By BERNARD BUSUULWA In the financial year 2023/24, Uganda saw the total value of refinanced government securities surpass half of the amount of Treasury Bills and bonds issued, indicating potential higher borrowing costs. Refinancing involves extending the duration of expiring securities, paying outstanding interest charges, and applying new pricing terms. The Finance Ministry data revealed that government-issued Treasury Bills and bonds were valued at Ush15,021.3 billion ($4 billion) while refinanced securities totaled Ush8,358.5 billion ($2.2 billion). A significant portion was allocated to mainstream budget activities, highlighting the country’s debt management challenges. Refinancing transactions primarily target Treasury Bonds with high-interest rates,…

In Africa, despite promises to support agriculture, the sector still struggles to access credit due to various factors. With lenders focusing on more profitable areas and interest rate controls being ineffective, farmers face high borrowing costs. Commercial banks often divert agricultural credit funds to other sectors, limiting support for farmers. The share of agricultural credit in African economies has remained below 20% since 2015, contributing to the sector’s challenges. In countries like Ghana and Kenya, banks face difficulties in accurately categorizing agricultural loans, leading to underfunding. Despite efforts to improve access to credit, challenges persist, such as poor documentation by…

Unlocking Higher Returns in Uganda through Fixed Deposits Looking for higher returns in Uganda? Stiff monetary policies and low customer deposit growth have led lenders to focus on fixed deposits. The Central Bank Rate (CBR) hike to 10 percent in response to shilling depreciation has caused commercial banks to raise lending rates and look to fixed deposits for liquidity. Ugandan financial institutions’ deposits increased by 3.4 percent to Ush34.8 trillion by March 2024, with fixed deposits becoming a popular choice for compliance requirements. Average interest rates for fixed deposits have risen from eight percent to 11 percent, offering attractive returns…

Challenges Facing Uganda’s Banking Industry in 2024 In the first three months of 2024, Uganda’s banking industry faced economic uncertainty, rising credit default risks, and liquidity challenges. This was driven by low deposit growth and a high-interest rate environment. The Central Bank reported an increase in the overall non-performing loan ratio, with trade, commerce, real estate, and community services sectors registering the highest default rates. Despite this, the banking sector saw a growth in net profits and interest incomes. However, challenges in accessing foreign currency and offshore investor outflows impacted deposit growth and investment in government securities. Fund managers like…

By BERNARD BUSUULWA As budget cuts in both the public and private sectors continue to hit Uganda, businesses in the fast-moving consumer goods and hospitality industries are feeling the pinch. Lower sales and decreased foot traffic are being observed in the market, signaling a challenging first half of 2024. The government’s spending cuts, attributed to reduced tax revenues and high debt costs, have affected various ministries and agencies. A supplementary budget of Ush1.3 trillion ($342 million) was introduced to address emerging needs. While distributor sales of consumer goods have dipped in Q1 2024, restaurants are also witnessing a decline in…