By Mulengera Reporters
A new independent evaluation of Uganda’s Agricultural Credit Facility (ACF) has recommended sweeping reforms to make the programme more development-oriented, inclusive and responsive to the needs of underserved players in the agricultural sector.
The evaluation, commissioned for the National Planning Authority (NPA) and released in May 2026, calls for stronger oversight of the facility, performance-based incentives for participating financial institutions (PFIs), increased risk-taking and greater investment in neglected segments of the agricultural value chain.
The report says the ACF should adopt targeted strategies that incentivize PFIs to align their lending more closely with the facility’s development mandate.
Among the proposed measures are performance-based incentives for lending in underserved regions and value chains, differentiated terms for PFIs that expand their outreach, and closer monitoring of compliance with ACF lending guidelines.
The evaluation says there is a need to rebalance commercial incentives with development outcomes to ensure that ACF financing is inclusive, equitable and transformative.
ACF urged to oversee loan applications
The report recommends that the ACF institutionalize direct oversight of the initial loan application stage before applications are screened by PFIs.
It proposes a digital pre-application system through which prospective borrowers would submit standardized baseline information directly to ACF before the PFI appraisal process begins.
The information would include the applicant’s location, gender, farm size, intended use of the loan and expected contribution to jobs, export earnings and tax revenues.
According to the report, this would give ACF better visibility of actual demand for its financing while allowing it to monitor applications rejected by PFIs.
The facility would also have the ability to recommend reconsideration of projects that are rejected but demonstrate strong alignment with its development mandate.
The evaluation further recommends that ACF establish a dedicated advisory mechanism to support prospective borrowers.
The mechanism, either through a central unit or regional outreach officers, would provide application guidance, financial literacy and project-development support.
By working alongside PFIs, the system would help improve the quality of applications and enable underserved borrowers to navigate the financing process.
ACF urged to target neglected parts of agricultural value chain
The report recommends that ACF adopt a more integrated value-chain financing strategy, with greater attention to activities beyond primary production.
It identifies agro-processing, storage and distribution as some of the segments requiring increased financing.
The facility is encouraged to develop targeted financial products for downstream enterprises and establish partnerships with cooperatives, commodity off-takers and logistics providers to co-finance post-harvest investments.
The report says strengthening these segments could increase producer incomes, reduce post-harvest losses and accelerate Uganda’s transition towards a more competitive and diversified agricultural economy in line with NDP IV and Vision 2040.
It recommends ring-fencing part of ACF funding for downstream value-chain activities, including post-harvest management and agro-processing, backed by monitoring and reporting systems to track the flow and impact of the funds.
ACF urged to increase risk appetite
The evaluation also calls for ACF to increase its risk appetite to reach borrowers who continue to face structural barriers to formal credit.
The targeted groups include smallholder farmers, youth and first-time borrowers.
The report says this could require greater use of risk-sharing mechanisms, block allocation products and other targeted instruments designed to support higher-risk borrowers.
It recommends that ACF introduce a structured graduation strategy for performing Block Allocation borrowers.
Under the proposed system, borrowers with good repayment records would gradually gain access to larger formal loans, supported by business-development and capacity-building assistance.
The report also recommends ring-fencing a dedicated portion of ACF funding for Block Allocation Loans to ensure predictable financing for micro and smallholder farmers.
The reserved funds would provide PFIs with resources to offer more flexible collateral arrangements and maintain consistent outreach to underserved rural borrowers.
Gender and regional inclusion
The evaluation recommends mainstreaming gender-responsive financing across ACF operations.
It proposes tailored loan products for women, targeted financial literacy programmes and incentives for PFIs that increase lending to female borrowers.
It further recommends gender-level reporting and recognition of PFIs that demonstrate strong performance in gender inclusion.
The report proposes 50 per cent gender distribution as the minimum threshold for measuring progress, noting the important role women play in Uganda’s agricultural workforce.
Regional funding quotas are also proposed to ensure more equitable access to agricultural credit.
Under the recommendation, a portion of ACF funds would be reserved for underserved regions, while PFIs would be incentivized to meet regional lending targets.
The report also calls for expanded financial literacy and capacity-building initiatives involving local governments, cooperatives and business-development agencies in underserved areas.
BoU and PFIs urged to tighten loan-processing timelines
The evaluation recommends revising the memorandum of understanding between the Bank of Uganda (BoU) and participating financial institutions to introduce enforceable service-level agreements.
The agreements should establish clear and standardized timelines for each stage of the loan cycle, from application and appraisal to final disbursement.
The report says this would address processing delays and strengthen PFI accountability.
More importantly, it says faster processing would ensure that ACF financing is aligned with the seasonal calendars of agricultural beneficiaries, thereby maximizing the facility’s intended impact. (For comments on this story, get back to us on 0705579994 [WhatsApp line], 0779411734 & 041 4674611 or email us at mulengeranews@gmail.com).
