Bank of Uganda (BoU) has asked commercial banks and other financial institutions to extend credit relief to education institutions and hotels that continue to suffer effects of lockdown precipitated by Covid-19.
According to BoU, whereas the credit relief measures put in place to help stressed borrowers cope with the effects of the pandemic expired on 30th September 2021, the education and hospitality sectors are still being negatively affected by the pandemic.
“The Bank of Uganda has asked all Supervised Financial Institutions to continue providing credit relief for one more year to borrowers in the education and hospitality sectors who are still negatively affected by the pandemic,” a November 18 statement signed by Dr Michael Atingi-Ego, the Deputy Governor, reads in part.
“This is to ensure that credit is available to support otherwise viable businesses in the education and hospitality sectors that remain under a partial or total lockdown,” it adds.
According to BoU, the credit relief extension means that effective 1 October 2021, borrowers in the education and hospitality sectors that had borrowed before 1 April 2020 can apply to have their loans restructured one more time on or before 30 September 2022 at the discretion of their financial institution.
“The restructuring may involve but not be limited to: extending the loan tenor; reduction of amounts in their loan repayment instalments; reduction of the applicable interest rate; a moratorium on repayments and/or a combination of these,” BoU said.
“All participating financial institutions are required to stop the accumulation of interest for any of the loans that benefit from this extended credit relief. In addition, loans restructured under this extended credit relief shall be exempt from penalties for late repayment and fees for early redemption,” it added.
Since President Museveni announced that the academic institutions will fully re-open in January next year, stakeholders in the education sector have periodically sought government support to facilitate their reopening. Proprietors of private schools for one reasoned that the funds, once availed, will be committed to pay teachers, partly waive arrears, and also procure hand rub sanitisers.
But government told parliament last week that it is not able to finance private schools’ recovery from pandemic-induced shocks.
Mr Edward Sebukyu, the commissioner of private schools at the Education ministry, said they do not “have the capacity to rescue constrained private education institutions.”
He added: “It is therefore proposed that the recovery plan of private education institutions should take a multi-sectoral approach.”