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Uganda’s Loans To Private Sector Increase To Shs17.2 Trillion

The stock of Uganda’s outstanding private sector credit increased by 1.5 percent from Shs16.97 trillion in August to Shs17.22 trillion in September, the Performance of the Economy Report for October released by Ministry of Finance, Planning and Economic Development on November 18, 2020 has revealed.

The increase is attributed to mainly “new credit extensions following  the  continued  improvement  in  economic activity.”

During September2020, Shs932 billion  worth  of  credit  was  approved  for disbursement to the private sector, the report obtained by Business Focus says.

“Of the total loans applied for during the month,73  percent  were  approved-which  is  higher  than  the  approval  rate  of  67  percent recorded in August 2020,” the report reads in part.

By  sector  categorization, it adds, manufacturing received  the  largest  share  of  credit approved in September2020 at 25 percent, followed by Trade at 23.4 percent and Personal  loans  &  Household  loans at  20.3percent.

Compared to August  2020, the report says, manufacturing was still the largest recipient of credit approved.

According to the report, average lending  rates  for Shilling  denominated credit increased  to  19.9 percent  in  September,  2020  from  19.8  percent  in  August,  2020-partly attributed to the  risk aversive tendencies of commercial banks.

However, the rates on foreign  currency denominated credit remained unchanged at  5.9 percent over the same period, the report says.

“In spite of the slight increase in lending rates, the number of loans approved by commercial banks as a proportion of the total loan application increased to  73  percent  during the month of  September  2020,  up  from  67  percent  in August  2020,” the report says.

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Taddewo William Senyonyi
https://www.facebook.com/senyonyi.taddewo
William is a seasoned business and finance journalist. He is also an agripreneur and a coffee enthusiast.

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