the world was under the full grip of the COVID-19 pandemic, Uganda recorded her first case – a trader returning home from Dubai. While the symptoms of the disease could be seen and diagnosed, there were no real visible impacts on Uganda’s economy, except those precipitated by fear.
For a while, MSMEs aired on the side of caution while observing the situation with Hawk’s eyes. Most reduced spending, cut down on investments and liquidated volatile assets in anticipation of harsh financial times ahead.
True to what was feared, businesses experienced absolute turmoil when Government introduced measures to contain the spread of COVID-19, among many but most lethal on MSMEs was the lockdown.
A survey conducted by the United Nations Capital Development Fund (UNCDF) reported combined economic effects spanning several sectors, from service to hospitality, foreshadowing losses of up to 37%. The report also sites reduced incomes in MSMEs due to COVID-19 restriction measures. 46% of manufacturing companies were expected to go below poverty lines followed by trading and services (41%) and Agriculture at 15%. An estimated 4.4 million informal sector workers were reported to have seen their earning falling drastically, the majority of whom are women or women-led enterprises.
The World Bank reported a 1.1 economic contraction of the country’s GDP due to the fall in household incomes.
Turning a new leaf
As part of the Government’s stimulus package to support the recovery of businesses from impacts of COVID-19, PostBank in partnership with the Uganda Development Bank (UDB) is providing 13% interest rate financing, targeting small, medium and large enterprises.
The package is tailor-made for businesses in the production of essential goods and services for import replacement and export promotion. Targeted beneficiaries are in sectors such as primary agriculture, Agro Industrialization and manufacturing/industry.
Julius Kakeeto, Managing Director, PostBank Uganda said “At PostBank we believe in tailoring local banking solutions to address local economic challenges. We’re delighted to partner with Uganda Development Bank to provide much-needed solutions at the most critical times.”
The product is aimed at boosting production for local, regional and international markets. The targeted UDB/PBU fund beneficiaries’ economic activities are in categories such as production of essential goods and services, import replacement and export promotion, medical equipment and products including machinery and ventilators and Personal Protective Equipment (PPE).
For streamlining and impact purpose, the package has been designed to be specific and focused on sectors that were most devasted. The funding of up to UGX. 2Bn addresses interventions like acquisition of farm inputs, acquisition of mechanization equipment, purchase of agro-processing equipment needed to add value to the agriculture produce, purchase of machinery needed in the manufacturing process and construction of factory warehouses among others.
To date, the bank has issued up to UGX. 11.1Bn financing to over 50 eligible business owners and MSMEs with more than UGX. 39Bn still available for borrowing.
Requirements for businesses to benefit from the package
Beneficiaries will be required to open a PostBank account, provide bank statements for the last 12 months from their current bankers and adequate security for the proposed borrowing.
Other requirements will include business registration documents, a copy of the financial card and audited books for the last 3 years for loan deals above sh100M.
This package will include both financial and non-financial interventions with general loan terms of up to 15 years and interest rates as low as 13% per annum.
This package can be assessed from any PostBank branch across the country or through an online application.