UGANDA – The government of Uganda is considering to set up an agricultural bank to enable farmers to easily access credit to fund their ventures and make them profitable.
According to reports by Business Focus, President Yoweri Museveni pin-pointed the commercial banks for failing farmers on access to credit, saying that they are only interested in funding traders to import.
Museveni said that the main hindering factors to the pace of Uganda’s prosperity include the high cost of capital, due to the high interest rates offered by the commercial banks to traders.
“To address this, government has increased capitalization of Uganda Development Bank (UDB) with USH1.1trillion (US$279m) this financial year.
“We are also thinking of setting up an agricultural bank because these commercial banks are really commercial banks like their name says,” President Museveni said.
He noted that commercial banks aren’t here to give loans to agriculture and industry where the gestation period of the project is a long one, noting, “UDB is there, we refused to privatize it, but we want a specialized agriculture bank owned by farmers operating on principles of giving cheaper loans.”
“We are also thinking of setting up an agricultural bank because these commercial banks are really commercial banks like their name says.”President of Uganda – Yoweri Museveni
In other related news, the government of Tanzania through the Tanzania Insurance Regulatory Authority (Tira) has introduced a five-year plan designed to spearhead insurance of the agriculture sector.
The plan known as the National Agriculture and Livestock Insurance (NALI) Scheme, which will run from 2021 to 2025 intends to tweak the role of each player in agriculture insurance.
It also targets to raise the contribution of the insurance sector to Tanzania’s GDP from the current 0.53 percent to 3% by 2023 and 5% in 2024.
Despite the agriculture sector accounting for 28% of the country’s Gross Domestic Product (GDP), the sector is exposed to a wide range of risks including drought, excessive rainfall, pests and diseases, among several other perils that negatively affect yields and farmers income.
According to reports by Citizen Tanzania, only five out of 26 insurance companies in the country offer insurance products and services in the agriculture sector.
Insurers say they fail to venture into agriculture insurance due to the risks involved, aggravated by farmers’ poor understanding of the insurance business – and also a lack of agricultural professionals in insurance firms.
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