Agribusiness

Small holder farmers isolated from Gov’t agric loans for lack of

KAMPALA, Uganda–Financial institutions offering financial agricultural credit under the Agricultural Credit Facility have been advised to create more awareness about the facility to the public to enable farmers take up the credit. 

The Executive Director Finance at the Bank of Uganda, David Kalyango told Journalist that limited  awareness  of the scheme  by the prospective  beneficiaries has hindered small scale farmers to apply for cheap agricultural loans from the over 15 participating financial institution. 

 “As government we want to see that small scale farmers are also benefiting from the scheme because they cannot afford ordinary credits from commercial banks to finance their agriculture projects, the only way to enable them participate is for commercial banks to do more on creating awareness among the general public about the benefits of applying for the Agricultural Credit Facility loan Scheme” He explained.

Kalyango said that since the scheme became operational in the year 2009, total disbursement to the Agricultural Credit Facility now amounts to UGX261.33 billion and this has supported 416 eligible projects across the country but the worry is that, majority of the beneficiaries are large commercial farmers.   

Apart from the low level of awareness about the scheme by the eligible beneficiaries, Bank of Uganda also observed the issue of lack of collateral by most applicants which has made processing of the loans very complicated especially for small farmers. 

However Kalyango assured the general public that Bank of Uganda is coming up with some amendments which will soften the process of accessing agricultural loans.

“In January  2018 Bank of Uganda  endorsed enhancements aimed  at making  the Agricultural Credit Facility  more accessible  to farmers  including those  at small scale holder level  by making it more sustainable  as a revolving public fund and  more feasible for the participation of financial  Institutions” Kalyango said.

Information available at the central bank indicates that during the last quarter of 2017,  the Agricultural credit facility  total loan portfolio grew by 5.20% (UGX12.92 billion)  from UGX248.41 billion to UGX261.33 billion  due to increase  in outreach  of the scheme  and repayment also increased by 125% or UGX3.10 billion.            

The Agricultural Credit Facility (ACF) was set up by the Government of Uganda in partnership with Commercial Banks with the aim of facilitating the provision of medium and long term financing to projects engaged in Agriculture and Agro processing, focusing mainly on commercialization and value addition.