Stanbic Bank MD: Ugandan Banks Can Only Provide US $220M for Long Term Infrastructure Dev't

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In short
Mweheire notes that savings accounts for only 10 percent of the Growth Domestic Product GDP in Uganda and Rwanda compared to countries like China or India which stands at 40 percent.

Local banks are unable to mobilise the required funds to finance long term development projects, the Managing Director Stanbic Bank, Patrick Mweheire has revealed.

 
According to Mweheire, although all the local banks have a deposit base of US $ 4 billion, they can only commit US $ 220million, which requires a long time to recover the money.


 
He says government may need US $ 2 billion to finance a single infrastructure project, which is an equivalent to half of the total deposit base of local banks. For instance, the government borrowed 85 percent of the US $ 1.6 billion that is financing the ongoing construction of the 600MW Karuma hydro power dam from the Export and Import (EXIM) Bank of China. 

 
According to Mweheire, the situation isn't any different from the other East African countries.


 
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He attributes the problem on the poor saving culture that restrains the amount of money banks can lend. Mweheire notes that savings accounts for only 10 percent of the Growth Domestic Product (GDP) in Uganda and Rwanda compared to countries like China or India which stands at 40 percent.

 

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He was speaking at the East Africa Law Society (EALS) annual meeting held at Imperial Resort Hotel, Entebbe on Friday. At the end of the last financial year, Uganda's debt to Growth Domestic Product (GDP) stood at 36.4 percent. The debt currently stands at 8.7 trillion Shillings. 

 

About the author

Blanshe Musinguzi
Musinguzi Blanshe is a politics-cum-business journalist. He joined Uganda Radio Network in February 2017. Previously, he worked at Daily Monitor and Red Pepper Publications Limited. He is keenly interested in data journalism.