Ugandan banks approve UGX1.93 trillion in loans as personal credit leads

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KAMPALA, Uganda — Commercial banks and financial institutions in Uganda approved 1.93 trillion shillings in new credit during October, with personal and household loans continuing to claim the largest slice of the lending pie.

The latest Performance of the Economy report, released by the Ministry of Finance, Planning and Economic Development, shows that while the total value of approved credit dipped slightly from September’s 2.12 trillion shillings, the appetite for borrowing remains high.

Banks approved 76.7 percent of all loan applications during the month, a marginal increase from the 75.5 percent approval rate seen in September.

Personal credit takes center stage

Ordinary Ugandans and households remain the biggest drivers of credit demand. Personal and household loans accounted for 24.7 percent of all approved credit, totaling 477.5 billion shillings. This sector significantly outpaced traditional commercial drivers like trade and manufacturing.

The distribution of the 1.93 trillion shillings across other sectors included:

Trade: 312.8 billion shillings

Building, construction and real estate: 247.9 billion shillings

Business and social services: 229.7 billion shillings

Agriculture: 227 billion shillings

Manufacturing: 217 billion shillings

By the end of October, the total stock of outstanding loans to the private sector stood at 24.35 trillion shillings, reflecting a modest growth of 0.3 percent from the previous month.

Spending up, revenue down

While private lending remained steady, the government’s fiscal balance sheet faced pressure. Public spending reached 4.61 trillion shillings in October, exceeding the programmed budget of 3.81 trillion shillings.

Ministry officials noted that the 802 billion shilling overspend was primarily driven by the purchase of goods and services and increased grants to local governments.

On the revenue front, the Uganda Revenue Authority faced challenges in meeting its monthly goals. Direct domestic taxes brought in 758.58 billion shillings, falling short of the 848.32 billion shilling target. This 10.6 percent shortfall was attributed to lower-than-expected collections from pay-as-you-earn (PAYE) taxes, corporate tax and withholding tax.

Consumer tax shortfalls

The report also highlighted a dip in indirect domestic taxes, which fell 25.64 billion shillings short of the 685.47 billion shilling target.

Analysts pointed to lower consumption or collection efficiency regarding excise duty and value-added tax on staple goods and services. Revenue from sugar, spirits, soft drinks, electricity and mobile phone airtime all trended below projections during the month.

Despite these monthly hiccups, the broader fiscal year remains relatively stable. Cumulatively, domestic revenue collections through November reached 12.77 trillion shillings, representing a 95 percent performance rate against the government’s cumulative target of 13.44 trillion shillings.