The banking sector in the region and more so in Uganda, has been
characterised by an increasing number of bad debts over time spanning a
couple of decades. Evidence of this is to be found in the transfer of
non-performing assets to such establishments as the Non-Performing Assets
Recovery Trust (NPART). To this, many loan portfolios originally with the
former Uganda Commercial Bank (UCB), and, Uganda Development Bank (UDB)
were transferred.
While these contained activities other than in agriculture and
manufacturing, the cited sectors accounted for the bulk of them. Reasons
for these are not too difficult to identify, being largely abnormally high
interest rates in an environment of low productive efficiency, small and
relatively less financially able markets, poor financial discipline, low
capital base settings with virtually no stock exchange markets, to mention
but a few.
It is my observation that a less than satisfactory understanding of the
implications of the high cost of borrowed money is largely responsible for
the predicament that has driven long-term borrowing to only being seen as
a myth by both lenders and borrowers.
Several studies have also shown that high costs both in technology and
input imports, utilities and transport put the local effort to great
relative disadvantage in comparison with other better placed competitors,
especially in markets beyond our borders. There are several other reasons,
but, credit will take centre stage in this review.
Time value of money is sufficiently advanced to require a readership
commensurate with such levels, but, an effort needs to be made to raise a
few fundamental issues for many, even at a small
'piecemeal' rate. In this issue, we will take a
'modest' look at one of the important
'tenets' of the cost of money and its implications.
Attempts can be made at simple modelling for enterprise activities,
which in spite of their 'humbleness' can be quite
instructive. We believe, that modest 'variability'
in 'parameter analysis' may still deliver an
important message for the general borrower, while more advanced matters
can and should be taken up at the right levels, with a view to create an
environment that can serve as engines for positive industrial development.
This is one approach to risk analysis, so essential for building
confidence in developing successful financial operations that are becoming
a requirement in present day banking activity in the area under
discussion.
Thereafter, we further advance some reasons for more effort toward
mechanisation of agriculture, justified by a background of a predominance
of 'little' processed primary export products in the
sector, and, the low level of technological development in our midst, for
which focussing on adding value in the sector is evidently more viable.
Government's effort to improve rural community access to more
desirable energy sources in the medium term is cited, along with mention
of a memorandum of understanding between a private sector conservation
interest group with the school of engineering at Makerere University.
As an insight of the several benefits that can accrue from adoption of
more modern scientific management, a 'network' method
for minimal transportation cost planning is introduced, with citation of
other areas of applicability.
Investment, a vehicle dear to our aspirations in enhancing
manufacturing, is revisited through what UIA expected to be put on the
ground between January 1995 and early March 2004. Later on in time, we
will provide a critique of Uganda's achievements in comparison with the
rest of the region, and, ponder necessary directions we may need to take
for a faster realisation of the broader general objectives.
Last but not least, the prospect of improved pubic transport is
advocated for and looked forward to in passing.
