To uphold confidentiality agreements between UDB and its clients, government rejected calls from Members of Parliament to disclose the list of individuals who have received loans from the bank.
The rejection by government came during a plenary session on March 20, 2025, as UDB sought parliamentary approval to borrow a total of $175 million (shs 641.3 billion) from the Arab Bank for Economic Development in Africa (BADEA) for its capitalization, along with an additional $100 million (shs 366.4 billion) loan for operational purposes.
Minister of State for Finance, Henry Musasizi, defended the government’s stance, emphasizing that the information requested by MPs was available in the bank’s records but could not be publicly disclosed due to the nature of the confidential client relationships.
“All the information the colleague wants us to provide is available in our records. However, this is a bank that deals with the private sector, and there is a client relationship with its borrowers, which includes a confidentiality agreement. This question has come up before, and when it did, we opted to share information with the Speaker, but not with the public,” Musasizi explained.
The issue arose after Aringa North MP Godfrey Onzima raised concerns about the distribution of UDB funds, particularly accusing the bank of favoring Kampala while neglecting other regions.
He argued that despite UDB being funded by taxpayers, its services appeared to be concentrated in the capital city, leaving rural areas underserved.
“When we privatized government banks, we expected UDB to be a national institution, but it remains centralized in Kampala. Accessing loans is a struggle, and even if you try, you won’t know who else is benefiting. It seems to be a bank for a select few,” Onzima said.
The concerns over the uneven distribution of loans were amplified by a minority report presented by MPs Hassan Kirumira, Charles Tebandeke, Jonathan Ebwalu, and Denis Oguzu.
In the report, they called on Parliament to delay approval of UDB’s loan request until a detailed breakdown of its beneficiaries was provided.
“Before approving this funding, the Committee on National Economy should have physically inspected funded projects and verified real beneficiaries. Uganda has a history of financing ghost projects, ghost workers, and ghost pensioners. While UDB credit is supposed to benefit all regions, in reality, it mostly serves wealthy individuals in Kampala who use the funds to complete stalled buildings and arcades,” Kirumira argued.
Despite Minister Musasizi’s defense, he acknowledged that UDB’s current capitalization of shs1.5 trillion, consisting of shs1.24 trillion in government contributions and shs211 billion in retained earnings, was insufficient to meet its financial needs.
UDB’s 2023 annual report showed total assets of shs1.67 trillion as of December 2023, with a gross loan portfolio of shs 1.58 trillion. Over the course of seven years (2017–2023), the bank disbursed shs2.5 trillion in loans.
Meanwhile, the minority report also highlighted the bank’s interest rates, arguing that even though President Museveni had directed UDB to keep its rates below 12%, the current rate remained too high for many Ugandans.
They called for interest rates to be capped at 10%, similar to the rates offered by other government-backed programs like Emyooga and the Parish Development Model (PDM).
“We believe 12% interest is still too high for the wanainchi, considering that these loans are secured at rates below 7% per annum. We request that Parliament and the Bank of Uganda instruct UDB to cap interest rates at 10%, aligning with other government programs like Emyooga and the Parish Development Model (PDM),” Kirumira stated.
Mawokota South MP Yusuf Nsibambi also raised a critical question about the government’s financial strategy, pointing out the seeming contradiction between borrowing funds from BADEA to recapitalize UDB while simultaneously guaranteeing a separate loan for the bank.
“If we are borrowing from BADEA, it suggests that we are struggling and need to recapitalize UDB. Yet, at the same time, we are guaranteeing UDB’s $100 million loan, which implies that we are financially stable. Which is it?” Nsibambi questioned.
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