Fourteen years ago the government in partnership with the commercial banks, Uganda Development Bank Ltd, Micro Deposit Taking Institutions and Credit Institutions introduced the Agricultural credit Facility.
The loans under the Agricultural Credit Facility are disbursed to farmers and agro processors through commercial Banks, UDBL, MDIs and Credit Institutions at favourable terms and are usually available under conventional loans.
“ We do support the entire value chain, all the way from the production,” prossy Namala the head of Disbursement Agriculture credit Facility at the Bank of Uganda said.
Meanwhile the maximum loan amount to a single borrower is up to Shs 2.1b. However it can be increased up to Shs 5 b on a case by case basis for eligible projects that add significant value to the agriculture sector and the economy as a whole.
Meanwhile there is no designated minimum loan amount to the final beneficiaries who are farmers however Bank of Uganda can only reimburse a minimum of Shs 10m to the lending institutions.
Private sector businesses or individuals whether small medium or large operating in Uganda and are engaged in agriculture, agro processing and grain trade among others are all eligible to get the credit facility.
Alex Tumwine one the beneficiaries of AFC in 2021 received Shs 150m that he invested in his cattle fattening business.
He also included farm improvement such as farm clearing, planting of maize and cattle purchase.
Tumwine started paying the loan back after six months at an interest rate of 12%per annum. Tumwine encouraged all farmers to go for AFC to commercialize agriculture production.
However similarly Mr Byarugaba Emmanuel a resident from Hoima district who also got AFC financing to the tune of Shs 56 m. He owned land that he desired to open for commercial agriculture.
“ I got a loan under the Bank of Uganda AFC program which I had to pay back in three years at a low interest rate of 12% per annum. I have managed to open my land in Mubende district and expand my production into coffee and animal rearing. I got to know the facility from an agricultural show,” he said.
However according to the central bank, to have access to the credit, all eligible borrowers have to channel the application through participating in financial institutions of their choice.
Meanwhile the loan amount is determined based on assessment and appraisal of project costs and genuine credit needs following the lending policy of the respective participating financial institution and its designated in Uganda shillings.
