Uganda’s weighted average lending rates increased in the quarter to June 2025, in part due to higher rates on government securities but also due to higher rates on housing, personal, and trade loans, Bank of Uganda has revealed in its Monetary Policy Report for August 2025.
According to the report, higher rates are also associated with digital loans. Interest rates are averaging 18% from 17.5% in the previous quarter.
BoU last week maintained the Central Bank Rate (CBR) at 9.75%, saying it considers the current CBR level appropriate for controlling inflation while supporting economic growth and socio-economic transformation.
The report notes that Private Sector Credit (PSC) recovered in the 3-mths to Jun-25 vs 3-mths to Mar-25. “PSC grew by 10.2% up from 8.1% driven by both shilling (11.7% from 10.2%) and fx denominated loans (6.0% from 2.3%). Also, the credit approval rate rose to 75.67% from 55.10%,” the report says, adding: “Nonetheless, demand for credit fell to Shs 7 tn from Shs 7.5 tn (on higher int rates on loans/ treasuries). PSC supply rose to Shs 5.3tn from Shs 4.2tn, largely because of lags in loan approval.”
According to the report, PSC growth has been supported by various structured/community-based government credit schemes that have anchored the development of creditworthy enterprises, promoted financial literacy, aiding transition into the formal banking sector.
“The recovery in credit was broad-based across major economic sectors, with the exception of housing and personal loans. NPLs improved to 3.98% from 4.27% over the same period,” the report says.
BoU says economic growth is projected to remain strong, at 6.0–6.5% in FY2025/26, and average 8.0% in the five years ahead.
