By Apollo Mubiru
The Bank of Uganda has disbursed sh860b in Agricultural Credit Facility (ACF), the Bank of Uganda Deputy Governor, Michael Atingi-Ego, has disclosed.
Launched in 2009, the ACF aims at promoting value addition in the agricultural sector by providing affordable medium- and long-term loans.
(ACF) and the Small Business Recovery Fund (SBRF), aimed at bolstering agricultural value addition and aiding pandemic-affected small businesses.
“The ACF has achieved significant success, with cumulative disbursements reaching sh860 billion by December 31, 2023. Western Uganda is the second largest beneficiary of ACF loans, taking a share of 23%, following the central region, which takes 54%,” Antingi-Ego said.
He made the remarks on Friday while speaking to participants on the role of the Bank in Socio-economic transformation at Mbarara Town Hall.
He said that 62% of the loans were granted to micro and small farmers under the Block Allocation arrangement, demonstrating the ACF’s potential to enhance financial inclusion.
The Block Allocation arrangement under the ACF caters to smaller players, accepting alternative forms of collateral such as movable property, inventories, and even credit history.
He, however, regretted that despite its achievements, the ACF faces challenges that limit its full potential.
“These include limited financial literacy, inadequate sensitisation of credit officers and beneficiaries, and insufficient public awareness of the facility,” he said.
“To address these challenges, the BoU reviews the ACF’s operations and implements strategies to improve uptake. These include engaging with PFIs to revise their lending policies, ensuring wider access to ACF financing, and enhancing public communication about the facility,” Antingi-Ego added.
Established in 2021, the SBRF targets small businesses affected by the Covid-19 pandemic. Similar to the ACF, the SBRF provides loans through supervised financial institutions. As of December 30, 2023, the SBRF had disbursed sh18.4 billion to 1,500 SMEs.
The SBRF’s uptake has increased due to amendments to the Memorandum of Agreement (MoA) and continuous BoU engagement with stakeholders. The western region is the second largest beneficiary of the SBRF, with sh2.9 billion extended to 219 SMEs.
Only the central region, has taken up more funding at sh13.5 billion.
Given the prominence of agriculture in Mbarara and Ankore, the BoU urged the area leaders to champion agricultural modernisation and value-addition projects by taking advantage of the ACF and SBRF.
