Uganda’s private sector credit stock experienced a slight contraction in July 2025, according to the latest Performance of the Economy Monthly Report released by the Ministry of Finance, Planning and Economic Development (MFPED).

The report indicates that outstanding private sector credit decreased by 0.5 percent from Shs23.90 trillion in June to Shs23.79 trillion in July 2025. This was largely driven by a reduction in both Shilling-denominated credit, which dipped by 0.06 percent, and foreign currency-denominated credit, which dropped by 1.55 percent.

“The slight decline in credit reflects a tightening in lending conditions, partly due to a rise in commercial lending rates,” the Ministry noted in the report. “Nevertheless, despite the dip in July, the overall trend since the beginning of the calendar year remains upward.”

In terms of credit extensions, banks approved Shs1.84 trillion in new loans in July 2025 out of a total Shs 3.03 trillion worth of applications, representing an approval rate of 60.9 percent for the month.

As in the previous month, Personal and Household loans took the lion’s share of approved credit at 28.2 percent, followed by Building, Construction, and Real Estate [21.7 percent], Trade [15.1 percent], Business, Community and Social Services [12.4 percent], and Agriculture [8.8 percent].

“The dominance of household lending reflects ongoing demand for consumption credit, but also raises concerns about household indebtedness,” an analyst at MFPED observed.

The cost of borrowing in local currency rose during the month, with the weighted average lending rate for Shilling-denominated credit climbing to 19.65 percent in July, up from 19.07 percent in June.

“This increase was influenced by prevailing market conditions and liquidity tightening,” the Ministry said. In contrast, foreign currency lending rates eased slightly, falling from 8.78 percent to 8.35 percent. Despite the rise in the local currency lending rate, the Bank of Uganda has maintained its central bank rate [CBR] at 9.75 percent.

Recently, President Yoweri Museveni criticised commercial banks for encouraging dependency and hindering business growth in Uganda by charging high and unreasonable interest rates.

Speaking at the inaugural Uganda Development Finance Summit at the Commonwealth Resort in Munyonyo on September 1, 2025, the President said interest rates over 20 percent are preventing Ugandans from making productive investments.

“How do you lend at 22 percent per annum when inflation is below 5 percent? At such rates, people cannot do serious business; they can only engage in quick import trade of perfumes and wines. These banks are engines of Africa’s dependence,” Museveni remarked.

The government raised Shs1.13 trillion from three domestic auctions of government securities in August 2025. Of this, Shs717.34 billion was used to refinance maturing securities, while Shs410.14 billion went towards financing other items in the national budget.

Annualised yields on Treasury Bills showed mixed movements. The 91-day bill yield dropped slightly to 11.5 percent [from 11.6 percent], while the 182-day bill yield rose to 13.5 percent [from 13.2 percent]. The 364-day bill yield remained unchanged at 15.3 percent.

Investor interest remained strong, with all Treasury Bill auctions oversubscribed. The average bid-to-cover ratio stood at 1.69, reflecting robust demand for short-term government paper.

Yields on Treasury Bonds saw notable downward movements, particularly for longer-tenor securities. The five-year and 15-year bonds registered yields of 15.5 percent and 17.7 percent, respectively, down from 16.8 percent and 17.8 percent in previous issuances. The two-year bond held steady at 15.8 percent, while the newly introduced 25-year bond debuted with a yield of 16.0 percent.

The 25-year bond, issued for the first time on August 6, 2025, marked a milestone in Uganda’s domestic debt strategy.

“This issuance is part of government efforts to extend the maturity profile of domestic debt and reduce refinancing risks,” said a senior official at the Ministry. “The strong investor appetite for this bond underscores growing confidence in Uganda’s long-term fiscal and monetary outlook.”

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President Yoweri Kaguta Museveni has once again called on Uganda’s political leaders to embrace peaceful dialogue and reject violence as the nation prepares for the 2026 general elections.

Speaking at the Inter-Party Organisation for Dialogue (IPOD) Summit held on September 18, 2025, at Kololo Ceremonial Grounds, President Museveni stressed that Uganda’s progress depends on leaders diagnosing societal challenges correctly and applying peaceful solutions rather than resorting to divisive politics.

The summit, convened under the theme “Together for a Peaceful and Sustainable Uganda,” brought together leaders of six political parties: the NRM, DP, UPC, FDC, JEEMA, and PPP.

In his keynote address, delivered as both NRM Chairman and IPOD Summit Chair, President Museveni urged opposition leaders to adopt peaceful engagement, arguing that stability allows for correction of mistakes over time.

“As we have seen in the last 40 years, the NRM has revived Uganda’s economy. Although we still face challenges, we are much stronger than ever before. Even if one has a wrong understanding, as long as they are not violent, the country will remain stable, and in the future, mistakes can be corrected,” he said.

The President emphasized that Africa’s biggest tragedy stems from poor diagnoses of societal problems combined with violent responses.

“Even when you make mistakes, if there is peace, there is room for correction. But when you combine wrong ideas with violence, you get a total breakdown,” he added.

Reflecting on his 65-year political career, Museveni likened politics to medicine, warning that leaders who misdiagnose their societies risk collapse. He also reiterated the NRM’s four guiding principles: patriotism, Pan-Africanism, socio-economic transformation, and democracy.

The President further weighed in on the recent teachers’ strike, stressing the need to prioritize limited national resources. Citing Soroti Flying School, he explained how prioritizing pilots and engineers over equal pay for all staff saved the institution from collapse.

At the same event, Museveni officially handed over the IPOD chairmanship to Democratic Party President General, Hon. Norbert Mao, after five years of NRM leadership.

“Thank you for having trusted us, NRM, for the last five years with the leadership. I now peacefully hand over,” Museveni remarked.

NRM Secretary General Richard Todwong, Chair of the IPOD Council of Secretaries General, commended Museveni for sustaining IPOD after international donors withdrew support.

“We were orphaned as IPOD when donors left, but as a father, you picked us up and nurtured us. You have shown that homegrown solutions can address African challenges,” Todwong said.

In his acceptance speech, DP’s Norbert Mao pledged to steer IPOD towards consensus and inclusivity, committing to a peaceful 2026 election.

“Our agenda will be to ensure that we have a peaceful election, a free and fair process, and that we shall continue to talk honestly about the problems we face, rather than attacking each other. IPOD is about finding common ground because the unity of Uganda is paramount,” Mao said.

He praised Museveni for his gesture earlier this year of releasing nearly 70 political detainees following DP-NRM dialogue, describing it as “a small but significant step towards reconciliation.”

UPC President Jimmy Akena reaffirmed his party’s commitment to dialogue, while FDC’s Patrick Oboi Amuriat urged that IPOD must yield tangible results and called for clemency for political prisoners. JEEMA’s Asuman Basalirwa and PPP’s Saddam Gayira echoed calls for peaceful, respectful engagement among parties.

IPOD Executive Director, Dr. Lawrence Sserwambala, reminded leaders that Uganda’s youthful population remains vulnerable to manipulation into violence and urged the platform to nurture them as “champions of peace.”

“Uganda is watching us. History will judge us by the choices we make. Let us choose peace, let us dialogue, let us put Uganda first,” Dr. Sserwambala said.

The summit drew broad participation, including Speaker of Parliament Anita Among, Electoral Commission Chairperson Justice Simon Byabakama, and delegations from all IPOD member parties, signaling wide support for dialogue as a cornerstone of Uganda’s democratic journey.

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The Supreme Court has handed businessman Hassan Basajjabalaba and his companies a major legal victory after setting aside a Constitutional Court ruling that had ordered them to refund more than Shs142 billion paid out as compensation for cancelled city market contracts.

The long-running dispute traces back to the early 2000s when Kampala City Council (KCC) leased out management of Nakasero, St. Balikuddembe (Owino), Shauri Yako, Nakawa markets, and Constitutional Square to firms associated with Bassajjabalaba, including Haba Group, Sheila Investments, Victoria International, and First Merchant International Trading.

KCC later annulled the contracts over irregularities, prompting the companies to seek compensation. The government eventually paid and guaranteed loans amounting to Shs142 billion through Bank of Uganda and commercial banks.

In 2012, Legal Brains Trust challenged the payments in the Constitutional Court, insisting the contracts were unconstitutional because they lacked the Attorney General’s clearance as required under Article 119(5). The petition also alleged fraud in the compensation process.

The Constitutional Court sided with the petitioners in 2020, voided the contracts, and directed the Attorney General to recover the billions already disbursed.

But in a unanimous decision, the Supreme Court struck down that ruling.

Delivering the lead judgment, Justice Monica Mugenyi explained that the Constitutional Court had stepped outside its jurisdiction.

“The Constitutional Court is not a trial court. Matters involving allegations of fraud or corruption must be proved through evidence, which can only be tested before the High Court or by way of enforcement proceedings under Article 50,” she stated.

The judges also ruled that the requirement for Attorney General approval does not apply to local government contracts.

“The word ‘Government’ in Article 119 does not cover municipal authorities like KCC,” the ruling clarified — a finding that shields many past and future local government agreements from similar constitutional challenges.

As a result, the order for recovery of funds from Bassajjabalaba and declarations against senior officials, including former Finance Minister Syda Bbumba and the late Attorney General Khiddu Makubuya, were set aside. Both were censured by Parliament in 2012 over their involvement in the compensation.

While the tycoon and his firms are off the hook for now, the government still retains the right to pursue a civil claim to recover the money.

Notably, the Supreme Court declined to award costs, stressing that the case raised questions of significant public interest.

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