By Mulengera Reporters
The Agricultural Credit Facility (ACF), managed through the Bank of Uganda (BoU), has come under scrutiny over legal uncertainty, weak institutional linkages and inadequate coordination with key government agricultural programmes, according to a National Planning Authority (NPA) evaluation report.
The report raises concerns about the institutional arrangement under which the ACF has operated since its inception in 2009, noting that its governance, implementation and administration are largely anchored in a Memorandum of Understanding (MoU) rather than a dedicated legal framework.
While the MoU is regarded as binding among its signatories, the NPA evaluation notes that it may not be legally enforceable in courts unless its provisions expressly provide for such enforcement.
The arrangement, the report says, has left the ACF without a statutory definition of its development targets and performance indicators, making objective assessment of its performance more difficult and exposing the facility to potential external influence.
The NPA further warns that the ACF’s position as an MoU-based entity overseen by the BoU Director of Finance makes it vulnerable to administrative changes, shifting government priorities and personnel transitions.
Such vulnerabilities, according to the report, could undermine the facility’s operational continuity and strategic direction and ultimately affect its ability to consistently pursue its mandate.
Weak links with key government programmes
The evaluation also faults the ACF for inadequate coordination with other important players in Uganda’s development landscape.
It notes that critical programmes, including the Microfinance Support Centre (MSC), the Parish Development Model (PDM) and the Uganda Agricultural Insurance Scheme (UAIS), often operate without formal integration with the ACF.
Institutional linkages with the Ministry of Agriculture, Animal Industry and Fisheries (MAAIF) and the Uganda Warehouse Receipt System are also described as underdeveloped.
According to the report, the absence of robust inter-agency coordination mechanisms limits opportunities for strategic alignment and operational synergy among institutions working to expand agricultural financing and transform Uganda’s rural economy.
The NPA argues that stronger partnerships could improve coordination, policy coherence and the overall impact of the ACF.
Calls for a new legal framework
The evaluation recommends that the ACF be constituted as a separate legal entity with clearly defined institutional responsibilities and sufficient autonomy to effectively operate within Uganda’s development ecosystem.
It calls for legislation or regulatory provisions to formally define the ACF’s mandate, development objectives, governance structure and operational scope.
The proposed framework should also provide for a dedicated governing body with technical competence, board independence and clear accountability mechanisms.
The NPA further recommends a clearer separation between the roles of BoU as regulator and the entity responsible for implementing the ACF, in order to avoid potential conflicts of interest.
The report also calls for formal operational guidelines covering areas such as beneficiary eligibility, credit appraisal, monitoring, risk management and other aspects of credit delivery.
In addition, it recommends that the ACF incorporate Environmental, Social and Governance (ESG) standards into its lending operations.
Growing importance of agricultural finance
The NPA says the reforms are increasingly important given agriculture’s central role in Uganda’s socio-economic transformation and the ACF’s expanding mandate and strategic importance.
A more robust and sustainable legal framework, it argues, would strengthen governance and institutional accountability while providing greater operational stability.
The proposed reforms are also expected to enhance transparency, improve the ACF’s ability to mobilize development resources and expand agricultural financing.
The findings place renewed focus on the institutional structure through which the ACF is administered and raise questions about whether its current MoU-based arrangement is sufficiently robust to support the facility’s growing role in Uganda’s agricultural transformation agenda. (For comments on this story, get back to us on 0705579994 [WhatsApp line], 0779411734 & 041 4674611 or email us at mulengeranews@gmail.com).
