Parliament approves sh778b loan to boost agricultural market access

____________

Parliament has approved a government request to borrow €192.96 million (sh778 billion) from Citibank to finance Phase One of the Enhancing Agricultural Production, Quality and Standards for Market Access Project.

The project seeks to strengthen Uganda’s agricultural competitiveness by improving product quality, safety, and market access, especially for smallholder farmers.

Finance state minister (general duties) Henry Musasizi presented the loan request for second reading on Wednesday (October 29, 2025). He said the project aims to promote an inclusive and competitive agricultural sector through infrastructure and systems that enhance the volume, quality, and safety of products reaching both local and export markets.

According to Musasizi, the project will improve diagnostic and surveillance infrastructure for detecting crop and animal diseases, as well as enhance the accuracy and timeliness of testing through accreditation of national agricultural laboratories.

The project also seeks to provide safe storage, bulking, and distribution facilities for agricultural inputs such as drugs, vaccines, and seeds.

It targets to support strategic value addition and processing infrastructure to make Ugandan products more competitive, and also aims to supply equipment to facilitate safer cross-border trade with neighbouring countries.

MP Hassan Kirumira (Katikamu South) opposed the loan request, arguing that the agriculture ministry is unprepared and lacks sufficient information about the project implementation plan. But his proposal to reject the loan was defeated.

The committee on national economy’s report on the loan was presented by deputy chairperson Robert Migadde.

The report supported the loan approval, noting that the project addresses persistent weaknesses in Uganda’s agricultural value chain, such as low productivity, limited market access, and poor product quality, which have constrained farmers’ incomes and export potential.

A significant contributor to Uganda's GDP growth, the agricultural sector employs 70% of the population and accounts for 42% of Uganda’s export earnings, which rose from 1.68 billion dollars in the 2020/21 financial year to 2.45 billion dollars in the 2024/2025 financial year.

Despite this progress, the committee highlighted ongoing challenges, including inadequate laboratory capacity, weak enforcement of quality standards, poor rural market infrastructure, and limited logistics for marketing and distribution.

The project will be implemented in 69 districts across 13 agro-ecological zones, including seven districts hosting refugee communities.

Beneficiaries include agro-processors and students from Makerere University’s School of Food Technology, Nutrition and Bio-Engineering, who will gain training and hands-on skills to support agro-industrial growth.

Overall, the project is expected to directly benefit 760,000 households and indirectly reach about 1.9 million households nationwide.

The committee recommended that; government negotiate for up to 789.87 million Euros to fully cover project costs, including premiums. It urged the finance ministry to ensure the timely submission of financing documents and renegotiate the premium fee to reduce debt servicing costs.

The committee asked the agriculture ministry to strengthen its institutional capacity, including establishing a fully staffed and technically competent Project Management Unit (PMU) with clear deliverables and timelines.

Migadde called on the ministry to adopt real-time monitoring systems, periodic independent audits, and enhanced coordination with other externally financed initiatives, especially under the Agro-Industrialisation Programme to avoid duplication and ensure efficient resource use.

The committee warned that as of December 2024, the agriculture ministry had disbursed only 112.78 million dollars out of 720.61 million dollars in ongoing externally financed projects, reflecting implementation inefficiencies that must be urgently addressed.