Commercial Banks Told To Popularise ACF Loans To Boost Agricultural Production, Farmers’ Incomes

By Davis Buyondo

Bank Of Uganda (BOU) has urged all commercial banks countrywide to popularise as well as offer agricultural loans under Agricultural Credit Facility (ACF).


This is aimed at boosting agricultural production for dependable food security as well as improving farmers’ income through trade of farm produces.


ACF started in 2009 as a partnership between the government of Uganda and the financial institutions which are registered and regulated by BOU. This type of loan is given farmers, a gro-processor or produce dealer.


In this partnership, if a farmer’s application goes through a commercial bank and Uganda Development Bank, BOU remits 50 percent of the money and the commercial bank 50 percent.


According to Rosette Bamwine, who Heads the Credit Analysis and Marketing of ACF in BOU, government through the central bank, apportioned shs331bn to aid farmers’ access to low-interest loans rated at 12 percent.


However, she said, the commercial banks have not given out the said loans as expected which has affected agricultural production in different regions.


Given the fact that majority of these banks have branches in the rural districts, Bamwine the banks are supposed to inform their clients (farmers) about the ACF loans but they doing it.


“It has come to our attention that commercial banks, instead, offer their own loans which are above 20 percent yet the ACF loans attract and interest of as low as 12 percent,” she noted.


She further noted that individuals, small and large-scale farmers, groups or associations and produce dealers are free to access the said loans provided they are to use it for agricultural purposes.  


She further highlighted that the fund does not cater for buying land for agriculture yet other commercial banks offer such loans in the pretext of agricultural extension.


“Initially, we were targeting large-scale farmers but we realized that the majority was small-scale farmers. Therefore we opened up access to all farmers regardless of size. Anyone can access it”, Bamwine said.


Greater Masaka


In greater Masaka region, she stressed, shs21.2bn was channeled to nine banks to offer the ACF funds loans to farmers but very few have received the loans.


These include namely DFCU, Stanbic, Centenary, Post Bank, Tropical, Opportunity, Bank of Baroda, Equity and Diamond Trust.


However, she said it was absurd to learn that few people had benefited from the funds since the project was launched.


Of these said funds, Stanbic has only managed to give the ACF loan to only 5 clients, DFCU (four), Centenary (one), Post Bank (three), Tropical (one), Opportunity (one), Bank of Baroda (one), Equity (one)and Diamond Trust (none).


Apparently, Bank of Baroda is no longer operational in Masaka region.




Bamwine further maintained that majority of farmers’ Savings and Credit Cooperatives (SACCOs) lack a proper governing structure which has led to mismanagement of the loan scheme.


As a result, they fail to pay the loans which affect other members and also limit other farmers who may need the loan.


“We have found problems with SACCOs when it comes to paying back the loans. Especially the ones that have closed after their managers misusing or running away with the money”, she stressed.


However, in order to get the ACF loan, SACCOs have been advised to open up accounts with commercial banks for clear follow-up. It is further highlighted that farmers and groups need collateral as one of the condition to secure the loans.


“In case farmers make genuine loses, then the loss is either written off or shared between the government and the farmer. This is possible under the Agricultural insurance premium scheme”, she said.




In the ten years, large-scale banana farmers in Rakai district have not accessed to the ACF loans.


Corp. Charles Matovu, a resident of Kiyumbakimu village in Kirangira parish, has a 20-acre-banana plantation, a coffee plantation sitting on more than three acres and 2 acres of beans garden.


He explained that due to lack of access to such loans he has failed to expand his acreage and to put value addition on his produces.


“Most of the loans offered by the banks have over 20 percent interest yet they need it paid even when you make losses during a severe dry spell and banana wilt invasion”, he said.


In addition, Matovu believes that he would be in a position to process different products such as banana powder and others if there was enough funding through low-interest loans.


Robinah Ndibalwanya and her husband Moses Ssebagala are large-scale banana farmers in Kankundi village in Lwamagwa sub-county.


They said that it was their first time to hear about ACF loans. “Had they been marketed by the bank managers, maybe farmers would access them to increase production and employ more people on their plantations”, Ndibalwanya argued.

BOU Town Hall Meeting

During the recent Town Hall meeting organized by BOU at Broad hotel in Masaka, several other farmers and produce dealers raised concerns over what they called deliberate denial to access to ACF loans in different banks.


They further suspect that the funds were secretly given to business people with and outside the region to use it for other businesses other than agriculture.


Badru Kagga, the secretary of Western Uganda Coffee Farmers Cooperative Union Ltd, argued that farmers in cooperatives should be given more time to facilitate their ACF loans especially in time of crisis such as a prolonged dry spell and coffee wilt invasion.


Kagga said that the banks in Masaka prefer to offer their own loans which have higher interest.


“I have been turned away on many occasions. The bank managers often claim that the ACF loan process is very complicated but they could not explain details of its complexity”, he disputed.


It was also highlighted that some illiterate farmers are tricked to sign for different loans in the name of ACF which confuses them in the end.


However, the Louis Kasekende, the Deputy Governor-BOU, appealed to the farmers to always take their time to understand the terms and conditions of the grants.


He explained that on many occasions farmers sign binding loan agreements under pressure and later regret.


“Please take time to study the agreement well before you sign it. You can also take the forms and consult someone knowledgeable about the type of loan you are requesting”, he stressed.


He appealed to the farmers to always ask for ACF loans for the great value and significant impact they have on-farm productivity and agricultural transformation.


Local leaders


Herman Ssentongo, the Resident District Commissioner (RDC) regretted the tendency of banks refusing to offer ACF loans to farmers.


He further pledged to assist farmers in their pursuit of the ACF loans and to popularise it to ensure they benefit from it.


“As RDC, my responsibility is to follow up on government projects and the ACF funds being one of them. I am now going to follow up how the shs21.2bn was distributed to how many individuals and why the rest were denied these loans”, he said.


He further added that there’s a possibility of the said funds being channeled to people outside Masaka or to clients who did projects outside agriculture who may have failed to return it.


Bank Managers


Ronald Sseruwagi, the Stanbic Bank Manager-Masaka, highlighted that majority of the farmers have requested for the ACF loans but they were unlucky.


“For the lucky ones, we have processed their forms and sent them to BOU for consideration and approval while the unlucky have not been approved”, he noted.


He further encouraged all farmers interested in the loan to apply so that the process can be followed in order to get the money.


Click to comment

Leave a Reply

Your email address will not be published. Required fields are marked *

Your True Source of Information
To Top
error: Content is protected !!