Kampala, Uganda | THE INDEPENDENT | Uganda’s tourism sector has received a boost of 6 million Euros (26 billion Shillings) thanks to the European Union. The funding will enable recovery of the sector which has been named one of the most affected by the coronavirus crisis.
It is remitted through the Uganda Development Bank-UDB, as part of the deal where UDB will provide another 39.4 billion Shillings. The EU partnership comes at a time that the country is slowly opening up the sector starting with domestic tourism which will also be allowed in phases to control the numbers of people visiting protected areas.
The funds will also go a long way in enabling the operators to upgrade their facilities especially in line with the standard operating procedures set by the Ministry of Health and government tourism sector agencies.
Hundreds of tour operators suspended operations and more than six percent of Uganda’s labour force lost their employment when the pandemic brought activities to a halt. The operators have also to recover revenues lost when prospective visitors made cancellations with some tourists likely to demand compensation.
During a training on development finance in Uganda, Wednesday, UDB director for Finance and Business Operations said that the funding is separate from the government’s rescue package meant for the small and medium enterprises.
Uganda Development Bank is also running a rescue program for micro, small and medium enterprises and beneficiaries will have to pay an interest rate of 13 percent per annum. There are concerns that Uganda’s MSMEs are too small and informal to access financing from the Uganda Development Bank as they neither have assets for collateral nor keep books of account that are required by banks.
But the Bank’s chief economist Francis Adede says they will use the group financing model that has been tested in some of their ongoing and previous programs where they have proved that small entrepreneurs can be ably facilitated when in a group.
However, the bank continues to complain that much as the government has recently given in significant amounts of money for capitalization, it is still one of the least funded development banks in the world relative to Uganda’s GDP.
UDB chief economist, Francis Adede says money set aside for development finance should be at least 4 percent of GDP or more than 4 trillion Shillings.