Traders have been urged to be transparent in their dealings with financial institutions as this will make their work easier.
The call was made by Stanbic Bank’s head of corporate and investment banking, Paul Muganwa, at a trade forum at the Protea Hotel on Monday.
Organised by Stanbic Bank under the theme “Coming together to achieve procurement”, the forum was held as a platform for traders and contractors in the supply chain to discuss ways of achieving better working conditions.
“We recognise the important role that traders and suppliers play in this country, and we are committed to continuing to support them to achieve growth. However, if you are seeking financial support, it is imperative that you treat your bank as a very important stakeholder that requires transparency,” said Mr Muganwa.
According to the World Bank, only 14.2 per cent of the private sector in Uganda had access to credit in 2020. This figure is significantly lower than Kenya’s private sector access to credit, which stood at 32 per cent over the same period.
Small and medium-sized enterprises (SMEs) are seen as key drivers of economic growth in developing countries. In Uganda, SMEs employ about 2.5 million people and account for about 90 per cent of private sector employment, while contributing 20 per cent of gross domestic product.
However, access to finance remains difficult, with just under 40 per cent of SMEs having access to bank loans, while around 80 per cent are underserved or underserved by financial institutions.
Emma Mugisha, executive director and head of business and commercial banking at Stanbic Bank, said banks typically stand between different traders — whether it is making payments, issuing letters of credit or ensuring that different parties comply with their contractual terms.
The government is expanding the use of digital services, which is expected to improve efficiency in the fight against corruption, reduce delays and increase accountability.
Mercy Kyoshabire, head of procurement and capacity building at the Public Procurement and Disposal of Public Assets Authority (PPDA), said: “Some suppliers are always complaining because they think people are interfering with the procurement process in one way or another. Now, with the electronic government procurement system, we hope to minimise human interference.”
“We hope to reduce delays in procurement and disposal, we hope to minimise corruption and especially fraud because this system will be enforced with tracking mechanisms,” Kyoshabire said.
Lawrence Male, representing the Bank of Uganda’s director of procurement, said that when it comes to contract finance, traders can’t do much without cheap capital, and that given the high interest rates charged by commercial banks, there is a lot of work to be done to help traders access finance more easily.
