The State Minister for Privatisation and Investment, Evelyn Anite has expressed optimism that the Agricultural Credit Facility (ACF) introduced by government will empower more Ugandans to join commercial agriculture.
The minister made the remarks during a stakeholders engagement on the progress of the ACF.
Agricultural Credit Facility (ACF) was created in 2009 by the government of Uganda in partnership with commercial banks, Uganda Development Bank, credit institutions and Micro-Deposit Institutions (MDIs) to provide affordable credit to small and large enterprises engaged in agriculture, at an interest of 12% per annum.
Over Shs800 billion in credit is at the disposal of interested small-scale and large-scale farmers across agricultural value chains.
In her remarks, Anite, said the main objective of ACF is to promote commercialisation of agriculture through providing short, medium and long term loans at more favorable terms as opposed to commercial banks, to all interested farmers across the agricultural sector.
She noted that the facility is part of President Museveni and the government’s efforts to empower Ugandans to go commercial agriculture.
“Agriculture being the backbone of Uganda, the best thing to do is to empower Ugandans to have access to affordable credit. On top of cheaper credit, we are going on to support farmers get access to market, " Anite said.
The minister noted that with the ACF, government intends to offer more market access to the farmers, ensure value addition and also offer them land to put their machinery.
“All this, we are doing it as the government to support our people to ensure that they get out of poverty and they come to the money economy and do meaningful commercial agriculture, so that all together, we surpass the middle-income status.”
The director of finance, Bank of Uganda, Richard Byarugaba highlighted that while designing ACF, they worked with the Finance ministry and the financial institutions to ensure that the programme is implemented in a way that makes every Ugandan in the agricultural sector fairly gets access to this credit facility.
“Every one can access money wherever they are, but if you’re in a bank that does not give small loans, you can open another account in another bank and access this funding. We want you to be in a bank that knows you, knows your integrity, business, cash flows..so that it is easier for you to access the loan immediately,” Byarugaba said.
He added that they brought banks on board because BoU did not have enough branches to reach everyone from wherever they are.
On the other hand, Byarugaba revealed that they are working on changing the law for licensing of SACCOs to allow big SACCOs access the facility directly through the Central Bank.
“When this happens, they will be added so that big SACCOs can also access this money for their members. Right now they can access through the commercial banks but when they get licensed by BoU, it becomes easier.”
According to Liz Kassede from Equity Bank, the bank has already extended the facility to over 11,000 farmers and expects the numbers to keep evolving.
She explained that farmers that participate in micros get between Shs100,000 to Shs5 million, while those in SMEs get up to Shs2 billion.
For micros, she said that not only does the bank work with farmers to provide them facilities, but also supports them to get market access for their produce.
However, she stressed that the number of loans extended to farmers is still low in comparison with their target. She said Equity targets to extend 30% of its credit to farmers.
“In terms of numbers, we are not where we want to be, but we are really excited to participate in the ACF.”
Jimmy Ocen, the manager Agriculture Lending at Post Bank Uganda noted that since 2009, they have been very active in disbursing loans across the agricultural value chains including in production, value addition and trade.
He noted that Post Bank has extended over 600 loans worth about Shs49 billion (outstanding) to farmers under the facility.
He observed that initially, the scheme targeted SMEs, but since 2018, they have been spreading to cover small holder farmers.
According to Ocen, over 300 small holder farmers have accessed the credit while 300 others are on pending.
Meanwhile, the chairman of Uganda Investment Authority (UIA), Morrison Rwakakamba noted that the facility being affordable, has helped in boosting investment in the agricultural sector hence creating more jobs for Ugandans.
He further noted that with the ACF, many factories that process produce locally have increased, and thanked BoU for facilitating grain trading.
“I think the facilities are around Shs10 billion. People can get a loan of Shs10bn from this facility and for value addition to those who want to add value in agriculture,” Rwakakamba said.
“The reason why government came in with this facility was to boost investment through agriculture production, but also boost agriculture in terms of value addition. That’s why as UIA, we are talking about all these opportunities that are available for investors across the sector.”