Commercial lending rates in Uganda eased slightly in September 2025, according to the Performance of the Economy Monthly Report for October 2025.
The weighted average lending rate for shilling-denominated credit edged down to 18.45 percent in September 2025 from 18.46 percent in August 2025.
Meanwhile, the weighted average lending rate for foreign currency-denominated credit fell more noticeably, to 8.15 percent in September 2025, from 8.34 percent the previous month.
“Interest rates remained relatively stable on account of low and stable inflation, the Bank of Uganda’s decision to maintain the Central Bank Rate (CBR)at the same level as the previous month, and reduced risk as shown by the decline in the ratio of non-performing loans to total gross loans,” the report notes.
The report adds that the Bank of Uganda kept the CBR unchanged at 9.75 per cent in October 2025, marking the thirteenth consecutive month at this level.
“This rate was considered appropriate to sustain price stability and anchor inflation around the 5 per cent target while supporting economic growth and socio-economic transformation,” it states.
According to the report, the stock of outstanding private sector credit grew by 1.0 percent to Shs24.29 trillion in September 2025, up from Shs24.05 trillion in August.
“This increase was observed in both shilling- and foreign currency-denominated credit, which rose from Shs17,417.05 billion and Shs6,631.18 billion in August 2025 to Shs17,481.48 billion and Shs6,805.94 billion respectively in September 2025,” the report says.
It attributes the growth mainly to stronger demand for credit driven by improved economic activity and recent reductions in lending rates.
In September 2025, credit approved for disbursement totaled Shs2.12 trillion, out of a total of loan applications worth Shs2.8 trillion. “This represents an approval rate of 75.5 per cent, up from 61.8 per cent in August 2025, when loan applications totalled Shs2,874.4 billion and Shs1,777.5 billion was approved for disbursement,” the report states.
The improved performance is largely attributed to increased lending to manufacturing, trade, and the building, mortgage, construction, and real estate sectors, all key drivers of economic growth.
As in the previous month, Personal and Household Loans accounted for the largest share of credit disbursements, representing 25.6 percent [Shs544.05 billion] of total approved credit in September 2025.
Other major recipients included Trade at 23.0 percent [Shs487.92 billion], Manufacturing at 13.0 percent (Shs276.25bln, Business, Community, Social and Other Services at 10.6 percent (Shs223.89 billion), Building, Mortgage, Construction and Real Estate at 10.5 percent (Shs222.29 billion), and Agriculture at 9.6 percent (Shs204.56 billion)
