Alex Lwanja, the Deputy Director in charge of the Agricultural Credit Facility and Small Business Recovery Fund at the BoU, reports that over UGX. 150 billion is idle due to the low uptake of the facility from the targeted population. Lwanja said that although they have disbursed UGX. 751 billion to farmers across the country, and very few farmers from Teso are seeking or taking up the money
Board Secretary to BoU, Susan Kanyemibwa (2nd left), Advisor to the BoU Goveronor, Dr. Jacob Opolot (2nd right), Soroti City Mayor Joshua Edogu (R) and RCC Pter Pex Paak (L) after the townhall meeting in Soroti.
The Central Bank has launched campaigns in the Teso sub-region
to promote the Agricultural Credit Facility (ACF) services in an effort to
boost agricultural production and transform communities. The ACF's primary goal
is to encourage the commercialization of agriculture by providing medium and long-term financing for agriculture, agro-processing, modernization, and
mechanization.
The facility was established in 2009, and its funds are
channeled through commercial banks, which assess and recommend farmers for
funding. However, according to information from the Bank of Uganda (BoU), there is a very low uptake of the fund in the Teso sub-region, which was one of the targeted regions for the Central Bank's involvement in agriculture.
Alex Lwanja, the Deputy Director in charge of the Agricultural Credit Facility and Small Business Recovery Fund at the BoU, reports that over UGX. 150 billion is idle due to the low uptake of the facility from the targeted population. Lwanja said that although they have disbursed UGX. 751 billion to farmers across the country, and very few farmers from Teso are seeking or taking up the money.
He also stated that the Agricultural Credit Facility was designed to ease the acquisition of agriculture machinery and post-harvest handling equipment for
farmers. With this loan, storage facilities and agricultural inputs such as
pesticides and fertilizers, land opening, paddocking, and biological assets
such as banana suckers, fruit seedlings, chicks, piglets, cows, and goats for
restocking the farm can be accessed at only a 12 percent interest rate per
annum.
Lwanja added
that the issue of collateral for the agricultural loan was waived off to enable
farmers to access funds for their agricultural projects. “We want to encourage
farmers to take advantage of this facility to boost their agricultural
projects. The repayment period for this loan facility ranges from six months to
eight years with a grace period of three months,” he added.
According to
Lwanja, the Agricultural Credit Facility loans range from 250,000 Shillings to
UGX. 2.1 billion for individuals or groups of people in the agricultural
sector.
However,
Noel Milton Eulo, a businessman in Soroti, noted that commercial banks are
reluctant to give out agricultural loans because of the low-interest rate that
benefits the banks.
He also noted that unfavorable weather conditions pose a
challenge to the farmers in Teso, who have suffered losses after failing to
service the bank loans.
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Bishop
Emeritus of the Church of Uganda Diocese of Soroti, George William Erwau, asked
the BoU to find alternative means of channeling agricultural credit to farmers,
other than relying on profit-oriented commercial banks.
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The Bank of Uganda team, led by the Deputy Governor, Michael
Atingi-Ego, is in Soroti to create awareness of its services and mandate in the
contributions to microeconomic stability in the country, aimed at achieving
socio-economic transformation.
