Government to recapitalize UDB

May 31, 2016

"There was pressure to privatise the Uganda Commercial Bank"

Government is to capitalize the Uganda Development Bank (UDB) to give low interest loans to manufacturers and those in the Agriculture sector.

According to President Yoweri Museveni, this will speed up government efforts to modernize agriculture and increase the manufacturing of goods made in Uganda.

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

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

"I wanted to see the development of the 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," said Museveni.

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.

Museveni made the remarks while delivering the State of the Nation address which marks the beginning of the first session of the 10th Parliament at the Kampala Serena Hotel.

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