The Bank of Uganda is advocating for wider access to affordable credit for farmers and small businesses to boost commercial agriculture and agro-processing in the country. This initiative aims to support the government's efforts to expand the sector and increase household incomes. According to the Bank of Uganda, the Agricultural Credit Facility has provided approximately Shs1.35 trillion to over 11,000 beneficiaries nationwide.
The Agricultural Credit Facility is funded by the government and participating financial institutions, with the government providing about half of the funding. Loans under the facility have a maximum interest rate of 12 per cent per annum for most agricultural projects and 15 per cent for grain trade, with repayment periods of up to eight years. The funds can be used to finance agricultural machinery, irrigation, farm inputs, storage facilities, and agro-processing equipment.
In Kabale District, 325 beneficiaries have received Shs13.59 billion through the Agricultural Credit Facility, including a government contribution of Shs6.81 billion. Additionally, 70 beneficiaries have accessed Shs636 million through the Small Business Fund. The Bank of Uganda administers both facilities on behalf of the Ministry of Finance, Planning and Economic Development.
Bank of Uganda Deputy Governor Professor Augustus Nuwagaba emphasized the need for more people to be aware of the financing available under the two programmes. He urged district leaders to disseminate information about the facilities to farmer groups, SACCOs, women and youth enterprises, and other small businesses.
President Yoweri Museveni has promoted commercial agriculture and value addition as part of efforts to move households into the money economy. Agro-industrialisation is also one of the areas identified under the government’s Ten-Fold Growth Strategy. The Bank of Uganda believes that the credit facilities can help farmers invest in production, storage, and processing.
The Bank of Uganda is working with district leaders, SACCOs, and participating financial institutions to increase awareness of the facilities and reach more farmers and small businesses. Expanding access to affordable credit is expected to support production, value addition, jobs, and household incomes.
The Bank of Uganda also encourages commercial banks to increase lending to productive sectors, including agro-industrialisation, tourism, minerals, science, and technology. By doing so, the bank aims to promote economic growth and development in the country.
Key points
- The Agricultural Credit Facility has provided approximately Shs1.35 trillion to over 11,000 beneficiaries nationwide.
- Loans under the facility have a maximum interest rate of 12 per cent per annum for most agricultural projects and 15 per cent for grain trade.
- The Bank of Uganda administers both facilities on behalf of the Ministry of Finance, Planning and Economic Development.
