Tuesday , August 9 2022
Home / Business / Businesses reap as schools re-open

Businesses reap as schools re-open

Privately owned schools and teachers owe financial institutions more than Shs1.5trillion

Kampala, Uganda | THE INDEPENDENT | Uganda’s decision to re-open schools after nearly two years to control the spread of coronavirus in the population has come as a blessing to traders in Kampala, according to Thadeus Musoke, the acting chairman of Kampala City Traders Association (KACITA).

Musoke, who spoke to The Independent in an interview said that his members in the printing industry, stationary, foods, textiles, footwear have seen their sales abruptly go up as schools re-opened on Jan.10.

“It is a big opportunity for our members to make some money as the economy gets better,” he said.
Businesses dealing in educational products and services have experienced a long dry spell following closure of schools in March 2020 to contain the spread of coronavirus pandemic.

Similarly, banks, too that extended credit to education institutions and teachers have had to contend with the unpaid loans for some time to allow schools stabilise their operations.

This prompted the Bank of Uganda, the financial sector regulator, to grant supervised financial institutions at their discretion, exceptional permission to provide repayment credit relief to borrowers, negatively affected by the pandemic, in the education and hospitality sectors.
Other commercial banks such as Stanbic, dfcu, I&M, Absa, HFB and Centenary have unveiled special salary loans from Shs 1million to Shs 250 million to cater for school needs.

Stanbic Bank, for instance announced the availability of Shs60billion in hugely discounted ‘booster financing’ to the education sector to support the ongoing nationwide reopening of schools.
Under the discounted booster finance, schools are able to borrow up to Shs500m in collateral-free (unsecured) loans to prepare their institutions for reopening.

Parents can also access up to Shs250million in unsecured loans processed digitally and dispersed within five minutes at zero processing fee.
Anne Juuko, the chief executive at Stanbic Bank said the bold decision even in the face of uncertainty, speaks to their commitment to walk the talk of their business purpose to ‘drive Uganda’s growth.’

However, according to the education ministry, the sector requires Shs500bn in the medium term of which Shs150bn is needed immediately, to support successful reopening of learning centres.

Absa Bank Uganda is offering a two-month repayment holiday on salary loans to customers as schools continue to reopen.
The offer, according to the bank’s executives is available on salary loans with competitive interest rates for sums between Shs1million to Shs250 million.

Musa Jallow, the Retail Banking Director at Absa Bank Uganda said the pandemic has created economic pressures sending many into financial distress.
“With the school reopening, we are aware that parents will face challenges meeting school fees obligations,” he said.

“With our salary loan offering, we will be able to provide support to our customers by providing a two-month repayment break valid for all salary loans with zero arrangement fees. Customers can also apply for loan top-ups online using our robust digital platforms.”

Currently, privately owned schools and teachers owe financial institutions more than Shs1.5trillion in loans with nearly Shs500 billion in accumulated interests. Banks have waived all the 2021 unpaid accumulated interest on loans given that schools have not been in operation.

****

Leave a Reply

Your email address will not be published. Required fields are marked *