Alliance for National Transformation (ANT) Presidential candidate, Rtd Major General Mugisha Muntu has promised to establish an ‘agricultural bank’ to provide affordable credit to farmers with the view of boosting their livelihoods.
“Knowing 70 percent of our people are in rural areas and are farmers, you cannot develop a country unless you concentrate resources in areas where the biggest number of people are and that is agriculture,” said Muntu while addressing a campaign meeting in Bukwo, Eastern Uganda on Friday.
“That is why we would want to establish an agricultural bank, where farmers can access cheap credit under the medium to long term repayment period,” said Muntu.
Financing is a major barrier to growth in Uganda’s agriculture sector, particularly among smallholder farmers, due to lack of collateral security and high cost of credit.
Yet, access to capital plays an important role in the overall strategy to improve the productivity, livelihoods and food security of smallholder farmers.
Dr Michael Atingi-Ego, Deputy Governor, Bank of Uganda, recently said the Agricultural Credit Facility (ACF) has devised a path-breaking innovation of block allocation to enable farmers access loans based on alternative collateral such as chattel mortgages, cash flow based financing, and character-based loans, among others.
“This innovation is unlocking access to credit in areas with communal land tenure; and most especially, for micro and smallholder farmers who are otherwise excluded for lack of collateral to secure credit,” said Atingi-Ego.
“By September 2020, the ACF had advanced Shs 2.8 billion to 187 small and micro borrowers with non-traditional collateral under block allocation,” he said.
Video: General @mugishamuntu says he will establish an ‘agricultural bank’ to help smallholder farmers access cheap credit to improve their productivity and household incomes #ugandadecides2021 pic.twitter.com/tqEZmpgBxH
— ChimpReports (@ChimpReports) December 12, 2020
The ACF is administered by the Bank of Uganda on behalf of the Government of Uganda.
The Deputy Governor said that through this innovation, the ACF working with the participating institutions, has extended loans of up to Shs 20 million to small-scale farmers.
He further said that block allocations support financial inclusion and advance equity in economic activity by serving women and youths with limited property rights.
But General Muntu said farmers are individually weak as they cannot negotiate for better prices and cannot build stores for storage.
“They (farmers) cannot buy tractors themselves. When you have a cooperative union, because of the power of numbers, they can build stores for storage, they can buy agricultural equipment like tractors,” said Muntu, who co-founded the FDC party before later forming ANT.
“They can have a higher purchase power which enables them to negotiate for better prices, and then help the farmer in that cooperative union.”
Muntu, who previously served as army commander, said his party, ANT is best positioned to get the country from the mess in which it is and put it back on the right track.
“It is time to have a change. But not just change. It must be qualitative change. That’s why we are saying, retire General Museveni and look amongst us and ask, who is suitable to manage this country better.”