Uganga: Banks raise lending rates due to failing economic conditions

Banks, including Standard Chartered and Housing Finance, have increased base lending rates as Uganda’s economic condition continues to deteriorate on the back of rising inflation.

Standard Chartered increased its base rate to 20.5 per cent, up from 19.5 per cent, barely two months after it revised it from 18.5 per cent in April.
Housing Finance increased its rate from 18 to 19 per cent.
The banks announced their new rate in a media notices to customers on Friday last week.

High inflation in the country that shot to 16 per cent in May 2011 before relaxing to 15.8 per cent in June has exerted pressure on the operations of commercial banks, forcing them to increase the rates.

Most commercial banks have increased their lending rate due to tight liquidity conditions that have pushed up short term rates.

Kenya Commercial Bank (KCB) increased its rate from 18 to 19 per cent while Stanbic increased from 15 per cent to 17.5 per cent recently.

Bank of Uganda, Uganda’s central bank also increased its lending rate by 1 per cent.

Increasing rates is set to make loans more expensive, something that affect the private sector, especially small businesses.