In order to facilitate access to affordable credit which is a major challenge to businesses, Uganda is promoting a new law which will allow the use of movable assets as collateral to access credit facilities.
In implementing this new act titled 'Movable Property Security Interest Act 2017', the Uganda Registration Services Bureau (URSB) will be working with Financial Sector Deepening Uganda (FSD Uganda), Bank of Uganda and local banks to set up a formal movable collateral securities registry.
Speaking during the validation meeting on the draft of the 'Movable Property Security Interest Act 2017', URSB Registrar General, Bemanya Twebaze stated that "this act once is in place will facilitate credit for small borrowers and manage the risk of borrowing by the financial sector.
"Instead of insisting on land as security, we are saying take the property as collateral to reduce risks of lending when you fail to stick to the agreement with the lender then the law will take its course," he said.
With only 20 percent of Ugandans owning land titles, 80 percent of Ugandans who do not hold land titles have been excluded from accessing credit facilities. The new law will allow people use their crops, cars, animals and valuable properties as collateral to access loans.