This will take the form of an unconditional undertaking by UDBL to pay a specified sum of money to a beneficiary against presentation of a written demand and any other documents specified in the guarantee. The beneficiary will be indemnified for a stated amount against the failure of the Bank customer to fulfill its obligation under the underlying transactions.
Guarantees aim at aiding investment in key sectors of the economy through contractual arrangement.
Qualifying Sectors or Businesses:
Bank guarantees will be provided to businesses engaged in Key growth sectors of Uganda economy such as Agriculture & fisheries, forestry, agro-processing, education & social services, health, oil & gas, infrastructure, manufacturing, construction & real estate, hotel, tourism & hospitality, extractive industries.
The validity period of Bank guarantees to be offered by UDBL will not exceed one (1) year but renewable, unless specific credit approval is held.
The grace period for guarantees is 4 months and guarantee fees are payable quarterly.
The Bank will charge guarantee fee per quarter that ranges from 0.5-1% of the value of the contract per annum depending on the underlying risk of the transaction.
Appraisal fee for carrying out due diligence process on transactions to be guaranteed vary from 0.5%- 2% of the value of the contract with a maximum capped at 100m.
Guarantees offered will be fully secured preferably by a mortgage over immovable assets, cash cover, fixed deposits and chattels mortgage. The forced sale value of security should be between 100% and 120% of contract amount. In addition, Corporate and personal guarantees of the business owner(s) will be required.