Private sector credit rises in March as loan approvals surge 17%

Private sector credit in Uganda continued to grow in March 2025, supported by rising loan approvals and strong demand for personal, real estate, and trade financing, according to the April Performance of the Economy report issued by the Ministry of Finance.

The total stock of outstanding credit to the private sector rose by 0.8% to Shs 23.31 trillion in March, up from Shs23.12 trillion in February. This growth was largely driven by an increase in foreign currency-denominated loans, which expanded by 1.2% to Shs 6.78 trillion. Meanwhile, Shilling-denominated credit grew at a slightly slower pace of 0.6%, reaching Shs 16.52 trillion.

The data indicates continued lending activity across key sectors of the economy, despite prevailing cost-of-living pressures and global financial uncertainty. Analysts suggest that improving economic stability, lower inflation, and easing interest rates may be boosting private sector confidence and credit uptake.

Surge in Approved Loans

The value of credit approved by banks and financial institutions jumped significantly in March — rising by 16.9% to Shs 1.56 trillion from Shs 1.34 trillion in February. This marks a strong monthly recovery in loan issuance and suggests a more accommodative lending environment.

Personal and household loans remained the dominant category, accounting for 34.8% (Shs 544.95 billion) of all approved credit. This reflects continued demand for consumer financing, likely driven by household spending, education needs, and debt refinancing.

Other key sectors benefiting from increased credit access included:

• Real estate, building, and construction: 19.7% (Shs 307.90 billion)
• Trade: 15.1% (Shs 235.48 billion)
• Manufacturing: 9.2% (Shs 144.07 billion)

These sectors are considered vital engines of economic growth, job creation, and value addition, and their access to credit is crucial for recovery and expansion.

Broader Outlook

The steady rise in private sector credit is a positive signal for Uganda’s economy, pointing to improved liquidity and growing investor confidence. It also aligns with the Bank of Uganda’s recent stance on easing inflationary pressures and maintaining stable interest rates to support economic activity.

However, economists caution that the high share of credit going to consumer and real estate loans may expose the economy to risks if interest rates or inflation were to rise again sharply. Continued diversification of credit into productive sectors like manufacturing and agriculture remains key to sustaining long-term growth.

Overall, the credit trends for March indicate growing momentum in domestic economic activity, with the financial sector continuing to play a central role in supporting both individual and business financing needs.