State Minister for Planning in the Ministry of Finance Hon. David Bahati has attributed the high interest rates charged by most financial institutions around the country, to what he termed as “Ugandan’s poor saving culture.”
The Minister noted that ever since the liberalization of the national economy nearly 30 years ago, government has endeavored not to interfere with the work of commercial banks.
He noted however that these banks have been left with no choice but to hike their lending rates in order to remain in business.
“This is because Ugandans don’t save; and the little they save, they don’t save it in the banks,” he said. “As a result banks have to find a way of remaining afloat hence overcharging those few that come to them.”
A number of commercial banks last month hiked their interest rates in reaction to the Central Bank’s increment on its lending rate (CBR) and the rate at which it lends to the banks to 14.5% and 18.5% respectively.
However even before these Bank of Uganda measures mostly aimed at containing the rising inflation, several banks have been reported to be charging up to 28% interest from their customers.
Minister Bahati who is also the Ndorwa County west Mp in Kabale nonetheless observed that Ugandans were to blame for this trend.
He was on Saturday speaking at the opening of Kitumba Cooperative Savings and Credit Society offices in Kitumba Sub County, Kabale district.
The minister urged Ugandans develop a saving culture by joining the Cooperative Savings And Credit Society where they can save the little they earn from their businesses for their sustainability.
Bahati also cautioned locals against acquiring loans without having work plans, noting that these often end up spending their money foolishly and in debt.