Business
Loan approvals fall for second month in a row – report
The report said although the loan approval rate declined for the second consecutive month in April 2026, it remained above the rate recorded at the beginning of the calendar year (38.7%), indicating that lending activity remained relatively supportive despite the month-on-month decline.
Uganda’s lending institutions approved only sh2.053 trillion out of sh4,074 trillion in loan applications in April 2026. (Internet photo)
By: Umaru Kashaka, Journalist @New Vision
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Uganda’s lending institutions approved only sh2.053 trillion out of sh4,074 trillion in loan applications in April 2026, translating into an approval rate of 50.4%.
This is according to the Ministry of Finance’s Performance of the Economy Report for May 2026.
The report said although the loan approval rate declined for the second consecutive month in April 2026, it remained above the rate recorded at the beginning of the calendar year (38.7%), indicating that lending activity remained relatively supportive despite the month-on-month decline.
The personal and household loans sector continued to account for the largest share of approved credit in April 2026, receiving 32.0% of the total, up from 26.7% received a month earlier.
This was followed by building, construction and real estate (14.2%), trade (12.1%), business, community, social and other services (10.5%), and mining and quarrying (10.1%).
“Notably, loan approvals to the mining and quarrying sector increased significantly in April 2026,” it said.
The notable pick-up in loan approvals for the sector reflected growing investment activity and financing needs associated with extractive industries, supported by heightened expectations surrounding developments in the oil and gas sector as well as continued activity in gold-related operations.
Financial experts say borrowers must complete the credit approval process in order to qualify for a loan.
They say through this process, a lender assesses the ability and willingness of a borrower to fully repay (interest and principal) a loan on time.
This was followed by building, construction and real estate (14.2%), trade (12.1%), business, community, social and other services (10.5%), and mining and quarrying (10.1%).
“Notably, loan approvals to the mining and quarrying sector increased significantly in April 2026,” it said.
The notable pick-up in loan approvals for the sector reflected growing investment activity and financing needs associated with extractive industries, supported by heightened expectations surrounding developments in the oil and gas sector as well as continued activity in gold-related operations.
Financial experts say borrowers must complete the credit approval process in order to qualify for a loan.
They say through this process, a lender assesses the ability and willingness of a borrower to fully repay (interest and principal) a loan on time.
Any loan extended by a financial institution is subject to this process to manage the lender’s level of risk exposure.
Experts also say low borrowing means dismal investment, low jobs and low taxes.
Interest rate movements
Similar to April 2026, the latest report said interest rates registered varying trends for the Central Bank Rate (CBR), commercial bank lending rates, and yields on treasury bills and treasury bonds in May this year.
The CBR is the rate at which the Bank of Uganda lends to commercial banks, which in turn lend to the public at interest.
The Monetary Policy Committee maintained the CBR at 9.75% in May. “The current monetary policy stance is deemed to be appropriate and consistent with prevailing macroeconomic conditions,” the report said.
It also noted that while acknowledging the inflationary risks arising from developments in the Middle East, the Monetary Policy Committee assessed that existing policy settings remained sufficient to support price stability.
The report referenced the United States and Israel’s war with Iran, which broke out on February 28, disrupting global energy supply chains and air travel.
Experts also say low borrowing means dismal investment, low jobs and low taxes.
Interest rate movements
Similar to April 2026, the latest report said interest rates registered varying trends for the Central Bank Rate (CBR), commercial bank lending rates, and yields on treasury bills and treasury bonds in May this year.
The CBR is the rate at which the Bank of Uganda lends to commercial banks, which in turn lend to the public at interest.
The Monetary Policy Committee maintained the CBR at 9.75% in May. “The current monetary policy stance is deemed to be appropriate and consistent with prevailing macroeconomic conditions,” the report said.
It also noted that while acknowledging the inflationary risks arising from developments in the Middle East, the Monetary Policy Committee assessed that existing policy settings remained sufficient to support price stability.
The report referenced the United States and Israel’s war with Iran, which broke out on February 28, disrupting global energy supply chains and air travel.