Ugandan manufacturers are calling for cheaper financing, saying the high cost of borrowing from commercial banks is limiting production, business expansion and job creation across the industrial sector.
Manufacturers say commercial lending rates currently ranging between 18 and 24 percent make it difficult for businesses to access the capital needed to expand factories, purchase equipment, increase production and create new jobs.
They are calling for more affordable credit facilities, with interest rates of about 12 percent, to enable industries to invest and compete more effectively in both domestic and international markets.
The call was made during the Annual Uganda Manufacturers Association Financial Symposium, where industry stakeholders discussed the challenges facing businesses in accessing affordable financing.
High Cost of Credit
Manufacturers argue that expensive credit increases the cost of doing business and limits the ability of companies to take advantage of new investment opportunities.
For businesses that depend heavily on borrowed capital, high interest rates can increase operating costs and reduce the funds available for expansion, technology upgrades and employment.
Industry players believe that lower-cost financing would give manufacturers greater room to expand production and develop new products while strengthening their competitiveness.
Lower Rates Could Drive Job Creation
State Minister for Trade David Bahati said reducing interest rates would have benefits beyond individual businesses, arguing that cheaper credit could stimulate wider economic activity.
Bahati said affordable financing would allow manufacturers to expand their operations, creating more employment opportunities and increasing household incomes.
As more businesses and workers earn and spend money, he noted, economic activity would increase, with more money circulating through the economy.
The minister also linked increased incomes and financial activity to greater participation in formal financial services, as businesses and workers gain more capacity to save, invest and access financial products.
Manufacturers Seek Greater Access to Capital
The manufacturers’ demand for lower interest rates comes as businesses continue to face pressure from rising operating costs and the need to invest in modern production facilities.
Industry leaders say access to affordable long-term financing is essential if Uganda is to strengthen its manufacturing base, create sustainable employment and increase the contribution of industry to economic growth.
They are urging financial institutions and policymakers to explore mechanisms that can make credit more affordable and accessible to manufacturers.
For the industrial sector, stakeholders say, lowering the cost of finance could be an important step toward unlocking investment, increasing production and making Ugandan businesses more competitive.
