The government is deliberating on providing financial support to a range of struggling companies, some of which are grappling with foreclosure threats. These firms, considered “too important to fail” in light of the country’s emphasis on import substitution, have been discussed at the Cabinet level, according to anonymous sources from within the Finance Ministry.
Finance Minister Matia Kasaija acknowledged that discussions regarding bailouts have taken place. He mentioned two specific cases, a pharmaceutical company on Bombo Road and a factory in Ntungamo. However, he refrained from providing further details, noting that the matter must undergo various processes.
While the exact companies in question remain undisclosed, sources within the Ministry of Finance have suggested that Dei Biopharma, a company under the DEI Group led by Mr. Matthias Magoola, is among those being considered.
Dei Biopharma is currently developing a multimillion-dollar biological drugs and vaccines manufacturing facility on Bombo Road in Matugga, Wakiso District. This facility aims to produce vaccines and affordable medications, including treatments for cancer and malaria. Unfortunately, it faces substantial debt exposure from Equity Bank and other financiers, who have recently threatened to auction various properties, including those belonging to Mr. Magoola.
In March, it was reported that Mr. Magoola had requested a government bailout of $600 million to complete the construction of the pharmaceutical plant in Matugga. He had previously received $100 million of an expected $400 million from Equity Group and other financial institutions, but further disbursements were halted at the Bank of Uganda’s instruction.
The exact amount and terms of the government’s financial assistance to the DEI Group have yet to be determined. Shadow Finance Minister Muwanga Kivumbi mentioned that Mr. Magoola’s company requested $1 billion but only received UGX 600 billion through the Parliament’s Budget Paper.
Additionally, there have been discussions about considering other enterprises, including Biyinzika Enterprises and Mukalazi Technical Services, for possible bailouts. However, Finance Minister Kasaija stated that he was not aware of discussions involving Biyinzika but affirmed that several enterprises were under consideration.
Biyinzika Enterprises currently faces foreclosure threats due to a UGX 40 billion loan. Furthermore, it was reported that the government had finalized plans to provide financial assistance to businessman Patrick Bitature, who is entangled in a $35 million dispute with a South African lender. Last year, the government bailed out Roko Construction with UGX 202 billion and extended UGX 26 billion to Abubaker Technical Services due to cash flow challenges.
