MPs Ask Gov’t to Prevail Over Commercial Banks on Loan Repayments

A section of Members of Parliament have criticized the government for turning a deaf ear to the plight of businesses that are collapsing as a result of bank loans.

The MPs led by the Kampala Central MP Mohammed Nsereko point out that businesses have been financially crippled by the COVID-19 lockdown and deserve a major bailout in order to stay afloat.

Nsereko accused the government of looking on as financial institutions auction property and assets belonging to businesses even when the president promised to shield these enterprises from effects of the crippling lock down until they are allowed to fully operate.

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Nsereko has also accused the president of preferential treatment for talking to the banks on behalf of some individuals close to him while the rest of the business community suffers under financial strain.

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Bugabula South MP Maurice Kibalya, blamed the government for failing to prioritize spending at the expense of tax payers who are unable to fend for their families. He cites the funds allocated towards the purchase of radios for the home schooling program which money he says should be availed as a bail out to the businesses that are struggling. 

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Muhindo says the government is ignoring the fact that no economy can flourish without the prosperity of its own citizens and urges the government to respond to their call and come to the rescue of the affected businesses.

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Bank of Uganda earlier this year directed commercial banks to restructure individual and corporate loans as the Covid-19 induced lock down affected businesses and economies globally.

According to the Central Bank financial institutions accommodated their client’s demands and adhered to Bank of Uganda instructions. 

The stock of loans, which were under credit relief in all banking institutions as at end of July was 4.8 Trillion Shillings, which is equivalent to 31.2 per cent of total loans.

However financial analyst Fred Muhumuza recently said many businesses have still not recovered and are still under lockdown or semi-lockdown and this presents a very high likelihood of the maturing loans turning into bad or non-performing.