Private sector credit increases by 0.27%

KAMPALA - The stock of outstanding private sector credit in Uganda saw a slight uptick of 0.27%, reaching sh22,880.45 billion (sh22.880 trillion) in January 2025 from sh22,818.96 billion (sh22.818 trillion) in December 2024.

This growth was driven by a rise in Shilling denominated credit which increased from sh16,272.98 billion (sh16.272 trillion) in December 2024 to sh16,371.30 billion (sh16.371 trillion) over the period.

Performance of the report economy for February 2025 released by the Ministry of Finance said this was on account of higher deposits to deposit-taking institutions, which availed more funds for lending.

In contrast, foreign currency-denominated credit declined over the same period, falling from sh6,545.99 billion (sh6.545 trillion) in December 2024 to sh6,509.15 billion (sh6.509 trillion) in January this year.

“This was partly due to restructuring of key loans from dollar to shilling denominated credit, in the telecommunications and communications sector,” the report said.

Economic experts say private sector credit is key in financing production and consumption, which in turn impacts the wider expansion of the economy.

Credit extensions

The report also said the value of credit approved for disbursement in January amounted to sh1,250.8 billion (sh1.250 trillion) against applications valued at sh2,090.3 billion (sh2.090 trillion), implying a 59.8% approval rate for the month.

Just like in December 2024, personal loans and household loans continued to dominate the largest share of credit approved in January at 43.1% (sh539.7 billion) of the total.

This was followed by trade at 19.5% (sh244.3 billion), building, construction and real estate at 11.0% (sh137.2 billion) and agriculture at 9.8% (sh122.4 billion).

In comparison to the same month last year, personal and household loans continued to receive the largest share of credit, increasing from 27.0% in January last year to 43.1% in January this year.

However, comparison with the same period shows that credit allocated to manufacturing and building, construction and real estate declined, the report said.