Agricultural prices improve by 5% as economy recovers

The gradual recovery of the economy witnessed in the 3rd quarter of 2020, has contributed to the positive performance of the agricultural sector with prices improving by 5 percentage points.

According to the June 2020 Uganda Bureau of Statistics report, food crop growing activities registered a growth of 4.3 percent in 2019/2020, compared to the 1.5 percent growth in 2018/19, while livestock growing activities grew by 7.7 percent in 2019/2020 compared to 7.3 percent in 2018/19.

“The five percentage points price improvement is largely attributed to the gradual recovery of activities in the agricultural sector and the economy as a whole, case in point is the improved price of Matooke and other foodstuff,” noted Evans Nakhokho,the Chief Manager, Agribusiness at Centenary Bank during a thought-leadership forum hosted by the bank.

“Financing plays an instrumental role in boosting agricultural activities and the structured ecosystems that focuses on both financial and non-financial services has enabled the utilization of credit extended. This year, we have disbursed close to shs600 billion of which 60% has been issued to smallholder farmers.”

He noted that agriculture financing contributes to about 12% of the total lending to all sectors in the banking industry which is approximately shs2 trillion.

“Beyond the financing, we have offered guidance to our customers in relation to managing their credit and how this can be rightly invested for the desired return on investment,” Nakhokho explained.

“We have reviewed business projects for customers who have prior credit accommodation for a possibility of restructuring, refinancing and where tenable extended moratoriums.”

According to Mon Ssebuliba, the Chief Operating Officer for aBi Finance Limited, they have focused on stabilizing and strengthening financial institutions to ensure that agribusiness financing is supported.

“ This has been implemented by rescheduling lines of credit (principle and interest) for a period of 12 months, reduced interest rate from an average of 13.5% to 8.2% on all running facilities with a short-term working capital for shs300 million – shs1 Billion at 8.2%, no fees, among others,” Ssebuliba said.

“Key lessons have been drawn, which the farmers have to adjust to not limited to; the ability to swiftly adapt to improved business models, digitizing for improved resilience, business monitoring, putting in place business continuity plans for the unexpected occurrences, have a plan to guide prompt decision making, among others which are designed to manage any potential risk that might pose a threat to the business.”

He noted that a  number of opportunities need to be embraced for the desired yield in the agricultural value chain including continuous product development to keep up with the need for innovations, adapting risk management frameworks, testing or develop business continuity plans, improvement and enhancement of digital channels plus digitizing businesses for the non-digitized.

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