The Bank of Uganda has clarified that the Agriculture Credit Facility is designed specifically for commercial farmers and not small scale subsistence farmers who are already targeted under the Parish Development Model.
While appearing before the Parliamentary Committee on Commissions, Statutory Authorities and State Enterprises on March 5, 2026, the Deputy Governor, Augustus Nuwagaba, said the facility, which currently stands at about Shs1.3 trillion, was established to support large-scale agricultural production rather than small household farming activities.
The committee was considering the Office of the Auditor General of Uganda’s report on the financial statements of the Agriculture Credit Facility for the 2023/24 financial year when the issue arose.
Nuwagaba told legislators that the fund was created to promote commercial agriculture and should therefore be accessed by farmers with large scale investment plans.
“You also cannot go for PDM as a commercial farmer. You come to us. If you have been having two pigs, or you want to buy ten chickens and increase to fifteen chickens, you cannot come to the Bank of Uganda to apply for this money. This facility is particularly for commercial farming,” Nuwagaba said.
He added that the programme was not intended for subsistence farmers who are mainly supported through government initiatives such as the Parish Development Model.
“It is not usually for our normal peasants and farmers who are using the hoe, because the reason why the government and Parliament allowed it was to increase commercial farming,”he said.
The Agriculture Credit Facility was established in 2009 as a government intervention to expand access to affordable credit for agricultural investments. Under the arrangement, the government contributes half of the loan amount through the central bank while participating in commercial banks provide the remaining portion.
However, legislators raised concerns about the low awareness and uptake of the facility among farmers.
Robert Kasolo, the Member of Parliament for Iki Iki County, questioned whether the programme was reaching the farmers it was meant to support.
“This facility started in 2009. It seems not to be operating widely. The farmers it was intended to serve, most of them are not aware of it,” Kasolo said.
He added that the issue had previously been raised on the floor of Parliament, with several legislators pointing to limited sensitisation about the availability of the credit facility.
Another lawmaker, Peter Okeyoh, the Member of Parliament for Bukooli Island raised concerns about a possible conflict of interest since commercial banks that administer the facility also operate their own agricultural lending products.
“I am a commercial bank, but I also have an arm in lending. When I walk into a commercial bank which has other facilities at maybe 22 percent interest, what do you think I will get first, the loan for 12 percent interest or the one of 22 percent?” Okeyoh asked.
In response, Nuwagaba explained that the structure of the facility actually provides strong incentives for banks to lend under the programme.
“You are almost getting free financial assets to lend out. Remember that if a loan of Shs200 million is approved, the commercial bank only contributes Shs100 million while the government brings the other Shs100 million through the Bank of Uganda,” he said.
He further explained that although the interest rate on the combined loan is capped at about 12 percent, the central bank does not take any share of the interest earned.
“The interest is charged on the entire Shs200 million, but Bank of Uganda does not take even a single cent from that interest. It becomes the profit of the commercial bank,” Nuwagaba said.
He added that strict monitoring measures have been put in place to ensure that participating banks do not keep the funds idle.
According to the deputy governor, any bank that fails to utilise the funds risks losing approval for additional allocations under the Agriculture Credit Facility.
The facility is one of the government’s key interventions aimed at boosting agricultural productivity, improving value addition and expanding Uganda’s commercial farming sector.
