Pay your loans, top govt officials warn Ugandans
KAMPALA– Ugandans who don’t want to pay back their loans are giving a bad image to the country, top government officials have said.
The Finance Ministry Permanent Secretary and Secretary to the Treasury [PS/ST] Ramathan Ggoobi and Bank of Uganda [BoU] Deputy Governor Dr. Michael Atingi-Ego made the remarks on Wednesday during a workshop held at the Kampala Serena Hotel on the implications of high prices on the household welfare in Uganda.
The comments from the two officials come at the time when Kampala businessmen Patrick Bitature and Hamis Kiggundu have run to court to dodge paying back the loans they willingly signed for.
PS/ST Ggoobi said commercial banks are so careful in lending to Ugandan borrowers because the latter pose great risks as some of them lack the culture of paying back the borrowed money. “You lend to a Ugandan at your own risk,” he said, adding that this raises the cost of assessment of the loans both pecuniary and non-pecuniary.
Ggoobi advised Ugandans to be prepared before going for loans. “Banks want to be sure that the borrowers will pay back the money borrowed,” he said, revealing that government has plans to set up a platform that will be able to tell Ugandans which banks offer better conditions for borrowing.
He said the new development comes to address the issue of the legal framework in Uganda that protects banks and not the consumers/ borrowers when it comes to loan transactions. He said plans were underway to set up a unit akin to the Consumer Reference Bureau to cater for the interests of borrowers.
Meanwhile, BoU Deputy Governor Atingi-Ego also blasted Ugandans who run to courts after failing to pay the loans.
“Ugandans get loans, but when time comes to pay they run to courts,” he said, adding that over Shs 4 trillion is help up because of court litigations.
He said banks also pay interest on the loans they get from other lenders to give to Ugandans.
Both Ggoolobi and Atingi-Ego were concerned that Uganda’s image continues to be tarnished regionally and internationally when borrowers refuse to pay their loans got from foreign lenders. They called for the improvement in the delivery of commercial justice but also building of the trust infrastructure.
Meanwhile, Ggoobi said government continues to pay its debts including domestic arrears, despite complaints that it takes long to pay.
He said government has paid domestic arrears of Shs 650bln in the current financial year. He said the delays have been caused by the technicalities in contract awarding, corruption as well as the indiscipline by some of the government officials.
Ggoobi said his Ministry is working with the Ministry of Justice and the Attorney General to cause a policy shift in the procurement process where government offices will no longer do the role of procurement. “The procurement in government offices is terrible,” he said, hinting that Ugandans will be helped to procure goods and services by themselves. “People of Uganda should be the procurement officers of their own things,” he said.
Meanwhile, on the implication of high prices on household welfare, both Ggoobi and Atingi-Ego said both subsidies and the cutting of taxes cannot be implemented, arguing that it is not sustainable in the long run, an argument also supported by Professor Augustus Nuwagaba of Reev Consult and Julius Mukunda of the Civil Society Budget Advocacy Group [CSBAG].
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