As part of the strategy to manage macro-economic stability as well as achieve middle-income status by 2020, the government of Uganda is planning to among others merge Post Bank Uganda and Pride Microfinance to form an agricultural bank whose role will be to finance and propel the agriculture sector.
The bank is expected to offer loans to farmers at affordable interest rates. The current market loans do not favour agriculture.
The merger is in line with government plans to pursue the policy of boosting exports and tourism promotion to offset the short run negative impact of the depreciation of the shilling. According to NRM Manifesto, this will be achieved by among others:
Establishing the new commercial bank (merging the Post Bank and Pride Microfinance Limited). Poverty levels in Uganda have dropped from 24.3% in 2009 to 19.7% in 2012/2013. The new bank is expected to play a big role in boosting farmer’s income, which will see poverty levels fall farther. In this regard, the government plans to sustain the effort towards production, productivity and value addition in order to enhance incomes, industrialisation and job creation.
In particular, the Government will undertake the following:
Mobilise and support small-scale farmers along the four-acre model concept where: one acre is dedicated to a perennial cash crop such as coffee, tea and cocoa. One acre is dedicated to fruits, one acre is dedicated to pasture for dairy cattle for daily income and one acre is dedicated to growing of food for food security and high value crops such as vegetables. Homesteads selected for the four-acre model will be supported to start poultry and for non-Muslims piggery projects in their back yard.
Under this plan, a homestead is expected to earn a gross income of about Ugx. 25m per year or US $7,200. Such a household will have moved to a middle-income status. Homesteads with less than four acres will be supported to become food secure and engage in high-value crops like horticulture and rearing livestock like poultry, zero-grazing diary, apiary and piggery for non-Muslims.
The four-acre model complemented by other Operation Wealth Creation (OWC) initiatives involving systematic distribution of improved seeds, planting and breeding materials, the single spine extension services, improved post-harvest handling storage and value addition will be the main strategy for commercialising and transforming small-holder and peasant agriculture in the country.
A mechanism will be put in place to ensure that all poverty alleviation related programmes are well co-ordinated to ensure that services reach the intended beneficiaries. All funds invested in agriculture will be aimed at increasing exports of specific commodities such as: Coffee from the current 3.6 million bags (60kg) to 6 million bags; maize – from the current 185,000 metric tonnes to 1.5 million metric tonnes; tea – from 65,000 metric tonnes to 130,000 metric tonnes; and Beans – from 32,000 metric tonnes to 500,000 metric tonnes.
The government will extend support individuals and companies, including the Uganda Prison Services, in seed production, and other planting materials in order to meet the demand for seeds, which is increasing as more homesteads transform from subsistence to commercial agriculture. In addition, a mechanism for the certification of producers of seeds, planting material and breeders will be established.
Companies and individuals in livestock breeding will be supported in order to meet the demand for dairy products, beef, poultry and piggery. Mechanisation will be boosted. As part of agriculture, mechanisation 40 tractors will be delivered before the end of FY 2015/2016. These will be given to organised farmers in 10 districts. More 50 tractors will be available in FY 2016/2017. More funds will be invested in disease and pest control and harmonise the levels of pesticides and acaricides acceptable in international markets.
The plan also involves collaborating with the insurance sector to design measures that ease insurance in agriculture in order to increase agriculture financing and sensitise farmers on this undertaking. In order to improve the quality of agricultural produce, government will invest in agricultural marketing infrastructure such as storage facilities. In particular, government will collaborate with the private sector to ensure that there are enough well equipped silos in the cereal-growing areas.
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District councils will be encouraged to pass by-laws that discourage drying of produce on open grounds. Furthermore, farmers will be educated on the best practices in post-harvest handling to ensure that cereals like maize have the right moisture content required in the market. Concerted efforts will be to invest in value-addition by completing the fruit factory in Soroti and setting up other value addition factories for products where response from the private sector is not forthcoming.
Water for production
The government will invest in water for production infrastructure to boost commercial agriculture and industrial activities. Emphasis will be placed on construction of large and small-scale water schemes for irrigation, livestock and rural industries. There are plans to increase cumulative storage from 27.8 to 55 million cubic metres by 2019/20. In the end, water will be pumped from large reservoirs to a high point and then extend it by gravity to reach more areas so that the water is brought nearer to the users for home consumption, irrigation, livestock and industrial use.
Design review is ongoing for six dams (Acanpii dam in Oyam district, Namatata dam in Nakapiripirit district, Katabok dam in Abim district, Bigasha dam in Isingiro district, Ongole dam in Katakwi district, Mabira dam in Mbarara district). Construction of these dams is commence in January 2016 and they will create a total of 28mm3 (28 billion litres) of water storage.Plans are already underway to rehabilitate 15 old dams in the Teso region. Rehabilitation of Ogole dam in Katakwi district will commence this financial year.
Bulk water transfer systems will be built to cover long distances and large areas to provide water for multi-purpose use. Feasibility studies for bulk water supply schemes for Bukanga (Isingiro), Nyabushozi and Kazo in Kiruhura district, Kakuuto and Kooki in Rakai district and Kabula in Lyantonde district, Nakasongola, Nakapiripirit, Moroto, Katakwi and Amuria districts.
A detailed feasibility studies and design of 12 irrigation schemes in: Labouri in Serere district, Ongom in Alebtong district, Namalu in Nakapiripirit district, Mubuku II in Kasese district, Amutur in Bukedea district, Doho II in Butaleja District. Construction will commence within the next five years.
Accordingly, government is convinced that the above measures will guarantee the transformation of agriculture from subsistence to commercial. This will lead to increased incomes in the rural areas and create opportunities for manufacturing and services sectors to grow due to increased demand of goods and services.
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