School owners set to lose property over bank loans
Students wait to be picked after schools closed on March 19. PHOTO | ABUBAKER LUBOWA
School proprietors have said with the uncertainty of reopening education institutions, some banks have already threatened to take on their property they mortgaged as collateral for loans.
Mr Patrick Kaboyo, the secretary for the Federation of Non-State Education Institutions (FENEI), yesterday told Daily Monitor that majority of their members received loans from commercial banks to renovate and expand their schools in the hope that they would recover the loans from students’ fees collection but have defaulted on repayment since the institutions were closed in March following coronavirus outbreak.
Although he did not put a figure to the affected schools with loans, Mr Kaboyo said: “I don’t know of a private school which can start and survive without a loan. Many borrow money at the end of the year and start paying back in January and February when schools open. Sometimes, they are constructing laboratories and have to pay teachers’ wages.”
For instance, a school proprietor in Wakiso District, who declined to be named, said he took Shs140 million as loan from a bank payable within three years but is worried that a delay to reopen schools will mean the banks either take his land where the school stands because he has not paid his dues since March and even a further restructuring would mean longer payment of interest rate.
However, President Museveni on Monday offered to give cheap capital to businesses which were affected by the lockdown when they resume.
“The categories of our people that are affected by the lockdown, such as the salon operators, private universities, private secondary schools, private primary schools, should be registered so that we can see how to get them, not free money, but cheap capital when their activities resume or even help them to do other activities. The ministers of Gender and Education will follow this up,” Mr Museveni said.
But Mr Hasadu Kirabira, the officer-in-charge of research at the National Private Education Institutions Association, another association, which brings a section of private school owners together, yesterday said their expectation was government to give then loans without interest.
“We expected a school recovery fund. We accept the loan the President is giving us but we expect loans without interest. If the loan has interest, there will be another problem to pay back,” Mr Kirabira said in an interview.
The school proprietors have previously requested government to step in and pay their teachers’ salaries which have not been remitted since March.
“Most private schools get loans to develop. Many mortgage their schools and they are now worried they will lose their properties if government doesn’t come in early to support them,” Mr Kirabira said in an interview.
Mr Kaboyo warned that unless a schedule for implementation of the stimulus proposal to schools is given, there is nothing much that will be achieved because of government bureaucracies.
Govt request
In April, the central bank asked commercials banks to restructure loan repayments for their clients. However, the matter would still remain at the individual bank’s discretion, a matter that has remained worrisome for the creditors.
