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Uganda bucks regional trend in private
sector lending growths: report

NAIROBI (Xinhua) -- Uganda bucked the regional trend in East Africa to record growths in private sector lending in all segments other than the transport and the building and construction segments over the past two years, said an industry report released in Nairobi on Tuesday.

The report by ICEA Lion Asset Management showed that households and the trade industry accounted for over 40 percent of total private sector lending in East Africa since September 2016, while manufacturing accounted for 10 to 15 percent.

There are also the sectors that tend to have the largest share of small and medium enterprises.

Despite being one of the major recipients of private sector credit, the manufacturing sector has continued to record slow growth in terms of economic output, indicating that this crucial sector faces unique constraints that need to be addressed, the report said.

It said that Uganda stands out in terms of private credit growth especially in the agriculture and real estate segments.

The real estate sector accounted for 13 percent of the total private sector credit in Kenya, noticeably higher than that in Uganda and Tanzania.

Agriculture, the main economic activity in the region, received between 5 and 7 percent of private sector lending in Kenya and Tanzania over the last two years, while the number was above 10 percent in Uganda.

Uganda had a larger share of private credit for the building and construction segment, at 16 percent, compared with the less than 5 percent in Kenya and Tanzania, the report said.

The study also showed that not all sectors have felt the credit crunch equally since Kenya introduced an interest rate cap in September 2016.

According to the report, credit flows to the trade and manufacturing sectors have remained fairly constant at between 400 million and 500 million U.S. dollars in the 20 months before and after the rate cap.

In contrast, credit flows to the real estate and private households have halved since the introduction of the rate cap, while the transport and communications sector has seen a 350 million dollar decline in private sector credit flows since September 2016, it said.



Uganda gets US five million dollars loan from India to boost SME growt

KAMPALA Uganda (Xinhua) -- Uganda Development Bank (UDB) has borrowed 5 million U.S. dollars from India to boost the growth of small and medium-sized enterprises (SME) and facilitate production in the east African country.

Patricia Ojangole, chief executive of UDB, on Monday said the seven-year loan from the Export Import Bank of India will increase UDB’s capacity to provide medium and long-term development finance.

She said the money will benefit entrepreneurs whose businesses require inputs from India in the form of raw materials, tools, agriculture equipment and various forms of technology.

“As a country, we still lack critical production inputs that we have to import from countries like India where they are available. That is why we need specific funding to support that kind of production,” Ojangole said.

“A lot of SMEs are currently importing agriculture equipment from India, because India has the technology we don’t have, and we need to support these SMEs,” she said during the loan agreement signing ceremony.

Ojangole said the money will go toward supporting enterprises in the agriculture, agro-industrialization, manufacturing, tourism, infrastructure, oil and gas and human capital development.

She said her bank will promote appropriate technology transfer by financing the purchase of modern and appropriate productive equipment, especially in agro-processing and manufacturing sectors.

Ojangole said aside from the new loan, the bank still needs approximately 20 million dollars to satisfy the current demand from SMEs waiting to procure agro-value chain equipment from India.

Depak Kujur, east Africa resident representative of the Export Import Bank of India, said his bank is willing to offer additional funding to help grow entrepreneurship in Uganda.

“Although we have known each other for a long time, this is the first time we are partnering, and for this, we need to see how the money will be handled and then increase financing,” he said.


Uganda bankers warn negative social media reporting to affect industry

KAMPALA Uganda (Xinhua) -- Uganda Bankers Association on Wednesday warned that the banking industry is likely to get a backlash if negative reporting continues on social media.

The association, which brings together all commercial banks in the country, said in a statement that targeted and calculated negative reporting about the banking sector has the potential of undermining confidence in the industry.

The association added that this risks triggering undesired panic with unintended adverse consequences for the economy.

“We are confident that the banking and overall financial sector is stable and resilient, however maintaining stability remains a responsibility for all of us and not only the regulator and the financial institution,” the statement said.

“We further count on the support of the relevant authorities to continue providing the right environment for sustained growth for the banking and financial sector.” it said.

There have been a series of social media reports questioning how Bank of Uganda, the country’s central bank, liquidated Crane Bank and sold it to DFCU Bank. The central bank has denied any wrong doing.



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