Commercial banks, especially those operating in rural areas, need to develop specialised products for farmers as a way of speeding economic growth as well as addressing some of the current problems including inflation.
Speaking at the launch of Crane Bank’s Masaka branch, Mr Joseph Kalungi, the district’s LCV chairman said: “Over 70 per cent of Uganda’s economy is built on agriculture, thus any investor has to figure out how to include farmers in the financial chain in order to unlock farmer’s potential.”
“This, he added ‘requires the development of specialised savings and credit products built around the farmers’ seasonal cycle.
According to Mr Kalungi, increased recruitment of farmers into the formal financial sector will help to sort the problem of cyclical increases in food prices and partly resolve the bigger problem of inflation which is partly responsible for the current crisis.
Food composes nearly 27 per cent of inflation nearly twice what other components including inflation contribute to inflation.
For the average household, according to Uganda Bureau of Statistics, food-related expenditure consists of about 45 per cent. According to some experts Uganda’s failure to keep inflation below the targeted 5 per cent is a result of her failure to match economic growth with agricultural production.
Banks particularly Crane Bank have in the last five years pursued an ambitious expansion plan moving into rural areas thus extending financial inclusion. The Masaka branch is Crane Bank’s 21st branch; however, the bank is looking to open up more branches across the country to make it 25 branches before close of 2012.
Mr Sudhir Ruparelia, the bank’s deputy chairman said. “Branch expansion is part of our larger plan to mobilise deposits, which we can deploy in vital sectors such as agriculture and mortgages.”