The State of Agriculture Finance in Northern Uganda

A comprehensive study by the International Food Policy Research Institute (IFPRI) has revealed that fewer than 15 per cent of smallholder farmers in the Acholi sub-region of northern Uganda have access to formal agricultural credit — a figure that has barely improved since the end of the Lord's Resistance Army insurgency more than a decade ago.

The research, based on surveys of 2,400 farming households across Gulu, Kitgum, and Pader districts, found that the average smallholder cultivates less than two hectares and relies almost entirely on rain-fed agriculture. Most lack the collateral required by commercial banks, and microfinance institutions in the region charge annualised interest rates exceeding 30 per cent.

"The credit gap is the single biggest constraint on agricultural productivity in northern Uganda," said Dr Sarah Nakamya, the study's lead author. "Without affordable finance, farmers cannot invest in improved seeds, mechanisation, or irrigation — the very inputs that drive yield increases."

The government's Agricultural Credit Facility, launched in 2009, has disbursed over $120 million in subsidised loans nationwide. However, the study found that less than 5 per cent of those funds reached borrowers in the Acholi sub-region, with the bulk going to larger commercial operations in the central and western districts.

Community savings groups, known locally as Village Savings and Loan Associations (VSLAs), have partially filled the gap. An estimated 8,000 VSLAs now operate across the north, collectively mobilising more than $15 million annually. But the amounts available through these groups are typically too small to finance anything beyond subsistence needs.

Agricultural economists are calling for a dedicated northern Uganda agricultural finance facility, ring-fenced from national allocation pressures and designed to serve smallholders with ticket sizes as low as $200.