WASHINGTON, June 30, 2011 – The World Bank Board of Directors approved today a US$50 million policy loan for Uganda to help build a more efficient, robust and deeper financial sector which can support broad-based private sector growth. The goal is that by the end of this two-loan program, the country will have a regulated pension sector, an expanded housing finance market and efficient national payment system.
The new loan will support reforms aimed at: promoting financial inclusion; promoting Small and Medium Enterprises access to finance; fostering the development of term finance market; strengthening financial sector regulations and supervision, including for pension schemes; and strengthening consumer protection.
“The loan will support Government’s financial sector reform program which aims at fostering financial intermediation and savings mobilization in support of higher and more diversified economic growth and increased poverty reduction,” said Javier Suarez, Senior Economist and Task Team Leader for the operation.
The first pillar of the program will concentrate on supporting the development of a market for term finance including pension system reform, specifically supporting the emergence of a regulated, competitive and sustainable pension industry catering to both mandatory and voluntary pension savings. Under this pillar, the operation will also support Government’s efforts to foster the development of housing finance market and improve the regulatory environment for Public Private Partnership arrangements for infrastructure financing.
The second pillar of the program will support measures to improve the lending environment and strengthen payment systems.
The new credit is in line with Uganda’s financial sector reforms that are outlined in the National Development Plan and the Financial Markets Development Plan for 2008-2012. The credit is provided on standard International Development Association (IDA) terms, with a commitment fee of 0.5 percent, a service charge of 0.75 percent over a 40 year period of maturity which includes a 10-year grace period.
As of end June 2011, the Uganda portfolio comprises 22 IDA-financed operations and an IDA guarantee for the Private Power Generation (Bujagali) Project, with a total commitment amount of US$2 billion. About one quarter of annual IDA assistance is provided in the form of direct budget support. In addition, there are five regional projects.
