By Julius Mugaga Tukacungurwa/Umoja Standard.
Kampala, Uganda: Investment and Privatization Minister Evelyn Anite noted that Banks are very bureaucratic and the processes are very tedious for them to be able to lend the money, she believes that they have to simplify the rules and regulations for anyone to be able to access this money.
“We have to move away from collateral off on the land titles to equity financing that would be able to support and jumpstart our economy and make it to grow faster because the SMEs do not have those huge collaterals but even those who have the collaterals, they tend to lose there are land titles, houses due to submitting them to the moneylenders which is not fair because how can you take my land which values 100 million just in exchange of loan of 10 million and then when I default on the 10 million you take my land value of 100 million. So it’s not fair, it’s not a leveled field and that’s why I want us to have a bigger barraza with all the banks and the central bank to see how we can support the people, it’s very good that we get the feedback from them and then we set the regulations.” She appealed.
Stakeholders during X Spaces Baraaza at Ministry of Finance Boardroom.
“For us as regulators, what we can do is get their views and then process it through cabinet and then to parliament to have better regulations because these rules and regulations are actually set by us, the central government or the executive because we then take them to parliament to get processed. So perhaps it is time that we get more involved with the views of those in business and the way how they get fitted, how tedious it is to work within the policies that we’ve put in place and then we change the policies to be able to make them to be all inclusive and benefit from the facilities that government put in place but my focus in this, is the government monies in these different banks. She added.
She highlighted that, Uganda Development Bank started from processing documents for one year and by the time one is called on to take the money, the interest for business is already off, and therefore they brought it down to six months which was still not good but its now to one month, because the President’s vision is that one must turn over investment within 48 hours.
She singled out the factor of senstization of public on the documents that they should come with and get prepared and submit to the bank ahead of time before even they approach the banks. ‘So I believe that if we continue with this pace, we will be able to reduce this one month to even 48 hours if we keep on sensitizing them. But my interest is to come down to that. From interest rate which is very high they’ve come down to 12%, we want to bring this interest rate even further lower to 8% or 5%. But this we have to make sure that we work only together with the banks. And together with the central bank,
Money Lenders give out money at 20%, COVID Recovery Bank is given out at 10%, UDB and Post Bank is at 12% and some institutions are lower than that.
Minister Anite is putting her focus on SME Recovery Fund which is close to 200 billion but expressed a disappointment that, this project has been on for two years and only 50 billion of the 200 billion has been given out which is not good uptake and the feedback is that it is because it is tedious, bureaucratic and the regulations that were put for them are not favoring. She then cited a need to revise all this as they collect this information.
She cited that, she is also aiming at agriculture credit facility that has been there since 2019 and has has grown from 200 billion to 670 billion but its uptake levels are still low because there is still more money. ‘We want more Ugandans to be able to access this money, not only within the central region of Uganda but the entire Uganda to be able to get access to this money.’ And she is also looking at UDB, where over 1 trillion was injected, she wants to ensure that Ugandans get access to that money, especially those in manufacturing, agro-processing, and they must get this money and different products, should be made cheap, available and categorise them according to the special interest groups.
Minister made this revelation during X Spaces BARAAZA under on a subject of Government having Invested over 1 trillion in the Uganda Development Bank on a topic; Have you gotten credit from UDB as Local Investors, Young Entrepeneurs, Women & SMEs?
Patricia Ojangole is the Managing Director at Uganda Development Bank Limited speaking.
In her remarks, Patricia Ojangole is the Managing Director at Uganda Development Bank Limited clarified that the bank do not support micro-enterprises because there are some other government programs that complement what they do which is a discussion of how governments do things. She said, they are looking at businesses that they don’t want to remain small or medium, but scale up from small to medium to medium to large and will be very careful to make sure that they give the right advice so that one can actually move forward with this. She added that they support farmer cooperatives through like value chain financing or cooperatives.
“We have supported a number of cooperatives especially dairy cooperatives and other farmer cooperatives. So here we do our assessment at the level of cooperatives, like that level where they get effective and where they don’t succeed. So the cooperative can have, say, 300 or 1,000 members and then each member will be want to buy 3 animals or 5 or something small, we lend money at the cooperative level and then you then manage and keep that distributed depending upon the needs of your member.” she highlighted.
“By the time you do that you will have completed once because you have to account and then you do it later on the time. So you have to give a service and say this member wants this and then when the other member wants it, it comes to a rate of 300 million but you know that the beneficiary is going to benefit 5 million, 10 million, or 20 million, or 2 million depending on what you need, so that is how we support groups, so we can get into a group and see how that can be structured.” She added.
Responding to one participant who needed more money with no equal collateral, Patricia said, If you have land in Nakaseke where you are farming, where you want to produce a factory, we usually take that project site as collateral for example, someone can come and say, I have 50 acres, that is already investment as your contribution, so that contribution, we shall factor in as your input contribution and then we shall also take it as your collateral contribution. If you want to save certain animals, we can give you money to plant pasture, give you money to plant everything else.
For Morrison Rwakakamba, the Board Chairman at Uganda Investment Authority, Becauses of hiccups in the laste five years, Sources of finding cheap capital, mobilizing proper liquidity that would help us became quite very difficult. So I think it was on that basis that the President, a cabinet with the Ministry of Finance, decided to devise ways to empower people.
“As Uganda Investment Authority, we said, let’s try to strengthen our local investment division to see how we can support our local investors, for those who are in industrial parks, we give free land, we say if you have started and you are 30% and you can throw evidence, as the Uganda Investment Authority would write to the Uganda Development Board and say, if these investors manage to move you to their projects, because of the squeeze they didn’t find any other money and I’m happy that Some of our investors in the Namanve and the industrial park and other parks have got some money from UDB to complete their factories but also bring in the equipment and start producing.” a
“We said, let’s also work with SMEs because we believe that small businesses are the future, big businesses are the future unicorns (global big businesses), so I reached out to my friends John Walugembe, the head of SMEs % negotiated a memorandum of understanding and that’s partly why you see him here and his team and recently we launched a platform to ensure that some of these services and I hope that we are going to be able to approach the products from UDB beyond that portal for purposes of access. So the Hon. Minister, what I can say broadly is that the smaller businesses are the bloodline of the country.” Rwakakamba added.
Some products in UDB include but not limited to short-term loans, medium term loans, long-term loans, equity investments, trade finance loans, and bank guarantees.