Bank of Uganda (BOU) Governor Dr. Michael Atingi-Ego on Tuesday April 15, 2025, graced the launch of the EPRC 2024 Agricultural Finance Yearbook under the theme, Achieving Sustainable Financing for Agriculture Leveraging Wealth Creation Funds. In the keynote speech, Dr. Atingi-Ego said the country’s history is littered with many failed attempts to finance the agriculture sector. These should offer lessons to the country.
“Uganda’s history with agricultural financing reveals important lessons. In the 1980s, we saw the limitations of directed credit through public sector banks. The 1990s and 2000s brought targeted schemes like the cotton sub-sector Development Project and Export Promotion Fund,” he said.
These initiatives were well-intentioned but often suffered from: Limited sustainability – relying heavily on subsidies that distorted markets; Poor targeting – with benefits not always reaching the intended beneficiaries; Weak linkages – between financing and critical support services like extension.
The central bank is the administrator of the Agriculture Credit Fund and has so far disbursed UGX1.01tn. The Governor said it “still excludes many smallholders due to several challenges such as limited financial literacy and poor bookkeeping. These experiences teach us that sustainable agricultural financing requires more than just capital – it demands innovative approaches that address the entire ecosystem of constraints facing our farmers”
What is Bank of Uganda doing?
The head of the central bank said they have developed a multi-pronged strategy to support agricultural financing, recognizing that no single intervention can solve this complex challenge alone. In some instances, this has led to very low non-performing loans.
The bank has adopted the block allocation model. The model broke down how it helps increase access to the agriculture finance where up to Shs 18.6bn to 2,767 farmers has been disbursed, with 34% of beneficiaries representing.
- Through this approach, the ACF arrangement accepts alternative collateral like the chattel mortgages, borrower’s character and cashflow assessments
- Enabling loans up to UGX 20million without traditional security
- Focusing on group lending to mitigate risk
See speech here:
Dr. Sarah Ssewanyana, the EPRC Executive Director, applauded the Government of Uganda for supporting the production of the book annually. She noted that government, however, should start implementing the recommendations that are contained in the book.
The Agriculture Finance Yearbook is an EPRC flagship knowledge product produced every year to address financing gaps in the sector critical to the country. The launch of the 13th edition of the book took place at Protea Hotel in Kampala.
