Hoteliers rap BOU over loans

Oct 21, 2003

NONE of the 50 members of the Uganda Hotel Owners Association (UHOA) has access the euro40m line of credit given to Uganda by the European Investment Bank (EIB) about eight years ago

By David Muwanga

NONE of the 50 members of the Uganda Hotel Owners Association (UHOA) has access the euro40m line of credit given to Uganda by the European Investment Bank (EIB) about eight years ago.

The funds were to be accessed through the Uganda APEX Private Sector partnership on concessionary terms. They were meant for all sectors, including the hotel and tourism sectors.

The objective was to offer long term funding to small and medium enterprises to result into increased foreign exchange earnings and make local enterprises competitive.

The credit offered the rural and urban projects long-term loans, grace periods of upto one year and competitive interest rates.

“However, the Bank of Uganda sent the money to a few commercial banks that prefer to offer the loans on commercial interest rates of upto 23%, whereas the loans were supposed to be soft. We cannot afford commercial loans,” a member of UHOA who declined to be named told The New Vision.

This was during the association’s extra ordinary general meeting held on Monday at Hotel Africana.

The trade minister, Prof. Edward Rugumayo, in a letter to the investment state minister, Sam Kutesa, said many hotels did- not meet the required standards.

“However, they are already accommodating visitors. This gives a bad impression about Uganda. This undermines the growth of the tourism sector. Some proprietors want to access the funds but have not succeeded,” Rugumayo said in a letter read by the association’s chairman, Edward Nsubuga.

“This is because the approved financial institutions prefer to channel the funds as commercial loans with high interest rates. This is to draw this issue to your attention for consideration,” read the letter dated October 16, 2003.

The hotel industry is one of the sectors given priority by the finance ministry in the June budget.

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