The Law on Interest Rates in Uganda

Interest rate is defined to mean the cost of borrowing funds or capital earned on loaned funds1. Interest is the return or compensation for the use of retention by one person of a sum of money belonging to another2. Interest rates can be classified as either short-term or long-term. For example, you can take out a home loan with the interest rate fixed for 20 years. This is considered a long-term interest rate. You make the same payments over these years, regardless of whether interest rates rise or fall. Alternatively, when you use your credit card or take out a personal loan you are borrowing money at an interest rate that can change in the short term. As a general rule, short-term interest rates tend to be higher than long-term interest rates.