Gov't to recapitalize Uganda Development Bank

May 31, 2016

The move will speed up government efforts to modernize agriculture and increase locally manufactured goods.

Government is to recapitalize the Uganda Development Bank (UDB) to extend low interest loans to manufacturers and farmers.

According to President Yoweri Museveni, the move will speed up government efforts to modernize agriculture and increase locally manufactured goods.

"Government is stepping up efforts to recapitalize the Uganda Development Bank because if you think you can modernize the agriculture sector using commercial bank, that is a mistake," said Museveni.

He said that there was pressure to privatize the Uganda Commercial Bank (UCB) claiming that the banks would lower interest rates.

"I wanted to see the development of private sector through the banking sector by lowering interest rates because of the competition but this has not worked out," he said.

He explained that the argument was that since banks would be competing, they would then lower their rates.

"The fact shows that it has not worked, even when the inflation rate is 5%, the banks still lend up to 23% as of now. And these are fueling the craze of importing by giving loans to importers who are very rich," the President said while delivering State-of-the Nation Address.

He also warned that as result of the high interest rates, many people have not paid back because they either did not understand the conditions of the loans or have acquired huge amounts of money and have failed to pay hence losing their property.

 

 

 

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