The Ministry of Finance, Planning and Economic Development is to use budget conferences to interest the farming community to go for agriculture loans.

Moses Kaggwa, the Director of Economic Affairs at the finance ministry, said their findings on the uptake of loans through the Agriculture Credit Facility (ACF) remains low among smallholder farmers.

“From our analysis, smallholder farmers take long to go for loans because the non-performing loans among SMEs are almost non-existent, they are less than 3%. It means that they only borrow for the intended purpose and pay back,” Kaggwa said.

The other reason for the low uptake could be that smallholder farmers are not organised, unlike their counterparts in large-scale farming.

Kaggwa, however, said they have embarked on country-wide mobilisation of the masses through the budget conferences to get people to go for credit under ACF.

“We have been going out to meet farmers and educate them about the facility, although some have resumed, we hope to get more people to go for the money,” said Kaggwa.

The other avenue that the finance ministry will use is the regional budget workshops. The staff of the Central Bank from the ACF section have been joining the team at the budget conferences to continue with the sensitisation process.

Kaggwa made the revelation on Thursday at Hotel Africana in Kampala during the Annual Farmers Symposium that was held under the theme Innovations in Agro Technology, Seed and Other Agro Inputs.

He explained that the credit facility was put in place because the government felt that financial institutions were not providing funds to farmers. Commercial banks were interested in shorter-term financing and yet agriculture is long-term.

This led to a partnership between commercial banks and the Bank of Uganda where funds from commercial banks were to charge an interest rate while funds from Central bank didn’t have any interest.

The fact that ACF was to finance a lot of activities both on farm and value addition, those in value addition were the first beneficiaries because they were already organised, added Kaggwa.

He was responding to calls from the executive director of the Private Sector Foundation (PSFU), Stephen Asiimwe, who said agriculture production is still constrained with expensive and unavailable credit.

He said cheap credit can be accessed from commercial banks but accessing it is a challenge due to many requirements while available capital like that from money lenders is accessible but at a higher cost.

At the same event, Andrew Kalonzo, the managing director of Uganda Breweries pledged to work with more farmers from the current 35,000 farmers to 50,000 to source barley, sorghum and maize for production.

According to Kalonzo, by 2022, the beer company had paid close to $52m to farmers adding that figure will grow to $80m in 2030.