Stakeholders in the agriculture value chain have expressed concern over the limited financing extended to the agriculture sector especially the small holder farmers. The Agricultural Credit Facility has been boosting the flow of credit to large scale farmers since its establishment in 2009, but little has been done to extend credit to small older farmers.
During the launch of the 10th edition of the Agriculture Finance Year Book 2020 held at Imperial Royale Hotel in Kampala on Tuesday 8th December 2020, Dr. Michael Atingi-Ego, the Bank of Uganda Deputy Governor, said that to deepen access to financial services by Small and Medium Enterprises (SMEs), there is need to review the Agricultural Credit Facility (ACF) from financing large scale farmers to encompassing small scale farmers.
The theme of the year book is “Digitalizing agricultural financing to boost agriculture commercialization in Uganda.”
Atingi-Ego said that though the COVID-19 pandemic has hampered many economies, digitalization has been the focus to spur Agricultural financing which he said will create a national connectivity base to deepen agriculture financing value chains.
“We need to support SMEs through enhanced and a comprehensive range of financial intermediaries necessary for a multiplicity in forming agriculture financial services. A comprehensive evaluation of ACF is necessary to extend its current reach,” he said.
Dr. Ibrahim Kasirye, who represented the Executive Director at the Economic Policy Research Centre (EPRC) said that there is need for all Stakeholders to address the digital needs of agricultural financing to rebuild the supply and value chain of agribusiness to find new markets, add value and overcome COVID induced indebtedness among others.
He said that the limited access to agriculture financing has constrained agriculture sector development. He said particularly there is need to reduce the risk associated with digital financing including technology, digital data among others.
“Despite the benefits of agriculture financing, digital financing services is still at its infant stage. Digitalisation of agriculture sector is critical to farmers in farmer profiling, data aggregating and credit information provision,” he said.
The 10th edition of the Agriculture Financing year book 2020 focused on Agricultural Financing policy, and strategy, Innovation and research, value chain and investment in agriculture sector. The book was prepared by EPRC with support from the members of the Agriculture Financing platform.
According to Bank of Uganda, only 12.9% of private sector credit is offered to the agriculture sector.
The recent EPRC study indicates that about 82% Agri-SMEs reported a severe decline in business activity arising from the outbreak of COVID-19 pandemic and subsequent containment measures.
Credit: businessfocus.co.ug
