Overview:
According to the report, Building, Mortgage, Construction and Real Estate accounted for the largest share of credit approved at 32.1% (Shs. 508.5 billion), up from an approval rate of 11.7% the previous month.
Financial institutions in Uganda approved a total of Shs1.586 trillion in loans to businesses and individuals in the month of December 2022, compared to Shs1.39.8 trillion in November 2022, an indication of decreased risk, a latest report indicates.
This is contained in the Ministry of Finance Performance of the Economy report for January 2023.
This represents a loan approval rate of 77.6% in comparison to 50.4% in November 2022.
The report attributes this partly to lower risk associated with lending reflected by the decline in Non-Performing Loans (NPLs) and the pick-up in economic activity.
According to the report, Building, Mortgage, Construction and Real Estate accounted for the largest share of credit approved at 32.1% (Shs. 508.5 billion), up from an approval rate of 11.7% the previous month.
Other notable recipients of credit included Trade at Shs. 282.3 billion (17.8%), Personal and Household Loans at Shs. 271.8 billion (17.1%), Manufacturing at Shs 107.3 billion (6.8%), Mining and Quarrying at Shs. 179.8 billion (11.3%) and Business, Community, Social and other Services at Shs. 115.2 billion (7.3%). These six sectors constituted 92.4% of all the credit extended to the private sector during the month.
The report attributes this to the weighted average commercial bank lending rates, which remained largely unchanged at 18.91%, compared to 18.98% recorded for the previous month.
“This is partly attributed to the high inflation rates which remain in double digits despite the declining ratio of NonPerforming Loans (NPLs) to total gross loans from 5.79% in March 2022 to 5.21% in September, 2022. On the other hand, lending rates for foreign currency denominated credit decreased to 8.01% in December 2022, down from 8.13% the previous month,” the report states.