Bank lending in Uganda accelerated to a 39-month high in April, according to central bank statistics, on a rise in loans to manufacturing and trade.
Outstanding loans in Uganda’s commercial banking system rose 12.2% in April from a year ago, the fastest growth since a similar increase was recorded in September 2018.
The stock of outstanding loans made by commercial banks totalled 13.8 trillion in April, the figures show. Loan disbursements grew 1.6% from a month earlier, the same increase recorded in March.
“Growth in private sector credit has continued on a recovery path to its historical levels, partly supported by a recovery in economic activity, improvement in asset quality evidenced by lower non-performing loans, the lagged impact of accommodative monetary policy and continued recovery in foreign currency lending,” the Bank of Uganda said it’s monetary policy report for April.
Still, the numbers underscore the contained growth in credit growth, 38 months after it hit single-digit territory. This is the highest it’s been recorded at since rising back to above 10% in June 2018.
The central bank says this is largely due to supply-side constraints, given that loan applications continue to outstrip approvals by a large margin. Banks continue to reflect risk in their loan pricing for certain sectors and have kept credit standards tight to curb non-performing loans.
The growth in bank lending was driven by loans to the manufacturing sector which rose 26.1% year on year to Shs1.9 trillion, and credit to trade which increased by 16.8% to Shs2.5 trillion. Loans for non durable goods and services — classified under personal loans and household loans — also showed robust growth, rising 28.6% to Shs1 trillion.
Total other depository corporations credit to the private sector, which includes loans by credit institutions and micro deposit-taking institutions, rose 14.2% year on year in April to Shs14.7 trillion, the fastest rate since December 2015.
Credit growth was mainly due to a 20.1% annual increase in trade credit to Shs2.9 trillion, particularly loans to the retail trade subsector which rose 39.7% to Shs1.2 trillion. In addition, manufacturing loans increased by 26.6% to Shs1.9trillion.
