Kampala businessmen and women are very bitter with their associate Patrick Bitature whose actions, they say and fear could see more and international financial firms raise a red flag on Ugandan borrowers.
The businessmen and women who spoke to this news site but wished to remain unnamed because of the sensitivity of the matter said that with Uganda, being home to one of the most expensive credit, more and more businesses had identified foreign lenders who offer generally cheap money, but with some selfish Ugandan businessmen increasingly attempting to cheat the lenders, over flimsy technicalities, lenders will be scared and those who remain, will be forced to increase rates, cater for this risk.
“It is a fact that Uganda has expensive money- often in double digits, yet most businesses here have single-digit margins, which makes borrowing locally for especially medium to long term business suicidal. Expensive credit makes us uncompetitive in the market which in due course kills the same business you are borrowing for. That is why most of us quietly found solace in getting loans from abroad which are comparatively very cheap,” a businessman who runs a manufacturing plant in the Namanve Industrial Park told this reporter.
But with Bitature’s actions, and very recently another similar move by Hamis Kiggundu, foreign lenders will now think twice before trusting Ugandan borrowers.
Commenting on Twitter, Andrew Muhimbise, a Financial Analyst, weighed in that, “Ham Towers (Hamis Kiggundu) and now Bitature are gonna dim access to big capital for Ugandan Entrepreneurs going forward with such trickery and underhand machinations.”
“Money attaches risk best on average behaviour,” he added, referring to the additional cost of default risk that is inbuilt into interest rates.
Since last week revered property mogul Bitature has dominated the news that he refused to pay back a $10 million loan he acquired from South African firm, Vantage Mezzanine Fund II Partnership.
Instead, Mr Bitature with the help of his lawyer Fred Muwema scoffed at the media reports insisting that the lender has no jurisdiction in Uganda because it never acquired a license.
Mr Muwema appearing on local TV told viewers that Bitature’s lender doesn’t exist, however, he admitted that his client signed for the money but did it by mistake.
Vantage had earlier through court bailiffs given Bitature’s a renowned motivational speaker only 30 days to repay the loan which has since accumulated to a tune of $34m or else lose his Simba group of companies he staked as security.
Bitature claims that his whole empire is worth $150 million.
Against that backdrop, the business community has since asked Bitature to pay the $34 million Vantage loan out of his empire, remains with $116 and respect.
“The public out there has lost trust, looks at him as very dishonest yet he was an inspiration to many with his motivational speeches. It is better to save the image built for a long time,” said another trader in Kikuubo.
Some of Bitature’s businesses under the Simba group of companies include; Linda Properties Limited, Elgon Terrace Limited, and Simba Telecom Limited.
Among other securities, the Simba Companies provided Vantage with charges on shares in the Simba Companies as well as legal mortgages on certain properties owned by both the Simba Companies.
The loan was acquired in 2014 until today, Mr Bitature has not returned a single coin.
Earlier, Vantage said that “Investors world over are concerned that borrowers who enter serious business undertakings can so easily abuse state institutions in a country with the kind of stable and able leadership that Uganda has, to avoid their creditors and debt obligations ad nauseum. We trust that sooner rather than later, the concerned authorities will address this issue and arrest a looming crisis of confidence in Uganda’s credentials as an investment destination.”
And indeed, local businessmen concur with Vantage’s position.