December 6, 2021

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No recovery package for private schools-Lugoloobi

Finance State Minister, Amos Lugoloobi

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The Minister of State for Finance (Planning), Hon Amos Lugoloobi has told Parliament that government is unable to provide a recovery fund for private education institutions that were affected by Covid-19 citing  what he termed as ‘pressure’ from all sectors.

“We must recognize that everybody has been affected; the SMEs that come to our office crying are not even from the education sector so there is pressure from everywhere and everybody is demanding for financial assistance,” Lugoloobi said.

Lugoloobi made this revelation while appearing before the Committee on Education and Sports on Wednesday, 10 November 2021. He was accompanied by the Deputy Governor, Bank of Uganda, Michael Atingi-Ego and officials from the Uganda Development Bank and Microfinance Support Centre.

He said government recognises the challenges private schools are likely to encounter when they re-open in January 2022 and tipped them to take advantage of the Shs200 billion fund set aside for small and medium scale businesses. 

“Government has established a small business recovery fund to be administered by banks across the country to provide concessional credit to businesses affected by Covid-19. The education sector may also benefit from this intervention,” Lugoloobi said.

He also observed that many private institutions are indebted to continue in business and that government is exploring initiatives that do not require borrowing.

“We are aware that as of 30 August 2021, the total outstanding loans to the education sector stood at Shs1.2 trillion spread over 73,240 institutions affecting the future of 15 million learners and 548,182 teachers,” he said.

For such schools, Lugoloobi said Bank of Uganda has directed financial institutions to extend loan repayment periods to 12 months so that schools are able to stabilise and collect revenue to service loans.

Atingi-ego said Bank of Uganda has also received demands from private schools on financial assistance and has directed banks to reduce lending rates when dealing with them.

“Bank of Uganda has worked tirelessly to have banks reduce lending rates which have been slashed to 6.5 per cent in a bid to spur easier access to credit” Atingi-Ego said.

He however said this is not sustainable in the long run since banks are also challenged by issues beyond their control such as unresolved backlog of commercial cases that are holding up significant funds.

Atingi-Ego talked of an upcoming initiative where supervised financial institutions will be urged to ease the loan repayment burden facing schools. He said BoU is in talks with Uganda Bankers Association over the matter and will soon issue a circular to banks.

Kashari South MP, Hon Nathan Itungo expressed disappointment with government and wondered what the majority of learners in private schools will do in case schools close.

“We have 53 universities and only nine are public. What will happen to the students in the 44 universities in case they close?” Itungo asked adding that, ’think of the many primary, secondary and tertiary institutions. If they close government, it will be another problem to government,” he said.

Hon Catherine Mavenjina (Elderly, Northern) said that the shs200 billion fund is too small to satisfy one sector and asked government to consider the special needs of the education sector and provide customised fund.

”This is a drop in the ocean; Covid-19 has affected all other sectors but I am of the view that you consider the education sector in a special way because during the lock down education suffered most,” Mavenjina said.

The Shadow Minister for Education, Hon Brenda Nabukenya said that Parliament will not fall for the meagre Shs200 billion fund saying it is very unfair to the sector.

“I find it so funny because the money needed is much more than that if we are to help the education sector especially the private side,” Nabukenya said.

The Committee Vice-chairperson, Hon Cuthbert Abigaba said the Finance Ministry has ignored the education sector in favor of other sectors.

“It is as if you have just thought of education when you were coming here. What is the spirit about the education sector? In the Shs200 billion, how much money have you put to the education sector?” Abigaba asked.

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