By Kaziro Kyambadde
Uganda’s next phase of economic transformation will depend not simply on how much capital the country can mobilise, but on where that money goes, what it finances and what it ultimately enables.
The economy has given us reason to be confident. Uganda’s economic growth accelerated from 6.3% in the 2024/25 financial year to 6.4% in 2025/26.
However, growth and expanding private-sector credit alone do not tell us whether financing is reaching the businesses that will shape Uganda’s economic future.
The cost of borrowing remains a major constraint. Government data show that the weighted average lending rate on shilling-denominated loans stood at 18.89% in March 2026 before easing to 18.26% in April.
At such rates, businesses can struggle to finance investments whose returns take years to materialise rather than months.
The debate should therefore focus not only on how much credit is available, but also on what it enables and whether financing can be made affordable and patient enough to support long-term productive investment.
Agriculture is one of the clearest examples. Uganda produces a wide range of agricultural commodities, but greater economic gains can be achieved by processing more of what we grow instead of exporting it in raw form.
This requires investment in irrigation, modern farming equipment, post-harvest storage, cold-chain facilities, agro-processing plants, packaging, transport and logistics.
It also requires financing for export-oriented agribusinesses and technologies that help farmers adapt to climate change. The central question is how capital can help Uganda move from exporting raw commodities to producing and selling higher-value goods.
Manufacturing presents a similar opportunity. Investment should prioritise machinery, technology upgrades, industrial parks, local supply chains and export-oriented production. Manufacturers also need working capital to maintain operations, purchase raw materials and fulfil orders.
Small and medium-sized enterprises (SMEs), which can play a significant role in employment creation, deserve particular attention.
SME financing should not be viewed simply as lending to small businesses. It should be seen as an investment in the next generation of employers.
Many businesses have viable ideas and access to markets but lack the resources to expand. They face challenges such as insufficient working capital, short loan repayment periods, limited collateral, informal business structures and inadequate financial records. Others cannot afford equipment or struggle to join the supply chains of larger companies.
Addressing these barriers would enable more businesses to grow, employ workers and contribute to the wider economy. It would also help viable enterprises move from small-scale operations to more productive and competitive businesses.
Productive infrastructure is equally important. Businesses can compete effectively when energy, transport, logistics, digital networks, water supply, industrial facilities, warehousing and urban infrastructure are reliable.
Developing these systems requires substantial investment, which is where blended finance can play an important role.
Under this approach, government, development finance institutions, commercial banks and private and institutional investors can combine resources, with each taking on risks suited to its capacity and mandate.
This can help attract private capital to projects that might otherwise struggle to secure funding.
Green and climate-resilient investment must also be part of Uganda’s economic strategy. The question is no longer whether businesses will need to adapt to climate-related risks, but whether financing will reach them early enough to make that transition.
Renewable energy, energy efficiency, climate-smart agriculture, waste management, green manufacturing and climate-resilient infrastructure all require investment.
Financing these areas can help businesses manage environmental risks, improve efficiency and remain competitive as markets and production standards evolve.
At Diamond Trust Bank (DTB) Uganda, our experience working with businesses across agriculture, manufacturing, tourism and other sectors reinforces a simple lesson: financing delivers the greatest economic impact when it enables a business to acquire productive assets, enter new markets, expand its capacity or join a larger value chain.
Banks understand many of the constraints that prevent businesses from accessing suitable financing. Loan repayment periods are often too short for the investments businesses want to make.
Perceived risks can discourage lending to sectors such as agriculture and manufacturing. Collateral requirements can exclude otherwise viable enterprises, while informal operations and inadequate financial records make it harder for lenders to assess borrowers.
These challenges can be addressed through better-designed financial products, stronger business records, appropriate risk-sharing arrangements and closer cooperation between lenders, government and development partners.
Four changes would help Uganda direct more capital towards productive investment.
First, lenders should move beyond an overwhelming focus on short-term credit and provide longer-term financing where the nature of an investment justifies it.
Agricultural processing plants, manufacturing equipment and other productive assets need repayment schedules that reflect the time required to generate returns.
Second, Uganda should mobilise private investment towards national development priorities instead of leaving government and development finance institutions to carry most of the risk.
Well-structured partnerships and risk-sharing arrangements can make commercially viable projects more attractive to private investors.
Third, lenders should assess businesses on their potential to grow, generate cash flow and repay loans, rather than relying too heavily on the collateral they can provide.
This does not mean abandoning prudent lending standards. It means developing better ways to assess viable businesses, including those that lack substantial physical assets.
Fourth, the success of financing should be measured not only by the volume of credit disbursed, but also by the economic outcomes it delivers. These include jobs created, productivity improved, goods processed locally, exports increased and businesses expanded.
Ultimately, Uganda’s next phase of growth will depend not simply on how much capital we mobilise, but on where we choose to invest it.
Agriculture and value addition, manufacturing, high-potential SMEs, productive infrastructure and climate-resilient businesses offer important opportunities to strengthen the economy.
Capital should follow productivity, value addition, job creation and export potential.
The more effectively Uganda directs financing towards these priorities, the better positioned the country will be to turn economic growth into lasting prosperity.
The author is DTB Uganda’s Head of Corporate and Business Banking.
