By Mulengera Reporter
Uganda’s Agricultural Credit Facility (ACF) is reaching thousands of smallholder farmers and rural borrowers, but a striking imbalance in its lending exposes a major weakness in the government’s drive for inclusive agricultural transformation.
An Independent Evaluation of the Agricultural Credit Facility by the National Planning Authority (NPA), released in May 2026, found that 66% of ACF loan recipients benefited through the Block Allocation product between 2021 and December 2024.
That translates to 3,531 out of 5,336 borrowers, compared with 1,805 borrowers—or 34%—under the Companies and Others category.
On the surface, the figures appear to show a strong commitment to financial inclusion, with ACF reaching smallholder farmers, informal groups and rural borrowers who often struggle to access conventional commercial loans because they lack formal credit histories or physical collateral.
But the value of the loans tells a dramatically different story.
As of September 2024, only UGX12 billion—just 1% of ACF’s cumulative UGX1.009 trillion in disbursements—had gone through Block Allocation.
The remaining UGX997 billion, or 99%, was disbursed to formal businesses and individuals under the Companies and Others product.
The result is a programme that appears highly inclusive when measured by the number of beneficiaries, but far less inclusive when measured by the amount of money reaching them.
In other words, ACF is spreading its reach without spreading its financial muscle.
The NPA evaluation warns that this imbalance limits the ability of smallholder farmers and rural groups to expand production, build commercially viable enterprises and achieve meaningful improvements in income, resilience and market participation.
While Block Allocation has helped overcome traditional lending barriers through mechanisms such as social collateral, the relatively small amounts available to these borrowers leave many of them with limited capacity to move beyond subsistence or small-scale production.
The evaluation therefore exposes what could be described as ACF’s “inclusion gap”: thousands of vulnerable borrowers are being brought into the system, but they account for only a tiny fraction of the financing.
The NPA recommends that ACF introduce a structured graduation pathway for successful Block Allocation beneficiaries, allowing them to move progressively into higher-value and more formal financing.
Such a system could involve increasing loan sizes for repeat borrowers, providing business development and capacity-building support, and giving Participating Financial Institutions incentives to continue supporting groups as they mature.
The recommendation is aimed at ensuring that inclusion goes beyond simply counting borrowers to actually giving rural enterprises enough financial capacity to grow.
The disparity is particularly significant given ACF’s broader mandate.
Established in 2009, the government facility is designed to promote agricultural commercialization by providing short-, medium- and long-term financing for production, mechanization, modernization, agro-processing and grain trade on terms more favourable than conventional loans.
Managed by the Bank of Uganda in partnership with Participating Financial Institutions, ACF is also a key Development Financing Mechanism under Uganda’s Vision 2040 and the Fourth National Development Plan.
Its financing model has mobilised substantial private-sector capital. Over the past 15 years, PFIs have cumulatively lent about UGX485 billion, averaging roughly UGX32 billion annually, alongside government financing.
Yet the product-distribution figures raise a fundamental question about who is benefiting most from the facility.
If 66% of borrowers receive only 1% of the money, can ACF genuinely claim to be financing inclusive agricultural transformation?
The NPA findings suggest that ACF has succeeded in widening the door to agricultural credit—but the biggest challenge may now be ensuring that those entering through that door have access to enough financing to actually change their economic fortunes.
Without a deliberate pathway from small-scale inclusive financing to larger, commercially viable credit, the evaluation warns that ACF risks achieving inclusion in numbers without empowerment in value. (For comments on this story, get back to us on 0705579994 [WhatsApp line], 0779411734 & 041 4674611 or email us at mulengeranews@gmail.com).
