Increasing Investment In Agriculture Is Possible – CSBAG Case Story

Whereas Uganda has experienced a rapid growth of the financial sector that has deeply penetrated the rural areas, the contribution of these formal financial institutions to agricultural credit has remained low. The Uganda Census of Agriculture 2010 by the Uganda Bureau of Statistics indicates that only about 10 per cent of agriculture households had received credit in the past five years. Of this, 61 per cent had accessed credit through informal financial institutions, 29 per cent through semi informal institutions while only 10 per cent had accessed credit through the formal financial institutions. Agriculture sector which accounts for 23.2% of GDP 2012/13 and employs 56% of the populations still get less 4% of the national budget.

Civil Society Budget Advocacy Group (CSBAG) through the Public Finance For Agriculture Project funded by Action Aid has since 2012 engaged government on increasing finance for agriculture sector through the development of alternative pro poor budget proposal key alternative proposals for the agriculture sector and among them included the need to increase investment in agriculture, secondly establishment of the agricultural Bank and increase citizens participation in agricultural planning and budgeting. . These are among the key proposals we have advocated for since 2012.

We are glad to report that by close of last year a number of CSBAG proposal were taken on by government and these included:

  1. Establishment of the Agricultural Credit Facility of shs 100bn at an interest of 10-12% interest. Although this is not the Agricultural credit bank we had wanted we welcome this proposal since some farmers will able to access credit.
  2. By October 2014, Parliament granted leave to the Shadow Member of Parliament to draft a private members bill to establish an agriculture and land bank. A move that was highly welcomed by CSBAG and its stakeholders. To further cement this, in 2014 the ruling party caucus also resolved to have the same. I.e. establishment of an agriculture bank to boost commercial farming and ease access to credit, especially for small-scale farmers, is a welcome measure.
  3. In the 2013/14 budget speech the government announced plans to restructure NAADS an issue we had previously presented to government. The NAADS program was not participatory. We envisage that the restructuring of the programme will enable small scale farmer’s participation in the planning and budgeting of the agriculture sector.
  4. In FY 2013/14, the agriculture sector budget was increased from ushs 378.9 in FY 2012/13 to Ushs 382.9 to address the institutional constraints of the agricultural service delivery in the country. Although this is below the 10% threshold recommended by CAADIP, we considered this an important gesture by government to invest in agriculture.
  5. As of February 2014, government requested for a supplementary budget for the agriculture sector amounting to Ushs 2bn specifically for a cross breeding programme and Ushs 16.7bn for control of the banana wilt disease. This all in an attempt to increase the agriculture budget.

In reflecting on our experience in engaging the government on investing in agriculture, a number of factors led to these successes. These include: a) technical expertise of CSBAG in agriculture financing and budget analysis enabled us to provide quality alternative proposals to parliament, b) collaboration between CSBAG and Parliament Budget Office provided an added advantage to engage government, c) collective voice and action of CSBAG membership on the public finance for agriculture especially with our local level partners who voiced the same concerns increased pressure on government to listen to our view but also made our concerns more legitimate and d) our media and public campaign which provided space for citizen to engage, debate and interrogate government policy options.

Although there are still other critical issues that need to be addressed in this sector, CSBAG will continue engaging the key stakeholders to ensure that the bank once established seeks to ultimately, transform agriculture and ease the financing burden faced by majority of Ugandan farmers by focusing on farmers’ credit needs.

Written by : Civil Society Budget Advocacy Group (CSBAG)

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