Bank of Uganda has revealed that between February 2024 and April 2024, Ugandan businesses and individuals applied for loans from financial institutions worth Shs5.1Trn, although, only loans worth Shs3.4Trn were approved within the same period.
The details are contained in the State of Economy Report for June 2024 that was released by Bank of Uganda o Wednesday, which report presents economic developments up to the three months to May 2024, where data is available, and prospects, specifically focusing on the macro economy and the associated policies.
“Both gross credit extensions and recoveries declined in the three months to April 2024, but the decline in gross extensions was faster than the decline in gross recoveries, as banks increasingly cut back on renewing credit lines for borrowers. Demand and Supply of credit remained on a downward trajectory. Credit Demand eased to Shillings. 5.1 trillion in the three months to April 2024 from Shillings 5.3 trillion in the three months to January 2024 while credit supply remained flat at Shs3.4 trillion,” read in part the report.
Bank of Uganda further explained that the gap created by the hesitancy of financial institutions lending to the private sector are being bridged by several Government intervention programs, such as the Parish Development Model (PDM), Emyooga, and other sources of financing such as fintech have complimented the banks’ credit to the private sector.
The Central Bank further revealed that credit growth is constrained across most of the major economic sectors mostly agriculture, trade, transport, and communications and attributed this trend to the decline in agriculture which were reported to be lower advances in fishing and forestry, while the slowdown in credit growth to the trade sector was driven by reductions in credit to the wholesale trade, and import.
