By David Mwanje
Bank of Uganda is pushing for wider access to affordable credit for farmers and small businesses as the country seeks to expand commercial agriculture and agro-processing.
The Agricultural Credit Facility has provided about Shs1.35 trillion to more than 11,000 beneficiaries across the country.
Government provides about half of the funding, with participating financial institutions contributing the rest.
Loans under the facility attract a maximum interest rate of 12 per cent a year for most agricultural projects and 15 per cent for grain trade, with repayment periods of up to eight years.
The money can be used to finance agricultural machinery, irrigation, farm inputs, storage facilities and agro-processing equipment.
The Small Business Fund also provides financing to micro and small enterprises seeking to expand their operations.
Bank of Uganda administers both facilities on behalf of the Ministry of Finance, Planning and Economic Development.
In Kabale District, 325 beneficiaries have received Shs13.59 billion through the Agricultural Credit Facility, including a government contribution of Shs6.81 billion.
Another 70 beneficiaries have accessed Shs636 million through the Small Business Fund.
Bank of Uganda Deputy Governor Professor Augustus Nuwagaba said more people need to know about the financing available under the two programmes.
He urged district leaders to take information about the facilities to farmer groups, SACCOs, women and youth enterprises and other small businesses.
“Our policies may be formulated at the centre, but their effects are felt in homes, farms, markets, and businesses across Uganda,” Nuwagaba said.
He also called on commercial banks to increase lending to productive sectors, including agro-industrialisation, tourism, minerals, science and technology.
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.
Bank of Uganda says the credit facilities can help farmers invest in production, storage and processing.
Financing for grain trade, for example, can support the purchase and storage of produce, while investment in processing can add value to commodities such as coffee, dairy products and bananas.
Bank of Uganda is also working with district leaders, SACCOs and participating financial institutions to increase awareness of the facilities and reach more farmers and small businesses.
The bank says expanding access to affordable credit is expected to support production, value addition, jobs and household incomes.
