By John Kusolo
Kampala, Uganda – The Senior Presidential Advisor on Trade, Mrs. Suzan Kabonero Muhwezi, ChairLady of the Uganda Hotel Owners Association (UHOA) and Vice Chair, Uganda Tourist Board(UTB) has made a significant appeal to the government of Uganda, calling for the reduction of interest rates charged by the Uganda Development Bank (UDB) to a single-digit(8-9) percentage. She emphasized that the current interest rate, which exceeds 10%, is a significant barrier to attracting more investors into the country, particularly in the hospitality sector.
Mrs. Muhwezi made these remarks while speaking on the sidelines of a high-profile conference hosted by the Ministry of Finance, Planning and Economic Development. The conference, held at Hotel Africana in Kampala, focused on tax incentives, tax policies, and tax administration, specifically tailored for Ugandan investors.
In her address, Mrs. Muhwezi highlighted the crucial role that affordable financing plays in the growth and development of the hotel and tourism industry. "The hospitality sector is one of the key drivers of Uganda's economy, especially in terms of foreign exchange earnings, employment, and promotion of local content. However, the high cost of borrowing from financial institutions like UDB is stifling growth and deterring potential investors who could otherwise contribute to the sector's expansion," she stated.
*The Case for Single-Digit Interest Rates*
Mrs. Muhwezi's call for a reduction in interest rates is grounded in the belief that a more favorable lending environment would spur investment in Uganda's hospitality sector, which is poised for growth but faces challenges in accessing affordable capital. "Lowering the interest rates to a single digit would not only make it easier for current investors to expand and improve their facilities but also attract new investors who are currently hesitant due to the high cost of borrowing," she argued.
She further noted that many hotel owners and operators struggle to service loans taken at high-interest rates, especially in the aftermath of the COVID-19 pandemic, which severely impacted the tourism and hospitality industry. "We need a conducive environment that allows us to recover and thrive. Affordable credit is essential for us to upgrade our services, enhance customer experience, and remain competitive in the regional and global markets," she added.
*Government's Role in Enhancing Investment*
The conference at Hotel Africana served as a platform for dialogue between the government and investors, with a focus on how tax incentives and policies can be optimized to encourage local investment. Mrs. Muhwezi commended the government's efforts to engage with the private sector but urged for more actionable measures, particularly in the area of financial accessibility.
She emphasized that reducing the interest rates on loans from UDB would be a strategic move to stimulate investment across various sectors, not just hospitality. "Affordable credit is a catalyst for economic growth. By lowering the interest rates, the government would be sending a strong signal that it is committed to supporting local investors and fostering an environment conducive to business growth," she remarked.
*The Broader Impact on Uganda's Economy*
The appeal by Mrs. Muhwezi comes at a time when Uganda is looking to bolster its economic recovery and attract more investment in key sectors. The hospitality industry, which includes hotels, lodges, and other accommodation facilities, plays a vital role in supporting tourism, one of Uganda's major foreign exchange earners.
Investors in the sector have long argued that access to affordable financing is crucial for the development of quality infrastructure that can attract high-value tourists. With Uganda's rich cultural heritage, diverse wildlife, and stunning landscapes, the potential for tourism growth is immense, but it requires substantial investment to unlock.
Mrs. Muhwezi's call for lower interest rates is thus not just a plea for the hospitality sector but a broader appeal for economic policies that support sustainable growth and investment across the board. She concluded her remarks by urging the government to consider the long-term benefits of reducing interest rates, which would likely outweigh the short-term costs. "We need to think about the future of our economy. Lowering interest rates will encourage more investment, create jobs, and ultimately lead to a more prosperous Uganda," she concluded.
As Uganda continues to navigate the challenges of economic recovery, the call by Mrs. Suzan Muhwezi for reduced interest rates at the Uganda Development Bank serves as a crucial reminder of the importance of creating a favorable business environment. With the right financial policies in place, Uganda has the potential to attract significant investment, not just in the hospitality sector but across the entire economy. The government's response to this appeal could be a key determinant of the country's economic trajectory in the coming years.
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