Covid-19: Government and commercial banks launch Shs 200 billion rescue fund for small businesses

The government, in conjunction with commercial banks, has launched a Small Business Recovery Fund (SBRF) of Shs 200 billion to bail out small businesses that have been hit hard by covid-19.

During his July 30 televised address on covid-19, President Museveni called on the Ministry of Finance, Planning and Economic Development (MoFPED) to set up a fund that will bail out small businesses that have been hit hard by the pandemic.

On Tuesday, November 23, Matia Kasaija, the Minister of MoFPED, announced that the fund will now be accessible at all commercial banks regulated by the Bank of Uganda.

Kasaija was flanked by Ramathan Ggoobi, PSST, Micheal Ating-Ego, Deputy Governor of Bank of Uganda (BOU), Mathias Katamba, Chairman of Uganda Bank’s Association (UBA) and other officials.

“Government has used a component of Shs 100 billion interest free and commercial banks have also used Shs 100 billion with interest not to exceed 10%,” he said.

“If you borrow like Shs 20m, Shs 10m will be interest free while Shs 10m will be charged with interest since it is a component of commercial banks,” he added.

Kasaija noted that the fund will be accessible only once by companies that have been affected by covid-19 and have never benefited from the Agricultural Credit Fund.

“This fund is available to all eligible borrowers and no one should ask for any inducement to help you access it, and if you come across any such incident, report it to us, we will act immediately,” he noted.

Set-up fees charged by lenders, Kasaija said, should not exceed 0.5% of the total loan and “will be charged once”.

“There will be no maximum borrowing if someone has multiple accounts in different banks. I also urge you to pay your taxes, keep accounts and that will help you thoroughly,” he added.

Finance Minister Kasaija and UBA President Katamba exchange the Memorandum of Understanding signed at the launch.

Speaking at the launch, Mathias Katamba, President of UBA, noted that this initiative is good and comes at a time when the economy is preparing for reopening.

“It’s a revolving fund that needs to be accessible in a short period of time. It is a good mechanism and aims to elevate our small businesses, which is why we charge a small interest rate,” he said.

For his part, Ggoobi said the economy is gaining momentum steadily given the reduction in inflation rates.

“All trajectory indicators show the economy regaining its strength and I am sure that after the reopening we will regain its full strength,” he said.

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