Posted on January, 30, 2019 at 09:36 am
By ISMAIL MUSA LADU
A section of farmers have said accessing the Agricultural Credit Facility, is next to impossible, especially for small holder farmers.
This, farmers say, results from the fact that Bank of Uganda (BoU), which administers the facility, has put in place stringent measures that deny majority of farmers easy access.
The Agricultural Credit Facility seeks to provide medium and long term loans to projects engaged in agriculture and agro-processing on more favourable terms.
However, according to Uganda Bankers’ Association, the long periods that commercial banks have to accommodate as they wait for reimburse of advanced funds has affected the facility.
Some banks, data shows, have relegated the facility to a non-priority function, opting to sell their own credit facilities directly to the farmers.
This has in essence exposed farmers to high interest loans of about 12 per cent.
Speaking during an engagement with the Parliamentary Committee on Agriculture, farmers organised under the Participatory Ecological Land Use Management, said there is need for drastic changes to the facility if it is the benefit farmers.
“The [Agricultural Credit Facility] in its current form is not helping majority of the farmers,” Mr Mugoya Awali, the Bugiri Farmers Association chairperson said.
Helping a few
Mr Mugoya, who is also the secretary general of Uganda Farmers Association, said save for a few farmers who are involved in commercial farming, the facility has not helped small and medium-sized farmers.
Ms Hellen N. Kasujja, a Community Integrated Development Initiatives (CIDI) advocacy advisor, said agricultural funding for small scale farmers should be prioritised if Uganda is to benefit from the sector.
“Agriculture financing represents only 7 per cent of commercial bank lending. This data reveals that the distribution of credit is lopsided against agriculture. In short, Agricultural Credit Facility has not worked for small and medium sized farmers,” she said.
According to the Central Bank as of June 30, 2018, a total of Shs268.88b was extended to 435 projects across the country. Of this, government contributed Shs134.79b.
Source: Daily Monitor