Kampala — HIGH interest rates charged by banks on loans have frustrated investment in small enterprises, Paul Tumusiime, the UGAFODE micro-finance internal auditor, has said.

Tumusiime said commercial banks charge interest rates of between 22-26%. He was speaking at a micro-finance roundtable discussion at St. Lawrence University recently.

Tumusiime added that the development of the sector has been hampered by high operational costs and a high rate of bad loans.

He said people do not repay the money saying it is for the Governement's "Prosperity-for-all", programme.

"Small loans are associated with several costs, while some borrowers do not want to pay back loans saying it is for Bonna Bagaggawale," Tumusiime said.

Meanwhile, Grace Asamo, the chairperson National Union of Disabled Women of Uganda, challenged micro-finance institutions to stop the negative attitude towards disabled businesspeople.

"Disabled people should be given special treatment when processing loans," Asamo said.

She added that most banks have no access routes for disabled people.

"Most financial institutions are located in high-rise buildings with no access for the disabled," she said.

Gerald Hildebrand, the director for the Global Centre for Social Entrepreneurship at the University of the Pacific in the US, said microfinancing was instrumental in transforming societies when well managed.

He called for regular audits of the firms, transparency and training of borrowers on how best to use the loans to ensure sustainability.

He called for regular self-evaluated to fill the existing gaps.