Ugandan Businesses Urged on Resolving Insolvency

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In short
The campaign, launched today by the Justice and Constitutional Affairs Minister, Kahinda Otafiire, is under the theme Enhancing Stakeholders Awareness on Insolvency. Otafiire was represented by Isaac Musumba, the Minister of State for Urban Development.

The Uganda Registration Services Bureau (URSB) has launched a campaign to increase awareness of businesses in resolving insolvency should that arise.
 
The campaign, launched today by the Justice and Constitutional Affairs Minister, Kahinda Otafiire, is under the theme "Enhancing Stakeholders' Awareness on Insolvency". Otafiire was represented by Isaac Musumba, the Minister of State for Urban Development.
 
Insolvency, according to Investopedia website, is when an organisation or an individual can no longer meet its financial obligations with its lender or lenders as debts become due.
 
Uganda enacted the insolvency law in 2011, but its awareness among businesses and individuals remains low, a situation URSB wants to reverse.
 
The Chief Executive Officer of URSB, Bemanya Twebaze, said the necessary regulations in operationalising the insolvency act is in place, paving way for increased uptake of the services of the Official Receiver, who also happens to be himself.
 
Bemanya said resolving insolvency is crucial in sustaining businesses so that the benefits like employment and provision of goods and services are not derailed.
 
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Bemanya cited Wava Broadcasting Services (WBS) Television and Uchumi Supermarket as distressed companies that are benefiting from the insolvency regime. He, however, could not reveal the rate at which businesses and individuals are seeking insolvency services.
 
According to Bemanya, improving resolving insolvency would also improve Uganda's ease of doing business and help in attracting foreign investments.
 
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Otafiire said the life of a business can be compared to a human being's, with ups and downs, hence the need to have mechanisms to help distressed companies. He said it makes no sense for businesses to go belly-up when frameworks exist to support ailing companies.
 
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The Chair of the Board of URSB, Francis Butagira, in a message read by Michael Mawanda, said the public's perception about insolvency is that it is a negative thing, yet in reality it is positive and for the good of distressed companies and individuals.
 
Butagira said insolvency regimes encourage commercial bank lending to businesses because they know when things go bad they are likely to recover their monies.
 
As part of the campaign, judicial officers will be trained by United States and United Kingdom insolvency experts on how to handle rescue plans.
 
Since insolvency may also be cross-border, regional official receivers from the East African Community will converge in Kampala to discuss ways of dealing with cross-border trade barriers leading to enactment of the East African Protocol on Insolvency Practice.
 
Before a company or an individual gets involved in insolvency proceedings it would most likely have been involved in informal arrangements with its creditors and suppliers on alternative payment arrangements.
 
Insolvency may arise from, among others, poor cash management, a reduction in cash inflow forecasts or from an increase in expenses.
 
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About the author

David Rupiny
In his own words, David Rupiny says, "I am literally a self-trained journalist with over 12 years of experience. Add the formative, student days then I can trace my journalism roots to 1988 when as a fresher in Ordinary Level I used to report for The Giraffe News at St Aloysius College Nyapea in northern Uganda.


In addition to URN for which I have worked for five years now, I have had stints at Radio Paidha, Radio Pacis, Nile FM and KFM. I have also contributed stories for The Crusader, The New Vision and The Monitor. I have also been a contributor for international news organisations like the BBC and Institute for War and Peace Reporting. I am also a local stringer for Radio Netherlands Worldwide.


I am also a media entrepreneur. I founded The West Niler newspaper and now runs Rainbow Media Corporation (Rainbow Radio 88.2 FM in Nebbi). My areas of interest are conflict and peacebuilding, business, climate change, health and children and young people, among others."