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Banks devise ways of increasing lending to agriculture



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.

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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National Coffee Forum Petitions Parliament Over UCDA Merger



Coffee stakeholders through National Coffee Forum say UCDA merger will disrupt the coffee sub-sector. Coffee is one of the leading sources of foreign exchange for Uganda

Coffee stakeholders through the National Coffee Forum – Uganda (NCF – UG) has petitioned Parliament through the Speaker over the proposed mainstreaming of Uganda Coffee Development Authority (UCDA) into Ministry of Agriculture, Animal Industry and Fisheries (MAAIF)

The government plans to merge a number of Agencies to the line Ministries in a move aimed at saving about Shs1 trillion annually. If the move succeeds, UCDA will be taken to MAAIF.

However, coffee stakeholders through NCF – UG say that they find the proposal to take UCDA to MAAIF untenable and detrimental to the coffee sub-sector.

NCF-UG is a private foundation whose membership includes farmers, processors, exporters, roasters, brewers and researchers, among others.

The Forum Chairperson Francis Wakabi says that mainstreaming the entity will negatively affect the achievements Uganda has attained in coffee production and export.

“This decision will negatively affect our access to the international market and will stunt Uganda’s economic growth opportunities by distorting the functions of UCDA that have stabilized the industry over the years,” said Wakabi in a petition dated February 21, 2024. The petition was copied in to the Chairperson of Parliament’s Committee on Agriculture, Animal Industry and Fisheries as well as all MPs.

He adds that Uganda should not risk its achievements by tampering with UDCA that is the main contributor to our coffee success story.

“Mainstreaming it would therefore disrupt the many livelihoods that depend on the industry and adversely affect the badly needed foreign exchange for the country,” the petition reads in part.

As a result of UCDA coffee regulation, Wakabi says that Uganda’s competitiveness was elevated on the global market, ensuring high quality Uganda coffee and enabling Uganda’s coffee to displace that of Brazil and India in Italy and UK coffee markets.

“… World over, coffee is supervised and regulated by a specialized body like UCDA for purposes of institutional memory and specialized focus. Experience from Ethiopia and Kenya who disbanded their specialized coffee authorities and mainstreamed them back into the relevant ministries had to reverse their decisions after registering negative outcomes,” said Wakabi.

The Forum further says that the European Union (EU) buys over 60% of Uganda coffee, making it the biggest market for Uganda.

“The EU has introduced a new regulation called the EU deforestation regulations (EUDR) which bans export of coffee from deforested land, taking effect from 2025. This calls for farmer traceability and the EU commission in Uganda is already working with UCDA to implement the said regulations. They require a country to constantly monitor deforested areas and map all the farmers for purposes of implementation of the farmer traceability program to maintain a high standard of quality. It was reported that Uganda has achieved most of the requirements under the EUDR and required a few steps to be declared compliant. Monitoring and implementing the scheme for the millions of farmers is a tedious activity which requires a specialized unit that can be best implemented using the already established structures of UCDA. Disrupting the current UCDA structure will not only halt the progress made in achieving compliance, but also risk reversing the gains made,” added Wakabi.

He avers that UCDA has been able to greatly contribute to Uganda’s improved Coffee quality through implementation of programs such as certification of Coffee nurseries to ensure quality of planting materials, Provision of Coffee specific extension services and agronomy to improve production and productivity, Provision of technical expertise in Coffee rehabilitation, post-harvest handling practices and pest and disease management and provision of coffee processing equipment like wet mills to farmers and cooperatives to improve quality and promote value addition. The coffee stakeholders are worried that once UCDA is taken to MAAIF which is loaded with many crops and projects, coffee, a key source of foreign exchange for Uganda may not get the necessary priority. Coffee stakeholders argue that if indeed Parliament is a people-centred institution, it should listen to the views of farmers and other stakeholders and retain UCDA as a semi-autonomous agency.

“Given the above position with the attendant reasons, the NCF advises that the proposed mainstreaming of UCDA into MAAIF should not be implemented and that the proposed Bill No. 30 (part VII) be dropped in order not to disrupt the industry and the progress made under the stewardship of UCDA. All coffee stakeholders are unanimously in agreement with this position,” reads the petition in part.


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Govt to import 10 million vaccines to control cattle disease



Entebbe, Uganda.  Government is set to import 10 million doses of vaccines to enable scaling up of ring vaccination as the fight to eradicate Foot and Mouth Disease (FMD) in Ugandan cattle enters a new phase.

Cabinet chaired by President Yoweri Museveni on Monday also proposed that once ring vaccination is complete, farmers start paying for the FMD vaccines in a compulsory vaccination scheme, and thereafter, trade in animal products, will be restricted to those adhering to the plan.

Minister of Agriculture, Animal industry and Fishers Frank Tumwebazwe on Monday shared the resolutions after Cabinet laid out strategies to contain the disease that has hit 36 districts.

Cabinet agreed to create a revolving fund to enable procurement of sufficient FMD vaccines to facilitate compulsory bi-annual vaccination of the susceptible domestic animal population. It also approved a plan for farmers to pay for the vaccines while government covers other costs.

“Vaccination is to be made compulsory. Proof of vaccination will be a precondition for any farmer to sell any animal products,” said Minister Tumwebazwe.

“I appeal to fellow livestock farmers and stakeholders to understand and appreciate these effort as we steadily move to eradicate FMD in Uganda just like other animal diesases like rinderpest wre eradicated.”

Ntoroko veterinary disease surveillance team conducting FMD surveillance and sample collection

The 36 districts currently affected and under quarantine are Budaka, Bukedea, Bukomansimbi, Bunyangabu, Butaleja, Fortportal City, Gomba, Ibanda, Isingiro, Kabarole, Kasanda, Kayunga, Kazo, Kiboga, Kibuku, Kiruhura, Kumi, Kyankwanzi, Kyegegwa, Kyotera, Luuka, Lwengo, Lyantonde, Mbarara, Mbarara City, Mityana, Mpigi, Mubende, Nakaseke, Nakasongola, Namisindwa, Ngora, Ntungamo, Rakai, Rwampara and Sembabule.

All districts neighboring the affected districts are at high risk, under strict surveillance, and the authorities have been advised to remain vigilant.

These include Apac, Amolatar, Bugiri, Bushenyi, Butaleja, Hoima, Iganga, Jinja, Kabale, Kaberamaido, Kaliro, Kamuli, Kamwenge, Katakwi, Kasese, Kibaale, Kiboga, Kyenjojo, Mbale, Masindi, Mayuge, Mukono, Namalemba, Nakapiripirit,
Palisa, Rukungiri, Sironko, Wakiso and Soroti.

Tumwebaze assured farmers that in the next one or two months, his Ministry expects to receive and dispatch 2.3 million doses of the FMD vaccine to the affected and susceptible districts for ring vaccination scale-up.

He told parliament earlier that as a way of increasing availability of Foot and Mouth Disease vaccines in the country,
Uganda’s National Agiculture Research Organisation (NARO) has started the process of formulating and developing an FMD vaccine for Uganda.

Source: The independent

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Farmers losing Shs4 trillion due to livestock diseases



ScienceDirect has revealed that farmers in Uganda lose more than $1.1b (Shs4.1 trillion) in aggregated annual direct and indirect loss due to the rising spread of tick-borne animal challenges, with the commonest and economically damaging tick-borne disease being the East Coast Fever.

The livestock industry in Uganda and its productivity continue to be threatened by a number of diseases many of which are tick-borne related.

This, Dr Anna Rose Ademun, the Ministry of Agriculture commissioner animal health, said results from arcaricides that have become resistant, thus the need to ensure collaboration and get solutions to the problem.

“There are ongoing efforts by the Agriculture Ministry, in collaboration with the Food and Agriculture Organisation to support diagnosis of tick resistance to acaricides at regional laboratory centres but this is not enough,” she said during the livestock industry key stakeholders meeting in Kampala, which had been convened to discuss and prioritise areas for tick control.

The stakeholders included veterinarians, extension staff, farmers, processors and government representatives.

Ministry of Agriculture is already working on the Managing Animal Health and Acaricides for a Better Africa Initiative, which seeks to, among others, provide sustainable solutions to enable small-scale farmers maximise the potential of their cattle by developing and practicing methods that can successfully manage tick infections in cattle.

During the meeting, the TickAcademy App, which will support farmers in managing tick infestations was also pre-launched.

By the end of January, farmers and extension workers will be able to access the app’s educational content, which includes simple-to-watch films, to help them become knowledgeable about tick control.

Mr Enrique Hernández Pando, the GALVmed head of commercial development and impact, said the Managing Animal Health and Acaricides for a Better Africa Initiative will be important in tackling acaricide resistance challenges as well as help farmers and animal health officers to access creative methods of addressing the problem of acaricide resistance.

During the meeting, stakeholders jointly agree to train and sensitise field staff and farmers about tick management strategies that work, as well as strengthen the diagnostic infrastructure and testing capabilities for tick resistance and other animal health-related concerns.

Others will involve making it easier for farmers to obtain credit from savings institutions run by farmer groups at a reasonable cost so they may purchase specialized equipment for applying pesticides.

Mr Nishal Gunpath, the Elanco Animal Health country director south and sub-Saharan Africa, said they will support the Initiative to drive livestock in a better direction, noting that it will also help small-scale livestock farmers to maximise their potential.

Original Source: Daily Monitor

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