Matia Kasaija, the minister for Finance has cautioned Ugandans against borrowing money which they cannot pay back.
Speaking at a housing conference at Srena Hotel in Kampala on Thursday Kasaija said unplanned borrowing is increasingly becoming a financial burden on borrowers, with many misusing borrowed money while others are investing in non-productive ventures.
“When you borrow money, make sure it’s paid back. Everyday I receive people claiming to be mortgaged yet they did not do a cash flow,” he said.’’
Financial planning is increasingly becoming a big challenge for majority Ugandans.
Many are struggling with heavy loans from commercial banks, micro-finance institutions and loans sharks in the country.
These loans are believed to be hurting families, just in case a family heads fail to repay, which leads to loss of property like land and houses.
“You borrow money to build a house, but if you know you are investing in a residential make sure you keep the job well,” Kasaija said.
Alice Namaganda, a young entrepreneur said Kasaija’s remarks made sense.
She said she once borrowed money to recapitalise her business but ended up spending half of the money on paying tuition fees for her sister.
“I borrowed five millions from a local bank using my land title but the loan did not serve the purpose. I spent two million on family and the remaining three could not serve the purpose’’ Namaganda said.
Kasaija called for people to save more of their income saying that savings will reduce people’s appetite to borrow.
“Let us save as much as we can but not at the expense of living an extravagant life,” he said.
Some borrowers accused financial institutions especially micro-finance institutions like Saccos and village saving groups of not explaining to them the terms and conditions of their loans.
Simon Peter Mukasa, a tailor in down town Kampala said they only get to know how much they have to pay back when the repayment date is due.
“They never sensitise us. Sometimes it is shocking when you are paying back it is when you get to know about the interest,” he said.