These costs must be covered from the interest rate spread and non interest income; hence it is not surprising that interest rate spreads are high in Uganda.
Over the long term, we need to lower lending rates 4  in Uganda in a sustainable manner, to support the growth of private sector business, but this will only be possible if banks’ operating costs can be reduced. Thirdly, as I noted above, it is the large capital buffers which banks hold which ensure the stability of our banking system.