Legal aspects of financial leasing in Uganda: a case of equipment finance for agro-business

Abstract

The study examined the legal aspects of financial leasing in Uganda with specific emphasis on equipment finance for agro-business. A total of 30 respondents were selected for the study, questionnaires and an interview guide were used for collecting data. The study employed an exploratory research design, in which both qualitative and quantitative data was sought. Data process involved editing and thematic grouping, analysis was done in relation to study objectives, research focus and conceptual framework. The study covers the history of agricultural credit in Uganda to date, the nature and scope of leasing as a financing mechanism in that it gives the key feature of leasing as separation of legal ownership of the asset from its economic use. The scope of leasing agricultural equipment is also covered and its shallowness is mainly attributed to lack of an effective legal regime and limited market awareness among customers. The study also includes an analysis of the current legal regulatory framework governing financial leasing in Uganda. From the findings it was noted that the continuous lagging behind of the leasing sector is mainly attributed to the absence of a specific financial leasing Legislation that spells out the rights and obligations of the parties in a lease contract. However, despite that challenge, lease financing is noted to be associated with benefits and the researcher believes that the enactment of the leasing law will inspire investor confidence in the industry and thus boost it. The study makes recommendations to policy makers such as designing a financial leasing legislation, increasing market awareness among others.