Diving Into Effectiveness Of Agricultural Credit Facility, Minister Anite Shares Views With The Public.

By Julius Mugaga Tukacungurwa/Umoja Standard.

Kampala, Uganda: On Wednesday 27-9-2023, Uganda’s Finance Minister of State for  Investment and Privatization, Hon. Evelyn Anite held an X-Space discussion with the public on Agriculture Credit Facility (ACF) and how Ugandans in Agricultural Value Chain can tap into it.

At the moment, there is over UGX.800Billion as Agriculture Credit Facility from Government of Uganda ready for disposal to the interested small scale to large scale farmers across Agricultural value chain.

Minister Evelyn Anite and officials are seen after the X-Space disscussion on Wednesday/Courtesy Photo.

Important to note;

The Agricultural Credit Facility (ACF) was set up by the Government of Uganda (GoU) in partnership with Commercial Banks, Uganda Development Bank Ltd (UDBL), Micro Deposit Taking Institutions (MDIs) and Credit Institutions all referred to as Participating Financial Institutions (PFIs). The Scheme’s operations started in October 2009, 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.

Loans under the ACF are disbursed to farmers and agro-processors through the PFIs at more favorable terms than are usually available under conventional loans, at 12% per annum. The scheme is administered by the Bank of Uganda (BoU) and its operations are guided by the Memorandum of Understanding (MoU) signed by all the stakeholders. The Government of Uganda is represented by the Ministry of Finance, Planning and Economic Development (MoFPED). The scheme operates on a refinance basis in that the PFIs disburse all the loan amount required by a client and seek for a re-imbursement from BOU.

The idea of ACF was coined by President of Uganda Yoweri Museveni after realizing the need to boost productivity and value addition in agriculture; however limited access to credit being one of the major deterrents to achieving this, Therefore, ACF was seen as a magic bullet towards promoting agricultural production and productivity especially for farmers.

Appearing with Richard Byarugaba, Director Financing-Bank of Uganda, Morrison Rwakakamba, Chairman Uganda Investment Authority, Liz Kassede from Equity Bank, Ocen Jimmy, Mnager Agricultural Lending at Pot Bank Uganda, moderated by Andrew Kyamagere, the NTV News Anchor, Minister Anite probed a discussion on the topic, DID YOU ACCESS THE OVER 800 BILLION SHILLINGSAGRICULTURAL CREDIT FACILITY FROM GOVERNMENT OF UGANDA? seeking to here the views of the public on the subject in order to better the agricultural sector in Uganda.

Hon. Anite said that, just as the president’s vision of seeing Ugandans transform from subsistence to  Commercial farming, ACF was established to realize that. Central bank partnered with Commercial banks to see that affordable credit facility can be accessed by farmers across the divide in Uganda to transform Agriculture.

“The main objective of ACF is to promote commercialization 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 value chain”. Hon. Anite.

Richard Byarugaba, the Director Financing-Bank of Uganda mentioned that for transparency and fairness purposes, the design of the facility was to serve interested people from wherever they are and that’s why they partnered with commercial banks and Micro Deposit Taking Institutions. As mentioned above, he highlighted that, for Commercial Banks, they contribute 50% to this facility as well as Central Bank but for Micro Deposit Taking Institutions, contribute 30% and the Bank of Uganda contributes 70%.

He went on to inform that, the law for licensing SACCOs was changed and assured that when this happens, big SACCO will be coming to Bank of Uganda but as for now, they will be getting money from Commercial Banks.

Speaking on follow up mechanism, Byarugaba said that Commercial banks report to Bank of Uganda on a regular basis. H added that when they go on the ground and find out that they are lending at an interest rate higher that 12%, they hold them accountable.

Like Hon. Anite, Morrisson Rwakakamba, the Chairman of Uganda Investment Authority re-affirmed that the government came in with this initiative to deliberately boost agriculture production and value addition, and that is why Uganda Investment Authority is leveraging on these opportunities for investors across the world for value addition.

“We now have many factories that are processing our produce (adding value) and I am happy that even Bank of Uganda is here and am happy for all these participating banks because, Bank of Uganda contributes 50% and they put 50%.” Said Morrison.

Ocen Jimmy, the Manager Agriculture Lending at Post Bank Uganda noted that they have disbursed ostandsing 670 loans worth about about UGX.49 Billion shillings but cummulatively, they have over 1000 loans given out since inception and the concentration is from cattle corridors as they take the loans to boost their practices. Central and western Regions take the lion’s share.

He highlighted that, 300 small holder farmers have accessed the facility and 300 more are pending and that, they are looking forward to give out more to finance different projects across agricultural value chain.

He spoke of some of the requirements as being, having records of production but for those who go for UGX.50 Million and above, they need a proposal detailing projections of one’s investment, and for those who can’t do it, Post Bank team helps them.

For Liz Kassede from Equity Bank noted that from inception of the partnership with Bank of Uganda to extend the ACF to the farmers across the Agricultural value chain, they have extended loans to over 1,115 people amounting to over UGX.49 Billions so far and their target has been to make sure that 30% goes to Agriculture.

UGX.217 Billion Shillings was put aside for this initiative by the Government of Uganda in the Bank of Uganda and was shared across the 24 partner Financial Institutions. The facility is a revolving fund and it is reported that, it has now grown to UGX.818 Billion.

Twenty Four bank 24 Commercial Bank and Micro Deposit Taking Institutions that Equity Bank, Post bank, DFCU, Centenary Bank, Stanbic Bank, Bank of Baroda, DTB, Stanbic Bank, Standard Chartered Bank, Opportunity Bank, Finance Trust Bank and others are some of them.

Public thoughts rotated around bringing down the interest rate of 12% which they described as still high and expanding the ACF as well as the amount one can maximumly borrow.