Free Access | 2024-04-12

AGRICULTURAL FINANCE YEAR BOOK

Authors/Editors: Brian Sserunjogi (PhD) ,  Sarah Ssewanyana (PhD) ,  Regean Mugume ,  Medard Kakuru ,  Bulime Enock W.

Abstract:

The 2021 Agricultural Finance Yearbook, which is the eleventh edition in the series offers an in-depth analysis of the Agricultural financing landscape in Uganda. The 2021 publication is made up of five chapters that highlight key processes, achievements, challenges and gaps in Policy, Financial Institutions Operations, Innovations and Digitalisation, Financing of Agricultural Value Chains as well as Financing COVID-19 Response and Resilience Building in Uganda. Below are the key messages. Government has over the past decades implemented a number of programmes, fiscal and infrastructure incentives, commodity specific agencies and interventions aimed at financing the agriculture sector. These include the Plan for Modernisation of Agriculture (PMA), Agricultural Credit Facility (ACF), Operation Wealth Creation (OWC), agricultural tax exemptions, the Youth Livelihood Fund, the Youth Venture Capital Fund, Microfinance Support Centre Ltd, Emyooga, Agriculture cluster development project, Agricultural Insurance to de-risk the agricultural sector and more recently the Parish Development Model (PDM), among others. Government is also currently developing the National Agricultural Finance Policy to, among others, improve coordination, timely provision of appropriate agriculture finance products and further streamline agricultural financing in Uganda. However, gaps in enabling policies and legal framework continue to hinder improved access to financial services. Key areas lacking the necessary legal framework include cyber security, contract farming, leasing, equity and venture capital financing as well as provisions for integrating agribusiness incubation into the national agricultural extension policy and system. Once done, the financial and capacity gaps in fighting cybercrime, provision of suitable agricultural financial products as well as in commercialising and digitalising agribusiness ideas can be addressed, and fiscal incentives to spur commercialisation of small agribusinesses, instituted. In addition, Government has established a number of credit and capacity building interventions, but these still fall short of addressing the structural bottlenecks in smallholders and agri-SMEs financing. Government is going to review these interventions, and focus them on improving the capacity of agribusinesses to keep records; and preparing and presenting bankable projects. On the supply side, government’s interventions are going to directly address the financing conditions (remoteness, collateral, high interest rates and short loan tenure) that continue to lock agribusinesses out of formal financing. Furthermore, emergency interventions and subsidies (as done in response to COVID-19), shall complement (not distort) existing interventions.