Commercial banks approved loans to a tune of Shs661bn which is Shs11.2bn less than loans approved in the previous month.
This revelation is contained in the Performance of Economy Performance Report for August 2021 that was recently released by the Ministry.
“The value of loans approved in July declined to Shs 661.39 billion compared to Shs 773.79 billion approved the previous month. Despite the reduction in lending rates and Non-Performing Loans (NPLs), credit extension remains subdued due to default risk emanating from the expected expiry of the earlier credit relief measures enacted by the Central Bank, as well as the impact of the second lockdown on business activities and slow pace of economic recovery,” the report reads in part.
In further breakdown, the report noted that Personal Loans and Household loans received the largest share of credit approved in July 2021 at 28.7%, followed by trade (19.3%), Manufacturing (13.8%) and Agriculture (13.5 %).
However, Credit to the construction sector declined by over 50% between June and July 2021, which is consistent with the reduction in growth of the construction sector highlighted by the (Price Manufacturing Index (PMI).
