UGANDA, Kampala | Real Muloodi News | According to the Ministry of Finance Performance of the Economy report, the building, construction, and real estate sector took the largest share of approved credit in January.
Real estate taking up more credit comes as a result of a more than year-long slump that the sector has been experiencing. The report released in late March this year indicates that the sector took at least 25.9 per cent or USh326.2b of approved credit.
Personal and household loans followed closely, taking 25.2 per cent (USh317.5b), while trade took 23.1 per cent (USh290.9b). The three sectors accounted for over half of the credit extensions during the period.
The report also shows that credit approval rates have fallen to 50.1 per cent, compared to 77.6 per cent, largely due to higher risk aversion.
The share of non-performing loans increased from 5.21 per cent to 5.35 per cent. The value of approved credit dropped to USh1.25 trillion, lower than USh1.586 trillion in December last year.
During the period, the stock of private sector credit declined slightly by 0.08 per cent to USh20.138 trillion, of which USh14.06 trillion was shilling-denominated credit while USh6.07 trillion was foreign currency-denominated.
Despite the slump, lending rates for shilling-denominated loans declined to an average of 18.54 per cent from 18.91 per cent, largely due to high borrowing by large multinationals, which commercial banks consider less risky.
Foreign-currency-denominated loans reduced from an average of 8.01 per cent to 7.73 per cent.
Agriculture took 11.1 per cent (USh139.4b), while manufacturing and business, community, social and other services took 5.9 per cent (USh74.8b) and 7.2 per cent (USh90.68b), respectively.
The transport sector took at least 1.2 per cent or USh15.6b.
The Ministry of Finance reports that the economy has continued to recover due to an improvement in economic activity.
All economic indicators point upwards, with the Composite Index of Economic Activity growing by 1.3 per cent on the back of reducing inflationary pressures.
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