Wednesday,October 21,2020 08:48 AM

Farmers get sh60b fund

By Vision Reporter

Added 14th October 2009 03:00 AM

The Government has launched a sh60b credit facility for commercial farmers.

The Government has launched a sh60b credit facility for commercial farmers.

By Francis Kagolo

The Government has launched a sh60b credit facility for commercial farmers.

Finance minister Syda Bbumba signed a memorandum of understanding with commercial banks to implement the loan scheme on Tuesday.

The scheme seeks to promote agricultural modernisation and expansion across the country.

Under the agreement, the Government will inject sh30b into the scheme and the banks sh30b to create a revolving pool of funds in the first year.

The credit facility was first announced by Bbumba in this year’s budget speech.

Farmers involved in large scale crop production, horticulture, livestock, fish farming, poultry farming and breeding as well as bee-keeping will access the loans.

“The scheme will be used to primarily to provide medium and long-term financing for projects in agriculture and agro-processing,” the memorandum says.

The loans will have a three-year grace period and a 10% annual interest rate, Bbumba said.

The Bank of Uganda will provide the funds to lending institutions depending on requests from farmers.

Bbumba explained that farmers involved in processing agricultural products will also receive loans to buy machinery, storage facilities and any other related equipment.

The measure aims at promoting value-addition, boosting foreign exchange revenue and accelerating economic growth and development, she added.

Besides commercial banks, other institutions that will handle the loans include Pride Microfinance, Uganda Finance Trust, Finca, and Faulu Uganda.

“The Government will not charge interest on the loans to banks so as to reduce their cost and enable lending to eligible borrowers at interest rates not exceeding 10% per annum,” the memorandum states.

In case of default by the farmer, the memorandum empowers banks to undertake “all reasonable efforts” to ensure recovery of the loan.

Bbumba noted that the scheme was an important milestone in supporting the agricultural sector, from which 70% of the population directly derive their livelihood.

“With the recent drought and consequent famine in some parts of Uganda and across the region, it is pertinent that Uganda’s comparative advantage in agricultural produce is enhanced with measures that spur productivity, while lifting the vast majority of people participating in agriculture out of poverty,” she said.

Bbumba said small scale farmers would not benefit from the scheme, except those working as outgrowers for the commercial farmers.

The deputy governor of the Bank of Uganda, Patrick Byabakama, called for wide usage of modern techniques to match the green revolution that boosted agricultural productivity and economic development in countries like China.

Farmers get sh60b fund

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