The first lady and Minister for Karamoja affairs Janet Museveni has urged Uganda’s largest financial institution, the National Social Security Fund (NSSF) to create an agricultural bank as this will breathe new life into the economy. Speaking at the annual NSSF awards at the Serena Hotel, Janet Museveni said international banks operating in the country are more interested in making profit than building the economy.
“With all the money the NSSF has, I wonder why they have not been able to start a rural agricultural bank.
Most international banks in Uganda are more interested in making profit than developing the local economy, “There are many people that could have opened up bank accounts with these (international) banks to borrow money. But, this too is hard in itself,” Janet Museveni explained. NSSF’s profit before interest for the six months up to December 2014 increased to sh202b up from sh156b during the same period in the previous financial year.
Over the same period, NSSF’s total assets grew to sh4.9 trillion from sh3.9 trillion. There are an estimated 5 million bank accounts and 25 licensed commercial banks in Uganda. World Bank reports indicate that over 60% of all Ugandans in urban areas and 80% in rural areas depend on Agriculture for their livelihood. Access to credit, market information, and modern farming equipment remains a key challenge affecting the Agriculture sector.
A survey by Actionaid shows that most farmers use hand held tools during production and post-harvest handling. Only 2% use tractors and 8% use animal power. Only 680,000 homes have ever been visited by extension workers. As a result, the agriculture, forestry and fishing sectors only grew by 2.3% in the previous financial year.
Government initiated an Agriculture Credit Facility (ACF) where farmers with bankable proposals can access money at 12% per annum. Matia Kasaija, the finance minister has allocated sh479.96b, or 2% of the national budget to agricultural sector in the next 2015/16 financial year. Part of the money will go to the Agricultural Credit Facility (ACF) for production and agro-processing.
What is left will go to provision of agricultural inputs to farmers, promotion of value addition for strategic commodities, funding research, pest control, crop irrigation and construction of valley tanks and dams. Speaking at a national budget analysis event, economist Fred Muhumuza noted that farmers play a key role in stabilizing inflation and the general Ugandan economy. Food and Food crop prices are the single largest component of inflation accounting for 27%. “Though the Central Bank will have us believe that raising interest rates is what stabilizes inflation, it is actually the peasant farmers that produce food at increasingly lower prices that calm inflation,” he says.
