Capital is one of the ingredients that make a good commercial farm. However, accessing loans for farmers is quite difficult.
“It is akin to selling your heart,” a farmer says.
Either many farmers have not accessed loans or those who took them failed to pay them off because of the huge interest rates.
“There are no real farmers’ loans in Uganda, because most of the available facilities do not favour the agriculture calendar and the interest is high,” notes Victoria Ssekitoleko, the former agriculture minister and a Best Farmers judge.
This is why dfcu Bank has come up with several agriculture loans in order to help as many farmers as possible access loans.
dfcu Bank has supported the Best Farmers competition for 10 years now, from 2014. The bank has awarded at least sh1.5b to farmers in prize money.
“We understand that the needs of farmers are not the same and this is why we have come up with different loan facilities to cater for as many categories as possible,” says Alex Madolo, the agriculture sector head of dfcu Bank.
He explains that the facilities can be accessed through all the bank’s branches across the country.
Save for loan
According to Madolo, this facility is designed for individual farmers and farmer groups involved in primary production, marketing and value addition activities.
He says this is a seasonal product, targeted to enhance agricultural value chain activities.
Main features include: loan amounts ranging from sh500,000 to sh50m, a loan period of up to 24 months — grace periods accepted.
Madolo notes that the loan can be secured with 30% collateral plus two personal guarantors. “
Farmer groups or an individual farmer should have been in business for the last two years and must hold an account with dfcu Bank,” he says, adding that they must also be registered.
Agricultural production
Madolo explains that in order to boost on farm production, the Agri-production loan has been designed and targeted towards farmers involved in primary production and related activities.
“It provides financing for on-farm production and post-harvest activities for farmer groups, SACCOS, clubs and associations,” says Davis Mutabarusya, a dfcu staff under the agriculture sector department.
The amounts start from sh5m and the farmers should have been in business for at least two years. Besides, the loan tenure is up to 24 months, with repayments based on cash flow.
“The Agri-product must have ready or reliable market either locally or internationally,” Mutabarusya adds.
Agri asset finance
This product has been designed to enable farmers and farmer groups acquire income-generating assets, such as tractors, greenhouses, irrigation equipment and the like.
It will also enable infrastructure development, such as construction of valley dams, pasture improvement, and farm fencing, among others, in order to boost farm productivity.
According to Madolo, the loan tenure is a minimum of three months and maximum is dependant on the farmer’s ability to pay.
“This loan is availed according to the crop calendar and the asset being purchased may be used as the main collateral. Repayment is based on cashflow,” Mudolo says.
He adds that the farmer must have at least two seasons/ production cycle of the enterprise to be financed and is engaged in commercial agriculture.
Agricultural credit facility
Mudolo says this is directly supported by the Government through the Bank of Uganda. It is available to registered entities and individual borrowers.
“The amounts go up to sh2.1b and the loan period is up top eight years,” he says.
The official rate is up to 12% and the loan is secured by a land title or the asset being financed. Additionally, there is a grace period of up to three years.
The grain facility (BOU)
Uganda produces over six million tonnes of maize alone, plus about three million tonnes of other grains.
However, the farmers face various challenges, including adding value to the grains. Because of this, they earn far less than they should. To access this, a person must own a grain facility.
According to Mutabarusya, this facility is available to registered entities and individuals.
“There are loan amounts of about sh10b, with a loan duration of two years,” he adds.
The loan is given at 15% interest rate. Other requirements include a land title and other acceptable collaterals, audited books of accounts for the last three years for facilities above sh250m.
Farmer group account
According to Madolo, this is designed for registered farmer groups and associations that are carrying out business together.
He says benefits include: no account maintenance fees, attractive interest rates payable on amounts saved, one free withdrawal per month, free intra-transfers between the farmer group account and group members and the account is also linked to mobile account for mobile payment systems. Others include: no early redemption fees charged on loan facilities, free capacity building and financial literacy trainings for members.
Dembe savings account
This is an affordable savings account to enable low-income earners to accumulate savings.
“This targets smallholder farmers,” Madolo says.
He adds that the benefits include: low account management fees, no deposit charges, no low balance fees, hence unlimited access to your cash and balances, as well as interest earned on balances above sh300,000 at a rate of 2.5% per annum plus convenient access through ATM, mobile banking and agency banking.
“The account comes with an embedded hospital cash benefit, where the holder is paid sh20,000 per day admitted, this will enable the farmers to sustain their farm operations with the compensation for the admission,” Mudolo says.
This is an affordable savings account to enable low-income earners to accumulate savings.
“This targets smallholder farmers,” Madolo says.
He adds that the benefits include: low account management fees, no deposit charges, no low balance fees, hence unlimited access to your cash and balances, as well as interest earned on balances above sh300,000 at a rate of 2.5% per annum plus convenient access through ATM, mobile banking and agency banking.
“The account comes with an embedded hospital cash benefit, where the holder is paid sh20,000 per day admitted, this will enable the farmers to sustain their farm operations with the compensation for the admission,” Mudolo says.
LEAD PHOTO CAPTION: Grace Akatuha (centre) of Kikazi Millet Flour receiving a dummy cheque from the former Dutch ambassador to Uganda, Karin Boven (right) and managing director of dfcu Bank Charles Mudiwa, recently.
