• Wed. Nov 29th, 2023

Bank of Uganda to Give Credit Relief Extension Case-by-Case

UGAND, Kampala | Real Muloodi News | The Bank of Uganda will grant borrowers in sectors that are still facing the impact of the pandemic and lockdown a 12-month extension on credit relief measures. The impact on various sectors, such as tourism, hospitality, entertainment, and education, has been severe.

Since the pandemic’s beginning and its unpredictability, the Central Bank offered 10-month credit relief measures to aid certain sectors against any impact of the pandemic. The measures included a moratorium on debt collection by banks and restructuring credit facilities such as an extension of the period, amoung other measures. 

Over 400 commercial properties used collateral for loans had been put up for sale by banks as borrowers cannot pay back loans. 

Speaking on this issue, Dr Adam Mugume, the Executive Director of Research at Bank of Uganda, explained that only severely affected sectors such as tourism, hospitality, entertainment, and education will receive the 12-month extension. The bank will examine the sector on a case-by-case basis.

Forecasted Economic Growth

Economic growth, according to predictions, is being revised downwards for the year by 0.5 per cent as economic activities remain sluggish. 

In efforts to increase economic activity, BOU has reduced the cost of money, allowing commercial banks to borrow and lend it to the public. However, despite these efforts and low-interest rates, borrowing remains low.

 “Interest loans have dropped to as low as 17 percent from a high of 23 percent in less than two years. This is not as low as would be expected because of the various factors that affect the cost of business for the banking industry,” says Wilbrod Owuor, the Executive Director of, Uganda Bankers Association.

According to bankers, the interest rate is likely to reduce as technology and digital platforms become more common. In addition, the low CBR set by BOU will contribute to the falling of interest rates. 

The current rate on average is 17% which makes it a prime time to get a loan. 

However, it is also important to note some banks’ unwillingness to lend money to specific subsets of people. BOU explained banks are worried about lending money to small and micro enterprises ,as they fear they will not pay back because of the current situation.

Mugume emphasises the government’s role in such a situation; he explains that the government needs to step in and help such borrowers by putting money into the Uganda Development Bank for online lending to sectors in need. 

Special Drawing Rights–International Monetary Fund

According to the IMF’s website, their board has introduced a Special Drawing Rights (SDR) fund to countries in need. The allocation is equivalent to 650 billion dollars. 

Uganda is hoping to receive approximately 493 million dollars, and the SDR allocation expects to increase the reserve cover to 4.5 months of imports.

However, if the expected budget financing does not materialise, the SDR will meet the financing gap.

The SDR will also support the government in financing relief measures for the public.


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