Minister Anite vows to Scrap off Non-performing Banks from the Gov’t disbursement fund program

KAMPALA – The State Minister for Finance, incharge of privatisation and investment, Hon. Evelyn Anite Kajik, has vowed to scrap off None-performing Banks from the list of Government disbursement fund program.

This follows her weekly physical and virtual online engagements with local Ugandans that are directly involved in Small Micro-business Enterprises (SMEs).

In her interaction with these Small Micro-business Enterprises on Wednesday this week, and through their testimonies, members revealed how they have struggled to access these funds yet they hear it is a government fund that is borrowed on a cheeper interest.

A couple of shocking testimonies were revealed infront of the Minister.

Among the present was Ms. Easter Najjemba, chairperson Lubaga women’s league, who accused most of the banks in giving hard time to the SMEs while trying to access low interest rate government funds.

She vividly told the Minister to remind the president if indeed he is against the exorbitant money lenders, he should start with these banks.

Najjemba reported that, it’s in fact these banks that lend to money lenders and then to low income earners at a high interest rate.

Her expression was not far different from Peruth Kabahuma from Makerere II Sacco, who narrated how together with fellow members went to Equity Bank.

Kabahuma, alleged that Equity Bank declined to give them funds because of their very young business and had just started without any collateral. She then opted for plan B on an individual basis with a request of 10m, which also could not stand because she was again asked to produce a registered land title within Kampala.

Easter Namwebye the CEO of Hotel heritage, narrated how she  imported business equipments from abroad and because of revenue, she wanted money amounting to 10m, and banks declined to give her money which forced her to run in a Sacco which rescued he.

She revealed by informing the Minister and audience that these banks only look so sweet but when you reach there, the language changes.

Agatha Mwesigye a dealer in Agricultural produce, whose business was affected by Covid-19, explained that it indeed pains and frastrates as banks ask for a financial credit card yet they know all businesses were affected by the pandemic, adding that young people have a lot of issues and dieing financially silent.

In her testimony, she accused Microfinance Support Center (MCS) which declined to help her because they changed their lending criteria from individuals to Saccos. More members kept on gave more testimonies of frastration like, the need to have 50m working capital be reduced, specific period to process funds, government’s intervention,  procedure adjustments, work with pre-qualified association among others.

In attendance was, the Managing Director of Uganda Development Bank (UDB) Patricia Ojangole, who was among the panelists. She was accompanied by UDB’s Chief Economist Dr. Francis Mwesigye and Mohamoud Andama the Director for investments.

She observed members outcry and explained some of the remedies in accessing UDB funds.  According to Ojangole, the current borrowing status with UDB stands at 12% percentage interest rate.

She explained a number of productions available for especially SME like; supporting anything around industry to, infrastructure, construction like brick laying, Tourism and hospitality like hotel and lodges, Education especially on specific intervention like vocational institutes, Health, Primates practitioners and not forgetting Oil and Gas among others.

She reminded them on banks role in; Business advisory especially to SMEs, Financial equity, Project operation ideas, Loan terms – long-term for 15yrs, Medium and short for specific structure depending on its maturity.

She gave an example by explaining to those who would like to start like a factory, which may take advisory procedures. Ojangole,  notify the audience about a high focus on UDB’s support to Agricultural production, Value addition, Manufacturing/Industry and infrastructure services.

Concerning, special programs, Ojangole said that currently for SMEs the working capital needs to be 50m turnover and 360m but with the bank’s advisory role discussions can be done.

For women and youths programs, the  Managing director director emphasized that the funds in UDB are accessed by all Ugandans irrespective of race, gender, political and religious affiliations.

She clarified that incase of women and youths program one has to registered under same program to be a beneficiaries like; Women sweet facility, Women acceleration (900m maximum about 8yrs and grace period of 2yrs) Women asset acceleration among other, but if not registered, the bank is helpful in registering those interested.

In her conclusion, the Managing Director of UDB Ojangole, informed them that for only this year they have registered over 270 SMEs and many are still under pipeline. She invited members to come and associate with the 12% interest since the process to access the facility takes not more than 1month adding they are soon putting into the operationalisation their reginal branches in; Mbarara, Gulu, Mbale, Hoima and currently head office doing well.

Minister’s Remarks.

In her remarks, Hon. Evelyn Anite who was accompanied by Board chairman of Investment Authority Morrison Rwakakamba. Shevexpresse her feel of pain on behalf of Ugandans who have been experienced hard times in trying to access Government facility fund yet it’s ment for them.

Anite noted that now all what is needed is to simplify laws and regulations for anyone to access these monies. “We have to move away from collaterals and land titles, jump start our economy and make it grow because these SMEs do not have huge collaterals” Minister told the SMEs.

She added that even those who have them tend lose them to money lenders because they submit them to the so called lenders which is not fair. The Minister wondered how someone take  land title which values 100m for just an exchange of 10m?  “It’s not a fair field!” she said.

Anite pledged to have a bigger Barazas with all the Banks together with the Central Bank as a regulator and chat away forward how to support the people.

The Minister was however on the other side pleased for the feedback on behalf of the government as she said now that, now they will see how to set regulations.

“For us as regulators what we can do, is to get your views and then process them to Cabinet and later to Parliament to have better regulations because these regulations are set us as central government (Executive)” she stated.

Anite further explained that because the government’s intention is to hear more more of these views from the concerned businesses people as the way on how they can get well treated or how tedious it is to work with in the policy they have put in place. This means the government will be able to make other inclusives for her people to benefit.

The Minister, opined that her current focus in this is on government’s money in different Banks and it’s major products of;  SME recovery funds which is close to 200b. She however expressed her disappointment on this project of now 2yrs and out this 200b only 50b has been give out.

According to Anite, this is not good uptake because of the current feedback from the public who are ment to use these monies. “It is because of tedious and bureaucratic regulations put in place that are not favouring them. So we have to reduce and put more favouring ones as we collect all this information” said Minister Anite. Adding that in 2yrs they can’t only give out only 50b, which is not right. She observed that if there was better organisation, these monies would be already given out.

Secondly, the other product she said is focusing on Agricultural Credit Facility funds (ACF). On this, the Minister was very happy for the feedback because since 2019, the fund has grown from 200b – 800b.

Anite noted with pleasure but said they have to double uptake levels. We want more people to receive this money not only with in central region but the entire country.

She further said the 3rd on her focus list is the UDB investment fund at total tune of 1B which is targeted for those especially in; manufacturing, agro-processing and construction who must access this money. She stressed out that this money is addressed to different products and  should be made cheep, available and categorised to different interested special groups. She also pointed out that also in PostBank there’s another SME product.

Hon. Anite, revealed that previously, they had started from 1yr for one to receive recovery money but because of her struggles together with her senior Minister Hon. Matia Kasaija, they have been able to reducing to 6months and now to 1month.

Anite added that this is because they are working in president’s vision of turning over business with in 48hrs. “So, we have to sensitise the public on the document needed and get prepared to submit to the banks ahead of time before the approach to the banks” she emphasized.

Conclusively, Anite is optimistic that if  they continue with this pace, they will be able to reduce to 48hrs, though according to her the preferred interest should be bellow 48hr.

And concerning the internet rates which was also very high has come down to 12% to the preferred 8% or 5%. She pledged to work with the regulator who is the central Bank so as to be able to guide for citizen’s favourable lending rates. She expressed her curiosity on how money lenders are charging 20% than the government money which is at 12% and recovery fund on 10% which is far much better even zero collateral than money that of money lender.

The Minister ended by cautioning the banks who have been hoarding these facilities yet they have been crying for government’s consideration in the disbursement program. She vowed to start the process of evaluation of these banks, name and shame thereafter scrap them off from the list of.

“We can’t tolerate someone hoarding information from the citizens and yet they have the money and kept” she expressed.  Adding that why shouldn’t they give it to the ones who are active or lend it to those who are interested.