Agricultural Finance Yearbook 2010 – Marrying Finance and Farming

The Agricultural Finance Yearbook for 2010 seeks to reflect the main issues, actions, successes and failures experienced in Uganda during the year, in the overall area of financial sector support to agriculture. It is increasingly recognized, in Uganda, in Africa as a whole, and in the international community, that adequate access to financial services is vital for those who build productivity and earn their livelihoods in agricultural commodity value chains.

The year 2010 has been notable in that lending to the agricultural sector by Tiers 1, 2 and 3 financial institutions has re-bounded to approach the levels recorded in 2007 and 2008. In part this can be attributed to more favourable agricultural seasons from a climate viewpoint, but it may also reflect some success on the policy front – for example the Government’s Agricultural Credit Facility, as described in Article 1.4. Another reason for the increase in lending to agriculture is due to a number of banks recognising business opportunities in the sector and developing products and approaches accordingly. Improved flow of information on successful investments, as conveyed in knowledge products such as the Yearbook series, are an important part of this process. It is also hoped that banks that have moved in this direction will enhance their involvement in the sector, driven by the opportunities presented.

Turning to Tier 4 institutions, a few SACCOs have recorded notable successes over the years, however, many have faced significant problems. The Yearbooks for 2008 and 2009 included articles that described some successes and also some sound working linkages between SACCOs and commercial banks. The 2010 Yearbook, and particularly Articles 5.1 and 5.2, focuses very specifically on some of the remedial actions needed for those SACCOs that are experiencing problems. The overall importance of the SACCO sector is recognised, as it is clear that this type of member-owned financial institution, when properly managed and regulated, can offer effective and valuable services to its members, who are often living and working far from the branch network of commercial banks.

The Yearbook series, including this edition, is commended to all concerned to see improved linkagesbetween the financial and the agricultural sectors in Uganda.

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