Business 1 April 2026 Daily Monitor (Uganda)
Uganda's Loan Approvals Hit Five-Year Low Amid Bank Caution
Commercial banks in Uganda approved just 39.2 percent of loan applications in January 2026, the lowest in five years, despite a slight uptick in private sector credit. This reflects lenders' growing risk aversion, particularly in key sectors like trade and agriculture. Source: https://www.monitor.co.ug/uganda/business/markets/loan-approvals-decline-to-the-lowest-levels-in-years-5410466
Loan approvals in Uganda plummeted to one of the lowest levels in five years during January 2026, with banks approving only Shs1.11 trillion out of Shs2.84 trillion in applications. This marked an approval rate of 39.2 percent, a steep drop from 73 percent the previous month.
The decline highlights increased caution among lenders, who reduced exposure to vulnerable sectors including trade, manufacturing, and agriculture. Despite this, total private sector credit edged up by Shs81.24 billion to Shs25.41 trillion, though growth slowed to 0.3 percent from 1.3 percent prior.
Shilling-denominated loans drove the modest rise, increasing to Shs17.82 trillion, while foreign currency credit fell slightly to Shs7.61 trillion due to lower deposits in those currencies.
Household and personal loans dominated approvals at 41.4 percent, up sharply from 23.8 percent in December. Construction and real estate followed at 15.2 percent, with trade at 13.2 percent, social services at 11 percent, and agriculture at 9 percent.
Borrowing costs also climbed, with shilling loan rates rising to 18.33 percent from 18 percent, while foreign currency rates dipped to 7.21 percent. The Central Bank kept its policy rate at 9.75 percent and hiked the cash reserve requirement to 11 percent to manage liquidity.
This tightening signals potential challenges for investment and growth ahead.
Source: Daily Monitor (Uganda)