Did You Know That As A Parent, You Can Use Your Movable Property As Collateral For School Fees Loans?

By Mercy K. Kainobwisho

Pupils and students will finally be reporting back physically to regular school programming after a long wait of disruption attributed to the COVID-19 pandemic. While most of them have outgrown both their uniforms and class levels from 2019, one thing remains clear; they need support now more than ever to transition and settle back into normal student life. The long break has adversely affected their social and physical development.

It is a fact that economic hardships have hit households with some parents losing their source of income and some children being left orphaned. As the economy makes its way to a full recovery from the dents and shocks left by the pandemic, it is our responsibility to take advantage of the measures that the Government has put in place designed to support ailing households financially.

As parents work towards ensuring their children return to school, some are turning to banks and other registered, regulated financial institutions including savings and credit cooperatives to access the much-needed finances to pay for school fees and related needs. While banks previously preferred the use of fixed assets such as land and real estate as collateral to offer loans, the use of movable property such as phones, furniture, agriculture stock like crops and animals is now a widely accepted form of collateral that the financial sector, especially banks have ignored leaving the majority of both urban and rural Ugandans grappling with very limited options for credit access.

Access to loans using movable property

The government in its bid to support all sectors of the economy from individually owned businesses to the myriad of micro, small and medium enterprises (MSMEs) devised strategic financial bailouts as a remedy to bolster quicker and easier income recovery measures. One of these nascent programs is the Security Interest in Movable Property Registry System (SIMPO) manned by the Uganda Registration Services Bureau (URSB). SIMPO was planned for such times to provide an enabling environment for the underserved Ugandan through facilitating access to credit using movable property.

Using movable property (includes items such as motorcycles (including boda bodas), household items, cars, farm produce, accounts receivables, farm machinery, patents, copyright, and trademarks among others. Through staking any of these as collateral, one can then borrow money from their preferred lender to pay for incidences like business capitalization, school fees and accompanying expenses for their child.

Legally acceptable practice

The Security Interest in Movable Property Act (SIMPA) 2019 offers legal protection for all parties in the transaction. For the lender, it reduces the risk of lending over movable property by putting in place mechanisms for protection and enforcement. For the borrower, it ensures protection of the movable property pledged from exploitation by unscrupulous lenders. In essence, it creates a perfect balance between the rights of the lender and the borrower.

SIMPO is a 24-hour available online notice board for all security interests obtained over movable property. With SIMPO, the lender can sleep restfully knowing that the whole world is aware of their right in a movable property pledged. The borrower is also assured that they have solved their child’s school fees problem having pledged movable property within their means and knowing that they retain legal title to their property among other benefits.

Easy borrowing, safer lending

The back-to-school school season usually creates a frenzy of panic from parents who are short of the required tuition amounts. Armed with the knowledge that we do not necessarily need land to access credit, parents can rest assured that the television set or household furniture or equipment in their possession could be their saving grace this season. SIMPO is here to facilitate easy access to affordable credit enabling financial support.

In the past, lending transactions have been characterized by fraudulent dealings and thus the SIMPA helps to eliminate all mistrust by offering a transparent platform through SIMPO. Once a borrower has pledged their movable property to access a loan, the lender registers the right they have obtained in that property on the online registry. SIMPO is a 24-hour available online notice board for all security interests obtained over movable property.

The writer is the Registrar General of the Uganda Registration Services Bureau