Financial institutions have urged the Government to increase funding to the agricultural sector to boost economic growth, reduce poverty and elevate Uganda to the middle-income status.
The call was made by Wilbrod Humpherys Owor, the executive director of the Uganda Bankers Association.
He made the remarks during an awards ceremony that recognised financial institutions that have played a key role in the implementation of the Agricultural Credit Facility (ACF) and the Small Business Recovery Fund.
The ceremony was held at Sheraton Kampala Hotel recently.
Owor said agriculture is the number one actor in the transformation of Uganda’s economy, and called for the participation of more banks and other financial institutions to expand credit to the sector.
“We are doing the work with the support of Bank of Uganda. If the agricultural total portfolio at the end of the year is sh2.7 trillion — to meet the target of the agricultural transformation agenda — we need an investment of at least sh51 trillion,” Owor said.
He also called upon the sector players to think about the market, which creates the cash flow of the enterprise, by coming up with products that focus on market expansion.
Speaking about linkages, Owor lauded development partners, like the Netherlands, for taking the best farmers for study trips, benchmarking and creating business opportunities for both countries.
“We ask for policy, regulatory incentives and initiatives so that more lending is directed to agriculture, such that we scale over 50 times to meet the target of the agricultural transformation agenda,” Owor said.
Richard Byarugaba, the finance executive director of Bank of Uganda, said in acknowledging the benefits of agriculture to the development of the economy and the contribution of the micro, small and medium enterprises to Uganda’s gross domestic product, the Government opted to extend financial support to them.
“The Government has made efforts to put in place interventions, such as the ACF and Small Business Recovery Fund, to spur economic growth and improve household incomes and reduce poverty among the population,” Byarugaba said.
The ACF and Small Business Recovery Fund align with the goals of the National Development Plan IV that include increasing production, productivity and value addition.
This is to ensure food security, boost exports and support the private sector to drive growth and create jobs. Both entities are also intended to accelerate socio-economic transformation and achieve the Sustainable Development Goals by 2030.
Byarugaba said ACF was introduced in 2009 with capitalisation of sh30b, and has since grown to about sh330b.
The key objective of the ACF is to provide affordable financing to farmers and value chain actors in the agricultural sector, focusing on commercialisation, modernisation and agro-processing.
This increases production, enhancing the competitiveness of Uganda’s products on the local and international markets, while creating jobs and higher incomes for farmers.
“Loans of up to sh1.12 trillion have been disbursed under the ACF to support over 6,000 projects engaged in various value chains. These include acquiring farm machinery, agro-processing machinery, infrastructure for post-handling, farm expansion, as well as the acquisition of agricultural inputs for increased production,” Byarugaba said.
Through the ACF, we have proven that inclusive finance is not just socially responsible — it is economically sound and strategically vital.
He said these are not large corporations with established credit histories — it is the entrepreneurs, the smallholder farmers, the village-based processors who form the true foundation of Uganda’s economy.
The Small Business Recovery Fund was established in 2021. It is an initiative to provide subsidised loans to small businesses, impacted by the COVID-19 pandemic financial distress, for their working capital needs. Thus far, sh69.96b has been disbursed.
By March 31, this year, about 3,496 small businesses had been supported to recover from the effects of the pandemic.
The winners
PostBank Uganda was the overall best under the Agricultural Credit Facility Tier I (commercial banks) and Small Business Recovery Fund 9 categories. Under ACF category, Centenary Bank came second and dfcu Bank — one of the sponsors of the Best Farmers Competition organised by Vision Group — emerged third.
In the category of the fi nancial institutions that have promoted the Small Business Recovery Fund, Housing Finance Bank came second and Finance Trust Bank came third. Other institutions that performed well include Opportunity Bank, Pride Bank Limited, Stanbic Bank, Bank of Baroda (U) Limited, Absa Bank, Uganda Development Bank and Equity Bank.
Michael Atingi-Ego, the governor of Bank of Uganda said the facilities have touched the lives of over 10,000 Ugandans.
Tangible impact
Credit facilities have also revitalised communities across the nation and proven that — when the Government, fi nancial institutions and private enterprises unite with a common purpose — great things happen.
Atingi-Ego said for a long time, many people have asked whether Uganda’s smallholder farmers can access meaningful credit.
“Today, we have our answer: sh1.12 trillion disbursed, 6,587 projects funded and a non-performing loan rate of 1%, three times better than the banking industry average,” Atingi-Ego said.
He said everyone must remember where the nation began. Uganda’s agricultural sector, the backbone of our economy, has faced a paradox: abundant potential trapped by limited access to capital.
“Smallholder farmers, who feed our nation and drive our rural economy, were locked out of traditional financing. Small businesses, the engines of innovation and employment, struggled to secure the credit they needed to grow,” Atingi-Ego said.
Government commitment
Evelyn Anite, the investment finance state minister, agreed that the cost of agriculture credit is usually too high and out of reach for most of the stakeholders in the sector since it is dominated by small-scale businesses and subsistence farmers, who are categorised as high risk and un-bankable by financial institutions.
The Government is focusing on full monetisation of Uganda’s economy through commercial agriculture and strengthening small businesses.
This is through providing long-term and affordable capital through various initiatives like Uganda Development Bank, where over sh3 trillion has been invested in ACF, the Parish Development Model, Emyooga and Small Business Recovery Fund.
“As the Government funds such programmes, we call upon financial institutions to come up with tailor-made loan products for agriculture transformation, modern farming techniques, purchase of improved inputs like seeds and fertilisers,” Anite said.
LEADPHOTO CAPTION: Anite (second-right) hands an accolade to PostBank Uganda staff at Sheraton Kampala Hotel recently. The institution was the overall best under the Tier I category during an awards ceremony where financial institutions that have played a key role in the implementation of credit facilities in Uganda were recognized. (Photo by Herbert Musoke)
