Kampala — UGANDANS importing from Iran will not have to worry about following the signing of Shs1.77 billion credit between Front Page Microfinance and an Iranian bank to facilitate imports.

In a deal signed last week, the Export Development Bank of Iran (EDBI) will provide a two-year insurance cover to Front Page for any credit given to those who will import goods from the Middle East country.

Front Page Micro Finance is to manage a line of credit worth $1m (Shs1.77 billion) under the Iran Export Guarantee Fund to help importers pay for goods and transport them back to Uganda.

Speaking to Business Power after the signing of the MOU, Front Page Chief Executive Officer Yiga Muwonge said Front Page Microfinance will guide prospective importers and link them with Iranian manufacturers and exporters and the EDBI will appoint a Ugandan agent to certify the receipt of the goods.

"Importers have an account with Front Page where they will deposit at least 30 per cent of the value of the goods they are importing," he said.

He said EDBI will pay the Iranian exporters as soon as Front Page is informed of the delivery of their goods in Uganda. Mr Muwonge, who has been to Iran ahead of the signing of the MOU, said the Iranian economy is so developed that it is nearly self sufficient in all respects. However, said he: "They are interested in Uganda grown fruits, especially pineapples."

"Front Page will recover from the importers what the Iranian bank has paid out and remit it to the bank. The arrangement will be implemented over a two-year period at an annual interest rate of 7.1 per cent," Mr Muwonge said.

The development is a follow up on a promise made in 1996 by the former Iranian President Ali Akbar Hashemi Rafsanjani. Mr Rafsanjani had expressed interest in the development of Iran-Uganda economic relations. At the time however, the promise could not be activated for lack of a guarantee by the government of Uganda and the high interest rates.

But all that changed in February this year when Foreign Affairs Minister Sam Kutesa visited Iran to discuss bilateral trade and other relations.

A decision to channel the money through Micro Finance Institutions was taken, it was agreed that the need for a guarantee by the government of Uganda would be waived and the interest charged would be 7.1 per cent per annum.

Once it picks up, the deal is expected to boost trade between the two countries and increase Uganda's diversity of trade partners, away from the traditional European Union market, the East African market and the U.S.