EIB and Housing Finance Bank of Uganda announce €50M investment partnership to support private sector entities

The project is aligned with Ugandan and EU priorities for the region as it aims to enhance inclusive growth and sustainable economic development by supporting women.

EIB Global, part of the European Investment Bank (EIB), and the Housing Finance Bank (HFB) of Uganda today announced a partnership to provide €50 million in investment to support private sector entities, notably small businesses in Uganda.

The operation has a special gender focus with the aim to make it easier for women to access finance by reserving at least half of the investment funds for female-owned or run businesses, and those employing or serving women, to thereby generate greater developmental impact.

This is considered a major operation for the women customers of Housing Finance Bank, financing the activities of micro, small and medium enterprises. Critical sectors include agriculture, health, manufacturing, transport, trade, education, renewable energy and clean water.

The project is aligned with Ugandan and EU priorities for the region as it aims to enhance inclusive growth and sustainable economic development by supporting women. Gender inclusion is also at the heart of the Uganda Vision for 2040, and providing better opportunities for women is one of the key drivers to reduce gender inequalities and drive the socioeconomic transformation of the country.

The EIB was the first multilateral lender to sign on to the 2X Challenge Criteria. These criteria require the EIB to offer at least 30% of its investment support to businesses that are 51% of owned by a woman; have a woman founder; whose senior leadership or board is at least 30% women; whose workforce is 30-50% women; or that offer services or products that specifically or disproportionately benefit women.

In line with the recommendation of the European Commission, the EIB and Housing Finance Bank jointly agreed to raise the 30% threshold of loans allocated to businesses to 50% to show their strong commitment to improving the socioeconomic conditions of women.  

Speaking during the signing ceremony, EIB Head of the Regional Hub for East Africa Edward Claessen said: “Signing this partnership ahead of International Women’s Day celebrations in Uganda re-emphasises our continued strong support for entrepreneurship and business development for all entrepreneurs, particularly women. We are committed to supporting projects and investments that empower women worldwide and address the systemic gender inequality in accessing capital.”

Housing Finance Bank CEO Michael Mugabi said, “Housing Finance Bank is keen on strategic partnerships with like-minded entities and the shared purpose to contribute to the socioeconomic development of Uganda by enabling micro, small and medium enterprises (MSMEs), especially those owned by women, is the pillar of this strategic partnership with the EIB. The bank has a wide range of affordable solutions to drive this agenda, which continues to form a significant part of our 2023- 2027 strategic plan. The new line of credit to HFB and a technical support grant will be used effectively to improve the capacity of women business and MSMEs in general.”

Housing Finance Bank has previously worked with the EIB, having signed a €13 million investment partnership under the East and Central Africa Private Enterprise Finance Facility project in 2014.

Housing Finance Bank is the ninth largest commercial bank in Uganda by asset size (out of 25 commercial banks) and focuses on consumer banking, business banking and housing finance. Currently, HFB operates It currently from its head office and 18 branches, with nine branches in Kampala. The customers participating in the project will also benefit from technical assistance under the African Women Rising Initiative delivered by the EIB.

Head of the European Union Delegation to Uganda Ambassador Jan Sadek said: “This loan will contribute significantly to the objectives of the Team Europe initiative Sustainable Business For Uganda (SB4U) Platform and Investing in Young Businesses in Africa (IYBA). It will promote employment via the financing of micro, small and medium enterprises (MSME) clients in the country, all of which will be female final beneficiaries.”

Apart from the partnership with Housing Finance Bank, entrepreneurs in Uganda also stand to benefit from the EIB’s SheInvest initiative launched in 2019, which commits to mobilising €2 billion of gender-responsive investment across Africa, focusing on empowering female-led businesses.

In addition to its public sector lending to governments, the EIB recognises that strong financial intermediaries are key to addressing market challenges and suboptimal investment situations across the continent. EIB Global is building on its many years of experience and partnership with banks, microfinance institutions and equity funds by supporting their efforts to innovate and enhance the scope and financial inclusiveness of their outreach. It also considers non-banking financial institutions, such as guarantee funds, leasing companies or fintechs, that have a financial model to enable greater outreach to underserved smaller businesses.

The EIB, in partnership with the various financial institutions in Uganda, has provided over €346 million in the past to support private sector businesses, targeting agriculture and gender thematic sectors. Accompanying technical assistance was also offered to these banks or microfinance institutions and their clients across a wide range of topics including risk management, product development, environmental and social assessment, and financial literacy.