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MSMEs, Uganda, EURIZ, Choose Africa Resilience, Centenary Bank
Through a credit line and portfolio guarantees equivalent to UGX 105 billion commitment, Proparco will help boost Centenary Bank’s capacity to support micro, small and medium-sized enterprises (MSMEs) in Uganda, with a specific focus on agriculture, microfinance and enterprises that have been affected by the Covid-19 crisis.

Centenary Rural Development Bank was founded in 1985 by the Ugandan Catholic church with the objective of serving the rural poor and contributing to the overall economic development of the country. Following years of strong growth, it has become the second largest financial institution in the country. In spite of this success, the Bank has remained focused on its initial target clients. The bank has defined a “Mission Critical Portfolio”, which includes microfinance, MSMEs and agriculture loans, and accounts for 47% of its total portfolio as at end of 2021. The bank has the objective to grow it up to 54% by 2026.

To support the development of Centenary Bank’s impactful activities, Proparco has granted the bank a credit line and two guarantees amounting to a total support of UGX equivalent of UGX 105 billion:

  • Proparco’s UGX 65 billion credit line (EUR16.5 million) will support the growth of Centenary Bank’s Mission Critical Portfolio towards microfinance, agriculture and MSMEs. This project is carried out with the support of the French Government.
  • A UGX 20 billion (EUR 5 million) guarantee to help Centenary Bank in supporting MSMEs that have been particularly affected by the Covid-19 crisis. This guarantee offer was made possible thanks to resources specially allocated by the French government, as part of the Resilience component of AFD Group’s Choose Africa initiative.
  • Another UGX 20 billion (EUR 5 million) EURIZ guarantee which will cover up to 70% of loans granted to micro and small enterprises. Launched in May 2019 with the support of the European Union (EU), the European Development Fund, and the Organization of African, Caribbean and Pacific States (OACPS), the EURIZ guarantee aims to facilitate access to credit for MSMEs, in particular in sectors with a high development impact, in order to help them play their essential role in economic growth and job creation.

The credit line and two guarantees will contribute to Choose Africa, the French initiative dedicated specifically to African entrepreneurs, start-ups and MSMEs. This initiative is being implemented by AFD Group since 2018.

Proparco's line of credit of UGX 65 billion (EUR 16.5 million) will support the growth of Centenary Bank's critical portfolio in microfinance, agriculture and MSMEs. This project is supported by the French government and the European Fund for Sustainable Development (EFSD) guarantee, a risk-sharing mechanism for microentrepreneurs and MSMEs set up by the European Union in response to the Covid-19 crisis.

"This operation is perfectly in line with Proparco and AFD Group’s strategy of encouraging the increase access to finance for small businesses and expanding our support to sectors and segments with high developmental impact. The EFSD and EURIZ guarantees allows us, together with the European Union, to stimulate economic growth in Uganda.Proparco is happy to initiate a promising relationship with Centenary” said Françoise Lombard, CEO of Proparco. “The Bank stands out with a clearly impact-driven strategy and a strong local presence in the rural and most remote parts of the country. Proparco is willing to support the Bank’s clients showing needs only in local currency”.

Speaking at the signing ceremony the Managing Director of Centenary Bank Fabian Kasi said, “Our economy largely has Micro, Small and Medium enterprises and it is therefore key to finance and amplify Centenary Bank’s agenda in supporting MSMEs, agriculture and microfinance institutions.”

“Our partnership with Proparco which includes the line of credit and guarantee will further enhance our Bank’s capacity to support small, medium and agricultural businesses in their growth journeys through flexible collateral requirements and affordable interest rate offerings compared to the market. In so doing, our key mandate to cushion and support these mission critical sectors will be actualized, positively impacting our citizens in rural areas as we aim to eliminate poverty in Uganda, and ultimately boost the Vision 2040 of increasing sustainable production, productivity and value addition in key growth opportunities. “Kasi added.

The project will contribute to SDG 1 (Zero hunger), SDG 5 (gender equality), SDG 8 (decent work and economic growth), and potentially SDG 7 (clean energy) and SDG 13 (fight against climate change).

 

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