In a strategic move to support and empower Ugandan exporters, the government, in collaboration with the Uganda Bankers Association (UBA), has unveiled a groundbreaking export insurance scheme. The initiative is set to inject a massive Shs1.8 trillion into the market.
- Funding commitment: The Uganda Bankers Association has pledged a substantial Shs1 trillion towards the export credit facility, emphasizing its commitment to fostering regional export growth.
- Public-private partnership: The national export insurance guarantee fund, currently in its final stages, underscores a strong public-private partnership. This collaboration aims to create a supportive environment for exporters, addressing their unique challenges.
- Reducing reliance on banks: The new fund marks a departure from the traditional approach where exporters sought underwriting from banks for their export deals. This shift is expected to streamline the process and offer more direct support to businesses engaged in international trade.
- Government backing: The Ministry of Finance, through the investment for industrial transformation and employment project, is working in tandem with the UBA. The government is providing $218 million, financed by the World Bank, to kickstart the initiative with approximately Shs815 billion allocated for the current financial year.
- Export volume growth: The fund aims to de-risk regional export markets, unlocking market access and facilitating the growth of export volumes. This move is poised to have a positive impact on export-oriented businesses, particularly those facing financial distress.
- Financial support for businesses: The export insurance scheme will not only provide guarantees but will also extend financial loans to businesses grappling with financial challenges. However, borrowers are required to present sufficient collateral in accordance with existing lending policies.
- Market potential: Markets like the Democratic Republic of Congo currently contribute nearly a trillion shillings annually to Uganda’s economy. The new scheme is expected to tap into this potential and further expand Uganda’s export footprint.
Mr. Ramathan Ggoobi, Permanent Secretary to the Treasury, expressed confidence during the presidential CEO forum, stating that the comprehensive export insurance guarantee fund is nearing completion and will play a pivotal role in supporting private sector exports.
Mr. Wilbrod Owor, Executive Director of UBA, welcomed the development, highlighting its positive implications for export support.
The details of the scheme are expected to be officially communicated once finalized.