BoU, UIA embark on public sensitisation on underperforming recovery funds

The Uganda Investment Authority and the Bank of Uganda have started on a campaign to popularize the small and medium enterprise credit funds that were meant to help lower-income entrepreneurs out of the effects Covid-19 pandemic.

There have been consistent reports that the Small Business Recovery Fund (SBRF) and the Agricultural Credit Facility have not been embraced by the intended beneficiaries and the expectations not been met.

According to the Bank of Uganda, by the end of January 2024, less than 10 billion shillings from the SBRF had been disbursed to beneficiaries, out of the 200 billion that was set aside by the government and partner banks in 2022.

The money meant for the small businesses employing between two and 49 persons, is managed by BoU and disbursed through commercial banks.

According to BoU, less than a third of the 33 regulated financial institutions were ‘actively participating’ in the management of the fund.

And of the 800 billion shillings under the Agricultural Credit Facility, so far only 3,744 beneficiaries have accessed the funds, hence the need for more awareness creation on access to the funds.

The authorities have been puzzled by the low uptake of the facilities which carry an interest of 10 percent per annum, just slightly more than half of the open market price for credit.

Michael Atingi-Ego, the Deputy Governor BoU said the ACF was meant for micro, small and medium enterprises (MSMEs) to acquire things like equipment for farming, post-harvest handling and value addition, among others.

This was at the awareness workshop on affordable financing for small businesses and commercial farmers in the southwestern district of Rukungiri, where he was represented by the Executive Director of Finance, Richard Byarugaba.

He said that although small businesses are key to Uganda’s economic growth, their major constraint is access to affordable credit, hence the creation of the two funds – SBRF and ACF.

The fund offers up to 2.1 billion shillings repayable in eight years (maximum), with a grace period of three years (maximum) and an interest rate of 12 percent per annum.

The SBRF provides affordable financial loans to small enterprises that have experienced hardships due to the measures undertaken to control the spread of the coronavirus in Uganda.

Eligibility is for small businesses operated by individuals, groups, partnerships, and companies, employing between 2-49 people and with an annual turnover of 10 to 300 million shillings, with a demonstrable capacity for recovery.

Private sector leaders have accused the financial institutions of ‘hiding’ the programs and instead selling to the public, their products which are usually more expensive.

The Chairman of Uganda Investment Authority, Morrison Rwakakamba, said the workshop on access to affordable financing is an eye opener to the business community and farmers in Uganda on funding opportunities offered by the government.

“Rukungiri is strategically located near the Eastern Democratic Republic of Congo and has enabling infrastructure like roads and electricity. These are opportunities and enablers that the business and farming communities should seize and exploit for investment and business”, said Rwakakamba.

The Rukungiri District LCV Chairperson, Geoffrey Kyomukama, urged the people to use the funds to boost commercial farming by investing in things like irrigation schemes, post-harvest handling, cold storage facilities, and transportation of produce, amongst others.

“My people let’s move with new development strategies. The time is now when you should arise with your group and family to share in national wealth. Take advantage of available investment opportunities”, said Kyomukama.

The access to affordable financing workshops, already also held in Arua and Mbarara, are being rolled out to other parts of Uganda in an attempt to increase the uptake of the central bank-managed funds.