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Bankers criticized for not assisting agricultural sector

Kampala, Uganda | THE INDEPENDENT | Commercial banks and government have been criticized for not putting much emphasis on developing the agriculture sector.

Dr James Kanyije, the executive director of KK Foods Limited said on Thursday that bankers had let farmers down by classifying the sector as risky. He said they are expected to put interventions to de-risk the sector to help it grow.

On the part of the government, Kanyije said it had failed to put up infrastructure including cold chains and irrigation facilities to facilitate production throughout the year. KK Foods is the biggest exporter of fresh food from Uganda.

Kanyije, who was speaking in a virtual meeting organized by Absa bank Uganda to discuss challenges in the agribusiness said Uganda was looking as neighbours Kenya and Rwanda make strides in the sector.

He said Kenya earns at least USD 2billion from flowers export but Uganda with better soil earned just above USD 36 million a year.

Mumba Kalifungwa, the Absa bank CEO said one of the key challenges they face is in structuring transactions that have a long term lifespan to help farmers. Bankers say their capital is a short term from people’s deposits and cannot therefore issue long term loans. It takes time for one to invest in the farm and get a return.

Government has tried to put schemes to help those engaged in agriculture to borrow money such as the Agriculture Credit Facility (ACF) administered at Bank of Uganda. However, the facility’s reach has been criticized as being low and only for the big ones.

Rosette Bamwine, the ACF administrator at BoU said the fund had been structured in such a way that small, medium and larger agriculture entities can access money, whose interest is capped at 12%.

Three-quarters of Ugandans do some agriculture with the majority of whom engage in subsistence farming. Developing the sector into a money-maker for the country remains a puzzle that the government has grappled with for ages. Much of agriculture in the country still depends on rainwater.

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