Last year, the government in conjunction with the Bank of Uganda and the Uganda Bankers Association launched a Shs200 billion recovery funds for Small and Medium Enterprises (SMEs) affected by Covid-19.
According to the Finance Minister, Matia Kasaija, the fund would assist Uganda’s business community with affordable credit to recover from effects of Covid-19.
However, Anne Juuko, the Stanbic Bank Uganda Chief Executive says these SMEs funds between government and commercial banks are yet to fully kick off and the banks are still waiting for the guidelines to commence.
“The SMEs funds are yet to be clearly articulated in terms of guidelines and recipients. We know it is SMEs, but which SMEs? What amount? All that has not been worked out and we are waiting for those guidelines,” she said during an interview.
Juuko says as they wait for the clear guidelines, Stanbic Bank Uganda had to announce the immediate availability of Shs 60billion in hugely discounted ‘booster financing’ to the education sector, a move aimed at supporting the ongoing nationwide reopening of schools after nearly two years of inactivity.
Under the discounted booster finance, schools are able to borrow up to shs500 million in collateral-free (unsecured) loans to prepare their institutions for reopening.
Parents can also access up to shs250 million in unsecured loans processed digitally and dispersed within five minutes at zero processing fee.
Juuko explains the decision to waive all 2021 accumulated unpaid interests on loans to privately owned schools was a proactive initiative based on the understanding that schools have not been earning and that they need to be supported to regain their ability to settle their liabilities.
“The bold decision by management even in the face of uncertainty, speaks to their commitment to walk the talk of our business purpose, which is that we drive Uganda’s growth, as such, we have to exercise our corporate responsibility to the country’s education sector,” she says.
This initiative came at a time when Covid-19 pandemic has left many SMEs with an unprecedented challenge and schools have been closed and teachers have been out of work for two years, many parents and guardians also had their livelihoods interrupted as a result of loss of jobs or business.
Juuko says the bank is taking bold steps to play its corporate responsibility to support the government and other stakeholders in facilitating a successful reopening of our learning centres.
Collectively, privately owned schools and teachers, owe financial institutions over shs1.5trillion in loans, with nearly shs 500 billion in accumulated interest alone.
According to the Education ministry, the sector requires Shs500bn in the medium term of which Shs150bn is needed immediately, to support successful reopening of learning centres, countrywide.
As Uganda’s largest lender by assets with over 30% market share, Stanbic Bank shoulders the bulk of loans to the education sector.
Dr. Kendrace Turyagyenda, the Director Education Standards at the Ministry of Education explains why private schools were unable to receive sh20billion that was promised by the head of state to support them during the tough times brought by the pandemic.
“The Government gave shs20 billion in which teachers in private schools can access; we had a few challenges because private schools didn’t have well organized associations that were registered, since this is public money, it has to be handled according to the rules. It has taken long to be accessed, but it is available,” she notes.
Turyagenda urged other players in the financial sector to play their part, adding that to fully support schools that were affected by the pandemic; it will require all stakeholders to come on board.
“Education is our collective responsibility which we cannot leave to the government alone. The Ministry of Education strongly commends the proactive gesture by Stanbic Bank for placing its corporate social responsibility above business interest, by waving accumulated interest payment on loans owed by our schools,” said Turyagenda.
Hajji Nanfumba Mustafa, the Director, Mpigi Mixed Secondary School hailed the bank’s display of corporate leadership by waiving accumulated interest on loans to schools for 2021, as reassuring to the sector.
“We were worried as private school owners that we would be on our own in dealing with commercial banks. I am relieved and encouraged that the government’s engagement with commercial banks is yielding good concessions such as this one by Stanbic Bank; waiving payment of accumulated interest for 2021 is indeed a true boost for us,” he says.
Uganda’s education sector is over 28,000 schools of which 80% are privately owned. With over 500,000 teaching and non-teaching staff and over 16 million students, the sector contributes about 5% to the country’s GDP.