Bank of Uganda Faces Criticisms Over Limited Reach of Agricultural Credit Facility [LOAN]

The Bank of Uganda’s townhall meeting in Lira City turned into a platform for impassioned voices as farmers and business owners raised their concerns over the limited benefits of the Agricultural Credit Facility and Small Business Recovery Fund.

The primary issue, as voiced during the meeting, was the lack of awareness about the availability of funds, leading to a sense of frustration among those seeking financial support for their agricultural ventures and small businesses.

Entrepreneurs at the meeting criticized commercial banks for hesitating to offer loans due to low interest rates, advocating for fund redirection through the Chamber of Commerce. This proposal aimed to address the financial gap and support those in need of resources.

Geoffery Obia, the chairperson of the Adoption Farmers Group, expressed his disappointment, blaming commercial banks for failing to provide adequate information about the Agricultural Credit Facility, focusing instead on their own loan offerings.

Otim Tom Otile of Timo Fresh Fruit Enterprise joined the chorus, urging both the Bank of Uganda and the Government to consider channelling the funds through the Chamber of Commerce, underlining the banking sector’s unwillingness to support farmers.

In response to these concerns, Winnie Mulisa, the Head of Disbursement and Recovery at the Bank of Uganda, encouraged farmers to maintain accurate records of their activities, stressing that many lacked essential documentation and proofs of their engagements. She also highlighted the challenge of farmers lacking active bank accounts or having inactive accounts, impacting their eligibility for loans.

Hannington Wasswa, Director of a commercial banking institution, appealed to the public to make use of the available funds. He emphasized the importance of choosing banks registered with the Bank of Uganda and cultivating a culture of timely loan repayment, essential for the effective functioning of such credit facilities.

Addressing the issue, Bosco Ogwang Edola, Commerce Director, attributed the problem to an information gap. He urged the Bank of Uganda to conduct regular engagements and establish an office in Lira to bridge this knowledge deficit.

Initiated in 2009, the Agricultural Credit Facility is a joint venture of the Ugandan government, commercial banks, and credit institutions, providing medium to long-term financing for agribusiness projects with a focus on commercialization and value addition. Over the past 14 years, the Bank of Uganda has disbursed over 800 billion Ugandan Shillings through this program.

According to the Deputy Governor of the Bank of Uganda, Michael Atingi-Ego, Northern Uganda currently receives a mere 4% of the Agricultural Credit Facility distribution, while the rest of the regions, including Eastern South, Eastern Central, and Western, share the remaining 96%.

Mr. Atingi encouraged individuals with ambitions to establish banks for specific purposes to fulfill the necessary requirements for setting up such institutions.