Agric financing grows by Shs150b

Farmers can now easily access financing to boost productivity.

What you need to know:

Incentive. The facility has enabled banks to venture into an area they considered risky.

KAMPALA. The Agriculture Credit Facility (ACF), meant to encourage banks lend to agriculture and increase productivity in the sector, has grown by Shs149.6 billion.
The ACF scheme was introduced by the government through the Ministry of Finance in 2009 but actual disbursements commenced in 2010.

Speaking at a workshop to review progress in the scheme in Kampala last week, the executive director of finance Bank of Uganda (BoU), Mr David Kalyango, said: “The ACF has no doubt registered a significant growth from Shs46.4 billion as of December 2010 to Shs196.0 billion as of December 31, 2015.”
Mr Kalyango said the success of the scheme is largely attributed to the active involvement of the participating finance institutions (PFIs).

“We appeal to all financial institutions, especially those not yet on board, to embrace the scheme in the spirit of developing the agricultural sector,” he said.
Currently, there are 18 PFIs actively providing funds under the ACF scheme.
Mr Kalyango explained that the scheme operates under a Memorandum of Understanding signed by the ministry of Finance on behalf government, PFIs, which includes commercial banks, credit institutions and microfinance deposit taking institutions, and BoU, which plays a role of the fund administrator.

The funds are contributed by both the government and the PFIs, the commercial banks with each contributing 50 per cent of any loan given to a farmer/agro-processor, the MDIs and credit institutions contribute 30 per cent and the government 70 per cent.
My Kalyango said overall performance of the ACF as at December 31, 2015 was encouraging, revealing that a total of 416 loan applications worth Shs303.7 billion had been received at Bank of Uganda, and 325 eligible projects across the country have benefited.

There are 404 agricultural projects under the scheme.
Mr Kalyango projected that the facility portfolio is likely to hit Shs500 billion mark in five years.
The head of Agribusiness Stanbic Bank Uganda, Mr Richard Wangwe, said the ACF has enabled commercial banks to venture into the territory that bankers had previously considered very risky.
“This has led to increased appetite for agriculture financing in participating financial institutions while at the same time the agriculture sector has had opportunity to access better structural funding under ACF,” he said.

The banks that are involved in Agriculture financing include DFCU, Centenary Bank, Standard Chartered, Stanbic, Housing Finance, Barclays, Baroda and Orient, among others.