50% of agribusiness loan requests rejected - BoU

Close to half of agricultural loan applications are rejected, data in the Bank of Uganda 2024 Annual Report shows.
The report, which reviews different funds managed by the Central Bank, including the Petroleum Fund and the Small Business Recovery Fund, among others, indicates that in the 15 years to June 2024, the Bank of Uganda Agricultural Credit Facility has received 7,726 loan applications worth Shs1.58 trillion, but only 57 percent were approved, which represents 4,442 approvals worth Shs981b. 
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The Fund is operated through 24 participating financial institutions. 
It was established in 2009 with the objective of commercialising agriculture through provision of medium and long-term financing for projects engaged in agriculture, agro-processing, modernisation, and mechanisation.
It is operated through a shared structure with government and participating financial institutions each contributing 50 percent to the revolving fund. Loans carry an interest 12 percent. 
Bank of Uganda data further indicates that during the year ended June, participating financial institutions received 3,530 applications worth Shs364.15b, which was an 84 percent increase in the same period ended June 2023.
However, only 987 beneficiaries worth Shs162.71b were approved, which was a 30 percent increase from the Shs81.46b approved in the year ended June 2023.
The report further indicates that uptake of Block Allocation rose to Shs5.1b, from which at least 654 micro borrowers benefited, while men continued to be the main beneficiaries, taking up at least 69 percent or Shs170.94b of allocations, compared to 19 percent or Shs19.9b for women and 12 percent or Shs789.94b for companies and farmer groups. 
At least 43 percent of the funds were allocated to financing working capital for grain trade, 31 percent to on-farm activities,17 percent to agro-processing value addition, and 9 percent to post-harvest handling.
Government, through the Agricultural Credit Facility, seeks to ensure that farmers have access to affordable medium to long-term credit for value-addition in projects engaged in primary agricultural production, agro-processing and value addition to raw agricultural outputs, post-harvest management and supporting mechanisation.
This in turn has resulted in increased capacity for job creation, improvement in household income, and boosting export promotion.