Africa-Press – Uganda. Uganda Manufacturers Association has revealed that unfair credit lending by commercial banks is affecting the growth of heavy industries in the country.
Mr Richard Mubiru, the chairman economic board committee at UMA made this revelation while presenting a paper on dialogue that is hugely informed by the need to deepen policy engagements with key stakeholders in the manufacturing ecosystem in Uganda, to better inform the formulation of the National Budget for 2024/25.
“In Uganda, over 90 per cent of credit into manufacturing is by commercial banks. No wonder, the current model of financing is short to medium-term (maximum average is 5-7 years) which explains why heavy industries like Iron Ore Smelting, Cement Manufacturing based on limestone crushing, Vertical Textile Production and Vertical Leather and Leather Products production plus vertical coffee processing into instant coffees are not taking-off yet these are the crucial industries for Uganda,” he said.
According to him, countries that have industrialized have close to 100 per cent credit availed by Development Banks that have patient capital alongside Pension Funds.
He said the sector is further strained by the fact that Kampala Stock Exchange remain too inactive to optimally attract local investment into companies listed.
“Interaction with the exchange indicates that Uganda must rethink the entire legal, regulatory and taxation architecture for the sector to entice the largely family-owned businesses to list at the exchange so as to lower the cost of capital in addition to presenting alternate value storing proposition beyond real estate,” Mr Mubiru noted.
He added that there is a need for rethinking and re-tweaking the Public Private Partnerships Unit under the Ministry of Finance to spur investments in strategic sectors where there has been a total market failure to attract the desired investments.
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