UDB’s 2024 results highlight gains, but raise deeper questions on Uganda’s path to inclusive development

June 19, 2025 in Business, Companies, Finance, Financial Services, Policy by Editor

Uganda Development Bank (UDB) has once again posted robust performance numbers for the year ended 2024, marking notable gains in financial sustainability and development impact. But while the Bank’s balance sheet growth and operational efficiency tell a commendable story, its results also pose critical questions about the structural depth of Uganda’s development financing and the inclusivity of its transformation agenda.

At the Annual General Meeting held in Kampala on Wednesday, UDB reported a 16pc jump in net profit to UGX 57.8 billion, buoyed by strong returns on interest-earning assets and tight cost control. Total assets rose by 7pc to UGX 1.78 trillion, while the net loan book expanded by 9pc to UGX 1.53 trillion. These gains, according to Managing Director Dr. Patricia Ojangole, are not merely financial—they underpin a deliberate strategy to deepen Uganda’s industrialisation and support private sector resilience.

Yet the numbers, while solid, raise a broader debate: Can one development bank meaningfully catalyse Uganda’s inclusive economic transformation in the face of mounting structural and macroeconomic constraints?

UDB’s dual mandate—to be commercially sustainable while delivering high social and economic impact—is one of the most difficult balancing acts in finance. In 2024, it disbursed UGX 388 billion across 770 active projects spanning 103 districts. The Bank’s industrial portfolio dominated again, taking 50pc of total funding—of which agro-industrialisation claimed nearly half.

This sectoral focus aligns well with Uganda’s ambitions under its National Development Plan III. However, the absolute scale of investment still raises concerns. With just UGX 454 billion in loan approvals during the year, the country’s leading DFI is only addressing a narrow slice of Uganda’s development financing needs. For a country facing a UGX 72 trillion national budget with nearly half funded through debt, UDB’s capital base—even at UGX 1.46 trillion post-government injections—remains modest.

Indeed, as Ojangole noted during a press conference, the Bank’s biggest challenge is not resource absorption but rather how to quench the huge thirst in the economy for credit.

The question is whether the state is under-leveraging UDB’s potential as a counter-cyclical lender. In an environment of rising domestic interest rates (19.1pc in 2025), crowding out of private credit, and slowing growth, UDB’s expansion should arguably be more aggressive. The government’s new UGX 1 trillion capital injection, while welcome, looks insufficient if the Bank is to serve as a bulwark against private sector credit constraints.

UDB touts its job creation and social impact with justified pride. In 2024, UDB-supported enterprises created and maintained 55,553 jobs—up 7.2pc from the previous year. Over half of these jobs went to youth, and nearly a third to women. Output from financed enterprises rose 3.2pc to UGX 6.05 trillion, while profitability and tax contributions also posted double-digit growth.

However, these figures must be interrogated in terms of depth and equity. Are the jobs stable and adequately remunerated? Do the profits benefit domestic shareholders or external owners? And while the Bank’s BASE and incubation initiatives are noble steps toward SME inclusion, they are still dwarfed by the dominance of large industrial clients in the portfolio.

Uganda’s development challenge is not just about GDP or output—it is about inclusion, redistribution, and resilience. UDB has demonstrated it can finance growth, but can it catalyse transformation in the country’s poorest regions, especially in Northern and Eastern Uganda, where poverty remains entrenched?

From a governance perspective, UDB is clearly in a class of its own among Ugandan institutions. The Bank retained a national AA+ rating from Fitch and an AA rating from the Association of African Development Finance Institutions (AADFI), and was recognised both regionally and globally for sustainability leadership.

Its efficiency metrics remain stable and commendable, with a cost-to-income ratio (excluding impairments) of 31pc, and returns on assets and equity showing incremental gains. Importantly, the Bank continues to innovate institutionally. The introduction of a project preparation facility, the Hybrid electricity connections program, and funding schemes for local contractors demonstrate responsiveness to real economic constraints.

Still, as the Bank finalises its 2025–2029 Strategic Plan, it must confront harder questions: How does it scale impact without compromising quality? How can it influence broader credit markets, not just serve as a niche player? And crucially, how does it crowd in private capital to extend its limited balance sheet?

As finance minister Matia Kasaija rightly noted, a strong national development bank is essential to delivering Vision 2040. But the state must move beyond ceremonial praise and position UDB as a bigger engine for transformation. This may mean deepening capitalisation beyond annual budget allocations—perhaps through bond issuances or multilateral partnerships—while also expanding the Bank’s mandate to co-finance with commercial players.

UDB’s story in 2024 is one of quiet, competent delivery. But Uganda needs more than incrementalism. If UDB is to be the “development brain” of Uganda’s economy, it must be equipped and trusted to take bolder risks, back longer-term public-private ventures, and redefine what inclusive transformation looks like in practice.

Until then, the Bank’s achievements, while impressive, will remain more of a national bright spot than a continental benchmark.