Finance is a key enabler in
developing profitable agricultural value chains and in
addressing issues of; community mobilisation, cooperative development; production
planning and management; harvesting, processing and storage; marketing, sourcing and
logistics etc. Improved financial systems can improve the efficiency of Uganda's agricultural
value chains by lowering transaction costs, providing adequate financial products and
improving local sources of finance.
Access to finance is critical to agricultural and rural transformation in Uganda. However, notwithstanding this, Agriculture Finance has been termed a "policy orphan", given the rarity of policy frameworks dedicated to Agriculture Finance and the lack of coordination among stakeholders, with often fragmented policies falling into a void among government ministries and regulatory and supervisory authorities, or even undermining one another.
This not only presents gaps in leadership and follow-up of issues but also makes Agriculture Finance interest, mission and priorities subservient to those of the sectors and players that should be the driving force behind financing of agriculture. At both the policy and operational level, these issues cut across departments and sectors, requiring well-coordinated and sequenced action so as to minimise risks and losses within agricultural value chains.
The lack of Agriculture Finance policy or framework does not promote a conducive environment for the private sector to increase its funding of agriculture on one hand and the use of Agriculture Finance on the other. One of the challenges is the need to closely network key actors who contribute to successful financing of agriculture. Agriculture Finance policy and practice issues cut across policies and mandates of multiple government ministries/ bodies such as the Ministries of Finance, Agriculture, Trade, Cooperatives as well as the Central Bank. In Uganda, none of these bodies has earmarked ‘Agriculture Finance coordination' as a priority area. Furthermore, there is limited awareness and coordination of how to remove the bottlenecks currently constraining Agriculture Finance.