Trade and manufacturing sectors took the highest amount in loans from commercial banks in Uganda this year. The latest data from the Bank of Uganda shows that loans to the two sectors rose to 23.8 per cent and 11.5 per cent respectively, between January and October this year, a development that financial analysts attribute to provisions made by banks during the year against high risk loans. Total provisions made for bad loans within the banking industry grew from Ush89.5 billion ( $35.7 million ) in June 2012 , to Ush144.8 billion ( $57.8 million ) in June this year, according to the Central Bank's Financial Stability Report for June 2013 . Lending rates on trade loans rose from 22.8 per cent between July and September this year to 24 per cent in October, reflecting a high risk perception among lenders. Manufacturing loans were given at lower rates of 19.1 per cent in October, down from 20.6 per cent recorded between July and September 2013 , highlighting lower risk perceptions. Non-performing loans from the manufacturing sector increased from 0.5 per cent of the total loans in June 2012 to 1.6 per cent by the end of June 2013 . The share of non-performing loans pegged to trade fell slightly to 5.3 per cent, from 5.5 per cent, during the same period. Industry sources claim that loans to the trade sector are short term overdrafts that bear quicker returns for lenders and have shorter processing times. "Most of the credit facilities extended to the trade sector are less than 12 months, and incomes from these transactions have been booked for end of year or first quarter of 2014. Applications for trade loans are still dominant in volume and spend less than a month in the approval chain compared to others," explained a credit analyst at DFCU Bank Ltd who requested anonymity. Ajay Kumar , the deputy managing director at Crane Bank , said there are many new projects from the manufacturing sector and banks have shown interest in financing them.
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