Small Scale Industries decry high interest rates

Members of Uganda Small Scale Industries Association (USSIA) have decried high interest rates charged by Microfinance Institutions and commercial banks saying they are hindering their business growth.

Writes Felix Oketcho

Speaking at the first ever microfinance and small enterprise expo, USSIA Executive Director Veronica Namwanje said they still face huge challenge in getting credit from commercial banks and microfinance institutions in Uganda.

“Our biggest challenge remain access to credit from microfinance and commercial banks. They give us money at high interest rate with short grace period to service the loan. This cannot support our business growth,”Namwanje notes.

She also called for tax waiver on raw materials especially used by small scale industries saying huge tax on raw materials charged by Uganda revenue authority will scare off entrepreneurs hence low development and industrialization.

The Four days expo was organized by Uganda small scale industries Association (USSIA) in collaboration with Association of Microfinance Instititition of Uganda (AMFIU) at Uganda Manufacturers Association ground Lugogo under the theme enhancing wealth creation through access to financial services.

According to Veronica Namwanje,the Expo was organized to bring microfinance institutions and members of small scale institutions to discuss how they can support each other in favoring business growth The Expo attracted over 100 Service Providers namely Banks, Insurance and other Customers to share information, knowledge about financial services and how they can support growth of small industries.

SMEs employ close to 90% of youth who belong to the informal sector.

“The expo aimed at stimulating the growth of small and medium enterprises with a focus on value addition and financial inclusion. The activity brought together financial Institutions such as Banks, Government Development Programs and those institutions offering Business Development Services,”Namwanje explained.

Recently bank of Uganda deputy director Louis Kasekende urged financial institutions to train small and medium enterprises on proper financial management and business operations saying majority lack these skills in running sound financial book keeping records.

Kasekende noted that close to 90%v of SMES lack proper cash flow with majority having not audited accounts and annual reports hence rendering them un fit to acquire credit from commercial financial institutions.

Kasekende said central banking is a challenge while handling non performing loans with large companies diverting resources meant for business operations to personal use.

The Association of Microfinance Institutions of Uganda (AMFIU) is an umbrella organisation of microfinance institutions (MFIs) in Uganda. AMFIU was founded in November 1996, through the collaboration of several organisations with interest in microfinance. The main reasons for its establishment were, the felt need for MFIs to have a common voice; to lobby government for favourable policies; to share information and experiences; and to link up and network with both local and international actors.

AMFIU is a member-founded and member-owned institution. Membership as of December 2016 stands at 117 members. This includes 92 ordinary members (MFIs) and 25 associate members (Other institutions and individuals supporting micro finance activities). Full directory can be downloaded from the members sections.

Uganda Small Scale Industries Association (USSIA) is a registered Membership Organization formed rig in 1979 with a major purpose to enhance the industrial development of Small Scale Industries in the Country right from the grass root level. USSIA vision is to promote the development micro, small and medium scale value addition industries and supportive service enterprises; as the engine of growth while its mission is to enhance the development and competitiveness of micro, small and medium scale industries and supportive service enterprises through quality services delivery and advocacy

Compiled by Felix Oketcho

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