For some reasons which include tedious bureaucracy, UDB is stuck with 44 billion shillings which it wants to lend to tour operators at 8%, which is extremely low by Ugandan standard. Ugandans are used to 20 plus interest rates which in reality mount to 25% because of different fees banks charge the borrowers, including ridiculous ones like forcing the customer to pay insurance for the risk the bank is taking.
A special facility launched 18 months ago for Covid -19 impacts relief was supplemented by a grant from EU which cut the borrowing rate to an incredible 8% from 12%. The UDB had put up Sh40bn to which the EU added Sh22bn, bringing the whole facility to sh62bn, and forcing the interest rate down to 8% per annum.
But the tour operators only borrowed Sh18bn of this, leaving a whole sh44bn lying idle. Some 94 companies applied for the facility but only 44 qualified. This was less than half of the applicants. Reasons for the failure to lend/ borrow included the rigorous bureaucratic requirements that customers in Uganda are required to fulfill.
But now UDB says it has relaxed the requirements, and keeps the basic ones such as the borrower having been in the business for at least two years, having at least five employees and being committed to green environmental practices.
