Ugandan banks approve loans worth Shs1.1 trillion in April as economic activity improves

Commercial banks and other financial institutions in Uganda approved loans worth Shs1.121.5 trillion in April 2023, the latest report by the Finance Ministry shows.

According to the performance of the Economy monthly report for May 2023, the value of credit approved for disbursement in April 2023 amounted to Shs 1.121.5 trillion, representing an approval rate of 69.5%.

This compares favourably with the 67.9% registered in March 2023.

Building, Construction and Real Estate took the largest share of credit approved in April 2023 at 26.2% (Shs. 293.87 billion). This was followed by Personal and Household loans at 24.6% (Shs. 275.43 billion) and Trade at 18.5% (Shs. 207.61 billion).These three sectors accounted for nearly 70% of the credit extended to the private sector during the month.

Other notable recipients of credit included Agriculture at 11.9% (Shs. 133 billion), Business, Community, Social & other Services at 6.2% (Shs. 69.03 billion) Transport and Communication at 5.7% (Shs. 63.89 billion), and Manufacturing at 5.2% (Shs 58.52 billion).

This comes on the backdrop of improved economic activity in the course of this financial year.

The general improvement in economic activity is also reflected in the performance of the Purchasing Managers’ Index (PMI), which continued its upward trend to 57.4 in May 2023 from 55.4 in April.

This marked the seventh consecutive month during which the indicator was above its threshold of 50. The growth was recorded across all the five monitored sectors of Agriculture, Industry, Services, Wholesale and Retail during the month.

 This growth was supported by an increase in new orders, output, and staffing levels (employment), with prospects of further improvements in customer numbers supporting confidence among firms regarding the 12-month outlook for business activity.