Suruma to lower bank interest rates

Feb 27, 2005

<br>DR Ezra Suruma, the finance minister, has promised to reduce high interest rates that are stifling local industries.

By Steven Odeu
DR Ezra Suruma, the finance minister, has promised to reduce high interest rates that are stifling local industries.
Suruma echoing the same concerns of the business community, said there is need for institutions that can provide capital to industries to compete in the bigger market.
“Financing (credit and the cost of borrowing) is a big limitation for industries. Interest rates have been very high for a long time. There have been some improvements of late, but they are not enough. I would like them to come down in comparison with the rest of the world with whom we are competing for markets,” he said recently during his first familiarisation meeting with the business community.
“It is complicated because a lot of money is coming into the country and the central bank has to work hard to control inflation. It is going to be difficult, but we will find a way of bringing them down,” Suruma told business people at Uganda Manufacturers Association hall in Kampala.
Recently, Suruma published a statement in the media calling for a shift in Uganda’s economic strategy, appearing to propose a return to a more interventionist model of macro-economic management.
The policy paper to be discussed by the Cabinet soon, suggested a reduction of interest rates, which would be achieved by promoting competition in the financial sector, channelling local borrowing and foreign aid into productive priorities, and limiting the Government’s borrowing to productive areas.
Commercial banks are charging interest rates of between 16% and 26%, which if compared with Kenya and Tanzania are the highest.
Daudi Migereko, the minister of trade, tourism and industry, promised support for the manufacturing sector, which he said needs to be transformed.
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