Banks that only fund what is running will never start what is coming

You have this bankable project: garbage to charcoal; plastic to tiles; or maize bran to animal feed. You take it to a bank, meet the manager with a shiny tie, and what does the manager say?
“Mzee, bring us two years’ audited accounts.”

“Mzee, bring us collateral of 200 percent of the loan.”
“Mzee, we only fund businesses that are already running.”

Seriously? You want me to run for two years without money, so that you give me money after I have already run? That is like telling a pregnant woman, “First give birth, walk the baby, take the baby to P1, then we shall give you money for antenatal.”
This is stone-age banking! Banking of fear! Let me give you international history so you know how naked we look.

In 1850, Germany was poor like Uganda is today. No factories, only small blacksmiths. German banks, Deutsche Bank and KfW, said: “We shall not fund shops; we shall fund ideas.” They funded a man called Krupp, who had only a small iron shed; no accounts, no collateral, only brain. Today, Krupp makes steel for the whole world. They didn’t ask for two years’ accounts; they asked for two hours of brain.
In 1908, American Henry Ford had no factory. He had only a garage and an idea: “A car for every man.” Banks like JP Morgan funded his garage. If American banks behaved like Ugandan banks, Ford would still be repairing bicycles in Detroit.

In 1945, Japan, with almost everything burnt by the atomic bomb, banks — Mitsubishi and Sumitomo – funded zero-collateral projects. They said: ‘Bring your hands, we give you money.’ They funded a man who made Toyota from bicycle parts. Today, Toyota’s global revenue is bigger than Uganda’s GDP times five.

In 1983, Bangladesh was among the poorest in the world. No bank would give $2 to a woman selling bananas. Muhammad Yunus started Grameen Bank and said: “We fund the poorest without collateral! We fund the beginning.” He gave $27 to 42 women. No title deed. No audited accounts. Today Grameen has more than nine million borrowers and won the Nobel Prize in 2006.

In Silicon Valley today, a boy with a laptop in a coffee shop, with an idea for an app that makes dogs bark when a thief comes, will get $1m from a Silicon Valley bank. No warehouse. No factory. No two years’ accounts. Just an idea. Because they know: fund the start, and the start will run. Fund the seed, and the seed will become a forest.
But in Uganda today, banks prefer to fund those who already have money. They fund the businessman who already has 10 hardware shops to open the 11th. They fund a property mogul to build the 100th building. 

But the boy in Kabwohe who wants to build the first briquette machine, no. The girl in Nakibanga Mityana who wants to turn mango waste into juice, no.
Bank of Uganda must wake up. Draw policies that tell commercial banks that 30 percent of your loan book must go to start-ups; green projects; youth-owned factories, etc. 
Because if you only fund what is already running, you will never fund the future. You will only fund the past and keep stagnant with small fish in the ocean. 

To the youth, don’t wait for these textbook banks. Go to Emyooga, which has fewer questions and get funding. 
The Kifuuta Oracles say a nation that only funds what is running will never start what is coming.

The writer is an investor and emeritus president, SC Villa