The latest data from Bank of Uganda indicates that the lending rates have continued to decline in line with the central bank’s reduced bank rate which aims at revamping private sector credit growth.
Louis Kasekende, the deputy governor Bank of Uganda(BOU) noted on Friday that this is already being reflected in the manufacturing sector which for the month of June has registered robust credit growth.
He was was officiating at the farewell function for the outgoing executive director of Commercial Bank of Africa (CBA), Sam Odeke.
Interest rates on shilling denominated loans for the month of June 2018 were recorded at 17.7% per annum according to information coming from the central bank.
Kasekende said the 17.7% rate has been the lowest in decades.
“Bank of Uganda has been struggling to make banks understand the importance of lowering the lending rates and this time the results are promising this is good news from the central bank,” he said.
Kasekende added that extension of credit to private sector by the commercial banks is on a positive projection with annual growth of 10.5% as of June 2018 relative to a very slow growth of 2.8% in November 2017.
“It’s very pleasing that sectors like manufacturing are recording robust credit growth,” Kasekende noted.
He said banks have also had in possession sufficient capital above regulatory capital requirements and this has enabled them to absorb all shocks.
“Banks have been struggling to reduce on the non performing loans and this time many have success stories, what is left of them is reducing on the intimidation margins” Kasekende adds
Odeke noted that CBA has managed to reduces it loss from Shs 8 billion to Shs 1.5 billion over the last couple of years.
He advised the incoming executive director to consider arbitration to settle bank and client cases to a void wastage of time in courts.