UDB finance director Denis Ochieng outlines how the bank's sustainability programme is building a pipeline of sustainable projects and why green bonds will be central to its long-term impact.
CFO East Africa interviewed Denis Ochieng, the finance director of Uganda Development Bank, (UDB) about RISE, its recently-launched sustainability initiative.
How does UDB integrate sustainability criteria into its credit assessment and risk management frameworks to ensure that funded projects deliver both financial returns and long-term environmental and social impact?
The platform is designed to bring together key stakeholders across the agri-tech ecosystem, including technology seekers and providers, government agencies, and development partners. Once onboarded, it serves as a space to post challenges. These challenges are intended to generate innovative, tech-enabled solutions that can form a pipeline for funding.
Solution providers are required to meet a set of eligibility criteria. These criteria assess both the institutional capacity and the sustainability orientation of the provider. Submissions are reviewed and validated by internal experts such as risk, environmental and social specialists. If a provider does not meet the criteria, they receive feedback and guidance on areas of improvement, with the option to reapply.
Once onboarded, stakeholders can respond to posted challenges with innovative solutions expected to address agricultural or development issues, be scalable, and align with broader social, environmental, and economic goals. Projects then go through a structured appraisal process. Specialists review them to ensure alignment with the bank’s environmental and social policy, which outlines acceptable and unacceptable project types. Monitoring and Evaluation specialists conduct an ex-ante evaluation to assess expected development outcomes, including job creation, inclusion of women and youth, and regional equity.
Projects are evaluated across social, environmental, and economic criteria. Those that pass form a pipeline for financing. The credit appraisal process incorporates the same triple-bottom-line criteria used by UDB’s mainstream portfolio, with the key distinction that this initiative focuses on innovative, tech-driven solutions.
Sustainable finance often requires long-term capital commitments. How is UDB structuring its funding mechanisms to attract private sector investment while maintaining financial sustainability?
The issue is not actually funds mobilisation; it is the deployment. It is easy to raise funding when funders, whether government or multilateral development partners, know where and how the funds will be deployed. As UDB, our main focus is on building a sustainable pipeline that aligns with the interests of those who have the funding. Essentially, it comes back to the solutions being generated from the platform and whether they meet the criteria.
What financial innovations is UDB exploring to enhance the scalability and impact of this initiative?
The bank is actively exploring and adopting a range of financial innovations aimed at enhancing both scalability and impact. One of these is green bonds. UDB is in the advanced stages of exploring their issuance as a strategic tool to mobilise long-term capital for environmentally sustainable projects, including renewable energy, climate-smart agriculture, green infrastructure, and waste management. We are engaging with regulators, guarantors, and potential institutional investors to develop a robust framework aligned with international standards such as the ICMA green bond principles.
The country is also in the process of developing a green taxonomy to support investment classification and to establish a common framework that enhances transparency and facilitates decision-making. Another innovation is blended finance structures. These help de-risk investments in sustainable sectors by combining concessional funds, donor grants, and commercial capital. This enhances the bankability of projects with high impact potential but moderate financial returns, particularly in agro-industrialisation and climate adaptation.
With the increasing emphasis on ESG-driven investments, how does UDB measure and report the returns of projects financed under the programme?
An important distinction is that we look at sustainability and not ESG. ESG forms just a small component of the whole sustainability agenda. Our focus is on sustainable investments and not ESG-driven investments.
We have implemented the Sustainability Standards Certification Initiative and were recently certified under Version 12, achieving a Level 5 certification. That framework is holistic and it is the same framework we are using to determine what impact we want to make. It allows us to set targets in terms of how much impact we want to create, whether environmental, societal, or financial. We assess this periodically both at project level and across the bank, then use the same metrics for quarterly and annual reporting.
How does UDB balance the need for concessional financing with the imperative of maintaining strong financial health and liquidity?
Despite the shrinking pool of concessional funds globally, they remain a critical tool in catalysing investment into sustainable industries that may otherwise struggle to attract traditional funding. In tandem, maintaining strong financial health and liquidity is essential to ensure the bank’s long-term sustainability.
To balance these priorities, the bank leverages blended finance structures that combine concessional capital with its own resources, allowing affordable financing while preserving balance sheet strength. It secures long-term lines of credit from multilateral and bilateral institutions, often on more favourable terms, which match the nature of sustainable projects and reduce liquidity pressure. Financing terms are increasingly tied to performance indicators such as tax collections, foreign exchange savings, or job creation.
Profitability through sustainability is central to the whole framework we are adopting. We ensure non-interest income is growing, costs and non-performing loans are managed, and operations are efficient. Digitalisation helps us maintain a low cost-to-income ratio. Liquidity is further supported by structuring the pipeline and by government’s commitment to capitalise the bank, which lowers funding costs and enables concessional lending.
