Kampala: The city traders governing body has agreed on a string of measures, including boycotting banking for a while, in protest of continued power shortages, high rent and high interest rates charged on loans. According to a trader, who attended the traders’ meeting, Kampala City Traders Association (Kacita) management, has also written to the teachers union, Uganda Manufacturers Association and Private Sector Foundation of Uganda to join them.
“The meeting also resolved that the chairman of Kacita, Mr Everest Kayondo, summons the city traders for a meeting on Thursday (today) to either endorse or dismiss the management resolutions,” the trader said yesterday.
Last week, city traders petitioned Parliament over high interest rates that banks are demanding on even running loans. The Kacita spokesperson, Mr Issa Ssekitto, confirmed to this newspaper the decisions and the meeting to decide on the action against the issues they raised to Parliament.
“It is no longer suspicion. It is true that we are holding a meeting to consult stakeholders on decisions we have already taken so that they can force the banks to comply with our demands,” Mr Ssekitto said yesterday. He said their members are complaining that banks are charging new interest rates on old loans, which is unfair.
“Some traders got loans in 2009 at an interest rate of 17 per cent but banks are now charging them between 24-30 per cent. The same applies to other people like teachers. We can’t continue with this,” Mr Ssekitto added.
However, government spokesperson Mary Karooro Okurut yesterday said the traders should first consider a dialogue with government. Ms Karooro said: “We have talked to traders and resolved the problem amicably before, so this issue can also be resolved through dialogue. There is always a room for dialogue,”
Bank of Uganda’s cumulative increase of the Central Bank rate from 16 per cent in September to 20 per cent in October sparked off a wave of interest rate hikes by commercial banks for both new and existing customers. The move was intended to mop up liquidity from the economy and rein-in double-digit inflation, currently at 29 per cent. Interest rates rise when the market is responding to a high amount of cash flow.
At some point, too much cash in the economy, normally due to financial indiscipline, will lead to double-digit inflation. To curb this, Bank of Uganda raises its rates, and lenders will do the same. But traders want Parliament to outlaw the clause of varying interest rates at the will of the financial institutions. Mid this year, city traders went on a strike closing shops for days over trading licences which forced the government to revisit the rates.