Charles K Mark and Gladys Kole Fred
Lack of loans and grants to boost up ventures is a challenge hindering the growth of small businesses in South Sudan, Vice President, Dr. James Wani Igga has said.
The Vice President for economic cluster was speaking on Thursday during the launch of the Association of Microfinance Institutions South Sudan.
Igga said that financial institutions are scared to give loans due to clients who refuse to pay back.
“Many South Sudanese hardly pay loans. This is why the big banks I was blaming before; they don’t also give loans,” Igga said.
The VP added that there is a need to formulate policies that protect both lenders and those who take the loans.
According to the Vice President, the laws would serve as guarantors to ensure that microfinance institutions access funds to support small businesses.
“It is time we make laws ready regarding loans, giving loans by the banks. And these laws must begin to bite,” The Vice president said.
He expressed that some banks who risk offering loans also do exaggerate their rates making it hard for small businesses to take loans.
Mr. Igga said with the presence of stiff laws, the bankers will also exaggerate rates for fear of penalties.
The Chairperson of the Economic Cluster cited a need for an atmosphere that attracts lenders to release money in terms of peace.
He also said money users need to be trained to establish proper records saying if money acquired to run a business is not well recorded then the venture can’t grow.
Dr. Igga advised microfinance operators to limit the size of the loans they offer to business owners.
He emphasized that lenders must schedule regular field visits to see how the people they give money are doing in terms of progress.
“Maybe they need your advice. You are the lender, so you have to have field visits to go and see their difficulties,” Igga emphasized.
The Vice president however noted that the country at the current stage needs microfinance support more than most countries in the region due to the degree of poverty and the fact that most businesses are also at their infantry stage.
However, Abraham Matoch, Vice Chancellor of Dr John Garang University criticized banks for not providing loans to local business investors in South Sudan.
He believes that the country’s economy is derailing due to the lack of support for local enterprises.
“Majority of Businesses in the market are not flourishing because they are not getting loans from the bank and banks are not even creating credits so that they lend to investors,” he said in an inclusive interview.
Matoch believed that economic progress would have been noticeable if loans were issued to local businesses with basic collateral, stimulating or promoting productivity in sectors like agriculture, the food industry, and vegetable areas.
“When they lend to the investors, they will in fact be stimulated or be productive in the economic sectors for example agriculture, food industry, vegetable areas,’’ Matoch noted.
The economist suggested that the introduction of protectionism policies for regulating foreign enterprises in market monopolies will bring change.
He further stated that capacity building on local entrepreneurship for South Sudanese business people will remedy financial constraints and their weak mindset on income generation.
“It is, in fact, the mentality of the people, the mindset that even commercial centers are not oriented to effective commercialization of their services in the market, it is a very complicated situation,” Matoch said.
He believed that the only way to deal with this situation was for the government to become a developmental state in the market, regulating the market, stabilizing prices, and encouraging people to produce.
“Nobody can just put any amount and decide, It will be fixed according to the productive cost they have, it has to be assessed,” he said.
He said that prices should be managed, regulated, and fixed based on productive costs.
The economist asserts that as a developing economy, the government has the right to oversee everything and should not import vegetables and fruits from Uganda, as they are abundant and not being consumed by the population.