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In his State of the Nation Address, President Museveni stated that government-subsidized loans will not be given to importers of second-hand clothes and similar goods. Instead, UDB funds will support manufacturing, agriculture, and certain services, aligning with the National Development Plan III’s strategy to promote local production and reduce imports.

President Yoweri Museveni has announced that the government will not provide subsidized loans to importers of goods such as second-hand clothes.

In his State of the Nation Address, President Museveni emphasized that funds from Uganda Development Bank Limited (UDB) will be prioritized for sectors such as manufacturing and agriculture.

“I cannot allocate subsidized funds to those importing second-hand clothes and perfumes,” Museveni remarked during his address to Members of Parliament at the Kololo Ceremonial Grounds on June 6.

“UDB funds are intended for manufacturing, agriculture, and certain services. If you wish to import perfumes, you should seek financing from commercial banks.”

UDB offers loans to qualifying enterprises in various sectors at interest rates between 10-12%, which is significantly lower than the current average lending rate of over 23% per annum at some commercial banks.

President Museveni’s support for manufacturers aims to enhance local capacity to produce many of the goods currently imported.

The National Development Plan III identifies “import replacement/promotion of local manufacturing” as a key development strategy for Uganda from the financial years 2020/21 to 2024/25 to achieve the plan’s objectives.

Uganda has consistently run a trade deficit, with imports exceeding exports over the past four decades. The trade deficit has grown from $56 million in 1980 to $3.1 billion in 2023.