Uganda’s lending rates showed mixed trends in February 2026, with the cost of borrowing in local currency inching upward while rates on foreign currency loans continued to ease, reflecting shifting dynamics in the country’s credit market.
According to the March 2026 Performance of the Economy report released by the Ministry of Finance, Planning and Economic Development, the weighted average lending rate on shilling-denominated loans rose slightly to 18.73 percent in February, up from 18.33 percent recorded in January.
The ministry noted that despite the marginal increase, lending rates in local currency have largely remained stable in recent months, supported by improved macroeconomic conditions and a decline in non-performing loans.
In contrast, borrowing in foreign currency became cheaper during the same period, with the weighted average lending rate dropping to 7.09 percent from 7.21 percent in January, extending a downward trend that has been observed in recent months.
Meanwhile, the Bank of Uganda maintained the Central Bank Rate at 9.75 percent in March 2026, a level that has been in place since October 2024. The steady policy stance underscores the central bank’s focus on maintaining price stability while supporting economic growth.
Data from the report further shows that total outstanding credit to the private sector registered a slight decline of 0.2 percent, falling to Shs 25,377.04 billion in February from Shs 25,427.94 billion in January. The drop was mainly attributed to a reduction in foreign currency-denominated loans, which contracted by 0.8 percent to Shs 7,549.9 billion.
However, lending in local currency posted a modest increase of 0.05 percent, rising to Shs 17,827.2 billion, partly cushioning the overall decline in credit.
Sectoral analysis indicates that the contraction in credit was most pronounced in agriculture, trade, and the building and real estate sectors. Analysts link this trend to improved repayment capacity among borrowers, as businesses continue to benefit from stronger economic activity, leading to a reduction in loan defaults.
Despite the slight dip in outstanding credit, new lending activity gained momentum during the month. Financial institutions approved loans worth Shs 1.74 trillion in February, a sharp increase from Shs 1.1 trillion recorded in January.
The rise in credit approvals was largely driven by increased lending to business, community and social services, as well as trade and manufacturing sectors.
Personal and household loans accounted for the largest share of approved credit at 30.1 percent, followed by trade at 19.9 percent and business services at 17.6 percent, highlighting sustained demand for both consumption and business financing across the economy.
