Civil Society Orgaisations(CSOs) have commended government for the recently announced shs200 billion small businesses recovery fund meant for SMEs hit by Covid.
Government together with Uganda Bankers Association last week announced Shs 200 billion recovery fund for small and medium enterprises affected by Covid-19 with government contributing shs100billion and a similar amount by banks.
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Addressing journalists on Sunday, Joanita Nassuna, the Program Associate in charge of women and economic injustice at SEATINI Uganda said such a fund is what they have been advocating for in order to address challenges that Micro, Small and Medium Enterprises, especially the small businesses face while trying to access the existing financial packages.
“We also commend government for involving private sector organisations and civil society organisations in the process of developing modalities for the fund, Therefore the framework has adopted many flexibilities which will facilitate easy access by the small businesses,”Nassuna said.
She noted that flexibilities like interest rate not exceeding 10% per annum on a reducing balance basis and the facility fees to eligible borrowers not exceeding 0.5% per annum on a reducing balance basis will help ease access to the fund by small businesses.
“Loans to eligible borrowers will be extended for periods of a minimum of six months and a maximum of four years depending on the nature of the project as agreed upon by the borrower and the participating financial institutions.”
According to John Walugembe from the Federation of Small and Medium Sized Enterprises Uganda, Bank of Uganda and Uganda Bankers Association ought to be hailed for their flexibility and willingness to finance the facility.
“We therefore urge small businesses everywhere to use their financial institutions to ask modalities in place for them to access these funds,”Walugembe said.
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The CSOs however urged government to ensure SMEs are trained to ensure they utilize the funds well.
“In order for small businesses to have impact from these funds, they need to be fully trained in basic book keeping so as to utitlise well the funds, ensure realise profits and also be able to pay back. The issue of digital marketing should also be key to ensure the small businesses can use the internet to get customers for their products,” said Herbert Kafeero, the communications coordinator at SEATINI Uganda.
He said government can make use of the Uganda Small Scale Industries Association and Federation of Small and Medium Sized Enterprises Uganda with organized members that can be trained.
The CSOs also asked government to come clear on how much of the fund is allocated for women since majority of them own small businesses.
“In the past, the stimulus funds they said catered for them were hard to access and with stringent conditions and this has left women entrepreneurs who dominate much of the micro enterprise sector but also who were most impacted on by Covid. When government puts up a fund addressing small businesses, it should come clear of the percentage meant for women,” Joanita Nassuna, the Program Associate in charge of women and economic injustice at SEATINI Uganda said.
“Let them state clearly where how the women will benefit from this fund. Let them clearly explain that women can form groups, come to the participating financial institutions and access the credit facilities. For women who lack collateral they should be allowed to access the funds by using the groups as their security.”
SEATINI asked government to ensure the fund benefits all businesses across the country and not only those located in urban areas as many of the earlier funds have been doing.
“There is limited awareness among the intended beneficiaries on the availability as well as the modalities of the funds, This information gap is likely to hinder access but we call upon government to use media, especially upcountry and community radio and TVs to raise awareness to ensure effective communication,” said SEATINI’s Herbert Kafeero.
