By Our Reporters
In a bid to increase access to affordable finance especially for those in agriculture sector, which banks tend to shun considering it risky and unviable, the government of Uganda in 2009 innovated and came up an intervention called Agricultural Credit Facility (ACF).
The ACF scheme, which lends to hitherto unbanked farmers at 12% interest, is implemented by Bank of Uganda in close collaboration with a few partner financial institutions and banks including PostBank Uganda (PBU) Ltd.
Riding on its vast branch network and mobile van banking facilities it operates across Uganda including in places where other banks don’t reach simply because it’s not profitable to do so, PBU has excelled more than any other participating financial institution in deepening access to the ACF funds.
And it’s this outstanding performance that saw its representatives walk off with the highest number of awards during the Thursday awards-giving ceremony the BoU organized at the Kampala Sheraton Hotel. The ceremony was convened to publicly appreciate institutions that have passionately been participating in implementing the scheme but none of them stood taller than PBU.
Finance Minister Matia Kasaija was the guest of honour and other dignitaries included BoU Deputy Governor Louis Kasekende, Prof Mondo Kagonyera, UBA CEO Willbroad Owori and Chief Executive Officers heading participating financial institutions.
Kasekende explained that the ceremony was intended to recognise significant efforts that have been made by different participating financial institutions in the operationalization, advancement and popularization of the ACF scheme. PBU was remarkably recognized for its relentless efforts aimed at growing agricultural lending in Uganda.
Himself a farmer, Kasaija said as government they are very proud of PBU for being willing to risk venturing into agricultural financing which many financial institutions are very apprehensive about perceiving at risky.
By the time the final announcement was made at the awards night, PBU had beaten all the participating financial institutions to emerge the overall Best performing financial institution in extending credit facilities under the ACF program. The specific indicators on which PBU swept the awards included having the highest outreach to small borrowers as evidenced by the number of loans disbursed; highest national coverage in terms of the number of loans disbursed as of 31st March 2019; having the highest absorption rate in terms of number of loans disbursed and showing interest in the scheme as evidenced by the number of loans applications submitted to BoU as of 31st March 2019.
An overjoyed PBU Executive Director in charge of Credit and Business Growth Benon Rukundo revealed that PBU has so far disbursed a total of Sh26,749,278,627 under the ACF scheme. He further disclosed that agriculture lending accounts for 25% of the PBU’s loan portfolio. He said management now looks forward to consolidating this excellent performance in support of the ACF intervention which is part of President Museveni’s overall strategy to bring down interest rates. Under ACF, farmers are funded for things like acquisition of tractors, purchase of pesticides and fertilizers as well as paddocking or opening of the land.
The maximum loan amount to an eligible borrower for biological assets (like banana suckers and fruit seedlings) is Shs80m. In some cases, ACF scheme money is also used to finance the purchase of land for expansion purposes. Upon assessment, a single borrower can be given up to a maximum of Shs2.1bn with a repayment period of 5 years.
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