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Banks devise ways of increasing lending to agriculture

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A teller counts money in a bank. Bankers have started the conversation about lending more to the agriculture sector. the share of lending to agriculture as a percentage of total private sector credit has more than doubled from 5.2 per cent in 2009 to 12 .9 per cent in 2019. PHOTO BY ERONIE KAMUKAMA 

By Martin Luther Oketch

Agriculture can offer an opportunity for inclusive, economic growth, particularly in developing countries such as Uganda. With sufficient financing for sustainable and climate-smart production systems, experts believe that the sector can unlock economic potential.

In response to the above benefits, commercial banks in Uganda are positioning themselves to use an ecosystem to increase lending to the agricultural sector in the next five years based on their aspiration of raising lending to agriculture to 20 per cent from the current 12 per cent.

Agriculture lending
The last decade has seen a remarkable improvement in lending to agriculture. Private sector credit to this sector has increased in nominal terms from Shs241.7 billion in 2009 to over Shs1.6 trillion in early 2019. Currently, the share of lending to agriculture as a percentage of total private sector credit has more than doubled from 5.2 per cent in 2009 to 12 .9 per cent in 2019

The agriculture ecosystem is an open system, whereby continuous human intervention is needed for the maintenance of equilibrium with the aim of maximising the production provided by a few domesticated plants (crops) and animal species.

In an interview with Prosper Magazine last week, the chairman Uganda Bankers Association (UBA) who is also the chief executive of Stanbic Bank Uganda, Mr Patrick Mweheire, said by increasing lending to agriculture, banks will aggregate farmers in groups depending on what crops they produce such as barley, cocoa, coffee and maize among other crops grown in Uganda.

“We have scaled up financing (lending) in specific crops grown by the farmers under the ecosystem,” he explained.

Mr Mweheire said partnerships such as the Agriculture Credit Facility (ACF) at Bank of Uganda and other initiatives will help in de-risking agriculture.
He said as Stanbic bank Uganda they have financed the entire value chains with Nile Breweries.

Mr Mweheire challenged bankers to rethink about financing agriculture.
“Bankers and financers must start seeing agriculture from another pair of lenses. We must invest in understanding the dynamic and cycles in agriculture and structure appropriate financing models that suit agriculture and its value chains,” he said.

Agriculture contributes 25 per cent of the Gross Domestic Product (GDP) of Uganda, and banks’ want to match lending to agriculture with the same level it contributes to GDP.

Asked how Stanbic Bank is doing regarding lending to agriculture, Mr Mweheire said: “At stanbic our lending to agriculture is already at 25 per cent.”
Bankers aspire to increase lending to agriculture from the current 12 per cent to 20 per cent in the next four to five years.

The executive director of Uganda Bankers Association, Mr Wilbrod Owor, said, “It is a change that will take some time.”
The Rabobank Group operates in 48 countries, providing clients in every market with industry expertise, extensive experience, innovative resources – and deep local market and sector knowledge.

Agricultural financier 
Rabobank is rooted in the Netherlands and has a large network in the agricultural business, research and education sectors.

Rabobank — a global leader in food and agriculture financing — has played an important role in developing Dutch agriculture and horticulture, both businesses in the Netherlands.

Rabobank was founded in the 1890s by farmers as a small cooperative of banks serving their rural communities. The cooperative model was designed to provide a fair and reliable source of credit to local customers through a system of shared liabilities, pooled resources and reservation of profits.
Rabobank expanded its business scope and geographic presence throughout the 20th century, adding a broader range of banking and financial services to meet the needs of its customers in the Netherlands and internationally.

Here in Uganda, Rabobank is supporting agriculture through the Netherlands Embassy. In dfcu bank, it is giving technical assistance on issues related agriculture financing.
Ms Marianne Schoemaker, the managing director, Rabo Partnerships, explained how banks can de-risk agriculture to promote decent youth employment and inclusive growth.

In an interview with Prosper Magazine, on how banks in Uganda can increase their lending to agriculture, Ms Marianne said banks should understand the business of their clients.

“They (banks) need to have an understanding of the business that they are servicing well; for instance, fish supplier trend, logistic inputs for the case of crops and the risks,” she said.

Ms Marinne said government needs the knowledge on how to blend financing for that particular product.
Sharing her knowledge on how Rabobank has operated effectively in agriculture financing, Ms Marianne said their operation is based on knowledge, network and finance.

“These three are crucial because it provides the insights on our operational models,” she
Marianne added: “Use the knowledge and come up with the financing solutions for clients. You need a network that provides information to you whether to provide financial support or technical assistance,” she explained.

Agriculture Insurance
During the Financial year 2016/17, government of Uganda established the Uganda Agriculture Insurance Scheme (UAIS) as a pilot project whose objective is cushion farmers from risks associated with losses from natural disasters while attracting financing to agriculture.

Agriculture Insurance encourages commercial banks to lend to the agriculture sector given that the risks associated with agriculture are mitigated through appropriate insurance covers, improving access to agriculture loans.

The scheme provides an insurance cover for crops and livestock, for both small and large-scale farmers. Under the scheme, government provides premium subsidy funds, and in collaboration with industry players also undertakes publicity, sensitisation and training of farmers.

The Insurance Regulatory Authority of Uganda (IRA) provides the regulatory oversight and quality control, Bank of Uganda on the other hand, manages the drawdown on UAIS Account, while monitoring and evaluation of the scheme is done by the UAIS Technical Working Committee.

Started on July 1, 2016 with Shs5 billion, the Uganda Agricultural Insurance Scheme (UAIS) is a Public Partnership arrangement, which covers five years.

The Acting Commissioner Financial Services in the Ministry of Finance, Mr Ira Kirungi John Byaruhanga, said the number of farmers accessing the agriculture insurance scheme has grown.

“In the last one year, we have seen uptake in this scheme increasing. 77,000 farmers are accessing the funds through the scheme,” he said.

In developing Uganda’s agricultural sector to the desired level, which attracts high credit services from the commercial banks, the governor Bank of Uganda, Mr Emmanuel Tumusiime Mutebile, said potential areas of further investment for government and the financial sector include roads, cold storage, transport, support for farmer organisations, agricultural extension and out grower schemes.

“Bank of Uganda will continue working with government and commercial banks in promoting affordable agricultural finance through the Agricultural Credit Facility, which we encourage all eligible borrowers to take advantage of,” he said.

Agriculture Credit Facility
The Agriculture Credit Facility (ACF) cumulatively disbursed Shs332 billion by 31st March, 2019, to finance 551 eligible projects. This enabled borrowers to establish large capacity agro-processing facilities, expand grain trade and investment in warehousing and expanding farm infrastructure.

However, 15 loans valued at Shs9.4b financed under the ACF were due for write off as at March 31, 2019.

The Netherlands’ Ambassador to Uganda, Henk Jan Bakker said di-risking agriculture finance is of critical importance to the development of Uganda’s economy. Ambassador Henk observed that commercial interest rates are still high. “Money cost is very expensive in Africa as a whole,” he said
Going forward, Ambassador Henk advised that to develop Uganda’s agriculture system government, donors and private sector have a role.

INVESTMENT AREAS
In developing Uganda’s agricultural sector to the desired level, which attracts high credit services from the commercial banks, Mr Mutebile said potential areas of further investment for government and the financial sector include roads, cold storage, transport, support for farmer organisations, agricultural extension, and out-grower schemes.
Mr Mutebile said it is also necessary to address information asymmetries, for example, by matchmaking international firms and local suppliers.
“Only through boosting agricultural development through inclusive rural-urban links will we effectively harness the agriculture sector as a dominant source of employment. I applaud the UBA for rising to this challenge and call upon Government to join the bankers in the modernization of agriculture for job-creation and inclusive economic growth,” he said.

De-risking agriculture
Several other initiatives have been introduced to harness opportunities while combatting obstacles including de-risking lending to the agricultural sector with schemes such as the ACF at Bank of Uganda, the agri-business development & guarantee scheme at aBi Trust, the Ugandan Agricultural Insurance Scheme, farmer skills empowerment programmes to enable them to undertake agriculture as a business.

More recently, there have been increased points of access to financial services through agent banking and use of other digital infrastructure to speed up financial payments and money flows through technology.

Without incentives, farmers are limited in their ability to invest the time and capital to change agricultural practices and overcome technical, cultural or financial barriers to sustainable production.

These incentives encourage farmers to protect and deliver more services through better management of crops, livestock, forest and fisheries, and conservation of endangered species and protected.

Original Source: Daily Monitor

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FARM NEWS

Govt moves to set up food and agriculture regulatory authority

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Agriculture minister Frank Tumwebaze tabled the Food and Agriculture Regulatory Authority Bill, 2026, for first reading in Parliament on August 25, 2026. (Credit: Maria Wamala)

The Bill has been referred to the Committee on Agriculture for scrutiny. The proposed authority will regulate the manufacture, processing, importation, exportation, distribution, transportation, advertisement, labelling, storage, sale and supply of veterinary medicines, agricultural chemicals, veterinary equipment and devices.

KAMPALA – The Government has proposed the creation of a food and agriculture regulatory authority to bring food, animal medicines, agricultural chemicals and related products under one regulatory framework.

Agriculture minister Frank Tumwebaze tabled the Food and Agriculture Regulatory Authority Bill, 2026, for first reading in Parliament on August 25, 2026.

The Bill has been referred to the Committee on Agriculture for scrutiny. The proposed authority will regulate the manufacture, processing, importation, exportation, distribution, transportation, advertisement, labelling, storage, sale and supply of veterinary medicines, agricultural chemicals, veterinary equipment and devices.

It will regulate food and feed manufacturing, processing and distribution, oversee food and feed safety, develop standards, inspect and certify agricultural inputs, and establish traceability systems for regulated products.

The Bill’s memorandum presents a troubling picture of the current food and agricultural regulatory system, stating that the country is “flooded with counterfeit substandard veterinary medicines and agricultural chemicals.”

It cites concerns over medicines and chemical residues, aflatoxins, harmful microorganisms and heavy metals in food and feed, warning that such contaminants compromise public health and the safety of agricultural exports.

Members of Parliament during Plenary on Tuesday. (Credit: Maria Wamala)The memorandum attributes the problem in part to “fragmented regulation”, which it says has resulted in weak and uncoordinated regulation by multiple agencies, duplication of efforts and inefficiencies in enforcement.

It argues that the absence of a single body overseeing the food and agriculture value chain “undermines the effectiveness of regulation” and creates uncertainty for stakeholders.

The proposed authority will inspect food premises, certify meat for public consumption, inspect and certify fish, regulate processed and semi-processed food, and oversee the storage and transportation of food.

The Bill seeks to regulate food packaging, labelling and advertising, while prohibiting the use of radioactive materials, heavy metals and banned substances in food. It provides for residue monitoring to detect harmful substances in food products.

Members of Parliament during Plenary on Tuesday. (Credit: Maria Wamala)

For agricultural chemicals, the Authority will license manufacturers, distributors, fumigators and commercial applicators. It would regulate the import and export of chemicals, as well as their packaging and labelling, storage, sale and advertising.

The Authority will have powers to recall agricultural chemicals and deal with prohibited, banned, restricted, falsified or adulterated products.

The Bill proposes inspectors and analysts with powers to access establishments, conduct sampling and analysis, seize adulterated products and oversee the disposal of obsolete, banned, prohibited and expired products.

Inspectors will, in certain circumstances, order the detention, return or destruction of non-compliant consignments.

The proposed authority will be a body corporate with perpetual succession. Its functions include the registration of veterinary medicines, veterinary devices, veterinary equipment, agricultural chemical application equipment and agricultural chemicals for use in Uganda.

The authority will be governed by a nine-member board appointed by the minister. The board will comprise a chairperson, six members with expertise in veterinary medicine, agriculture, pharmacy, standards and environmental science, and two representatives of farmers nominated by a recognised farmers’ federation.

The Bill contains 13 parts, 101 clauses and three schedules. It seeks to amend the Dairy Industry Act, Fisheries and Aquaculture Act, National Coffee Act and Animal Feeds Act, while repealing the Agricultural Chemicals (Control) Act and the Food and Drugs Act.

The proposed law seeks to give the Minister power to issue written policy directions to the authority.

The Government argues that the new framework would improve the quality and safety of agricultural inputs, strengthen consumer protection and help Uganda gain access to regional and international agricultural markets.

The Bill moves to the Agriculture Committee, where MPs are expected to examine its regulatory, institutional and enforcement provisions before it returns to the House for further consideration.

The public, including experts, are expected to provide their views on the Bill.

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FARM NEWS

Concern over low cassava yields in Bukedi region

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For decades, cassava has been more than just a crop in Bukedi Sub-region in eastern Uganda. It has served as a lifeline, providing a reliable source of food during droughts, a key source of household income and an integral part of the region’s cultural identity.

Across the districts of Budaka, Kibuku, Butebo, Pallisa and parts of Butaleja, cassava gardens once stretched across vast expanses of land. Families harvested the crop throughout the year, processed it into flour and sold surplus produce in local markets.

Today, however, those fields are shrinking. Farmers are increasingly abandoning cassava cultivation in favour of crops they consider more profitable and less risky, raising concerns about food security and the future of one of Bukedi’s traditional staples.

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FARM NEWS

Parliament gives Jinja land office three months to clear backlog

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Some staff of the Jinja Ministry Zonal Office meet members of the Parliamentary Committee on Land on August 27, 2026. PHOTO/TAUSI NAKATO.

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