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MPs condemn red tape in capital goods leasing
2008-04-11 10:28:37
By Judica Tarimo, Dodoma
Members of Parliament yesterday called on the government to stamp out red tape and corruption in the leasing of machinery and capital goods, one of the key components of the Financial Leasing Bill, 2007.
Finance and Planning deputy minister Jeremia Sumari tabled the bill in the National Assembly here yesterday.
Financial leasing has been introduced as a supportive investment tool aimed at helping small and medium-scale entrepreneurs (SMEs) access capital equipment and goods for the purpose of leasing.
Most legislators who contributed to debate on the bill hailed government moves to financially and technically support SMEs. However, they called for serious reforms to check unnecessarily long procedures and corrupt elements in institutions that would be overseeing the leasing process.
The House Finance and Planning Committee asked the government to take precautionary measures in the issuance of leasing contracts to ensure that the targeted business classes benefited from the new investment system.
“This will require serious changes to ensure that the leasing process is not rendered cumbersome by unnecessary bureaucracy and corruption. The focus should be on SMEs which lack capital for purchasing capital goods rather than large-scale investors,” said the committee chairman, Dr Abdallah Kigoda (Handeni, CCM).
The committee further recommended the introduction of low leasing fees to enable more SMEs to access capital machinery and thus accelerate their development.
The Opposition camp in the House called on the government to devise better ways of ensuring that SMEs became the first priority in the leasing arrangement under the proposed law.
“The proposed financial leasing law should address both the problem of SMEs accessing leased capital machinery and the lack of financial capital with which to operate their businesses.
The quality of the machinery to be leased needs to be clearly spelt out in the legislation,” said Opposition spokesperson Lucy Owenya (Special Seats - Chadema).
Contributing to the debate, Eustace Katagila (Kyerwa - CCM) commended the bill, saying it would save SMEs from a number of problems, including lack of capital, machinery and collateral with which to secure bank loans.
“However, we have to minimise interest on the leased machinery and capital goods so that SMEs can afford them.
In this way, the leasing arrangement will be a great relief to SMEs in the agricultural, fishing and construction sectors,” said the legislator.
Castory Rigarama (Kilombelo - CCM) said mechanisms and criteria should be introduced under the proposed law to guide lessors on the process of leasing the machinery or capital goods.
“That will do away with having to look at the faces of people (lessees) instead of the criteria specified in the law. The lease contract should give lessees at least three years in which to repay the loan,” proposed Rigarama.
Tabling the bill, minister Sumari said the government came up with the leasing arrangement after realising that most promising SMEs had no access to capital because of the stringent conditions attached to the securing of bank loans.
“They are required to have collateral to get bank loans, which they don’t have. Financial leasing will enable many people, especially SMEs, to easily access credits without collateral,” he noted.
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