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NPA’s Henry Serukeera presents the findings.

By Isaac Wandubile  

This Thursday afternoon, hundreds of Ugandans converged at Serena Conference Center to participate in the 11th National Development Policy Forum during which debate focused on how the cost of borrowing or accessing credit for businesses can be lowered in Uganda. At the same event, NPA Executive Director Dr. Joseph Muvawa, ably aided by brilliant researcher Henry Serukeera, presented findings of a research that was conducted across the country regarding the ordinary man’s views regarding the extent to which their government should get involved into the commercial banking business.

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Should the GoU revive Uganda Commercial Bank, start a new one afresh, acquire and recapitalize one of the existing banks or merge Post Bank, Housing Finance Bank and Pride Microfinance into one large public bank?

From what Serukeera presented from the detailed findings, it was clear majority preferred the strengthening of the three commercial banks that are already owned by government namely HFB (51%), PBU (100%) and Pride (100%). It was recommended that Shs2.5trn be mobilized to go into the recapitalization of these three financial institutions (each continuing to exist autonomously) so that they grow to the level of controlling up to 20% of the market share or banking business in Uganda. This (20%) can be achievable in between 3-5 years and the idea is that each must retain its niche area.

Whereas PBU, which is widely spread out in key major Ugandan towns and funds agriculture and other NDP III critical areas, HFB is having a huge niche of up to 60% of the urban mortgage financing market. Pride Microfinance is having a huge niche in group lending targeting low income grounds that would ordinarily not attract lending by commercial banks.

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During the discussion (which attracted Ministers, Bank of Uganda officials, MPs, development partner representatives and many other important people) consensus emerged that it was high time the GoU does something to strengthen public-owned banks in order to become market leaders and pace setters if the ever skyrocketing interest rates will ever be tamed. This proposal gained even more credence when PSST Ramathan Goobi, who was present at the event, declared support for increased government involvement into the extension of commercial banking services to the people.

Especially leaders of the private sector in the audience were very excited with this proposal because they have detrimentally suffered expensive credit more than anyone else. Prominent among these was real estate and furniture manufacturing tycoon William Byandusa of Master Wood Works Ltd who said there is no way Ugandan businessmen can favorably compete with colleagues from other countries where they access credit much more cheaply. He gave several examples to illustrate his point persuasively showing that at 19.8% interest rate as of 2021, Uganda remained the most prohibitive market for private businesses to borrow from.

He compared this with Rwanda’s 16.2%, South Sudan’s 16.1%, Tanzania’s 13.8%, Burundi’s 12.6% and Kenya’s 12.17% during the same period. South African businesses, many of which find Uganda attractive, can borrow from Commercial banks at 7% interest rate and Chinese, many of whom are equally investing in Uganda, access credit at as cheaply as 2.8% from their country’s commercial banks. William Byadusa castigated Ugandan political leaders, who despise and dismiss Ugandan businessmen as extravagant, saying they should help them overcome such credit access challenges rather than dismissing them as lazy.

Byandusa said in Uganda, credit is expensive regardless of whether one borrows from private or government-owned banks. He gave the example of Housing Finance Bank, whose MD Micheal Mugabi was in the audience, saying the interest rate at which it lends is way much higher than what private banks charge in Rwanda, Kenya, Tanzania and other countries within the region.

The government was also condemned for constraining private sector’s access to affordable credit by borrowing heavily (borrowed up to Shs6.8trn in FY2020/2021) from the same commercial banks which find it safer lending to GoU than private businesses many of which are always struggling. This, in effect, crowds out the private sector making credit more costly.

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Olive Z Kigongo, the President of Uganda National Chamber of Commerce is another private sector leader who was present and spoke during the plenary session. She thanked the NPA researchers for such well thought out recommendations but also registered her displeasure at government saying it was time to call the spade a spade and not a big spoon since Oscar Semweya Musoke, the session moderator, had encouraged them to speak candidly.

She targeted State Minister for Finance Amos Lugoloobi, who also supervises NPA, and reminded him how government had many times promised to diminish on its reliance on internal borrowing only to do exactly the opposite. She also welcomed the proposal to strengthen the three government-owned banks with the increased capitalization of Shs2.5trn as was proposed in the NPA recommendations.

She, however, was fearful and demanded for assurances that corporate governance ideals would be permitted to take root in the running of these banks without crude political interference from the politically powerful in this country. This same point had been made by many people present including the Deputy Governor Bank of Uganda Micheal Atingi-Ego who asserted that strengthening corporate governance would be as important and increasing capitalization.

Senior Minister Chris Baryomunsi, humorous as always, represented the Prime Minister Robinah Nabanja who was scheduled to preside over the closing ceremony. In his speech, Baryomunsi (who kept cracking jokes) felt obliged to respond to what Olive Kigongo had said about government politicians interfering into the running of such public-owned businesses.

Baryomunsi dismissed Olive Kigongo’s fears as unfounded and castigated her for not understanding the difference between government interference and intervention. Baryomunsi asserted that interference was a bad thing and no sane government should ever do it “but I want to inform that lady over there that intervention is a positive thing and government will always intervene to make things even better and that is okay. It’s not something for which the government should be criticized.”

Olive Kigongo (who also demanded for unique credit packaging for women who she called very credit worthy) wished to speak back to make herself understood better but, according to moderator Oscar Musoke, there was no more time. The event had to be brought to an end. (For comments on this story, get back to us on 0705579994 [whatsapp line], 0779411734 & 0200900416 or email us at




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