Farmers Yet to Access Agricultural Credit Facility

1972 Views Fort Portal, Uganda

In short
The fund is administered by Bank of Uganda through selected commercial banks. Under the service, government finances 50 percent of the total credit sought while the banks provide the other 50 percent. The loans have a three year grace period and a 10 percent annual interest rate.

Large scale farmers in Kabarole district are yet to benefit from the agricultural credit facility set up more than five years ago. The facility was set up in 2011, to finance farmers who wanted to purchase machinery like tractors, irrigation equipment and storage facilities among others.

The fund is administered by Bank of Uganda through selected commercial banks. Under the service, government finances 50 percent of the total credit sought while the banks provide the other 50 percent. The loans have a three year grace period and a 10 percent annual interest rate.

However in a survey conducted by URN in Kabarole district, farmers are not accessing the service.

Some of the banks in Fort Portal like Centenary, Post Bank and Stanbic that URN spoke to say, they have not received applications from farmers who are interested in the facility. 

Chris Mugenyi, the head of credit at Post Bank, Fort Portal Branch, says farmers who go to the bank only to apply for loans offered by the bank and ignore the credit facility. Mugenyi says that the bank has publicized the facility, to no avail. 

At Centenary Bank, Fort Portal Branch, records show that 4 Billion Shillings provided under the credit facility is yet to be utilized.

But Gerald Amanyire, the Secretary Kabarole district farmers' association, says that farmers are not aware of the facility because it has not been popularized by the government and the financial institutions. He explains that banks are deliberately not popularizing the facility for fear of losing their own loan services since the government facility has lower interest rates.
 
Amanyire argues that if the facility is well popularized, it will go a long way to improve on agricultural productivity.
 
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Betty Mugisa, a farmer in Rwimi Sub County, who owns 10 acres of rice, says that if she was aware of the credit facility, she would have purchased irrigation equipment to water her rice gardens. She explains that during the dry season, she loses more than 5 acres to weather conditions because she cannot afford a standard irrigation facility because of her low income.
 
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Francis Isingoma, a farmer in Karambi Sub County, says that the facility should not only be offered by banks, but also micro-finance institutions and Savings and Credit Cooperatives (SACCOs). He says that few farmers have accounts in commercial banks.
 
He also says that the government should revise the agricultural credit facility with the immediate objective of also targeting the small scale farmers. 

 

About the author

Emmanuel Kajubu
Emmanuel Kajubu is proud to have been the first Ugandan journalist to write in depth pieces about the Tooro Kingdom institution. His knowledge of the inner workings of the Tooro Kingdom is what made him privy to the splits in the royal family. These splits almost challenged Tooro Omukama Oyo Nyimba Iguru's reign.

Culture, agriculture and the environment are just two areas of many of interest to Kajubu. As long as he has held a pen, Kajubu has also written about public policy, health and crime.

Kajubu is keen on impacting his society not just as a writer but also a trainer and mentor. Bundibugyo and Ntoroko districts fall under his docket. Kajubu has been a URN staff member since 2008.