Government through the Ministry of Finance, Bank of Uganda and Commercial Banks under the Uganda Bankers Association(UBA), has launched the Micro Small and Medium Enterprises Fund to provide liquidity assistance to small businesses affected by the Covid-19 pandemic.
During his address on July, 30, 2021, President Yoweri Museveni pronounced that government will establish a Micro Small and Medium Enterprises Fund to support businesses affected by Covid-19.
The president therefore directed the finance ministry and Bank of Uganda to establish the fund and inform the public on how to access it.
Now, announcing the fund at the Ministry of Finance Planning and Economic Development (MOFPED), Headquarters on Tuesday, the MOFPED, minister, Matia Kasaija noted that the fund will provide loans at concessional terms to small businesses that were in operation by the time Covid-19 pandemic struck.
Kasaija noted that they will support the businesses that suffered financial distress because of the pandemic to recover.
The Permanent Secretary/Secretary to the Treasury, Ramathan Ggoobi, noted that the decision to create the fund was informed by research and extensive consultationw with various local and international stakeholders.
Ggoobi noted that research has showed that there ate mainly four binding constraints to Uganda’s economic development which includes, cost of capital, cost of transport, cost and efficiency of power and cost of adaptation.
Ggoobi noted that the intervation of the fund, seeks to address the first constraint of the relatively high cost of capital and high interest rates.
“Our motivation for this approach, is to stimulate these Enterprises with the multplier effect to enable economic recovery and save the majority of the population who are employed by the businesses,” he said
He added, “The goal of the fund is to enhance the capability of small businesses to recover and resume operations at the levels and beyond positions they were at before Government instituted the standard operating procedures.”
Fund Size Government will provide an initial amount of UGX 100bn for the commencement of the fund which shall be administered by Bank of Uganda in conjunction with eligible Participating Financial Institutions (PFI).The PFIs, will match the government contribution of UGX 100bln by adding UGX 100bln to form a consortium pool of UGX 200bln. COST OF LOANS According to Kasaija, the government component to the PFIs will be interest free so as to reduce the cost of funds and ensure that PFIs lend at a concessional interest rate.He revealed that the chargeable by the PFIs shall […]