dfcu Bank
Our initial stake of 55% in Dfcu Limited (“Dfcu”) was acquired from our shareholders at the time Arise was formed. In 2017, Dfcu Bank acquired some assets and liabilities of Crane Bank Limited (under administration) from the Bank of Uganda. To complete the acquisition, we provided Dfcu with a USD 50mn bridge loan to capitalise the bank. Subsequently, USD 35mn of the bridge loan was converted by a rights issue by Dfcu, and as a result, our shareholding increased to 58.7%.
Country Overview
Uganda is a landlocked country in East Africa with a population of approximately 45 million people. The country has a diverse economy, with agriculture, services, and industry being the major sectors. Uganda’s GDP was estimated to be around USD 33.7bn in 2020, with a growth rate of 3.3%. The country has seen steady economic growth in recent years, averaging about 6% yearly since 2016. Agriculture is the backbone of Uganda’s economy, employing over 70% of the population and contributing over 20% of the country’s GDP.
The major crops grown in Uganda include coffee, tea, cotton, maize, beans, and bananas. The country is also a significant exporter of coffee and tea. The service sector is the largest contributor to Uganda’s GDP, accounting for over 50% of the country’s economy. The major sub-sectors include tourism, financial services, and telecommunications. The food processing, textiles, and chemicals industries account for around 25% of Uganda’s GDP. The country also has a growing oil sector.
Banking Sector Overview
Uganda’s banking sector includes commercial banks, microfinance institutions, credit institutions, and other financial entities, all regulated by the Bank of Uganda. As of 2024, the sector comprises 25 licensed commercial banks, with a total asset base of approximately UGX 40.5tn (around USD 10.8bn) and total deposits of UGX 30.2tn (approximately USD 8.0bn). The non-performing loan (NPL) ratio stood at 6.1%, reflecting a slight increase from previous years, due to lingering economic impacts from the pandemic and other macroeconomic factors.
In terms of profitability, the banking sector recorded an after-tax profit of UGX 550bn (around USD 146mn) in the first half of 2024, compared to UGX 475bn (approximately USD 127mn) during the same period in 2023. The government’s policies promoting financial inclusion, especially in rural areas, have driven greater access to banking services, fostering competition among financial institutions. With continued policy support and a stable political environment, Uganda’s banking sector remains resilient and is expected to continue its growth trajectory.