs in the country.
“This funding addresses this challenge to some extent given that it’s a 5 to 7-year facility and drawn in local currency,” noted Muhimbisa.
“There is definitely more need for long term funding in local currency which is necessary to stimulate the economy in terms of longer term infrastructure and value adding projects that can bring about economic transformation,” he added.