Provide farmers soft loans as means of boosting agriculture

Monday July 2 2018

Farmers have asked government to gazette a

Farmers have asked government to gazette a national farmers’ day to recognise and celebrate farmers contribution to the country’s development. FILE PHOTO 

By Jacob Opio

Uganda’s economy has continued to grow at a steady rate of 6.5 per cent annually for the past several years. And of all the four sectors - ICT, industry, and services - have and continue doing well, while agriculture seems to be stagnating and struggling. During the State-of-Nation Address on June 6, the president said agriculture employs 38 per cent of Uganda’s work force and contributes nearly 37 per cent of the GDP.

With naturally endowed resources such as ample fertile soils, warm climate and relatively regular rainfall, agriculture would by far, be the most successful sector in the economy, had it not been for government’s neglect of the sector. This is evidenced by the meagre allocation of Shs832b in the 2018/19 financial year Budget. This is 3.8 per cent of GDP, which is way below the 10 per cent recommended by the Abuja Declaration to which Uganda was a signatory.

The challenges in the agriculture sector range from top policy makers, who make all the decisions down to the disgruntled grass roots farmers or households. I picked out two major ones that need to be addressed: There is a ministry for Agriculture with a budget for designing frameworks that should propel the sector, but a lot is left to the imagination as to whether plans are fully implemented.

First, the lack of efficient credit facilities to provide farmers with soft loans and capital, has limited application of technology in agriculture. The few existing credit facilities are either far away in urban centres or they ask for collateral securities, which many farmers can’t afford. The good news is that government can revive by recapitalising Saccos to provide these farmers with capital to invest in Agriculture as well as providing tax incentives, including low taxes on agricultural inputs and machinery, tax holidays for industrialists dealing in agricultural inputs and machinery, which in turn could attract more investments in the sector.

Putting in place insurance programmes to safeguard farmers against loss in times of natural disasters is an additional mechanism that would augment inclusiveness in the sector.
Secondly, there have been targeted government interventions such as seed distribution and provision of extension services, but these have not yielded much.

So-called improved seed varieties are distributed to household farmers at grassroot level with little or no technical instructions on how to handle and care for such crops during and after planting. For example, in Soroti District treated maize seeds were distributed to the locals, but they opted to boil it to get rid of chemicals used in treating them before they eat them.
Operation Wealth Creation has since sidelined Naads that had the technical expertise to sensitise farmers on such matters.


Jacob Opio,
Uganda Debt Network