Amid the looming uncertainty of whether education institutions will open or not, some commercial banks have already threatened to take on the property that school owners mortgaged as collateral security for loans.
Mr. Patrick Kaboyo, the secretary for Federation of Non–state Education Institutions (FENEI) said the majority received loans from commercial banks in order to renovate and expand their school premises hoping they would recover the loans from students fees collections but have defaulted on repayment since the institutions were closed in March following COVID–19 outbreak.
Refraining from mentioning some of the affected schools with loans, Kaboyo said “I don’t know of a private school which can start and survives without a loan. Many borrow money at the end of the year and start paying back in January and February when schools reopen. Sometimes they’re constructing laboratories and have to pay teacher’s wages.”
For instance, a school proprietor in Wakiso district who chose to remain anonymous said he took 140 million Uganda shillings (about 4 million Ksh) as a loan from a bank. The loan was payable within three years but is extremely worried that a delay to reopen schools will mean the banks either take his land where the school stands. This is because he hasn’t paid his dues since March, or further restructuring, which would mean longer payment of interest rate.
Museveni Offers Cheap Capital to Businesses Affected by Covid-19 Lockdown
However, President Museveni on Monday offered to give cheap capital to businesses that were affected by the lockdown when they resume.
“The categories of our people that are affected by lockdown such as the salon operators, private universities, private secondary schools, private primary schools should be registered so that we can see how to get them, not free money, but cheap capital when their activities resume, or even help them do other activities.” Mr. Museveni said.
But according to the officer in charge of research at the National Private Education Institutions Association which unites a section of private school owners, Mr. Hassadu Kirumira said their expectation was the government to give them loans without interest.
“We expected a school recovery fund. We accept the loan the president is giving us but we expect loans without interest. If this loan has an interest, there will be another problem to pay back.”
The school proprietors have recently requested the government to step in and pay their teachers’ salaries which have not been remitted since March.
“Most private schools get loans to develop. Many mortgage their schools and they are now worried they will lose their properties if the government doesn’t come in early to support them” said Mr. Kirabira said in an interview.
Mr. Kaboyo warned that there is nothing much that will be achieved because of the government bureaucracies unless a schedule for implementations of the stimulus proposal to schools is given.
In April, the Central bank asked commercial banks to restructure loan payments for their clients. However, the matter would still remain at the discretion of the individual banks, a matter that still worries the creditors.