KAMPALA, Uganda — Personal and household credit has emerged as the primary driver of lending in Uganda, as the total stock of outstanding private sector loans climbed to 24.35 trillion shillings in October.
The latest Performance of the Economy report from the Ministry of Finance, Planning and Economic Development shows a resilient appetite for individual credit, even as overall monthly disbursements experienced a slight contraction.
While total approved credit for October reached 1.93 trillion shillings—down from 2.12 trillion shillings in September—the approval rate for loan applications actually rose to 76.7 percent.
The rise of the individual borrower
Personal and household loans accounted for 24.7 percent of all credit approved in October, totaling 477.5 billion shillings. This sector continues to outpace traditional pillars of the economy, such as trade and agriculture, signaling a heavy reliance on credit for domestic and individual needs.
The 1.93 trillion shillings in approved credit was distributed across several key sectors:
- Trade: 312.8 billion shillings
- Building, construction and real estate: 247.9 billion shillings
- Business, community and social services: 229.7 billion shillings
- Agriculture: 227 billion shillings
- Manufacturing: 217 billion shillings
The 0.3 percent growth in the total stock of private sector loans indicates a cautious but steady expansion in the credit market.
Fiscal pressures and revenue gaps
The surge in private borrowing comes as the government grapples with its own fiscal challenges. In October, government expenditure reached 4.61 trillion shillings, exceeding the planned budget of 3.81 trillion shillings by 802.7 billion shillings. This overspend was largely attributed to higher costs for goods, services and grants to local governments.
While spending climbed, revenue collections struggled to keep pace. The Uganda Revenue Authority collected 758.58 billion shillings in direct domestic taxes, falling roughly 10 percent short of its 848.32 billion shilling target. Finance officials noted that lower collections from corporate tax, withholding tax and pay-as-you-earn (PAYE) drove the shortfall.
Consumption tax declines
The report also detailed a 25.64 billion shilling deficit in indirect domestic taxes. Revenue from value-added tax and excise duty on common consumer goods—including sugar, spirits, soft drinks, electricity and mobile phone airtime—was lower than anticipated.
Despite the monthly fluctuations, the Ministry of Finance maintains that the cumulative performance for the financial year remains relatively on track. Total domestic revenue collected through November amounted to 12.77 trillion shillings, representing 95 percent of the 13.44 trillion shilling cumulative target.
