On an evening talk show early last week Kampala businessman William Kajoba came out strongly in favour of a bailout of local businessmen, who are struggling through the current economic hard times and are staggering the weight of the growing debt load on their businesses.
A few weeks ago a list was published that listed a number of prominent businessmen who had approached government to assist their struggling businesses. The reports have caused a public uproar, with the loudest voices against any bailout of private businessmen.
Kajoba, who started off as spare parts dealer but has now ventured out into the commodities trade and is the proprietor of the Hotel Sojovalo, argues that many of the businesses are distressed out of no fault of the individual businessmen.
“I can speak for myself. I borrowed money in a seven year loan in 2010 at 16 percent but within a year because of the raising of the CBR (Central Bank Rate) my monthly payments to the bank doubled,” he remembers.
“Imagine is you are supposed to be paying sh30m monthly in loan repayments and then suddenly you are asking for sh100m? You can’t survive.”
As a result Hotel Sojovalo is on the brink of going under the hammer.
"And for many businessmen they dug themselves deeper into the hole by accepting overdraft facilities to not only run their day-to-day operations but to go towards paying off existing loans...
“Using short term money to pay for long term loans. It made matters worse once the initial relief had passed, “ Kajoba at his Mengo office.
Kajoba while he has a ready answer for the critics of the bailout he understands the sentiments.
“Such noise is not only here everywhere in the world when you mention bailout people start jumping up and down,” he explains, throwing in the Luganda saying “Teri ayagaliza ya munne kuzaala ndusi”
He is ruled by charges that the distressed businesses pushing for bailouts are poor businessmen, blowing their capital on high living.
“I am the one who started pushing for this but there are many, many businessmen large and small suffering. Many of whom have run successful enterprises for years. Are you saying we all don’t know what we are doing? All these years what have we been doing?,” he asked with a dismissive wave.
He puts the blame squarely at the Bank of Uganda’s feet.
“So you are preventing inflation but burying businessmen, where is the sense in that?”
Responding directly to the count that these businessmen have just been caught with their pants down after years of lavish living during the good times and when the hard times came they were exposed.
“No one complains when a person who earns sh50m a year buys a sh20m car, so if a business man earns a billion shillings a month what kind of car or house should he have?”
He acknowledges that what may have passed as business bailouts in the past may have been messed up.
“But when you are driving to Masaka and you hit the humps unknowingly on your way back aren’t you going to be more cautious?,” he asked. Let us not mix things up he urges, this a real issue that demands a solution.
“This is a disaster. When a disaster happens you cannot say there is no money,” adding that he wants no doubt to be left that we are seating on a ticking time bomb.
"He makes the now well-worn argument that he employs 150 workers who may have a few more dependents down the line so if or other businesses go down they do not do so alone. He doesn’t understand why the virulent critics don’t factor this in their arguments...
“People are just shouting because they don’t like you they don’t have a real point,” charged a visibly agitated Kajoba.
So what should be the nature of the bailout?
“People think we want free money that’s why they are jumping up and down. But no. In my thinking government should impose on the banks to ease loan repayments but we keep our properties, after all they are the ones that will help us pay off the banks,” Kajoba said.
He suggested too that maybe the government can take over their loans with the properties held by government as collateral, maybe such an arrangement could happen through Uganda Development Bank with a grace period worked in to allow them reorganise.
“They will get paid. There is no free money. But something has to be done first to ease the current situation.”