Uganda president wants to increase credit for agriculture
Uganda’s president has announced that the government will add 500 billion shillings (around 140 million euros) to the capital of the Uganda Development Bank (UDB).Uganda’s president has announced that the government will add 500 billion shillings (around 140 million euros) to the capital of the Uganda Development Bank (UDB), to lower interest rates in strategically important sectors such as manufacturing and agriculture.
Due to high inflation and the sharp depreciation of the Ugandan shilling since the beginning of 2015, market interest rates are currently high, and lending rates are close to 21 per cent per annum.
In his state-of-the-nation address last week, President Museveni identified these high borrowing costs as a major impediment to the transformation of agriculture. He therefore declared that lowering the cost of financing in this sector will be a high priority in coming years.
A recapitalisation of the UDB is indeed welcomed by sector’s experts. Some analysts even suggested last week following this announcement that a new bank dedicated to financing agriculture should be created.
According to the Agricultural Business Initiative (aBi) group CEO, Andre Dellevoet, interviewed last week by The Observer (Kampala), Uganda could become an agricultural powerhouse, if farmers had better access to finance. To that effect, the aBi
group will increase its budget from 60 billion shillings to 120 billion shillings over the next five years. Since its establishment in the country five years ago, the group has facilitated the grant of 64,058 new loans, for a value of 123 billion shillings and the opening of 182,219 saving accounts.