Agricultural Finance – The Agricultural Finance Platform (AFP)

The Agriculture Finance Platform (AFP) is a dynamic, responsive and issues-based multi-stakeholder partnership hosted by UAA. Its purpose is to promote effective actions that will increase the depth, quality and absorption of financial services for (and by) all levels and sizes of actors along the agriculture value chains in Uganda. The activities of the AFP are run by UAA and guided by a Steering Committee of 15 member organisations/agencies. Through the AFP, UAA focuses attention on activities that have the capacity to positively and sustainably influence the flow of financial services to the agricultural sector. This enables UAA to promote effective actions that are aimed at strengthening the agriculture supportive financial markets that are broader- reaching more customers; and deeper- offering more and innovative products.

UAA is supporting the Government of Uganda, through the Ministry of Finance, Planning and Economic Development (MoFPED), to improve the enabling business environment for agriculture finance. This is being implemented through a public-private sector partnership to policy reform, using a policy “hub and spoke” model. MoFPED’s Financial Services Department is the policy hub, while UAA is the spoke. In this “hub and spoke” formation, the identification of the policy problem, identification of policy options, getting buy-in for reform options, identification of policy priorities and drafting of the Policy, the Implementation Strategy, Legislation and underlying Regulations are being undertaken by UAA (the spoke), but owned by MoFPED (the hub), which has the mandate to reform these policies.

In addition, through the Agriculture Finance Platform, UAA aggregates the expertise of the different agricultural finance stakeholders to support MoFPED in its efforts to undertake the necessary agricultural finance reforms. MoFPED coordinates the activities of the different Ministries, Departments, Agencies (MDAs) through an Agricultural Finance Technical Working Committee (TWC) that was established by the Ministry’s Permanent Secretary/Secretary to the Treasury (PS/ST) in order to exploit strategic complementarities and synergies. MoFPED (with technical support from UAA) also ensures a robust whole-of-Government approach to, and provides the overall leadership and coordination of, the reform process.

The ultimate outputs in the areas of work have been (a) a draft National Agricultural Finance Policy (the Policy); (b) a draft National Agricultural Finance Policy Strategy (the Strategy); (c) legal reforms in the financial system supporting the agricultural sector; (d) regulatory reforms in the financial system supporting the agricultural sector.

Technical assistance

UAA through the AFP aggregates the expertise of the different agricultural finance stakeholders to support MoFPED in its efforts to undertake the necessary agricultural finance reforms, laws, regulations and practices that constrain agricultural finance in Uganda. Furthermore, the UAA team has been instrumental in strengthening the technical and institutional capacity of government MDAs, as well as agricultural industry apex organisations that are vital to improving the mobilisation, provision and utilisation of agricultural finance in Uganda, as well as promoting the expansion and uptake of agriculture insurance.

Access to agricultural finance – supply side

UAA offers the opportunity for building the capacity of services providers and suppliers of finance, for them to better understand the sector and thus to be able to develop a full range of appropriate financial products and services that are responsive to the needs of the different actors in the agricultural industry. This includes sensitising financial institutions on the use of both social and legal land documentation, to increase lending to small scale and other farmers.

Access to agricultural finance – demand side

Likewise, in streamlining the supply side of capital, UAA offers the opportunity in the creation of demand for agricultural financing. This is by building the capacity of agribusinesses of all sizes to better absorb financing that maybe available in the market. UAA is committed to increasing access to finance for the “hidden middle”, SMEs and subsistence households which are currently unidentified and remain underserved. This is being done through collaborations with financiers and the private sector.

1. Promoting increased revenue inclusiveness (fair sharing of revenue) in the relationships between exporters with nucleus farms and the small-scale farmers in their out-grower networks, resulting in the farmers receiving increased prices for their produce and the exporters benefiting from increased retention of farmers in their out-grower networks.
2. Promoting the use of digital technology to increase access of small-scale producers to agricultural finance.