When Borrowing Is Not a Choice: Can Higher Interest Rates Help Ugandans Who Borrow to Survive?

What the report says

Nile Post reports that the Bank of Uganda raised its Central Bank Rate from 9.75% to 12% on October 14, a move meant to curb inflation and support economic stability. The article says the decision comes as Ugandans face higher fuel costs, pressure on the shilling and the prospect of more expensive credit. It argues that while tighter monetary policy can help slow price growth, its effects may be uneven for different kinds of borrowers.

The piece highlights a distinction between people who borrow to expand business activity and those who borrow because their income does not cover basic expenses. Drawing on FinScope Uganda’s 2023 survey, it notes that many adults were running budget deficits and that a large share of borrowers said they used loans for regular living costs. In that context, the article asks whether raising borrowing costs can really reduce spending for households that already have little flexibility.

The report also points out that interest rate increases cannot directly fix external drivers of inflation such as global oil prices or food supply constraints, though they can help limit broader inflationary effects. Its central argument is that monetary policy remains important, but the burden of higher rates and persistent inflation will not fall equally on all Ugandans.