As the rest of Uganda chokes on expensive credit, with commercial bank lending rates hovering between 18 and 20 percent, staff at the Bank of Uganda (BoU) are enjoying the rare comfort of nearly interest-free, long-term loans stretching up to two decades.
Revelations from the central bank’s latest Integrated Annual Report 2024/25 have lifted the lid on a rare privilege: access to nearly interest-free loans for central bank staff and executives, stretching up to 20 years and offered at rates between 0% and 3%.
The disclosure has triggered both curiosity and criticism. For some, it’s a thoughtful staff welfare strategy, for others, it’s an uncomfortable contradiction for a regulator that preaches tight credit discipline to the market but shields itself from the very hardship its policies create.
It’s a benefit that has triggered both curiosity and criticism, rekindling a familiar debate about the cost of credit and the credibility of the country’s monetary authorities.
A benevolent policy or a tone-deaf privilege?
The Bank’s management describes the scheme as a staff welfare and retention strategy, meant to motivate employees, promote home ownership, and ensure stability within an institution that carries one of the most sensitive mandates in government.
The loans are reportedly collateralized by mortgages and insured to minimize default risk.
However, the optics are hard to ignore. At a time when the average Ugandan entrepreneur or homeowner must negotiate credit at rates six to seven times higher, the central bank’s internal lending arrangement has raised uncomfortable questions about fairness, consistency, and accountability.
Critics argue that BoU, which sets the policy environment that determines the cost of money, should not be seen to insulate itself from the same market pressures it expects everyone else to endure.
To them, the policy reflects a troubling contradiction, one where the country’s chief regulator preaches prudence to the financial sector but practices self-indulgence within its own walls.
A dual reality: The comfort of the few, the strain of the many
For most Ugandans, credit is not just expensive; it’s often out of reach. Businesses that depend on working capital are routinely suffocated by double-digit rates.
Households seeking mortgages face repayment schedules so burdensome that home ownership remains a dream.
Meanwhile, at BoU, staff and senior executives are enjoying interest rates well below inflation, translating into negative real interest. It is a privilege even the best-rated borrowers in the private sector could never hope for.
This disparity fuels the perception that the Bank, while technically independent, is morally detached from the economic realities it manages.
If the policymakers responsible for ensuring affordable credit are personally cushioned from high interest rates, where will they find the motivation to confront the structural factors keeping Uganda’s cost of borrowing painfully high?
Inside the numbers
According to the Bank’s latest disclosures, total staff loans and advances rose to UGX 114.1 billion in the year ending June 2025, up from UGX 100.1 billion a year earlier. Of this, about UGX 3.8 billion was advanced to executive management, including directors.
During the same year, new advances worth UGX 1.59 billion were issued to top management, while UGX 1.26 billion was repaid. The interest earned from these facilities was a modest UGX 43 million, a figure that underscores just how low the applied rates are.
The loans are repayable over periods of up to 20 years which effectively spans a large part of an employee’s career hence making them not just a welfare benefit but a lifetime financial cushion.
From a policy standpoint, the central bank’s justification isn’t entirely misplaced. BoU argues that in an environment where competition for talent is rising and the private sector offers lucrative packages, staff retention has become an existential concern.
Tribunal Backs URA in UGX 10.2 Billion Century Bottling Tax FightThe cost of perception
Public confidence in a central bank is as much about optics as it is about policy performance.
BoU has rightfully earned plaudits for maintaining macroeconomic stability and keeping inflation at 3.5 percent, stabilizing the shilling, and building reserves of USD 4.3 billion. But reputational credibility is fragile.
When staff and executives at the same institution are seen to benefit from privileges that ordinary Ugandans cannot even imagine, it dents the Bank’s moral authority to push for reforms in the financial sector.
The image of a central bank insulated from its own monetary realities threatens to overshadow its technical achievements.
Uganda’s high cost of credit: The bigger picture
For years, Ugandan businesses have complained that the cost of credit is too high, with small and medium enterprises bearing the brunt. Commercial banks cite high operational costs, default risk, and government’s aggressive domestic borrowing as major reasons.
The central bank, on its part, has maintained a cautious policy stance by balancing inflation control with financial stability.
Yet, critics argue that BoU has not been tough enough in compelling commercial banks to cut spreads or innovate in affordable credit delivery.
The result? A private sector is trapped in expensive debt while the public sector.
A question of alignment
There is nothing inherently wrong with staff welfare or concessional loan programs. Every institution has the right to look after its people.
But the disconnection between BoU’s internal credit reality and the market’s harsh borrowing climate exposes a deeper issue: alignment between policy rhetoric and institutional practice.
If Uganda’s central bankers are not personally exposed to the consequences of high interest rates, what incentive remains for them to tackle the systemic problems keeping those rates elevated?
Beyond loans, the Integrated Annual Report also details BoU’s leadership compensation.
Directors’ fees and emoluments climbed to UGX 3.75 billion in FY 2024/25, up from UGX 2.30 billion a year earlier, reflecting an expanded board (from 22 to 26 members) and increased governance activity.
The Governor and Deputy Governor earned UGX 2.6 billion — UGX 2.05 billion in salaries and allowances, and UGX 551 million in pension benefits.
The executive management team of 11 directors took home UGX 8.28 billion, of which UGX 7.29 billion was short-term benefits and UGX 984 million was post-employment compensation.
Altogether, BoU’s total staff benefits reached UGX 286.6 billion, up from UGX 230.2 billion, a 24% rise driven by a larger workforce of 999 employees, including 78 new hires.
