New BoU report shows ACF progress well as loan book hits Shs 620.04b

The Bank of Uganda has released the Agricultural Credit Facility report for the period ended June 2021. According to the report, the ACF has continued to facilitate access to finance by smallholder farmers.

The report states that 61 percent of the funded projects under the scheme, comprised of micro, small and medium-sized enterprises (MSMEs), which constitute most of the agriculture sector in Uganda.

Furthermore, a cumulative total of Shs163.27 billion was repaid by the Participating Financial Institutions (PFIs) in respect of the loan instalments due as of June 30, 2021.

The report for the period ended June 30, 2021 adopted the theme ”transforming the agriculture sector through mechanization”. Mechanisation facilitates commercialisation of agriculture through transforming subsistence farming to commercial agriculture leading to increased production and productivity.

Funding totalling Shs102.8 billion has been extended towards mechanisation constituting 16.6 percent of total financing under the ACF. Farm machinery and equipment financed include; Tractors and implements, irrigation equipment, feed mills, seed planters, green house facilities among others.

The total loan book under the scheme grew by Shs30.56 billion from Shs 589.48 billion in March 31, 2021 to Shs 620.04 billion as at June 30, 2021, extended to 1,194 eligible projects.

The repayment rate under the ACF has been impressive with continuous recovery of the outstanding loans by the PFIs.

Out of the total GoU contribution amounting to Shs 314.79 billion refinanced to the PFIs, the non-performing loans were Shs 5.5 billion with a non-performing asset (NPA) ratio of 1.8 percent compared to the overall ratio of 5.4 percent for the commercial banks as at June 30, 2021.

The increasing demand for the ACF loans is reflected in the pipeline (loan applications under review) at BoU amounting to Shs 90.14 billion with the corresponding GoU contribution of Shs46.51 billion. As at June 30, 2021 the facility had a fund balance of Shs 25.49 billion and if the pipeline applications are to be approved, there will be a funding deficit of Shs21.12 billion.

Disbursements have also progressively increased since inception from Shs 21.02 billion to 38 beneficiaries when the scheme’s operations started in 2010 to Shs 620.04 billion disbursed to 1,194 beneficiaries (including 314 beneficiaries under block allocation). The cumulative GoU contribution accounts for Shs 314.79 billion.

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