Uganda’s Prime Minister Dr Ruhankana Rugunda has said that the government together with other partners, under the Agriculture Finance Platform, are working to finalize the National Agriculture Finance Policy that will ensure that all bottlenecks encountered in the agricultural sector including financing are dealt with.
The Prime Minister, in a speech read on his behalf by Matia Kasaija the Finance Minister during the 2019 Annual Banker’s Conference at Serena Hotel, said the policy aims at improving timeliness, regularity, relevance and coordination of policy responses to the financing issues and needs of the agribusiness sector.
“The key interventions for this year include training farmers and extension workers in improved agronomic practices and other new modern production and harvesting technologies, providing a combination of inputs including soil testing kits, fertilisers, and improved seeds, constructing and maintaining small irrigation systems, modal communal aquaculture parks and launching the organic fertilizer factory ,” said Rugunda.
He said Agriculture, being the backbone of Uganda’s economy, more investments are required to enable it to attain its full potential.
The 2019 Annual Banker’s Conference was conducted under the theme, “De-risking financing and investment in agriculture to promote decent youth employment and inclusive growth.”
Marianne Schoemaker, the Managing Director, Rabo Partnerships who delivered the Keynote Speech asked the government of Uganda to find ways of making farming attractive to the young people especially those in the digital space.
“You need to embrace digitization and Agtech in the sector, build strong partnerships and ecosystems with a long horizon and also identify and collaborate with people who have already succeeded in the agriculture sector,” advised Schoemaker.
She added that all enabling factors are key to success.
Prof. Emmanuel Tumusiime Mutebile, the Governor Bank of Uganda noted that It is quite unlikely that the formal sector will employ a significant share of the population, with some surveys including one conducted by the Aga Khan University in 2016 already indicating that a tiny proportion of the youths aspire to employment in the agriculture sector.
“While I remain uncomfortable with the high lending rates and believe that they should be reduced sustainably over time, I dare say that access to credit is not the ultimate binding constraint on economic growth.
“We must think holistically about the challenges holding back the power of finance to transform our economy. Proper diagnostics must reveal the problems that constrain agricultural finance before we devise durable solutions. We must examine the borrowing capacities of the businesses in our real sector.
“On one hand, financial institutions are challenged to rethink their views of bankable projects so as to design solutions for potential borrowers at their level. On the other hand, formal sector creditworthy businesses, which have been the main clients of commercial banks, comprise a small share of the economy.
“Informal business and micro-enterprises abound and their capacity to utilize credit effectively is constrained, including by inadequate business and technical skills, the high costs of inputs, and unpredictable market conditions,” said Mutebile.
The United Nations forecasts that Uganda’s population will rise to 102 million by 2050, and then to 203 million by 2100. Uganda will become one of the most densely populated countries in the world by the middle of this century when its population will be more than two and a half times the current level.
Mutebile added that some financial institutions have started tackling agriculture financing problems through business incubation programs.
Patrick Mweheire, the Chairman Uganda Banker’s Association, said initiatives like the Agriculture Credit Facility (ACF), that target agriculture projects focusing on commercialization, modernisation and value addition, have played a significant role in accelerating the growth of credit to marketing and processing.
He said private sector credit to the agriculture sector has in nominal terms increased from Ush241.7billion in 2009 to over Ush1.6 trillion in 2019.
BY PAUL TENTENA