KAMPALA- The National Social Security Fund (NSSF) has taken over payment of a Shs19 billion loan of the struggling Uganda Clays.
Uganda Clays borrowed the money from various commercial banks in 1999 to build the Mbale-based Kamonkoli tiles factory.
While addressing the annual general assembly in Kampala on Friday, the Uganda Clays board chairman, Dr Martin Aliker, told the shareholders the company could not pay them dividends because the investment in the Kamonkoli factory turned too costly for them.
“NSSF changed its equity into shares so as to own more shares in Uganda Clays, meaning the NSSF shareholding will increase. NSSF decided to retire the loans and take over the debt in the last four years,” he said.
NSSF’s shareholding now goes to 66 per cent in the clay products manufacturing company which was at the verge of collapsing because of the bad loan.
Asked why NSSF, which is not a banking institution, decided to take over the loan, Dr Aliker said: “NSSF wanted to save its own investment by retiring the loan, otherwise Uganda Clays would have wound up with NSSF’s 32 per cent shares because we borrowed money from the wrong people instead of Uganda Development Bank or East African Development Bank.”
According to George Inholo, the Uganda Clays MD, the Kamonkoli factory has become a costly venture.
“Kamonkoli is turning out an expensive company because of the cost of the oil. We are currently transiting from heavy oil into coffee husks and groundnut shells, hoping that the migration will reduce the cost of production,” he said.