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Evans Nakhokho, the chief manager of agribusiness at Centenary Bank

Agricultural prices rise 5% as economy starts to recover from Covid-19 pandemic

According to the June 2020 Uganda Bureau of Statistics report, food crop growing activities registered a growth of 4.3 percent in 2019/2020, compared to the 1.5 percent growth in 2018/19.
posted onOctober 26, 2020
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The gradual recovery of the economy following the easing of the lockdown in the last quarter of the previous financial year saw the agricultural sector register a five percent growth in prices.

According to the June 2020 Uganda Bureau of Statistics report, food crop growing activities registered a growth of 4.3 percent in 2019/2020, compared to the 1.5 percent growth in 2018/19.

The livestock sub-sector activities grew by 7.7 percent in 2019/2020 compared to 7.3 percent in 2018/19.

“The 5 percentage points price improvement is largely attributed to the gradual recovery of activities in the agricultural sector and the economy as a whole, case in point is the improved price of Matooke and other foodstuffs,” said Evans Nakhokho, the chief manager of agribusiness at Centenary Bank during a thought-leadership forum hosted by the bank under the theme: Interventions for Agribusiness Development.

“Financing plays an instrumental role in boosting agricultural activities and the structured ecosystems that focus on both financial and non-financial services have enabled the utilization of credit extended. This year, we have disbursed close to Shs600 billion of which 60% has been issued to smallholder farmers.”

Agriculture financing contributes about 12% of the total lending to all sectors in the banking industry which is approximately Shs2 trillion.

The agribusiness manager also noted that clients, aside from financing, are guided on credit management and business planning.

The Agricultural Business Initiative (aBi), which was jointly founded by the governments of Denmark and Uganda, and is supported by USAID, SIDA, UKAid, and KfW to support private sector agribusiness development -- has also played a huge role in facilitating the observed growth.

“Agricultural Business Initiative (aBi) has focused on stabilizing and strengthening Financial Institutions to ensure that agribusiness financing is supported. This has been implemented by rescheduling lines of credit (principal and interest) for a period of 12 months, reduced interest rate from an average of 13.5% to 8.2% on all running facilities with short-term working capital for Shs300 million – Shs1 billion at 8.2%, no fees, among others,” said Mona Ssebuliba, the chief operating officer at aBi Finance Limited.

“Key lessons have been drawn, which the farmers have to adjust to not limited to; the ability to swiftly adapt to improved business models, digitizing for improved resilience, business monitoring, putting in place business continuity plans for the unexpected occurrences, have a plan to guide prompt decision making, among others which are designed to manage any potential risk that might pose a threat to the business.”

To realize the desired yield in the agricultural value chain, officials say, players need to continuously work on product development to keep up with the need for innovations, adapt risk management frameworks, test or develop business continuity plans, and improve and enhance of digital channels plus digitizing businesses for the non-digitized.

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