Uganda’s farm credit tops Shs1.5 trillion, but rural borrowers face a closed door

Uganda has disbursed more than Shs1.5 trillion in agricultural credit since 2009, yet many rural farmers still struggle to qualify for it. Districts around Greater Kampala have received about 27% of the money, while borrowers beyond major commercial centres face hurdles ranging from limited information to inadequate collateral—assets lenders accept as security for a loan.

The figures were presented by the Bank of Uganda at a Local Government Budget Consultative Meeting in Mukono on Friday, according to Daily Monitor Uganda (direct). By June 30, the Agricultural Credit Facility, or ACF, had received about 23,000 applications. Around 15,300 had been approved and funded. Government money accounted for about Shs721 billion of the disbursements, helping reduce the cost of borrowing through the facility.

A funding gap beyond the commercial centres

The district totals show how unevenly that financing has spread. Wakiso received Shs139 billion, against Shs11 billion for Nakasongola and Shs19 billion for Masaka. Greater Kampala districts together received about Shs405 billion. Officials linked the concentration partly to the stronger presence of financial institutions, businesses and commercial activity around Kampala and Wakiso. A similar pattern appeared in the Small Business Fund: Greater Kampala districts received about 40% of its Shs75 billion in disbursements.

Sarah Nakamya, a local government official from Nakasongola District, said many rural residents who could benefit do not know about the agricultural facility or understand its application requirements. She called for district commercial officers to play a bigger role in explaining the programme and helping farmers navigate the process. Her concerns point to a barrier that comes before any bank assessment: potential borrowers may not know how to seek the financing in the first place.

Sidney Rugwagye, a reporting officer in the central bank’s Fund Department, said the ACF was created to improve access to affordable, longer-term agricultural finance. It supports commercial farming, machinery, processing and activities that increase the value of agricultural products. Rather than run a separate agricultural bank, the Bank of Uganda distributes the financing through commercial banks and other regulated financial institutions, using networks already in place.

Records and security remain the test

That structure still leaves farmers facing lenders’ requirements. Officials cited insufficient collateral and weak financial records as obstacles. The central bank also identified weather risks, pests, uncertain markets and changing commodity prices as difficulties for agricultural lending. Rugwagye urged local governments to promote better record-keeping, saying banks need evidence that a business is financially viable before they lend.

Rugwagye’s message to local governments: encourage farmers and businesses to keep financial records.

The facility covers farm expansion, irrigation, livestock, inputs, grain trading, processing and post-harvest infrastructure. Loans for long-term assets can last up to eight years, with a grace period of up to three years. For smaller loans, block allocations—funding set aside for such lending—cover amounts up to Shs20 million. Lenders can consider business cash flows, bank statements, guarantees and repayment histories instead of conventional collateral.

Further public money is entering the financing schemes. Rugwagye said Shs47 billion had been provided in the current financial year, alongside an existing pool of about Shs380 billion. The issue to watch is whether greater local outreach and better financial records help rural applicants gain access, and whether the options already available for smaller loans bring more government-backed credit beyond the main commercial centres.