Opposition leaders have urged the government to establish a dedicated agriculture bank to provide affordable credit to farmers, arguing that reliance on foreign funds undermines national agricultural development.
Their call comes amid growing concerns that commercial bank loans remain expensive and unsuitable for the unique challenges faced by farmers.
In a revelation made by Asinasi Nyakato, the Shadow Minister of Agriculture, during the presentation of the Alternative Policy Statement for the Agriculture Sector before Parliament last week, she raised concerns over the government’s increasing reliance on foreign funds for agriculture.
She revealed that in the 2025/26 National Budget, external financing is set to increase from shs929.26 billion to shs 1.048 trillion, while government expenditure on agriculture is expected to decrease significantly from shs 1.135 trillion in FY 2024/25 to shs 640.06 billion in FY 2025/26.
“Government should act on the resolution of Parliament to establish an Agriculture Bank to avail affordable credit to the farmers within a framework that relates to agricultural practice, that looks at maturity and harvests of crops and animals involved,” Nyakato stated.
She further suggested that some of the funds currently channeled through the Uganda Development Bank (UDB) could be disbursed through the proposed Agriculture Bank, as UDB’s credit remains inaccessible to many farmers due to stringent requirements.
“Limited access to agricultural credit finance by many agricultural households has heavily impacted farmers’ credit balances and constrained agricultural production,” she explained.
Nyakato also pointed out that since a significant portion of the agriculture sector’s funding comes from external sources, challenges such as delayed disbursements and high interest rates negatively affect the industry.
She emphasized that these issues are particularly concerning given Uganda’s comparative advantage in the region.
Despite the shs72.2 trillion National Budget approved by Parliament for the 2024/25 financial year, a 36% increase from the previous year, Nyakato noted that the Agro-Industrialization Program continues to suffer budget cuts.
The program’s funding is set to decline from shs2.064 trillion in FY 2024/25 to shs1.589 trillion in the Budget Framework Paper (BFP) for FY 2025/26, reflecting a shs375 billion reduction (-18%) a figure significantly lower than the shs2.448 trillion proposed in the National Development Plan IV (NDP IV).
She proposed that the government revamp the National Seed Company to ensure the provision of high-quality and subsidized agricultural inputs to farmers across the country.
“This will ensure the availability of quality and affordable seeds on the market. The government should provide funding in the budget for FY 2025/26 to procure and make available to farmers a variety of subsidies, including seeds and seedlings, fertilizers, fish gear and fishing vessels, and irrigation equipment, all of which are essential for increasing productivity,” she stated.
The Alternative Policy Statement outlined several recommendations for developing Uganda’s agriculture sector, including; establishing an agency to manage perennial crops in the country, fast-tracking and revamping the National Seed Company to ensure the provision of high-quality seeds to farmers and establishing a National Food Regulatory Agency to oversee food quality and safety critical factors for market access.
