Uganda: Museveni, banks on collision course
On Tuesday evening, Museveni told the country’s new parliament that it was necessary for the state to take an interest in agreements between borrowers and the banks and also check import and export rates.
Some lending entities entice borrowers to borrow money with hidden interests
“Some lending entities entice borrowers to borrow money with hidden interests [with the intention] of grabbing their properties [if they do not repay], which is not good,” he said.
Museveni said he once had to intervene when a legislator, who had deferred on his loan payment, faced the foreclosure of his home from the bank.
The bank, the East African nation’s president said, wanted to take the legislator’s 1 billion-shilling home to compensate for a 200 million-shilling loan.
“It is unfair to take away a person’s property with higher value than what he borrowed for failure to pay back,” he said.
In a call for action against excessive interest rates, Museveni argued that although the privatisation of banks was intended to lower interest rates for borrowers, the financial institutions had failed to keep their end of the deal, in spite of low inflation rates.
Museveni said the government will capitalise the Uganda Development Bank to support the agricultural sector to access low interest rate loans.
The Ugandan presidents said he was also alarmed at the country’s trade deficit, although he did not give details, before instructing government institutions, including the army and the police, to buy their uniforms and footwear from local manufacturers.
Chief of Defence Forces and army representative in parliament, General Katumba Wamala, said the army will adhere to Museveni’s order.
Legislator, Fred Mukasa Mbidde, said recapitalising Uganda Development will encourage farmers and businessmen to boost agribusiness, as they would not be forced to hand their title deeds as surety for banks loans.