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Agriculture begins attracting funding

Reflex Eco Group – Uganda News

by Stephen Otage (Local Journalist)

sotage@ug.nationmedia.com

This Blog is sponsored by http://www.reflexecogroup.com

The European Investment Bank has given three local banks a 11m-euro grant to lend to farmers at low interest rates so as to ensure availability of long-term and affordable financing.

Among the banks benefiting from the grant are Centenary Bank, DFCU Bank and KCB Bank.

While announcing the grant last week, Pim Van Ballekom  the Vice President European Investment Bank (EIB) said the three banks will be able to lend the money to farmers to invest in new opportunities and small businesses to act as a motor for new jobs and economic growth.

“The European investment Bank has a strong track record supporting private sector investment in East Africa and today’s lending demonstrates our continues and firm belief of supporting private sector investment by entrepreneurs and smaller companies in Uganda,” he said.

He added that improving access to finance and reducing constraints farmers face in accessing it are the key goals the European Investment bank hopes to achieve so as to support small business growth adding that the priority focus of Europe’s long-term lending institution is to support the private sector investment by smaller companies by reinforcing support for small businesses for to directly address the financing gap hindering their expansion.

While signing the agreements a total of EUR 11 million was handed over to DFCU bank in Uganda and KCB Rwanda and this is the first time that the EIB has lent to the two banks marking a new beginning in lending in the region.

Last week, the Uganda development bank also announced similar scheme where farmers are now able to access agricultural loans. In an interview Patricia Adongo Ojangole announced that the bank is lowering its interest rates by 26% where long term financing was reduced to 12.5% from 17%, the medium term financing from 18% to 13% while the short term financing is falling to 14% from 19%.

She said the bank was lowering the interest rates to address the shortage of cheaper development finance in the country which has been identified as a hindrance to the growth of private-sector led development especially to support development of industries for the private sector to play part in key development sectors like agriculture, value addition, industry and health.

She said the bank has identified crops like sorghum, Irish potatoes, tea and sugar cane where organized farmer groups which are adding value to the crops can be bank rolled by managing their risks through crop insurance by ensuring where the farmers will sign contracts with off takers.

“We must collect the money back because we are not only banking the farmer groups but also the off-taker by creating the market for the farmer through the off taker who in this case is the person involved in value addition,” she said.

Currently the bank is supporting Dairy farmers in Jesa dairy farm and the Balitweigomba farmers’ cooperative farm in Luuka district where the farmers who are involved in cotton sector are being supported by securing them market for their cotton.

Currently the source of funding is mainly from Arab Bank for African Economic Development, Islamic Development Bank, Afri-Exim Bank through which the bank hopes to cover its mandate which stretches across all Uganda.

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