Govt asks commercial banks to reduce lending rates

"I want to thank Absa Bank for contributing to the growth of Uganda's economy. Going forward, however, one of your priorities should be the reduction of interest rates so that you attract more business from government while at the same time contributing more significantly to the country's economic growth," Musasizi said.

He noted that affordable financing remains one of the biggest requirements for accelerating investment across the economy.

"The country needs cheap money to support the anchor sectors, particularly agro-industrialisation and tourism development, as well as the key enablers including infrastructure such as roads and the railway network, industrial parks, manufacturing and agro-processing," he said.

Musasizi explained that lowering the cost of credit would enable businesses to expand production, create jobs and increase exports, all of which are necessary to attain Uganda's long-term economic ambitions.

Musasizi said commercial banks should move beyond traditional lending and become strategic partners in national development by financing sectors that generate the greatest economic returns.

He emphasised that affordable capital is especially important for agriculture and agro-processing, where many enterprises continue to struggle with high borrowing costs despite government efforts to increase production.

The minister also highlighted tourism, manufacturing and industrial parks as sectors requiring sustained financing if Uganda is to accelerate economic transformation.

Responding to the minister's call, Absa Bank Board Chairman Keith Kalyegira said the bank fully supports government's vision of building a US$500 billion economy and is prepared to play a bigger role in financing strategic sectors.

"We are aligned with the mission of building a 500-billion-dollar economy. The bank is ready to support the government's Anchor Transformation Model sectors and help mobilise resources through innovative financing mechanisms. Absa is prepared to support the anchor sectors and also assist in mobilising resources through alternative financing instruments such as Sukuk," he said.

Kalyegira, however, stressed that maintaining investor confidence would be essential if Uganda is to attract long-term capital.

"Uganda should continue maintaining a predictable investment climate and a stable tax regime if it is to achieve its development goals," he said.

Absa Bank Uganda Managing Director David Wandera said the bank remains committed to supporting government's development agenda by leveraging its international presence to attract foreign investment.

"Absa is the third-largest bank in Uganda and remains committed to attracting international investors into the country while supporting the implementation of the Tenfold Growth Agenda," Wandera said.

He said the bank would continue working with government to finance productive investments capable of accelerating economic growth.