Financial institutions have been urged to extend more credit to the agriculture sector to enable it to continue to drive Uganda’s economic agenda.
Speaking at the Annual Bankers Conference 2019 in Kampala on Tuesday, several financial experts and economists said the agricultural sector, despite the risks and uncertainties, is growing and can catapult the country to financial independence.
Ms Marianne Schoemaker, the Managing Director of Rabo Partnerships, a Dutch-based agricultural lending institution, explained how their model of agricultural credit has been successful.
“Through the Raiffeisen’s model, agricultural credit was extended through savings and credit unions, bringing scarce capital within reach of farmer entrepreneurs. The Raiffeisen’s model was successful because of collaboration between government and institutions, higher and lower social classes, agricultural society organizations, churches and savings organizations,” she said.
Ms Schoemaker urged the private sector and government to invest more in the agricultural sector which is highly dynamic.
“Innovation is a crucial part of agriculture because its becoming more capital intensive. Netherlands is the world’s second-largest exporter of agricultural produce. Over 160000 companies are related to food and agri-sector. The agricultural sector is highly dynamic and cool which means it’s attractive. You can earn a decent living with this sector. Agri-food was important in history, it is important today and it’ll be more important in the future. Food availability is becoming a globally relevant topic. The impact of climate change is felt by the agricultural sector, farmers and eventually all of us,” she added.
The Governor Bank of Uganda, Prof. Emmanuel Tumusiime-Mutebile, urged financial institutions to lower lending rates for farmers and said government must focus on boosting export-oriented manufacturing.
“It is quite unlikely that the informal sector will employ a significant portion of the population. This brings me to the importance of financing the sector. If only financial institutions lower their lending rates, substantial businesses will be able to borrow money to boost their investment. Access to credit is not the ultimate binding constraint to economic growth. We must think holistically about the powers holding back the ability to enhance our economy,” he said.
He added: “Government must focus on boosting export-oriented manufacturing and growth of the tradable sectors. This will help to meet the rapidly growing urban demand for food thus linking urban and rural growth by creating a market for rural production. The government needs to join hands with finance and all sectors by facilitating urban-rural linkages to embed local farms within the supply chain.”
Minister of Finance Matia Kasaija underscored the role of agriculture to the economy and outline government plans to boost the sector.
“Agriculture is the backbone of this economy, agriculture is a cool sector especially with the new technology. Agriculture is a good business if you can put a few things in place. As countrymen, we need to support the agricultural sector, we need to think outside the box. Within the agricultural sector, government key areas include; strengthening agricultural research, agriculture is where it is in Uganda because as government we haven’t given that angle the attention it deserves. Government continues to work towards the expansion of the market for agricultural products beyond East Africa. China is very open, the issue remains quality and sustainability,” he said.
The conference, which was organized by the Uganda Bankers Association (UBA), was based on the theme: “De-risking the financing & investment in agriculture to promote youth employment and inclusive growth”.
CEO Stanbic Bank Patrick Mweheire: “This is the 3rd conference of its kind, we have found it a useful platform to discuss issues that affect the agricultural sector and economy at large. We also thank the government for continued support. We believe that Uganda is deeply tied to the growth of the agricultural sector and this conference makes it possible to discuss issues of financing and the Eco-system. Inspite of the challenges in the agricultural sector, there are positives we can not ignore, key among them being the revolution of technology and change in the perception of agriculture by young people.”
