You have probably heard the expression “Assets are financed by liabilities” often used by both finance and non finance professionals. Simply put loans and other notes payable facilitate the acquisition of assets. However, the process of loan application in Uganda is not always easy as the banks would like to make us believe. The procedures are much more stringent for applicants holding contract jobs and/or applicants in the private sector. On top of an undertaking from your employer and reference letter from a family member you are required to produce audited accounts. I find the latter a divergence from the very goal(s) the loan products and the various background checks are intended to achieve. For example I don’t understand why I would be required to produce my personal financial statement and a reference letter from my spouse when eventually you would require my employer to provide audited accounts.

My wife has recently applied for a personal loan product from one of the prominent banking houses in Kampala where we hold a joint shelter savings account. We have been saving in this bank for over 2 years now. The credit department chose to ignore and overlook my commitment to help meet the loan facility obligation and the paper assets (Share Certificate and Unit Trusts) we hold with other entities including the bank balances amounting to 30% of the loan facility required.

One is left to wonder whether the credibility of Ugandans is that bad to warrant this kind of treatment. Or is this evidence of poor bank credit check procedures meant to undermine personal wealth growth by discouraging prospective customers. I have for example has found no justification for the difference in the bank lending rates (18% -25%) and the Depositors interest rates (6%) given the inconveniences involved in the whole loan application process. Or is this a clear display of ignorance and disregard of the developments in the finance sector happening in Uganda over the past year or so. This conservative nature is inexcusable given the fact that it’s a hindrance and contravention to the same gospel of “Bona bagagawale” that we continue to preach to the masses. In the developed world for example paper assets are more widely used as security as compared to the land tittles that our financial sector often requires us to provide on most loan applications.

How can you continue to pronounce the poor saving cultures of Ugandans when you are actually not cleaning your back yard? How can you expect savings to increase when you have such deterring processes, procedures and requirements in place? And most of all how do you expect to achieve the prosperity for all program with these hindrances in our banking sector. I welcome the customer service programs employed by most financial houses in Uganda but I want to advise all key players in the industry to revisit their in-house procedures.

Over the years as a growing professional, I have discovered that employing text book solutions to real solutions will most often than not lead to shunning  of the financial sector by the population if nothing is done to rectify the current situation. The banking sector needs to treat and allow us to become a “partner” in your business. After all, our success is your success.

Arthur Kaliisa

http://smallwins.blog.com