The Independent Uganda: You get the Truth we Pay the Price
Kampala, Uganda | THE INDEPENDENT | Bank of Uganda Deputy Governor Dr Louis Kasekende has dispelled claims that the Agriculture Credit Facility (ACF) administered by the central bank was nonfunctional, saying there are success stories to speak for it.
Kasekende was speaking at the ten-year anniversary of the facility on Thursday evening at Sheraton hotel, where Postbank Uganda was awarded as the financial institution that has given out more money to farmers under the scheme. Stanbic and DFCU banks came second and third respectively.
The ACF was started in 2009 as a platform where government and private financial institutions bring resources together and lend them to agriculture at a 12 per cent interest rate, far below the market rates of usually 20 per cent. The money is disbursed to farmers through participating financial institutions.
As of March 31, 2019, the Scheme had registered total disbursements amounting to 332.04 billion Shillings extended to 551 eligible projects across the country. The government had contributed 167.79 billion Shillings. The remainder is contributed by banks.
“Often whenever Governor and I, interact with various segments of the country’s political and business class, the common thread is that the ACF is not working and is inaccessible for the majority of farmers. This is far from the truth… the ACF is performing well in line with those set objectives,” Kasekende said.
At a recent retreat in Chobe Safari Lodge in Nwoya district, the top NRM leaders approved a proposal that the administration of the facility is moved from BOU to Uganda Development Bank (UBD) for easy access to farmers. They said BOU had failed to make the fund have an impact.
But Kasekende said that the government reports issued by the Ministry of Finance in April 2019 and an earlier one in December 2018 had rated the ACF at a score of 76.2 per cent compared to the overall agriculture sector rating of 61.8 per cent.
“In fact, only Uganda Coffee Development Authority (UCDA) attained a higher score,” he said.
He said the facility also had a low loan defaulter rate, a testament that the projects funded are scrutinized well.
“The smallholder farmers have not been a target – perhaps that’s why the success of the scheme has not been much visible,” he added.
Joanita Kamuli Babumba, the Deputy Director of ACF at BOU, said they were going to introduce a block allocation up to 1.5 billion Shillings to the participating financial institutions, to particularly address the needs of the small and micro-borrowers.
“This will allow for the extension of collateral free loan facilities up to 20 million Shillings to commercially viable small and micro enterprises,” she said.
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