More hope for the Uganda oil sector as Banks avail more cash for oil and gas loans

Uganda banks have shown commitment towards giving out loans and supporting activities of the Uganda’s oil and gas sector.

Although the Central Bank regulations dictate that the bank can only avail a maximum of 25 per cent of the bank’s capital, many banks have started staging billions of money to lend to companies involved in the sector.

In a bid to improve its balance sheet and profitability, Barclays Bank publicized plans to utilize opportunities in the oil and gas sector three weeks back.

Over $250m in credit has been availed by Equity up for grabs for individuals and companies interested in the oil and gas sector.Equity Group capital base totals-up to approximately $1b with outstretched operations in six African countries.

Image result for Uganda’s oil and gas sector.

Mr James Mwangi, the Equity Group managing director, while addressing journalists at the bank’s 10 years celebrations confirmed that the bank can now give a single loan of $250m to an individual or more people who have the right business plan for the oil and gas sector.The bank is strategizing with global companies so as to improve its performance in oil and gas sector activities in Uganda.

“You can borrow from a bank that is 75 per cent the size of the industry which would instead require five or six Ugandan banks to syndicate the $250m loan facility.Equity has had strong lines of credit with African Development Bank, International Financial Cooperation, European Investment Bank, China Union Bank and among them, they have put lines of another $1b. So we can syndicate with them beyond the $250m,” Mr Mwangi said.( Newvision August 8, 2018)

At the end of 2017, Equity Bank Shs38b profit before tax and has now accumulated its deposits to Shs750b, an asset base of Shs1.1 trillion and with more than 600,000 customers focusing on long-term investments in innovations and agency banking.

In reaction to recent  Central Bank’s reports, Mr Louis Kasekende, the Bank of Uganda deputy governor that it was quoted out of context, saying the governor’s remarks have been directed at banks with insolvency and not liquidity problems.

“We represent and protect the interests of depositors. If an institution is insolvent, that means that shareholders can no longer support it and it should not remain in business. How shall we regulate an institution we own? We shall use bank resources to provide liquidity to an institution with liquidity problems and we shall not use our resources to bail out insolvent institutions,” he said.

 

 

 

 

Leave a Reply

Your email address will not be published.