State Minister for Trade, Industry, and Cooperatives David Bahati has appealed to commercial banks to reduce interest rates and facilitate affordable financing for Uganda’s manufacturing sector. Despite government support of over Shs1.3 trillion, the cost of capital remains a significant obstacle for manufacturers.
“The cost of capital is a significant obstacle hindering the growth of manufacturers in Uganda. We urge commercial banks to provide cheaper capital to manufacturers and support the development of industrial parks to boost industrial growth,” said Bahati.
“We are asking banks to provide cheaper capital because we believe this will boost the sector’s growth and contribute to Uganda’s economic development. The government is committed to supporting the growth of the manufacturing sector and will continue to provide incentives and support,” Bahati added.
Executive Director of Diamond Trust Bank (DTB), Godfrey Ssebaana, echoed Bahati’s concerns, citing the high lending cost of 17-20% as untenable for the manufacturing sector. “The high lending cost is a challenge for manufacturers. We need transparency to access sustainable finance options, which helps manufacturers access cheaper capital pools. Banks are prepared to assist manufacturers in accessing cheaper capital pools if they meet our sustainability criteria,” said Ssebaana.
Ssebaana emphasized the importance of transparency and proper financial structuring for manufacturers. “Manufacturers need to understand existing taxing strategies and seek expert advice on taxation, especially before purchasing machinery. This will help them avoid currency mismatches and reduce their financing costs,” he added.
The symposium brought together stakeholders in the manufacturing sector to discuss financing options and strategies to boost industrial growth. The event highlighted the need for cheaper credit and transparency to support the growth of the manufacturing sector in Uganda.
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