The Central and Western regions are the largest beneficiaries of the Agricultural Credit Facility(ACF) loans, the Bank of Uganda (BoU), has revealed.
Launched in 2009, the ACF aims to promote value addition in the agricultural sector by providing affordable medium- and long-term loans.
“The ACF has achieved significant success, with cumulative disbursements reaching Shs860 billion by 31 December 2023,” Michael Atingi-Ego, the BoU Deputy Governor, said during a Town Hall Meeting held in Mbarara City on Friday, 15 March 2024 under the theme ‘Bank of Uganda’s Role in Socio-economic Transformation’.
“Western Uganda is the second largest beneficiary of ACF loans, taking a share of 23%, following the central region, which takes 54%,” Atingi-Ego added.
He revealed that 62% of these 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 said.
Atingi-Ego added 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.
“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,” he said.
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 the Small Business Recovery Fund (SBRF), aimed at aiding pandemic-affected small businesses.
“These schemes will help to uplift communities from subsistence farming to a thriving money economy,” Atingi-Ego said.
