When Development Associates Link International Ltd, a financial management consulting firm, applied for a Shs 60 million loan from KCB Bank Uganda in August 2022, the bank managers were confident that it would repay the loan swiftly and possibly request more.
See, its founder and managing partner, Henry Clarke Kisembo, holds two PhDs and is a respected financial management consultant. Kisembo is designated as a CPFA, which stands for Certified Plan Fiduciary Advisor. He is also a FIPA, which means he is a Fellow of the Institute of Public Accountants.
In addition, Dr Kisembo has delivered several talks on debt management for SMEs across Uganda.
Back to the KCB loan. To secure it, Dr Kisembo signed a personal guarantee dated August 11, 2022, pledging to cover the debt should his company fail to meet its obligations. The interest rate was set at 23% per annum, and repayment was to be made in a single instalment.
Three years later, Kisembo and his firm defaulted on the loan, and the bank sought the intervention of the court.
The records, presented by the bank in court by its Collections and Recoveries Manager, Cedric Kasozi showed that after months of silence, the first payment, the firm made a payment of just Shs 202,000. This was in February 2023.
Later, with some pressure, the firm made a payment of Shs 31 million. But remember, at this point, the interest had ballooned, and to make matters worse, the bank had instituted “penalty interest. Therefore, even after these payments, the outstanding balance remained Shs 50 million.
The bank issued several demand notices, but they went unresponded to.
Dr Kisembo, according to testimony in court, switched off his phones and, on a few occasions when they managed to get him, “he claimed he was upcountry on a project but would repay the debt soon.”
He never did. In fact, he did not even show up in court despite being served with summons.
Therefore, the court proceeded with formal proof, relying heavily on the bank’s witness and documentary evidence.
In her ruling, Justice Patricia Kahigi Asiimwe offered a striking contrast between Dr Kisembo’s professional profile and the financial indiscipline.
“Where the creditor [KCB] introduces some evidence of the debt establishing a prima facie case, the burden… shifts to the debtor [Dr Kisembo], who is then under a duty of producing some evidence to show payment,” she said.
She said since the consulting firm and Kisembo had offered no proof of settlement of the loan, they were liable.
“In the present case, I have already found that the 1st Defendant [Development Associates] defaulted. It therefore follows that the 2nd Defendant [Dr Kisembo], as guarantor, has a duty to pay the loan,” Justice Asiimwe said.
She ordered that the two clear the loan and pay the costs of the suit.
Yet for some observers, the fact that a consultant who routinely teaches entrepreneurs how to meet loan obligations now finds himself condemned for defaulting on one is the irony of ironies.
