The Ministry of Finance has revealed that credit approvals for October 2024 experienced a marginal increase, rising from Shs1.568 trillion in September to Shs1.589 trillion.
This growth is largely attributed to businesses securing working capital ahead of the festive season, particularly in the business services sector.
The data, contained in the Performance of Economy Monthly Report, notes: "The higher approvals were driven by increased demand for working capital in the business services sector as firms prepared for the festive season."
A significant improvement in the rate of loan approvals was also recorded. According to the report, the approval rate rose sharply from 55.2% in September to 75.4% in October 2024, reflecting a more responsive and confident banking sector.
Personal and household loans continued to dominate credit activity in October, with loans worth Shs445 billion approved, representing 28% of the total credit extended. This trend underscores increased consumer spending in preparation for the holiday season.
The report further highlights: "Just like in the previous month, personal loans and household loans accounted for the largest share of total credit approved for lending in October 2024."
The business community, social, and other services sector followed, with Shs254 billion approved, accounting for 16% of the total credit.
The trade sector secured Shs248 billion (15.6%), while building, construction, and real estate attracted loans worth Shs231 billion (14.5%). Meanwhile, the manufacturing sector received Shs211 billion, contributing 13.3% to the total credit approved.
The Ministry also reported a rise in the stock of outstanding private sector credit, which increased by 0.3%, from Shs22.209 trillion in September to Shs22.270 trillion in October.
This growth was supported by increases in both shilling-denominated and foreign currency-denominated loans.
According to the report: "The growth in outstanding private sector credit was driven by a rise in both the shilling and foreign currency-denominated credit."
Financial analysts believe the uptick in borrowing reflects heightened economic activity as businesses and households gear up for the end-of-year festivities.
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Increased consumer demand during this period is expected to boost sectors like retail, trade, and hospitality, providing significant economic momentum.
With Shs1.5 trillion extended in loans, the festive season promises to stimulate economic activity across Uganda. The Ministry of Finance remains optimistic, noting that the improved loan approvals signal growing confidence in both businesses and households as the year comes to a close.
