Uganda to benefit from $2.5b World Bank private lending
KAMPALA, December 11, 2017 – Uganda has chance to tap into a $2.5 billion World Bank facility that will support private sector access to more affordable capital for investment. Several other sub-Saharan African countries will also benefit from this money.
“Many projects in emerging markets that need capital are unable to access financing because the risks are too high and the returns are not commensurate with the level of risk. The use of blended finance allows us to fill this financing gap by addressing market barriers and attract private sector investments to areas of strategic importance with high development impact,” Oumar Seydi, the International Finance Corporation (IFC) Director for sub-Saharan Africa was in Kampala to give insight into the new Private Sector Window.
He said, “The World Bank Group is engaged in a crucial effort to redefine our approach to development finance. We are working to help countries maximize financing for development by leveraging the private sector and optimizing the use of scarce public resources. Our support will continue to promote good governance and ensure environmental and social sustainability.”
Under the 18th replenishment of the International Development Association (IDA), the World Bank Group’s arm for low income countries, the $2.5 billion is now available to catalyze private sector investment. Seydi was attending a workshop to brief private sector companies and government officials.
The World Bank Group’s current investment portfolio in Uganda is primarily financed from the IDA, which provides interest free “credits” and grants on concessional terms, attracting only an administrative service charge of 0.75% on the disbursed credit amount. Loan repayments are stretched over 38 years, including a six-year grace period.
Private Sector Window is intended to help private companies access more affordable capital for investment by providing additional guarantees to insure against risks, particularly for countries that are affected by conflict or are politically unstable.
The new facility is spearheaded by the World Bank Group’s private sector lending arm, the International Finance Corporation, and the Multilateral Investment Guarantee Agency (MIGA) which offers political risk insurance and credit enhancement guarantees to help companies access credit.
Speaking on behalf of the government, Keith Muhakanizi, the Permanent Secretary in the finance ministry and Secretary to the Treasury, recognised the role of the private sector in driving development, and said there is need to join hands with the government to finance public investments, including infrastructure which is critical to spur economic growth and boost shared prosperity. He commended the World Bank Group for its continued support to Uganda.
Seydi said, “It is important that we apply our new strategy here in Uganda to build on the role of the private sector. Together with the World Bank and private partners, IFC has succeeded in delivering large and important projects already. With the Bank we supported Bujagali Hydroelectric project and with other investors we helped encourage the privatization and expansion of Umeme. We have much more to do here, and we need to build on new tools and momentum for private investor interest in Africa to re-energize our support.”