Manufacturing to drive lending, says I&M Bank
Mr Sam Ntulume. Photo / File
What you need to know:
- According to Mr Sam Ntulume, the I&M chief operations officer, the confidence in manufacturing to drive lending is premised on government’s commitment to cut the import bill through import substitution.
I&M Bank has said it is confident that manufacturing and agri-business will be the key movers of lending for financial institutions in the near future.
Speaking during a press briefing, in which the bank highlighted a number of activities to celebrate one year in Uganda, Mr Sam Ntulume, the I&M chief operations officer, said the confidence is premised on government’s commitment to cut the import bill through import substitution.
“Going forward we shall put key emphasis on small and medium enterprises that are engaged in import substitution industries and those that are adding value to agricultural exports,” he said, noting that bankers under Uganda Bankers Association, had already endorsed the creation of a Shs1 trillion fund to support manufacturers in the export sector.
“As bankers we resolved to support government in its endeavour of growing the manufacturing sector. However, how much each bank will commit to the cause, is yet to be known,” Mr Ntulume said, but noted lending has been curtailed by the increase in the Central Bank Rate (CBR).
Bank of Uganda has since June increased the CBR from 6.5 percent to 10 percent, thus increasing the cost of commercial borrowing to between 19 percent and 24 percent.
“When the CBR moves it affects all businesses including banks. Of course, borrowers don’t want to pay high interest rates but it is a decision of the Central Bank,” Mr Ntulume noted.
Currently inflation is at 10.7 percent with some food crop prices increasing by more than 25 percent.
