Uganda bucked the regional trend in East Africa to record growths in private sector lending in all segments other than the transport and the building and construction segments over the past two years, said an industry report released in Nairobi on Tuesday.
The report by ICEA Lion Asset Management showed that households and the trade industry accounted for over 40 percent of total private sector lending in East Africa since September 2016, while manufacturing accounted for 10 to 15 percent.
There are also the sectors that tend to have the largest share of small and medium enterprises.
Despite being one of the major recipients of private sector credit, the manufacturing sector has continued to record slow growth in terms of economic output, indicating that this crucial sector faces unique constraints that need to be addressed, the report said.
It said that Uganda stands out in terms of private credit growth especially in the agriculture and real estate segments.
The real estate sector accounted for 13 percent of the total private sector credit in Kenya, noticeably higher than that in Uganda and Tanzania.
Agriculture, the main economic activity in the region, received between 5 and 7 percent of private sector lending in Kenya and Tanzania over the last two years, while the number was above 10 percent in Uganda.
Uganda had a larger share of private credit for the building and construction segment, at 16 percent, compared with the less than 5 percent in Kenya and Tanzania, the report said.
The study also showed that not all sectors have felt the credit crunch equally since Kenya introduced an interest rate cap in September 2016.
According to the report, credit flows to the trade and manufacturing sectors have remained fairly constant at between 400 million and 500 million U.S. dollars in the 20 months before and after the rate cap.
In contrast, credit flows to the real estate and private households have halved since the introduction of the rate cap, while the transport and communications sector has seen a 350 million dollar decline in private sector credit flows since September 2016, it said.
