Deputy Speaker appeals for cut in interest rates

Kampala, Uganda | THE INDEPENDENT | The Deputy Speaker of Parliament, Thomas Tayebwa, has implored Bank of Uganda and all players in the banking sector to consider lowering lending rates, in order encourage more production and counter the anticipated inflation due to the rising commodity prices.

Tayebwa said he was concerned that the cost of capital in the banking sector has remained high, thereby discouraging low income earning citizens from meaningful investment.

“The cost of capital here is so high, and when I am reading some of the statements of some of the banks, you find the bank has made huge profit of Shs90 billion, the cost of capital is around Shs70 billion but the interest rate remains high,” said Tayebwa.

Tayebwa was speaking during a dinner at Sheraton Kampala Hotel hosted by Ecobank where he was chief guest.

He said it is the interest of government that even the lowest earning individual participates in wealth creation, which would be made possible through low cost credit.

“The Governor spoke and explained things but for us common people, we want to know how we can get low interest rates,” he said.

He appealed to banks to support the Parish Development Model (PDM), where government will extend cheap credit to low income earners to ably participate in wealth creation.

“We are approving Shs1.59 trillion for the Parish Development Model. We would want banks to support government in this programme,” Tayebwa said.

He was also concerned that despite the decline in the cost of a barrel of fuel, fuel prices in Uganda are instead soaring.

“We have a problem in Uganda, when prices go up even if you do what, they can never go down. Now on fuel, the barrel was around US$120 and when the barrel goes back to US$50, prices remain at Shs5, 000,” said Tayebwa.

Bank of Uganda’s Deputy Governor, Dr Michael Atingi-Ego, reiterated the urgent need to support agricultural production so as to combat the likely inflation which he said is associated with deficits on the supply side.

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SOURCE: UGANDA PARLIAMENT MEDIA