There is need for financial institutions to fund companies investing in Uganda's oil and gas sector so that the country can secure sustained growth from the commercial oil deposits, according to Mr Michael Monari, the Ecobank Uganda managing director.
Mr Monari, who pledged the bank's readiness to fund the sector, was speaking at the oil and gas seminar in Kampala on Wednesday where he presented financial intermediation proposals to players in the sector.
"Uganda's financial market is not quite ready to provide financial solutions to the oil and gas sector. Ecobank wants to take the lead in that direction," he said.
"Africa must get involved in supporting investment in the exploitation of the oil and gas discoveries to become a catalyst for accelerated growth on the continent instead of waiting for support from overseas countries."
The group has an asset base of about $12 billion, which Mr Monari said is strong enough to enable the bank support any balance sheet requirement from the sector.
Mr Monari said the Ecobank Group has built capacity and expertise in oil and gas financing, following its operations in the same sector in countries including: Ghana, Nigeria, Gabon and Angola.
The group thoroughly evaluates investors in terms of capabilities, management and knowledge of the sector before they are given the loans. "We want to give money to companies that fully understand the oil and gas business to appreciate the industry dynamics and risks to be able to effectively benefit from the bank's financial support," he said.
The banking industry is, however, characterised by high interest rates, close to 30 per cent, yet high interest rates are a disincentive to private sector players in the oil and gas sector who would want to access credit from the banking sector.
Mr Monari, however, said the industry expects a slowdown in lending as inflation calms. Inflation slowed to 29 in November, compared to 30.4 per cent in October.
Ms Rolake Akinola, oil and gas specialist at Ecobank Capital Research, urged Uganda to address the legal and regulatory frameworks and governance issues in the sector to boost investor and stakeholder confidence.
She said the rising global oil prices, electricity shortage and emerging market in the Democratic Republic of Congo, South Sudan, Malawi and Zambia offer opportunities for investing in Uganda's oil and gas sector.