Musasizi challenges banks to cut lending rates to spur growth

Finance Minister Henry Musasizi has challenged commercial banks to lower lending rates, saying affordable credit will be critical to financing Uganda’s ambitious Tenfold Growth Strategy and accelerating investment in key productive sectors.

Speaking during a meeting with the leadership of Absa Bank Uganda, Mr Musasizi said access to cheaper financing would help unlock investment in agro-industrialisation, tourism, manufacturing and infrastructure, which government has identified as the main drivers of its plan to grow the economy to $500 billion.

The Absa delegation was led by Board Chairman Keith Kalyegira and Managing Director David Wandera.

Mr Musasizi commended the bank for its contribution to Uganda’s financial sector and economic development but said reducing the cost of borrowing should be a priority for commercial banks.

“The country needs affordable financing to support the anchor sectors of agro-industrialisation, tourism, mineral development, including oil and gas, and science, technology and innovation, as well as strategic investments in infrastructure such as roads, railways and industrial parks,” he said.

He added that lower lending rates would not only stimulate private sector investment but also strengthen the banking sector by expanding demand for credit from businesses and government.

Mr Kalyegira said Absa’s strategy is aligned with government’s vision of building a $500 billion economy and pledged the bank’s support for financing investments in the priority sectors.

He said the bank is also prepared to support resource mobilisation through alternative financing instruments, including Sukuk financing, to diversify funding options for development projects.

Mr Kalyegira, however, emphasised the need for Uganda to maintain a predictable investment climate and stable tax regime to attract long-term domestic and foreign investment.

Absa Bank Uganda Managing Director David Wandera said the lender, which ranks among the country’s largest banks, remains committed to mobilising international investment and providing financing solutions that support government’s economic transformation agenda.

The meeting comes as government steps up engagement with financial institutions to mobilise private capital for the Tenfold Growth Strategy, which seeks to expand Uganda’s economy to $500 billion over the next 15 years through increased industrialisation, value addition, exports and infrastructure investment.