Agriculture Bank Proposal Gains Momentum with Muhoozi’s Support

Kampala, Uganda – Uganda’s Chief of Defence Forces, Gen. Muhoozi Kainerugaba, has thrown his weight behind the establishment of an Agriculture and Cooperative Bank.

The development follows a formal request by Prof. Eria Hisali, an economic advisor to President Museveni, to discuss the bank’s establishment.

The proposed bank aims to address the challenges faced by Ugandan farmers, who struggle with high interest rates, averaging between 18% and 23% for agricultural loans.

In a letter dated June 25, 2024 to Gen. Muhoozi, Prof. Hisali said that the rates to which other banks are charging are significantly higher than the global average, making it difficult for farmers to access affordable credit.

He added that the bank plans to offer loans at lower interest rates, provide tailored financial products that align with agricultural cycles, and promote cooperatives.

This initiative has been a long-standing demand, particularly championed by President Museveni, despite reluctance from Parliament.

The establishment of an Agriculture and Cooperative Bank is seen as a national imperative, addressing the sector’s long-standing financial challenges.

Uganda’s agricultural sector contributes approximately 24% of the country’s GDP and employs over 70% of the population with the sector remaining one of the most underfunded and underdeveloped.

Critics argue that unless accompanied by robust governance frameworks and safeguards against political interference, the bank could become yet another state-run institution plagued by inefficiency and corruption.

Gen. Muhoozi’s involvement has reignited hope, but whether that hope will bear fruit depends on the government’s willingness to prioritize the needs of Uganda’s farmers over political expediency.