West Nile business community demand cheaper loans

The business community in West Nile region, under their umbrella the Uganda National Chamber of Commerce and Industry (UNCCI) is seeking to meet all banking institutions operating in the area to lobby for better credit services in order to boost their businesses. 

The businesspeople say that they have lost out on many opportunities due to lack of knowledge on which credit facilities each bank in the region offers and how they can benefit from those with affordable interest rates.

This has led to closure of some businesses because of the economic hardship fueled by the Covid-19 pandemic. 

The interim UNCCI chairperson, Mr Caesar Trinity Draecabo, said on Monday that many businesspeople are struggling with meagre resources to recover from the effects of Covid-19 pandemic lockdown.

“There has been concern that elsewhere around the country, it has been the government move that has helped certain businesses to recover faster. What about West Nile? We need better loans and government to help our businessmen,” Draecabo said.

He said in their first engagement with the management of one of the financial institution in the region, they realised that there was an information gap between the business community and the banks.

During Covid-19, several businesses, mainly small and medium enterprises, closed due to the economic hardships. Many of them are still struggling to recover due to the current economic hardships.  

For instance, Mr Francis Odoi, the proprietor of Winner Classic Supermarket in Arua City, closed the supermarket after the business plunged into losses during the Covid-19 lockdown. 

“Before the lockdown, we were getting between Shs1.2b and Shs1.5b in monthly sales. But when the lockdown came, we could not make even Shs500m a month. We could not then afford to pay rent, taxes, workers, utilities like water and electricity. The only option was to close,” he said.  

Mr Ham Ezama Muzami, a businessman in Arua, said: “The business community here has been crying that the banks are not doing good to their businesses, that when someone takes out a loan, there is no sympathy when he delays to repay, they just rush to attach the security.”

He said banks should have good relations with their clients, especially when business is not doing well. 

Mr Umaru Hasule, the Stanbic Bank manager, Arua branch, said: “I believe the bank has a solution for them, for instance the pain of bidding, the bank has to hold a fraction of your money. Right now, the bank is saying you can get up to Shs3b unsecured bid bonds. I believe this would be a good one for contractors,” Mr Hasule said.

Covid-19 impact on businesses
A 2020 rapid survey of businesses by the Economic Policy Research Centre (EPRC) in Uganda reveals that three-quarters of the surveyed businesses have laid off employees due to the risks presented by Covid-19 and subsequent containment measures.

Indeed, the results suggest that lockdown measures reduced business activity by more than half.

The survey also indicates that a severe decline in agricultural demand may be to blame: Close to 71 percent of surveyed businesses in agriculture reported severe decline in demand compared to 47 percent in manufacturing and 49 percent in services.