A group of traders in the Ugandan capital of Kampala say they are establishing their own credit bank that will accept import documents, including letters of credit (L/Cs) as security.

The Kampala City Traders Association (KACITA) said the financial institution that will operate under the Savings and Credit Scheme is expected to open early September.

Traders' shares

According to KACITA spokesman, Isah Ssekitto, more than 100 traders havebought shares in the bank.

Ssekitto says the bank has taken soundings on savings schemes it could offer and reckons it would offer loans at two to three per cent interest per annum.

Respect for L/Cs

"This bank will respect the power of import documents like L/Cs, [and] invoices among others," the KACITA spokesman says.

"This has not been the case with the commercial banks," he adds.

Dissatisfaction with banks

The new bank is apparently a response to traders' dissatisfaction with current banking arrangements in Uganda.

"Traders have no saving culture. This is because they lost trust in the commercial banks, they have redundant money and have nowhere to put it," says Ssekitto.

This article represents the views of the author and not necessarily those of the ICC or any of the other partners in DC-PRO.