Performance of the Agricultural Credit Facility in Uganda: What are the trends?
Budget Monitoring and Accountability Unit
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There is often an assumption that agriculture faces inherent difficulties in mobilizing credit and that this is a binding constraint on expanding agricultural output which justifies government intervention to provide or subsidize agricultural financing.Although the second National Development Plan (NDP II) and the Ministry of Agriculture, Animal Industry and Fisheries (MAAIF) Development and Investment Strategy (DSIP) emphasize increased access to agricultural financing as a fundamental input to the sector transformation, this may not be achieved if the institutional and policy factors are not well streamlined along the credit market chain to solve the demand factors. Since the inception of Agricultural Credit Facility in 2009, various areas in the agriculture value chain have been financed under the scheme. With the introduction of Block Allocation under the current Memorandum of Agreement, 2018, a number of micro borrowers have accessed funding from the scheme which is intended to unlock credit to the smallholder farmers who are unable to access funding due to the stringent loan requirements such as collateral by Participating Financial Institutions (PFIs). This policy brief examines trends in funding, overall physical performance, inclusiveness and investments funded by ACF from FY2011/12 to FY2017/18. The brief uses data from the Budget Monitoring and Accountability Unit (BMAU), Ministry of Finance, Planning and Economic Development (MFPED) and Bank of Uganda (BoU).