Home Banking Minister Anite Warns of Consequences for Banks Refusing to Disburse Government Credit...

Minister Anite Warns of Consequences for Banks Refusing to Disburse Government Credit Facility

81
0
minister anite warns of consequences for banks refusing to disburse government credit facility
minister anite warns of consequences for banks refusing to disburse government credit facility
Share this News

The State Minister of Finance responsible for Investment and Privatization, Evelyn Anite, has issued a warning regarding financial institutions that are unwilling to provide government funds to Ugandan Small and Medium-sized Enterprises (SMEs). Anite stated that the government is collaborating with the Central Bank to take punitive measures against such banks.

During an event discussing the Shs1 trillion SMEs fund on Wednesday, concerns were raised about the difficulties and inflexibility faced by participants when attempting to access these funds. Participants also accused banks of withholding information about government credit programs.

Speaking to journalists, Minister Anite revealed that, with the exception of Opportunity Bank and PostBank, most banks have been identified as withholding government funds to offer their products at higher interest rates. To address this issue, Anite explained that discussions have been held with the regulator, the Central Bank, and punitive measures will be imposed. Banks that continue to withhold government funds will be excluded from participating in government credit programs.

Minister Anite emphasized that the government, in collaboration with the regulator, is assessing each bank individually to identify those holding onto government funds and prevent them from receiving further disbursements.

In response to concerns raised by participants about the strict rules and regulations imposed by banks when accessing financing, Anite expressed the need to shift from collateral based on land titles to equity financing to protect SMEs from exploitative moneylenders.

Anite also mentioned plans to organize a larger forum involving all banks and the Central Bank to facilitate easier access to adequate financing for SMEs.

The Managing Director of Uganda Development Bank (UDB), Patricia Ojangole, acknowledged the challenges faced by SMEs in accessing affordable financing. She highlighted interventions by UDB, such as value chain and cooperative lending, aimed at addressing these challenges.

Morrison Rwakakamba, Chairperson of Uganda Investment Authority (UIA), emphasized the importance of supporting SMEs and local investment. UIA has provided free land in Namanve and assists SMEs in accessing funding through UDB to strengthen local businesses.