By Honorine Nininahazwe

Agriculture has been regarded as the backbone of the African Continent in terms of economic growth. Each year governments allocate funding to the sector for sustainable development. However, they have struggled to bring about  tangible changes in the sector.

Financial experts attribute this to a number of obstacles preventing them from operating profitably in rural areas. The recent „Making Finance Work for Africa“ meeting in Kampala, Uganda from 29 to 30 June highlighted the key issues stopping the continent from harnessing its full agricultural potential.

African leaders and development experts agree that agriculture is vital to the continent’s economic future. But farmers and agri-businesses complain that a lack of access to financial services continues to hinder their growth.

To gain an insight in this matter and discuss solutions, agricultural experts, bankers, farmers and government representatives from around Africa met in Kampala, Uganda on the last two days of June.

Airing grievances and hopes

The conference allowed the various stakeholders to air their grievances and hopes.

The co-chair of the G20 agrifinance committee, Susanne Dorasil, says the open exchange of opinions would help international efforts to „Make Finance Work for Africa“.

Several speakers at the conference said it was high time for policymakers to re-define their approach to agriculture and finance. One of them was Nixon Bugo from the Alliance for a Green Revolution in Africa (Agra), a non-govermental organization that focuses on making financial services available to small-hold farmers in Africa.

Statistics show that more than 50% of Africans are youth that could be productive in the agricultural sector if they had support. Instead these young people have resorted to emmigrating from rural to urban areas in anticipation of a better life. They abandon fertile lands due to what they see as a lack of economic opportunity. Francesca Akello is a Young Ambassador for Rural Development in Africa. She says the big question for policymakers is how to make rural areas a better place for youth in Africa.

The conclusion of the conference noted that without firm institutions and a skilled workforce, even the best policies will have little effect.

Listen to the entire report below:

Experts: Lack of Access to Finance Hinders Agriculture in Africa by financeafrica

Watch an interview by Yvonne Msemembo with Ugandan State Minister for Finance Fred Omach:

Watch an interview by Yvonne Msemembo with Fabian Kasi, managing director of Centenary Bank of Uganda:

Watch an interview by Yvonne Msemembo with Susanne Dorasil, German Ministry for Economic Cooperation and Development (BMZ):

Watch an interview by Yvonne Msemembo with Christian Königsperger, head of the financial sector development programme of German Development Corporation GIZ in Uganda:

By Yvonne Msemembo and Stella Teta

Savings and credit cooperative, so-called SACCOS, are often the only providers of financial services in rural areas. Despite this development in Uganda they have had a mixed record of success and failure.

Frequent reports about mismangement and fraud make many farmers think twice before becoming a member. But this is not the case with Mateete SACCO. Situated some 180 km from Kampala city, in Sembabule district, central Uganda Mateete SACCO was formed in 2003 and serves as a role model for successful agricultural lending.

Justine Kasoma a techical officer of the financial systems mangement programme under the German development Co-operation GIZ says Mateete SACCO is a beneficiary of the programme being implented in the country in collaboration with the Bank of Uganda. On a recent visit to Mateete SACCO she attributes its success to good managemnt and the recently installed software of a database that keeps track on the performance and operations of the SACCO.

Improving the lives of rural farmers

Mateete SACCO's manager Lawrence Busuurwa and Justine Kasoma look over loan reports

Mateete SACCO has done alot to improve the lives of rural farmers from the financial products it offers. Justine says the microloans provided have a grace period of five months and repayments start on the sixth month, the deposits are safe and members can have access to loans whenever they want as long as they meet the criteria.

Poor management and lack of good governance have been pointed out as the leading challenges that could result in the collapse of a SACCO but Mateete SACCO has managed to overcome these problems by being an organised organisation with an effecient board in place, a good accounting record and a well motivated staff. Justine Kasoma Says that its ability to reach out to the rural population has also made it a success.

Climate, borrowers pose challenges

But Mateete SACCO does face challenges. The senior laison officer in charge of loans Elias Kayinamura says the challenges include the impact of climatic change and multiple borrowers. The loans risk portfolio at the SACCO stands at 21 percent, but he says through improved record keeping farmers are able to manage their finances better, and build the confidence of the SACCO.

Thadeus Kiggundu who owns a 108 acre banana plantation is a beneficiary of financial services provided at Mateete SACCO. He says he has been able to access loans which have enabled him to make successful developments on his farm, but at his current level he would now like to have access to bigger financial funds.

Innovative services

Mateete SACCO has not been behind in inovating its services. This can be seen from the moblie banking services it offers to farmers who in the past have had to walk long distances to make finacial tansactions but can now make payment  such as of school fees, business and loan repayments just from a mobile phone.

The growing developments at Mateete SACCO if replicated in other parts of rural Uganda will definately bring positive and sustainable economic development to the poor who depend on agriculture for their livlihood. This is what the Financial systems programme is trying to do by supporting micro financial instititions  such as SACCOS operate more efficiently so that they are able to reach more people particularly in the remotest parts where there is little or no access to formal financial services.

Please watch the entire report below:

Listen to the radio report on Mateete SACCO:

Mateete SACCO: Helping Farmers in Central Uganda by financeafrica

By Emmanuel Wodomal Emrow

For many farmers in eastern and sub-Saharan Africa, micro-financing has delivered sustainability and growth. It’s paving the way for agricultural investment in the region, which single-handedly holds the potential to transform the poverty-stricken continent into not just a surplus for food but a huge business arena to better the lives 0f over 22 billlion people, who live below the povery line — earning less than a dollar a day.

In Uganda, Centenary Bank has majored in micro-financing so as to help small-scale farmers achive their dreams. With over 38 local branches spread in over 50 districts, 4 service centres and over 80 ATM machines, the bank offers different types of loans: micro loans which stretch from 100,000 to 500,000 Ugandan shillings, the equivalent of 190 dollars; loans for small and medium-sized businesses, so-called SME loans, and corporate loans, of over 100 million shillings advanced to graduated loan recipients.

The bank believes in the power of these loans to help them meet the daily needs not just in the farms but in their homes for sustainability and growth in an agro-based an yet agri-biased nation, faced with the constant policy conflict that continues to shadow the sector’s snail-paced growth.

Successul business plan

First established in 1983 as a trust fund, the bank has grown eminently through the scheme. Agri-financing for instance, forms 18% of the total portfolio, bringing in a whooping 77 billion shillings in revenue to the bank with a loan recovery rate of 90%. Succcess? No question about it.

Patrick Oyaga, the chief financial officer, is at the helm of this campaign and leads the commitee for assessment and evaluation of these loans — the brains behind the schemes progress.

“Our main business is micro-finance small depositers and the borrowers, but we depend mostly on loan officers for our lending,” he says.

Loan officers are the soul of the project

The soul of this 18-year-old project has been in the hands of its over 300 loan officers, spread far and wide through its branches to make the idea reachable to its growing multitude of customers — especially the rural population, who have been alienated by the remoteness of their farms.

Mr Emmanuel Ngoga is a lead loan officer at their branch in Mukono. He works tirelesly to bridge the gap between the banks faithful, pending loan receipients and the management. At the dawn of every day, he is dedicated to the challenge of balancing bank interests and making the farmer a succesful businessman an yet a loyal customer. His job revolves around appraising, visiting farmers to assess the potential of the farmers to repay the loan.

“We assist the farmers but also as an instituition we have to make a profit,” he says.

Growing a farm with the help of loans

In Mukono, one of his loyal clients is Mr Francis Ssenfuma, a poultry farmer who now rears over 2,400 birds that he was able to purchase with his first loan after he suffered bird flu attacks, which robed him of his first flock.

“The loan helped me to add more to my farm, ” he says. “I bought more birds and now i can repay the loan by selling my birds.”

He has also managed to build new shacks. In them, he plans to rear more animals, especially cattle, grow crops and become one of the most prominent farmers in Mukono.

He is hopeful that his favourite loan officer will help him realise his dream.

Watch the TV report below:

By Irene Simiyu and Nicholas Nyombi Prince

Mobile money, a service that allows people to do financial transactions on their phones has become so popular in Uganda, especially in the rural areas.

A recent Finscope study reveals that only 18% of Ugandans are served by the formal financial institutions. As a result, people in rural areas have found an alternative scheme in mobile money. The introduction of this service has tapped in the rural areas, where formal financial services hardly penetrate and are deemed to be out of reach for the common man.

The service has revolutionised the way people transact. It makes it easy to pay bills and carry out business transactions without having to be physically there. It saves time and money, because transaction can be made from virtually anywhere. Its very convenient and goes a long way to bridge the gap that had been left by the financial institutions.

A threat to banks?

Mobile Telephone Network (MTN) was the first to launch Mobile Money in March 2009, and other providers Uganda Telecom Limited (UTL) and Airtel have followed suit. For one to access these services, he/she needs to register with the mobile phone service provider where they are given an account and a secret code that is used when sending or withdrawing money.

Steven Mulumba, a coffee trader in Sembabule district says, it couldn’t have come at a better time. This service enables him to pay his suppliers, pay school fees for his children and better still pay his loans. However, some people think this trend is a threat to the commercial banks in the country who have failed to go deep down in the village, while others see it as a compliment to the conventional financial services.

Listen to Nicholas Nyombi Prince’s radio report below:

Mobile Money Enhances Banking in Rural Uganda by financeafrica

Watch Irene Simiyu’s TV report below:

By Timothy Ondere

They say “money makes the world go round” — and indeed it does. I strolled down the streets of Kampala, brushing shoulders with street kings, queens and their proteges, trying to find out how they put food on the table. Truth be told, though we have many unpublishable ways of making money down here, we still have legal ways, too, that have a future.

Living at the Hotel International in Muyenga, a 15-minute drive from Kampala, I would make my first stop at a 24-hours shopping center by the name Kabalagala. Here everything is available at whatever time of the day and every one is so welcoming — save for a female bouncer I met at one particular club, who wanted to thow me out for asking her where the toilets were before making my order.

Kampala downtown would be my prefarable second stop.  There is something about streets in these areas that is always fresh and since my story is about money exchanging hands there is no way I would have avoided the red-soiled streets of Kampala.

It is here that I bumped into Josephine Birungi, who gave me a moving story of how she got herself off the streets and got help at Kabaawo Mutundwe co-operative savings and credit society limited, a 30-minute drive from Kampala. She says she owes her entire life to the organisation, they trusted her with their money when she went to ask for capital to start a business after seeing her business plan.

Josephine started a business in poulty farming two years ago and she has never looked back. I visited her farm and the sacco where she is a member now and filed the following report:

By Vincent Wamundu 

With the recent rise in security scares, security detail was beefed up to protect the world in Kampala. The bell was used as sign to show things were ready to roll in the Victoria ballroom. Since many people from different nationalities attended, translation was a key factor.

In the first meeting on the 29th of June 2011 delegates came in at the Speke Resort Munyonyo, ready for the conference, dubbed “Zipping Finance and Farming” that took place in Kampala.

At the entrance all delegates were obliged to register and get accreditation; however some delegates took this time to get in contact and build networks among the participants before heading into the ballroom in order to listen to presentations and reports presented to them.

Coffee breaks were offered in between the presentations to make sure that delegates were awake and alert through out the meeting and during the afternoon, lunch was also offered.

Getting down to work

After short presentations participants were divided into discussion groups. They were given the mandate to tackle different topics for efficiency in the final document, the key factor being successful initiatives and approaches from agricultural and financial sectors. The groups discussed different topics such as training and technical support tackled funding, draft policy paper on agricultural finance and public sector policy.

According to the program, the workshop was supposed to come up with the so-called Kampala principles for agricultural finance policies in Africa, the draft committees were formed from among participants to discuss the vital principles, intended to convey suggestions for actions on the development of agriculture in Africa.

As they say: work without play makes jack a dull boy. So on the 3rd day of the conference, which was the last day, all laptops, head phones, microphones, pen and paper were put away and all the delegates embarked on field trips around the country.

For sure excitement was clear on their faces, a sign that truly, the conference had met its goal.

Watch Timonthy Ondere’s TV report on the conference below:

Watch an interview by Yvonne Msemembo with Ugandan State Minister for Finance Fred Omach:

Watch an interview by Yvonne Msemembo with Fabian Kasi, managing director of Centenary Bank of Uganda:

Watch an interview by Yvonne Msemembo with Susanne Dorasil, German Ministry for Economic Cooperation and Development (BMZ):

Watch an interview by Yvonne Msemembo with Christian Königsperger, head of the financial sector development programme of German Development Corporation GIZ in Uganda:

Photo: sarahemcc

By Brenda Nalumansi

Agriculture is the central pillar of many African economies. As cocoa farming is to Ghana, Kenya is significant for tea, Uganda has a long tradition of coffee production and is now ranked second in Africa and seventh in the world in terms of output.

The Uganda Coffee Development Authority (UCDA) estimates that 500,000 households depend on coffee production - about 25 percent of the entire country’s population.

But coffee growers face a number of challenges since farming is a partnership with nature. Crop cycles and careful timing are part of the coffee farming fabric, but prolonged dry-spells have led to calls for irrigation and subsidised agricultural inputs.

Banks fear risky investment

Gerald Sendawula, the former minister of finance and the winner of the 2010 outstanding farmers award, says small scale farmers find it very difficult to obtain financing from lending institutions. But the banks kick the ball out of their court, saying the lack of risk mitigants like weather index and crop insurance leaves them no option but to sow only where they are certain to reap.

The deputy governor of the Bank of Uganda, Louis Kasekende, agrees that agricultural lending by banks is limited and that some stages on the agricultural value chain would only spell losses if taken up as an investment venture.

As the government strengthens policy efforts to improve access to loans at affordable rates in the agricultural sector, Uganda’s distinguished coffee farmers hope to prosper.

Listen to the radio report below:

Coffee Farming Success Starts and Ends With Finance by financeafrica

By Jane Uwimana

During a recent “Making Finance Work for Africa” conference in Kampala, finance institutions were asked to work together with governments in order to support farmers financially and provide easy access to loans.

Policy makers and farmers highlighted the need for better infrastructure and market policies to support the agriculture business in Uganda and Africa in general.

Gerald Sendawula is one of the big grain farmers in the Ugandan village of Lwamagwa. He borrowed money to finance his operations, but had trouble making repayments when a bumper harvest saw price levels drop.

“Maize was selling only for 30 shillings when we have delivered it all the way from Lwamagwa to grain milling in Jinja,” Sendawula says. “At the end of the day I failed to repay that loan because I took the loan when the cash flow, my projection, was on a hundred shillings per kilo. So here I am ending up having to deliver the maize to grain milling in Jinja and I get only 30 shillings per kilo”.

Warehouses are needed 

Farmers like Mr Sendawula say the construction of warehouses would prevent such losses, and that storage should be given priority in the government’s national agricultural support program – NAADS.

“The part of the money which is put under NAADS …should be made available in the grain area so that that money can build the necessary stores and people will be encouraged to produce,” he says. “Because I will know that if at the time of getting the product, harvesting  the price are very low I can afford to (NOT) take that low amount but store.”

Government says it works

Speaking on the sidelines of the recent conference, the Ugandan minister of state in charge of investment, Aston Kajara, said the government is working with the private sector to promote commercial agriculture.

“85% of our population depends on agriculture and yet the government has not found the investment to put into that area,” Kajara says. “So what we have done is we’ve been looking for partnerships with banks and partnerships with other stakeholders, partnership with donors to enhance the funding element so that our population, who are very committed farmers at subsistent levels, who don’t have sufficient funds, can benefit.”

Beyond the borders

Looking beyond Uganda’s borders, policymakers say efforts to boost productivity must go hand in hand with improved market access for farmers.

“The challenge is if you have increased production what happens to the markets?” says Boaz Blackie Keizire, an agriculture advisor from the African Union Commission. “We have worked with countries to work on what we call the caterpillar two. Which is on market access and market integration to make sure that whatever is produced has access to the market. We support the member states to develop their country investment plans.”

Food shortages still 

Food shortages remain a major concern for much of the population. John Agaba, the head teacher at a boarding school in Uganda’s south-west told The Daily Monitor newspaper that high food prices were making it difficult for the school to feed its students. He said the government should control the exportation of foodstuffs to neighboring countries like Burundi, Southern Sudan and the DR Congo to ensure the domestic market is served first.

Listen to the radio report below:

Ugandan Farmers Need More Infrastructure to Succeed by financeafrica