Posted on May, 10, 2023 at 12:54 am
Farmers say a deal reached with the Microfinance Support Center (MSC) to facilitate farmers’ cooperative societies with low-cost loans is a game changer to the agricultural sector.
The chief executive officer of the National Alliance of Agricultural Co-operatives in Uganda (NAAC), Mr Samuel Ssentumbwe Magala confirmed the deal that will see farmers under the arrangement access loans at 8 percent which he says is not possible in commercial banks.
“If you go to any commercial bank now, most of them are charging between 25 and 30 per cent interest rates on those loans, but the Miro-finance support center is willing to give loans at interest rates as low as 8 percent,” Mr Magala said.
He’s optimistic that with such a move, the agricultural sector is bound to register growth, and poverty will steadily reduce among the population, especially in the country side.
In Uganda 80 percent of the country’s land is arable but only 35 percent is under cultivation. Agriculture accounts for about 24.1 percent of GDP, and 33 per cent of export earnings.
The Uganda Bureau of Statistics (UBOS) estimates that about 70 percent of Uganda’s working population is employed in the agriculture sector.
Uganda produces a wide range of agricultural products, including coffee, tea, sugar, livestock, fish, edible oils, cotton, tobacco, plantains, corn, beans, cassava, sweet potatoes, millet, sorghum, and groundnuts.
Commercialization of the sector is impeded by farmers’ limited use of fertilizer and quality seeds, and a lack of irrigation infrastructure – rendering production vulnerable to climatic extremes and pest infestations.
Mr Magala explained that access to loans from the commercial bank has been difficult for the farmers therefore the government’s decision to facilitate farmers through the microfinance support center is a good move.
“The loan targets all farmers, not any specific valve chain whether it’s in livestock, coffee so for as long as a corporate has come together and they have organized themselves and they have identified the market where they are going to sale their product”. Mr Magala said.
Climate concern
The NAAC Chairperson, Mr Emmy Geoffrey Sayekwo, asked the government to also invest more in sensitising farmers about the current climate change effects, affecting farmers’ output.
“Climate change has hit mostly smallholder farmers, yet the majority of the farmers are smaller holder farmers. This is affecting the value chains,” Mr Sayekwo said.
Ms Hellen Aanyu, a local farmer in Ngora District and also a member of the National Alliance of Agricultural Co-operatives in Uganda said she is engaged in the growing of g-nuts, but year after year, the crop failed to yield as a result of climate change issues.
“I planted 4 acres of G-nuts during the last season and expected to earn about Shs2m, but to my dismay, I did not earn anything “she said.
She proposes that farmers should be given an opportunity to access low-cost interest loans as well as accessing agricultural insurance so that in case of occurrence of such calamities they are able to be compensated and the financial institutions will be able to provide the farmers with low-interest rate loans.
Mr Richard Kaiyego, a farmer and a manager of Namutumba Oil Seeds and Grain Co-operatives says, climate change issues must be addressed comprehensively, because as farmers they are no longer depending on seasons to grow crops as they used to previously.
“This has become dangerous, it rains for a short time, and then we go into a dry season. These are all losses to the farmers” Mr. Kaiyego lamented.
Source: Monitor