By Jacky Achan
Farmers have been asked to make use of the Agricultural Credit Facility (ACF) to boost production and revenue from farming.
Fourteen years ago, the government in partnership with commercial banks, Uganda Development Bank Ltd (UDBL), Micro Deposit Taking Institutions (MDIs) and Credit Institutions introduced the Agricultural Credit Facility (ACF).
It provides medium-and long-term financing to people engaged in agriculture and agro-processing, focusing mainly on commercialisation and value addition.
The loans under the ACF are disbursed to farmers and agro-processors through commercial Banks, UDBL, MDIs and Credit Institutions at favourable terms than are usually available under conventional loans.
“We do support the entire value chain, all the way from the farm to production,” Prossy Namala Head of Disbursement Agriculture Credit Facility at the Bank of Uganda says.
The maximum loan amount to a single borrower is up to sh2.1b. However, it can be increased up to sh5b on a case-by-case basis for eligible projects that add significant value to the Agriculture sector and the economy as a whole.
They include the acquisition of agricultural machinery, post-harvest handling equipment, storage facilities, agro-processing, mechanization and any other related agricultural and agro-processing machinery and equipment.
There is no designated minimum loan amount to the final beneficiary who is the farmer or agro-processor however Bank of Uganda can only reimburse a minimum of sh10m to the lending institutions.
Private sector businesses or individuals, partnerships, companies, Savings and Credit Co-Operative Society (SACCOs whether small, medium or large) operating in Uganda and engaged in agriculture, agro-processing and grain trade among others are all eligible to get the credit facility.
Has the ACF worked?
Alex Tumwine is one of the beneficiaries. In 2021, he received sh150m that he invested in his cattle fattening business.
He also included farm improvements such as farm clearing, planting of maize and cattle purchase. Tumwine started paying the loan back after six months at an interest rate of 12% per annum.
“It is a friendly facility compared to other financing options from the conventional banking system,” he told the New Vision.
Tumwine encouraged all farmers to go for the ACF to commercialise agriculture production “The ACF is stress-free,” he said.
Similarly, Emmanuel Byaruhanga, from Hoima district got ACF financing to the tune of sh56 million. He owned land that he desired to open for commercial agriculture.
“I got a loan under the Bank of Uganda ACF programme which I had to pay back in three years at a low-interest rate of 12% per annum. I have managed to open my land in Mubende district and expand my production into coffee and animal rearing. I got to know about the facility from an agricultural show,” he said.
According to the central bank, to access the credit, all eligible borrowers have to channel the applications through the participating financial institutions of their choice.
The Loan amount is determined based on assessment and appraisal of project costs and genuine credit needs following the lending policy of the respective participating financial institutions and is designated in Uganda shillings.
