By Mulengera Reporters
The Agricultural Credit Facility (ACF), a government-funded programme managed by the Bank of Uganda (BoU), has no formal legal owner, with an evaluation by the National Planning Authority (NPA) exposing a major gap in the facility’s institutional structure.
According to the evaluation, the ACF does not have a formal ownership structure because it is neither incorporated as a legal entity under the Companies Act nor established through an Act of Parliament.
As a result, the facility has no shareholders or legal proprietors, despite being fully funded and initiated by the Government of Uganda as a public sector initiative designed to facilitate affordable agricultural financing.
The arrangement means that while government provides the funding, there is no formally constituted legal entity that owns the ACF.
Instead, the facility operates through an institutional arrangement involving the Government of Uganda, BoU and the Ministry of Finance, Planning and Economic Development (MoFPED).
BoU serves as the implementing and supervising agency and is responsible for the ACF’s day-to-day operations.
Although BoU does not own the ACF, the facility is embedded within the central bank’s internal structure, specifically under the Directorate of Finance.
The ACF is headed by a Deputy Director who reports to the Executive Director Finance, with BoU providing institutional oversight and ensuring that fiduciary and operational controls are maintained.
At policy level, MoFPED exercises strategic oversight over the facility.
The ACF is accountable to MoFPED through routine reporting, with its implementation expected to align with national development priorities.
The NPA also notes that, because of its government funding and institutional arrangement, the ACF may be viewed as a public enterprise under the Public Enterprises Reform and Divestiture Act (PERDA), placing it under MoFPED’s broader public enterprise supervision framework.
The unusual arrangement leaves the ACF operating under layers of government and institutional oversight without a clearly defined formal ownership structure.
The NPA says the layered oversight structure reinforces public accountability but also highlights the need for a formal legal framework to clarify institutional roles and responsibilities.
The ownership question is particularly significant because the ACF was created to play a major role in expanding affordable financing to Uganda’s agricultural sector.
The facility was established in 2009 by the Government of Uganda through a Memorandum of Understanding (MoU) involving MoFPED, BoU and Participating Financial Institutions (PFIs), including commercial banks, the Uganda Development Bank (UDB), Credit Institutions and Micro Deposit-Taking Institutions (MDIs).
Its mandate is to enhance access to affordable, long-term credit for agriculture, targeting strategic segments of the agricultural value chain including primary production, mechanization, agro-processing and grain trade.
The ACF was specifically designed to address a critical financing gap in agriculture, where private financial institutions had historically been reluctant to lend because of perceived high risks, weak collateral structures, weather dependency, price volatility and inadequate insurance coverage.
Through concessional financing and risk-sharing mechanisms, the facility was intended to de-risk agricultural lending and incentivize PFIs to participate in financing a sector that employs over 70% of Uganda’s population and significantly contributes to GDP.
However, despite this important role, the NPA’s assessment shows that the facility continues to operate without the formal legal ownership structure normally associated with an institution handling a major public financing mandate.
The evaluation’s comparative analysis also shows that African countries have adopted different models for structuring and supervising development finance mechanisms, with significant implications for their autonomy, performance and ability to mobilize resources.
Some agricultural development finance institutions operate as formal banking entities regulated by central banks.
Tanzania’s Agricultural Development Bank (TADB), for example, is registered as a formal banking institution and supervised by the Bank of Tanzania (BoT), while adhering to banking standards, risk management protocols and regular reporting obligations.
Kenya’s Agricultural Finance Corporation (AFC), meanwhile, is a government-owned development finance institution established under the Agricultural Finance Corporation Act (Cap 323), with its mandate, governance and oversight defined through legislation.
The NPA also identifies development finance mechanisms that operate within government ministries or central bank structures without independent legal status, including Nigeria’s Agricultural Credit Guarantee Scheme (ACGS), which functions as a programme under the Central Bank of Nigeria (CBN) without a distinct legal identity.
The comparison highlights the different institutional models available for agricultural development finance and reinforces the NPA’s concern over the need to clarify the ACF’s own institutional framework.
For the ACF, the question is not simply who supervises the facility, but who legally owns it and under what framework its institutional responsibilities are defined.
The NPA’s assessment therefore points to the need for a formal legal framework capable of clarifying ownership, institutional roles and responsibilities while strengthening the facility’s accountability and long-term sustainability. (For comments on this story, get back to us on 0705579994 [WhatsApp line], 0779411734 & 041 4674611 or email us at mulengeranews@gmail.com).
