Private sector credit growth remains flat as lending rates rise – report

KAMPALA, July 27, 2025 — Growth in Uganda’s private sector credit remained largely subdued between April and May 2025, even as lending rates edged higher, according to the Performance of the Economy Report for June 2025, released by the Ministry of Finance, Planning and Economic Development.

The stock of outstanding private sector credit stood at Shs 23.53 trillion in May 2025, reflecting a marginal increase of 0.1 percent from Shs 23.52 trillion in April. Of this, Shs 16.85trn was denominated in Ugandan Shillings, up from Shs 16.76trn the previous month.

Meanwhile, foreign currency-denominated credit declined to Shs 6.68trn from Shs 6.77trn in April.

Lending rates on the rise

The period also saw a rise in average weighted lending rates for both domestic and foreign currency credit. Shilling-denominated lending rates increased to 18.64 percent in May, up from 16.64 percent in April. Foreign currency loans followed a similar trend, with rates rising slightly to 8.36 percent from 8.20 percent.

Credit approvals surge

Despite the marginal growth in outstanding credit, the report says new credit approvals saw a significant increase. In May 2025, Shs 2.31trn was approved for disbursement, an 88.7 percent approval rate against the Shs 2.61trn in applications received. This marks a 49.4 percent increase compared to the Shs 1.55trn disbursed in April.

Transport, communications, electricity and water sectors received the lion’s share of disbursed credit, accounting for 30.6 percent [Shs 707.84 billion] of the total. This was followed by personal and household loans at 21.2 percent [Shs 490.80bln], and manufacturing at 11.9 percent [Shs 275.46bln].

Monetary policy holds steady

The Central Bank Rate [CBR] was maintained at 9.75 percent in June 2025. Authorities deemed the rate appropriate for keeping inflation within the medium-term target, while supporting ongoing efforts toward economic growth and socio-economic transformation.

https://thecooperator.news/private-sector-credit-dropped-0-7-percent-in-january-2024/

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