Credit line

Centenary Bank obtains Sh100 billion line of credit from Proparco

Centenary Bank has received a 105 billion shillings line of credit and portfolio guarantees from Proparco in France, officials said.

Proparco is a subsidiary of the French Development Agency (AFD) dedicated to private sector development.

Talk to New Vision on July 18, Godfrey Byekwaso, chief financial officer of Centenary Bank, said the support will be used to boost lending to micro, small and medium-sized enterprises (MSMEs)

“The total package is worth 105sh. Centenary Bank will be able to offer longer term loans to its customers. As long as you are an MSME, in microfinance and agriculture, you can use collateral or borrow directly. The guarantee takes 70% and the rest (30%) comes from the bank. This will help small businesses that have access to collateral financing,” he said.

According to data from the Bank of Uganda (BOU), overall credit risk in the sector remains moderate, but non-performing loans (NPLs) are expected to increase in the near term. The BOU forecasts NPLs to increase further through 2022, largely due to; weak economic growth, the impact of inflationary pressures and the potential default of delinquent Credit Relief Program loans.

As commercial banks remain risk averse, lending grew 6.3% in the year to March 2022, to 18.5 trillion shillings, a slower pace than the 13.2% of March 2021.

“After the economy reopened, we saw some growth but with the problems that arose (Ukraine and Russia), we saw that people are very cautious,” Byekwaso added.

Françoise Lombard, chief executive of Proparco, said the support for Centenary Bank will strengthen access to finance for small businesses “and extend our support to sectors and segments with high development impact”.