A senior lawyer has called on the government to revise its decision stopping persons who have taken on public land through leases from using it as mortgage to access bank loans.
Philip Karugaba, the managing partner of law firm ENSafrica, said on Tuesday that the decision was likely to affect businesses and make it hard for manufacturers with leased land in industrial parks to get money for expansion.
The statements were in response to a declaration made last year by State Minister for Investment Evelyn Anite that the government would no longer allow investors to mortgage land that has been leased to them for production. She said that some investors would mortgage the land then fail to pay back bank loans, exposing government land to attachment by the banks.
But Karugaba said that the government should instead look out for questionable businesses that mortgage government land and run away to stop them.
Karugaba was speaking at a manufacturers’ forum organized by Standard Chartered Bank in Kampala. The bank sought to address manufacturers’ issues, including access to insurance, loans and use of digital platforms to cut transaction costs.
The issue was common in industrial parks like Namanve and several national parks where some investors have been given leases to construct hotels.
Speaking to Africa Tembelea, Daudi Migereko, the Uganda Tourism Board chairman, also queried why banks were not ready to use concession permits as security.
“Why is the bank not ready to use a concession permit as security, moreso if it is 20 years and above,” Migereko asked.
“This is happening with hydro power sites and forestry permits. Motor vehicles which are movable and prone to accident, any time, are being accepted as security; why does a bank turn down a more secure security in the form of a concession permit in the park,” he added.
Investors use the land to get money to invest in their businesses. A lease usually lasts 49-years, 99-years or even more. A loan from a bank usually spans 10 years or less.
But Karugaba says they admit there are problems with the issue but the government should pick out the bad guys and let business thrive.
In a related development, Allan Ssenyondo, the policy analyst at the Uganda Manufacturers’ Association (UMA) narrated the usual problems that manufacturers are facing, including limited access to financing, the proliferation of substandard products, delayed Value Added Tax refunds, poor linkage of trade and other industries.
He said that while the government had made enough laws to address some of the problems, most of the laws gather dust with hardly any effort to implement them.
Additional reporting by URN