Government bail out will not work – senior banker

By Vision Reporter

Recently over 65 loan-stressed firms lined up for a sh1.3 trillion government bailout

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The Stanbic Bank Chief Executive Officer, Patrick Mweheire, has said the bail out that companies are asking for from the government will not work because owners lack the right mind set.

“Unless there is an end and success in mind, bailouts cannot work. Bailout is like one step out of a 10-step journey for such businesses,” said Mweheire.

He was speaking to journalists and civil society activists at African Centre for Media Excellence offices in Bunga.

Mweheire pointed out at different challenges facing banking sector such as insufficient cash flows, diversion of funds among others. He also said delayed government payments are the biggest reason for non-performance of credit facilities in banking sector.

Recently over 65 loan-stressed firms lined up for a sh1.3 trillion government bailout. The companies included banks, steel companies, and private business among others.

However, in July, Private Sector Foundation Uganda  (PSFU) chairman Patrick Bitature said the body had not made any list on who should be bailed out.

“The PSFU board, executive director and the management have not been involved in any way,” Bitature told New Vision.

According to Bank of Uganda (BoU) statistics, the non-performing loans (NPLs) for the first three months of 2016 were the highest for any quarter since December 2003. 

The first three months of 2016 saw the level of NPLs rise to 6.87 per cent from 5.29 per cent in the three months to December 2015 according to Uganda Bankers Association.