Agricultural Finance in Uganda: The Way Forward
The overall objective of this study is to highlight the major bottlenecks in the development of self-sustainable agricultural finance in Uganda and to set out a medium term strategy for the support of this sector. By way of backdrop, the analysis and recommendations of this paper are formed around the question “How will Ugandan agriculture change over the long term and how will these changes influence the demand for financial services?”.
The report begins by describing the evolution of macroeconomic and financial policies and how this evolution has affected the structure and performance of the financial system and its ability to serve the agricultural and rural sectors. It follows this with an analysis of the demand conditions for financial services that will emerge as Uganda’s economy undergoes structural transformation over the next 20 years. An analysis of the structure of Uganda’s current financial system, its products, and the segments of the agricultural and rural economy it serves, is also undertaken. Alongside this the report analyses the constraints that are likely to impede the financial system’s ability to meet the demands that are expected to emerge and recommendations for improvements.
The final section attempts to pull these arguments together and forms a series of key recommendations, most of which are directed towards policy makers across a range of ministries and institutions. These recommendations are based around three main clusters:
- Cluster One: Long-term strategic plan for financial services to the agricultural sector and related issues;
- Cluster Two: Issues for attention by legislators, government ministries and BoU;
- Cluster Three: Unfinished business.
The annexes to this report also provide further useful details on some of the key areas of the report – SACCOs, a note on the use of land as collateral for agricultural lending in Uganda, information management, and insurance as a financial service.