By Mulengera Reporters
The Agricultural Credit Facility (ACF) is heavily concentrated at the primary production end of Uganda’s agricultural value chain, limiting the facility’s ability to drive value addition, agro-industrialization and stronger returns for farmers, an independent evaluation has found.
The Bank of Uganda-managed facility has provided substantial support to agricultural production, but comparatively less financing has reached activities such as processing, storage, marketing and distribution, according to a National Planning Authority (NPA) evaluation commissioned by the Ministry of Finance, Planning and Economic Development.
The evaluation, released in May 2026, found that 55% of sampled ACF-funded agribusinesses were involved in primary production.
Input supply accounted for 11%, while processing and value addition and aggregation and storage each represented 13%.
Distribution and marketing accounted for only 8% of the activities supported.
The figures show that more than half of ACF-supported agribusinesses are concentrated at the production stage, while activities further along the value chain receive substantially less attention.
The NPA says primary production remains critical for food security and rural livelihoods, but warns that the limited financing of downstream activities constrains the broader economic potential of agricultural investment.
Without sufficient investment in processing, logistics, storage and marketing, farmers and agricultural enterprises remain exposed to low producer prices, post-harvest losses and limited opportunities to capture value from their products.
The imbalance also limits the potential of agriculture to contribute to Uganda’s industrialisation and export ambitions.
The evaluation argues that the ACF has not yet fully leveraged its financing role to support the transformation of agricultural commodities into higher-value products.
Greater investment beyond the farm gate could allow more agricultural enterprises to participate in value addition and create stronger linkages between farmers, processors, traders and markets.
The NPA therefore recommends that the ACF adopt a more integrated value-chain financing approach, with particular attention to currently underfunded activities such as agro-processing, storage and distribution.
The facility should develop targeted financial products and concessional lending instruments for businesses operating beyond primary production, the evaluation recommends.
It also proposes stronger partnerships between ACF-funded financial institutions, commodity off-takers, cooperatives and logistics providers to support investment in post-harvest infrastructure.
Such partnerships could help address financing gaps in areas where individual businesses may struggle to secure sufficient capital for storage, transportation or processing facilities.
The evaluation further recommends that the ACF establish dedicated funding allocations for post-harvest activities and agro-processing within its lending framework.
This, the NPA says, would provide a clear institutional signal that the facility intends to contribute to agro-industrialisation rather than concentrating primarily on production.
Participating financial institutions could also be encouraged to increase lending to downstream agricultural activities through performance-based incentives.
The proposed measures include portfolio bonuses for PFIs that finance agro-processing and storage infrastructure, particularly in underserved areas.
The NPA also recommends partial risk-sharing mechanisms to reduce the risks perceived by PFIs when financing post-harvest and value-addition investments.
Such instruments could encourage financial institutions to enter segments that they currently consider less commercially attractive.
The evaluation says strengthening these parts of the agricultural chain would help farmers and businesses secure better returns, reduce waste and create additional economic opportunities around agricultural production.
For the Bank of Uganda and participating financial institutions, the challenge is therefore to move the ACF beyond financing what happens on the farm and deepen support for what happens after the harvest.
A broader value-chain approach, according to the NPA, would enable the facility to play a stronger role in building a diversified and competitive agricultural economy aligned with the objectives of NDP IV and Uganda’s Vision 2040. (For comments on this story, get back to us on 0705579994 [WhatsApp line], 0779411734 & 041 4674611 or email us at mulengeranews@gmail.com).
