STANBIC Bank has secured a sh61.6b ($30m) credit line from PROPARCO, a subsidiary of the French Development Agency, to provide long-term finance to the private sector.
The funds will be lent over a 7-year tenor and will support projects in the energy, transport, telecommunications and the manufacturing sectors. The bank will use risk-based pricing to determine the interest rate to be charged on individual loans.
Philip Odera, the Stanbic Bank managing director and PROPACO’s chief executive officer, Luc Rigouzzo, signed the financing deal at the bank’s offices in Kampala on Tuesday. The French ambassador, Rene Forceville, witnessed the signing.
“There is a mismatch between private sector’s long-term funding needs and the available finance. This line of credit from PROPARCO will allow us put forward substantial funds, about $30m, on a tenor of seven years in foreign currency,” said Odera.
Odera noted that the available foreign currency funding in the market was for less than one year tenor. He also observed that interest rates on loans were likely to drop in the medium-term.
“Interest rates have been trending downwards and they will continue reducing. It is a natural progression and will move according to the market forces.”
Rigouzzo said the line of credit was the organisation’s largest investment in Uganda.
“This is the largest line of credit extended to the banking industry, not only in Uganda but in the whole of the East African Community. It is a sign of our confidence in Stanbic Bank,” he said. He explained that PROPACO had invested over $200m in Uganda over the last decade.
He said the organisation’s goal was to finance sustainable growth in developing countries through loans, guarantees and equity investments.
