By Beinomugisha Godfrey
Kampala: Reflecting on the current Business Financing in Uganda, its very difficult to get An investment long term loan in our local commercial Banks.
Bank of Uganda needs to loosen up on “the intricacies of economic policy-making on banks lending out money to individual investors, who find it hard to get cheap money to do investment.
Currently its very hard to get a credit facility at as low as 1% for a loan term of 10-20 years,yet iam sure such facilities are available in other countries.
I always read and do a lot of research on foreign banking,and countries especially in Asia & the Arab world where they are ready to give poor countries money at no interests rate for as long as 10-20 years but this is ignored by government, yet they are ready to lend out to developing countries at the lowest interest possible.
I am sure that Ugandans Especially civil servants would qualify for such a loan to construct a decent house, start up a business as long as the loan repayment is spread wide for 10 years.
Secondly when such money is borrowed at a low interest rate for a longer period its easy to payback and this does not hurt the borrowers busness,most Busness men get 10million for a period of 1 year,but its always a very short time to make profit out of this money.
Building a home would require a long term loan where instead of paying it as rent,it would be paid as a loan for 10 years and finally the borrower owning it after the repayment period.Insurance would do a good Arrangement with such a loan facility to protect the lender and the borrower. Most ugandan banks don’t look at this,may be bacause the central banking lending rate remains a challenge and the fact that Ugandan banks are basically commercial.
To me Central bank should not allow any new commercial banks into the market but shld now invite more of investment banks to come in to help in the investment industry,and home loans etc
The few investment banks like East African Development Bank ,Uganda Development Bank are giraffes and are not for ordinary Ugandans, making them useless and invisible in the Economy.
To me, government shld put more Emphasis on funding Investment banks to spar growth.This is the only way to fight poverty head on; by helping Ugandans own huge businesses,and property like owning up a home,thru long term loans.I always ask my self Where in Uganda one can find a longterm credit facility of £100,000 for 20 years @ a rate of 1% per Annum.
African countries need to style up,the only Available credit facilities in our poor Ugandan banks are for buying a car,a bed and a mattress, otherwise there are no investment loans for ordinary Ugandans like teachers Medics, and other civil servants,for setting up huge investment projects,meaning that the cycle of poverty remains with us for as long as we live,meaning no Ugandan can Set up a processing factory,the only credit Facility an ordinary Ugandan can Access will be 200mn for 5years,to trade in substandered goods from China and India, meaning Indians, Chinese will take control of our economy if Our Governments don’t look far otherwise everything remains dull in our economies compared to these foreigners where there countries are ready to give them 10-30 year loan facilities specifically for investments abroad.
No African country is providing such to its citizens, African leaders would rather give Incentive’s to foreigners like tax holidays, land for investment, but not to a citizen, worse still the rich class who could help out instead open bank Accounts Abroad and keep stolen money on fixed deposits in Switzerland, Malta,China,Europe as we all know etc.
My question still stands unanswered where can an ordinary Ugandan citizen get a 25yr long term credit facility of 5bn at a very cheap interest rate?? because Arabs, Chinese are ready to give us interest free money, why then can’t government allow the Islamic banks to join the Ugandan Banking Industry??
A few years ago Islamic Bank was ready to open a bank in Uganda to give interest free loans just like in the Islamic laws can u imagine??? But the idea was killed with no reason.Cry my beloved country!
Beinomugisha Godfrey
