Despite majority of Ugandans being involved in agriculture, only 286 farmers have applied for government’s cheaper loans estimated at Shs218 billion, under the Agricultural Credit Facility (ACF), a Bank of Uganda (BoU) official has said.
The executive director Finance BoU, Mr David Kalyango, told the Daily Monitor, that of the 286 loan applications, 239 were approved and money disbursed, with 65 per cent of the loan portfolio financing agro-processing projects.
Dismissing allegations of low uptake, Mr Kalyango said the scheme has steadily improved over the years, with the number of participating financial institutions also increasing to 17 as at December 2013 from 11 in 2010.
“The overall performance of the ACF has been encouraging with the increased involvement of financial institutions. Its performance in an environment of slow private sector credit is laudable,” he said. Mr Philip Odera, the Stanbic Bank managing director told this newspaper last week that ACF scheme faces low uptake due to limited sensitisation about its existence.
Private Sector Foundation Uganda policy analyst, Mr Moses Ogwal, added that the restrictive loan conditions are also to blame for the low uptake.
Established in 2009 by government in partnership with commercial banks and micro deposit taking institutions (MDIs), the scheme administered by the Central Bank is meant to provide medium and long term loans to projects engaged in agriculture and agro-processing at low interest rate of 10 per cent per annum.
The government contributes Shs30 billion annually while banks are supposed to match the amount with their own resources to make a total pool of Shs60 billion.
Mr Kalyango, however, said ending last year, the total disbursements and commitments by both government and financial institutions towards the scheme had increased to Shs146 billion up from Shs117 billion in June 2013.
He noted that although the credit facility was initially designed to cater for commercial farmers and agro-processors, terms and conditions of loan access were later modified to bring on board other Micro, Small and Medium Enterprises as well as farmer associations comprising
To benefit from the schemes, the MSMEs must be involved in grain milling, tea processing, sugar processing, poultry farming, dairy farming, fruit growing, post-harvest handling and storage facilities among others.