UDB Commits UGX 148.5 Billion to Enhance Electricity Access in Uganda

Uganda Development Bank (UDB), the country’s national development finance institution, has today committed UGX 148.5 billion to enable 550, 000 households to access electricity.

The commitment was announced at the launch of the Hybrid Electricity Customer Connection Credit Framework by UDB, Electricity Regulatory Authority (ERA) and the Ministry of Energy and Mineral Development, at the Ministry offices in Kampala.

While announcing the commitment, Ms. Patricia Ojangole, the Managing Director UDB highlighted that the availability of sustainable energy is critical for economic growth, poverty reduction, as well as the social and cultural transformation of society.  She further noted that the Bank is alive to the low level of electricity access in the country, as well as the high connection costs.

“The Bank has therefore partnered with players in the energy sector to promote the hybrid electricity customer connection credit framework which aims at enhancing electricity access,” she said.

The Hybrid Electricity Customer Connection Credit Framework is based on the 2020 connection costs of UGX720,883 for a  no-pole connection as approved by ERA. The framework will be implemented as follows:

1. The customer will make a down-payment of UGX200,000 as a contribution towards their connection.
2. The second proportion of UGX270, 000 will be taken as a credit line provided by UDB that will be recovered as a proportion of every bill payment / energy purchase by the customer. Considering, the cheap and patient nature of funds provided by UDB, connected customers shall have up to eight (8) years to pay off the credit facility of UG 270,000 per connection. The extended repayment period is aimed at minimizing the deduction every time a consumer makes an energy purchase or “yaka” token.

• The last portion of UGX250,883 and the interest payable for the UDB financed credit portion shall be considered as a subsidy to the customers.

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The funds provided by UDB shall be used to purchase connection materials and will be channeled through the electricity distribution companies.

Connection applicants will not be required to apply to UDB separately or directly for the connection credit facility. Applicants shall express their interest in the UDB credit connection facility upon making an application for an electricity connection and sign the necessary application documentation through their designated Electricity Distribution companies.

The program will be rolled out for Umeme Limited and the Uganda Electricity Distribution Company Limited customers as a pilot.

The Minister of Energy and Mineral Development, Hon. Dr. Ruth Nankabirwa Ssentamu, commended Uganda Development Bank for committing up to UGX 29.7 Billion annually for each of the next five (5) years, amounting to UGX 148.5 billion which support she believes will be pivotal in bridging the gap to electricity access.

Uganda still lags in energy access; almost half of Ugandans live without electricity, 95 percent live without clean cooking solutions, 50 percent of health centers and 80 percent of schools lack electricity.

According to a survey by the Uganda Bureau of Statistics in 2019 (UBOS,2019), one of the main obstacles to households getting connected to the national grid is the high cost of initial connection.

Uganda Development Bank Limited (UDB) is the country’s national Development Finance Institution (DFI) with a mandate to accelerate socio-economic development in Uganda through sustainable financial interventions. Consistent with this mandate, the Bank supports projects within the private sector that demonstrate potential to deliver high socio-economic value, in terms of job creation, improved production output, tax contribution and foreign exchange generation, among other outcomes.

These projects fall within the key priority sectors of the economy, and in line with Uganda’s development priorities. The Bank’s financing interventions are mainly in Primary Agriculture, Agro-processing, and manufacturing which account for about 80%of its investment portfolio. The Bank however undertakes specific interventions in other sectors including Tourism, Human Capital Development and Infrastructure including ICT.

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