By Rogers Wanambwa 

KIU, Main Campus – The Chief executive officers of commercial banks have today, June 10 met to discuss the directive from Bank of Uganda requiring them to slash interest rates on loans with immediate effect.

The Governor of the Bank of Uganda (BoU) Emmanuel Mutebile, in a letter dated July 7, directed commercial banks to reduce with immediate effect the interest rates on loans they give out to the public, lest the monetary regulator introduces a cap on the banks' lending rates.

He expressed concerns about the persistent high lending rates which banks still charge Ugandans despite the central bank reducing its lending rate to commercial banks to a record 7%. Instead commercial banks increased their average lending rate from 17.7% in April to 18.8 % in May, in contrast to BoU's aim of bolstering an economy which has taken a massive hit from the COVID-19 pandemic-induced lockdown.

Commercial banks, in response to this directive, therefore decided to hold a meeting of their Chief Executives so as to look for a way forward in ensuring compliance to BoU's directive.

Many businesses continue to suffer from low demand due to a slump in business caused by the lockdown which has rendered many people jobless.

Ackline Twikirize, a mobile money operator in Ishaka town, welcomed the central bank’s directive because she says the high interest rates on bank loans had made access to credit difficult.

“I wanted to get a bank loan so that I can diversify my mobile money business but the bank was charging high interest rates. That means any money I would have earned as profit would have gone to paying the interest,” Twikirize, also a student of KIU Western Campus said.