Jane Nalunga (L), ED SEATINI appearing before Parliament’s Trade and Finance Committee
Experts and activists have call on Government to re-evaluate the decision to inject Shs500bn in the revival of Uganda Development Bank (UDB) for facilitation of traders whose businesses were hit by the corona virus pandemic, saying the money has only helped big companies.
The remarks were made by Jane Nalunga, the Executive Director Southern and Eastern Africa Trade Information and Negotiations Institute (SEATINI) Uganda while appearing before Parliament’s Trade and Tourism Committee that is investigating impact of the COVID-19 Pandemic on Uganda’s trade and tourism sector.
“Government has put funds in UDB but when you look at the conditionalities of UDB they aren’t appropriate for our Medium and Small Sized Enterprises (MSMEs). The conditionalities are for big companies not MSEMs so either government removes that money and put it in other commercial banks or other private sector associations or UDB should be able to reduce on those conditionalities,” Nalunga said.
This comes at the time Parliament recently challenged Government to make public a list of all companies and organizations that benefited from the Shs450bn stimulus package meant to companies hit by the pandemic.
This was after Parliament learnt that the money given to UBD had been rewarded to only businesses in Kampala, while some borrowers used funds to construct malls.
The activists listed a number challenges they say have been hampering growth of small and medium sized enterprises, and were further exposed by the pandemic.
She said there is need for Government to review the over liberalization of domestic markets which has led to the influx of cheap and subsidized products.
The high cost of doing business due to limited access to viable finance by MSMEs, the unsupportive operating environment like the high cost of electricity and unsupportive tax policies which hinder MSMEs growth and sustainability.
Nalunga also called on Government to contain its appetite for domestic borrowing by the government (currently at $ 4.73 billion) which has crowded out the much-needed credit that MSMEs could access as loans, thus stifling their growth and competitiveness.
The activists also called on Parliament to caution Government to regulate Commercial Banks that have ignored the set Central Bank Rate (CBR) by hiking interest rates.
