Stanbic Bank explain farmer’s loans

The Agriculture sector is key to the Ugandan economy contributing 25 per cent of the national Gross Domestic Product (GDP).
More than 65 per cent of Ugandans find a source of livelihood in farming, many of them on subsistence level.
The bank leverages from its wide branch network that covers both urban and rural, upcountry locations where the economy is primarily driven by agriculture.

The Agriculture sector is key to the Ugandan economy contributing 25 per cent of the national GDP and employing more than 60 per cent of the work force. How has Stanbic Bank been involved in supporting the growth of the agriculture sector?

As a bank with wide branch network positioned mostly in upcountry locations where the economy is primarily driven by Agriculture, our presence in these areas means we work closely with the sector and help it grow. Beyond this, Stanbic has been instrumental in providing affordable loans and credit facilities to individual farmers, cooperatives, large scale plantation owners, farm suppliers and other stakeholders.

These facilities worth Shs350b in 2017 have helped create a local market for farm produce, generate jobs and add value in form of finished
products. As a result, the country has been able to earn valuable foreign exchange with about $500m being generated every year from agriculture exports as part of our involvement.

Which specific agricultural arrears does the bank support?
We touch almost all agricultural sectors, however those where we have the greatest impact are; tea, dairy and beef in the west; grain and seed oil in the north; sugarcane cane processing in the east. In the central region where a lot of the agricultural produce is brought for collection, processing and trade. Stanbic has helped finance construction of factories, processing and storage facilities and packaging plants.

What types of financing facilities does the bank provide and what are they mainly used for?
The bank provides short and long and short term facilities which are used for a variety of purposes including; the purchase of farm inputs, construction of processing facilities, purchase of machinery and importantly working capital during harvest and trade periods. Just to give you an example during the peak trading periods in the Lira sub-region we provide aggregators with revolving credit equivalent to about Shs20b per month.

Do Farmers at the grassroots level feel the impact of the bank financing?
Yes they certainly do and mostly in-directly through larger clients. By financing the aggregators, final processors, large scale buyers and cooperatives; we certainly touch the grassroots farmers because without us there would be no one with the money to buy their produce and access the markets the majority of which are miles away.

Beyond financing, what else does Stanbic do for farmers and players in the agriculture sector?
One of the most important services we provide but is often overlooked is advice on future exchange rate fluctuations helping farmers and other sector players who are very dependent on imported inputs to save money by hedging in forward rates with us. Such inputs include seedlings, fertiliser and animal feed. Further to this are the provision of comprehensive banking solutions that include trade facilities (letters of credit, collection, and export and import facilitation).

Mechanisation is an indispensable ingredient towards scaling up agriculture. Has Stanbic been involved in financing of machinery?
Wangwe: Yes we have, through our vehicle and assets purchase scheme, farmers have been able to access loans and hire purchase products using them to buy/lease tractors, mechanised ploughs, trucks and delivery vehicles. This has helped improve on productivity and scale up many Agricultural based operations.

Processing of Agricultural products into finished goods is key to the development of the economy has the bank been involved in making this possible?
Over the past 20 years Stanbic bank has provided financing that has been used to construct and upgrade numerous factories and Agro-processing plants across the country. Two examples are Kakira Sugar Works Ltd and Rusekere Growers Tea Factory, Agroways to mention but a few. The Rusekere plant is impressive because by using a series of mid-sized loans the owner has managed to scale up his operations and now produces 3.5 million tonnes of tea for export.