The Dutch Government, through their Embassy in Uganda is to extend 2.5m Euros (Ushs8.3bn) grant to Ugandaâ€™s 6th largest bank, Dfcu towards its ambitious 4.2m Euros (Ushs16bn) five year project â€œfurthering financial inclusion and agri-finance in Uganda.â€
The signing ceremony took place on Monday in Kampala, with the Dutch Ambassador, Alphons Hennekens noting the need to continue supporting Uganda’s agricultural sector for it is to remain the food basket of the region.
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Dfcu is partly owned by Dutch company, Rabobank, and a leading agricultural sector lender in the Netherlands.
The Dutch government will between 2014 and 2017 extend 50m Euros to support Uganda’s agriculture. However, the grant extended to Dfcu is for the bank to generate the technical capacity, mainly for the bankers to understand the agricultural sector. Commercial bankers have often been accused of not understanding the agricultural sector, which explains the sluggish lending. Dfcu, by 2018 is looking to have at least increased agricultural lending six-fold.
Juma Kisame, the Managing Director Dfcu, pointed out the need for farmers to access affordable capital for inputs, machinery and processing equipment. A Uganda Economic Update report published by the World Bank emphasizes that inclusive growth can be delivered only if more jobs are created and improving agricultural productivity. There are still 67percent of Ugandans practicing agriculture, contributing 37percent of GDP.
Efforts by government, including the Agricultural Credit Facility (ACF) set-up at Bank of Uganda (BOU) in partnership with commercial banks has been beneficial to large farmers – sometimes - and less of the small-holder farmers.
During a panel discussion just before the grant signing ceremony, Clayton Arinaitwe, General Manager, Uganda Crane Creameries Coop Union criticized governments numerous agricultural policies that are detached from the realities of farmers. He also revealed how the cooperative failed to secure agricultural credit through the ACF, despite their asset base – a milk processing plant in Mbarara.
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In response, Justine Bagyenda the Director Supervision, Bank of Uganda noted that if any farmer association fitted the criteria, they would have been access to this credit. Bankers also indicate that the credit facility has mostly focused on agro-processing and value addition as it is sustainable and less risky.