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Education stakeholders are concerned by the tendency of financial institutions, including banks and money lenders, that lure teachers into taking loans which they say affects their performance. 

The Jinja City senior inspector of schools, Amina Mutesi, said financial institutions normally approach teachers with attractive terms, something she said entices many to acquire multiple loans. 

Mutesi noted that though the lenders appear so ‘friendly’ in the initial stages, once the deals are concluded and funds released, they become tough and start hunting down the teachers in a bid to recover their money. 

“As a result of too much pressure from these institutions, some teachers abscond from duty which affects their work. Something needs to be done before the situation gets out of hand,” she said. 

Beatrice Nansamba, a deputy head teacher at Spire Road Primary School and the vice chairperson of the teachers’ SACCOS in Jinja, also noted that several teachers grapple with payment of loans. 

The matter was raised during an awareness meeting organised by the Deposit Protection Fund (DPF) at Source of the Nile Hotel in Jinja on October 28. 

Christine Birungi, the head of marketing at Cairo Bank, however, cautioned customers against entering financial agreements until they have read and understood the contents. 

“Do not sign anything you don’t understand. Take your time, read through the documents, and get someone to interpret them for you before appending your signature,” she advised. 

Teddy Namugga, an administrator at the Bank of Uganda’s Jinja branch, explained that whereas money lenders are not regulated by the Central Bank, borrowers must always deal with duly registered entities. 

She argued that this makes it easy for the Uganda Microfinance Regulatory Authority (UMRA) a body that regulates the money leaders, to follow up in case of any irregularities. 

Margaret Kisa, a retired teacher counselled that teachers need sensitisation on financial management and family planning. 

“Why would anyone produce ten children that they cannot provide for? It is these pressures that are driving them into multiple borrowing. Let us sensitise them so that they are not stuck in poverty,” she said. 

DPF review 

During the meeting, the chief executive officer of DPF, Dr Julia Claire Olima Oyet, revealed plans for a review of the DPF law next year, adding that requests to increase the insurance limit will be discussed. 

Currently, the deposit protection limit is sh10m, up from sh3m at the start of the fund. 

Patrick Kagoro, the DPF board chairman expressed optimism over the steady growth of the fund, revealing that it currently stands at sh1.3 trillion from sh400 billion in 2017. 

The DPF was established by the government of Uganda following the enactment of the Financial Institutions (Amendment) Act 2016, to provide deposit insurance to customers of deposit-taking institutions licensed by the Bank of Uganda. 

“DPF ensures that depositors are paid their protected deposits in the unlikely event of failure/closure of their bank,” Patrick Ezaga, the DPF director of communications said.