The Minister for Finance Planning and Economic Development, Henry Musasizi, has called on commercial banks to lower lending rates and increase financing to productive sectors as the country seeks to grow its economy tenfold by 2040.
Musasizi made the remarks on Friday, September 18, while speaking at the 9th Annual Bankers Conference held at the Marriott Hotel.
He said Uganda’s ambition to expand its economy from US$50 billion in the 2025/26 financial year to US$500 billion by 2040 would require affordable and long-term financing from the banking and financial sector.
“Government cannot deliver Uganda’s transformation alone. We need you and indeed, the banking and financial sector is central to the tenfold growth strategy,” Musasizi said.
The minister said the cost of borrowing remained a major concern, noting that average lending rates currently range between 18% and 20%.
He urged banks to review their lending models and find ways of reducing the cost of credit, while improving credit assessment and making better use of available data within the existing legal framework.
Musasizi also encouraged financial institutions to expand risk-sharing and guarantee mechanisms, saying such measures could help reduce the risk premium attached to loans and make financing more accessible to businesses and investors.
He further called for a shift in lending towards sectors identified under the government’s ATMS priorities. These include agro-industrialisation, tourism, minerals including oil and gas, and science, technology and innovation.
According to Musasizi, banks should reduce their concentration on trade financing and provide more credit to sectors with the potential to increase production, investment and economic activity.
The minister also asked banks to work closely with the Capital Markets Authority to deepen access to long-term financing through infrastructure bonds, project bonds, green bonds and equity financing.
He said financial inclusion must also be expanded, particularly among the eight million farmers targeted for commercialisation under the Parish Development Model.
“These farmers must be enabled to save, borrow, insure, receive payments and invest,” he said.
Musasizi said the government is targeting an increase in private sector credit from Shs28 trillion currently to Shs490 trillion by 2040. Capital markets mobilisation is also expected to rise from Shs1.5 trillion to Shs440 trillion.
He said the government would continue maintaining macroeconomic stability, implementing financial sector reforms and working to expand the capitalisation of Uganda Development Bank to support the country’s long-term growth ambitions.