Stakeholders Decry Low Uptake of Small Business Recovery Fund

The Small Business Recovery Fund’s low uptake and other issues will be discussed at a meeting between the Ministry of Finance, the Bank of Uganda, and commercial banks.

The Finance Ministry made the decision for the government to provide cash for small enterprises through the Small Business Recovery Fund (SBRF).

On November 16, 2021, the government made a statement as a part of its efforts to assist business owners in overcoming the financial hardship brought on by the COVID-19 epidemic.

Through Participating Financial Institutions (PFI) such commercial banks, microfinance deposit-taking institutions, and credit institutions, the Ministry distributed the SBRF.

To combine the fund run by the Bank of Uganda, the government and participating financial institutions each donated UGX 100 billion.

It was decided that the fund’s charging interest rate would not be higher than 10% per year on a declining basis and that one-time facility costs would not be greater than 5% of the entire loan.

Depending on the nature of the project, the borrowing companies would have a minimum of six months and a maximum of four years to repay the loan, including a one-year grace period.

The Finance Ministry’s Acting Director of Economic Affairs, Moses Kaggwa, attributed the low uptake of the money, among other things, to inadequate publicity and cumbersome access procedures.

“The commercial banks are required to forward loan applications from their clients to the Bank of Uganda. As a result, we discovered that there has been virtually little uptake. We decided to meet with the interested parties to discuss how to improve the processes so that individuals may get the monies, he said.

The Federation for Small and Medium Enterprises’ Executive Director, John Walugembe, welcomed the meeting and stated that it will help them resolve certain technical issues that had prevented them from receiving the funding.

“We are pleased that a meeting is being planned. We would like to attend the meeting. As a federation, we can do something; we can effectively represent our businesses and determine how to assist them in gaining access to this funding, he said.

The limits imposed by banks, according to Walugembe, are advantageous to medium-sized businesses, which the Uganda Development Bank already supports (UDB).

The money was designated as the Small Business Recovery Fund, however the intended groups (small enterprises) are a missing category that is not being served.