Agricultural Credit Facility

Eligible Projects

Eligible projects include acquisition of agricultural machinery, post harvest handling equipment, storage facilities, agro processing, mechanization and any other related agricultural and agro-processing machinery and equipment. Agricultural inputs required for primary production and working capital requirements are considered provided this component does not exceed 20% of the total project cost for each eligible borrower. The scheme also provides financing for Working capital and infrastructure for projects engaged in grain trading.

Sub-loan amounts are determined on the basis of assessment and appraisal of project costs and genuine credit needs in accordance with the lending policy of the PFI and the ACF Memorandum of Understanding. The loans are designated in Uganda shillings. The PFIs disburse the total loan amount (100%) to the final borrower (Sub-borrower) on the following terms:

1. Loan amount

The maximum loan amount to a single borrower is up to Shs.2.1billion. However, this amount can be increased up to Shs.5billion on a case by case basis (for eligible projects that add significant value to the Agriculture sector and the economy as a whole). There is no designated minimum loan amount to the final beneficiary (farmer/ agro-processor) but BoU can only reimburse a minimum of Shs 10million to the PFIs. 

ii Loan Tenure

The maximum loan period should not exceed 8 years and the minimum should be 6 months.

Grace Period:

The Grace Period is up to a maximum of 3 years.

1. Interest Rate

The interest rate to the final borrower is up to a maximum of 12% per annum. The 50% GoU contribution is disbursed to the PFIs at zero

Interest (interest free).

1. Facility fees

Loan processing fees charged by PFIs to eligible borrowers should not exceed 0.5% of the total loan amount. Legal documentation and registration costs are borne by the borrower.

The main objective of the ACF is to promote commercialization of Agriculture through provision of medium and long term financing to projects engaged in agriculture, agro processing, modernization and mechanization.

Eligible purposes

1. The acquisition of agriculture machinery and post harvest handling equipment, storage facilities agricultural inputs that include; pesticides and fertilizers, land opening, paddocking, biological assets that include; Banana suckers, fruit seedlings, chicks, piglets, cows and goats for restocking the farm, agro processing facilities, purchase of Grain and any other agricultural and agro-processing related activities.

1. Working capital required for operating expenses will be considered provided this component does not exceed 20% of the total project cost for each eligible borrower. These will include among others wages for hired farm labour, overhead costs like utilities and installation costs, and hiring of specialized machinery for farming activities. The maximum loan amount to an eligible borrower for biological assets shall not exceed UGX 80 million.

The Scheme shall not be used for financing working capital for purchase of land, forestry, refinancing existing loan facilities and trading in agricultural commodities with the exception of grain.

The primary security for the credit facilities is the machinery and equipment financed, where applicable, and any other marketable securities provided by the borrower/final beneficiary. PFIs may seek additional security based on their evaluation of the risk profile of the project being financed.

The PFIs shall ensure that the loan is adequately secured as per their credit policy to protect their interest and that of the BoU and the GoU.

The scheme shall also provide financing for Working capital and infrastructure for projects engaged in grain trading. The terms will be as follows:

• The maximum financeable amount to a single borrower will be UGX 10 billion and the GoU contribution shall be 50 percent of the eligible amount.
• The maximum tenure of a loan for working capital for an eligible project under the grain facility shall be 24 months from the date of disbursement to the borrower.
• The maximum tenure of a loan for capital expenditure for an eligible project under the grain facility shall be 8 years from the date of disbursement to the borrower with a maximum grace period of 3 years.
• The applicable interest rate for loans advanced to finance grain trading under the scheme shall be a maximum of 15% per annum.
• The applicable interest rate for loans advanced to finance capital expenditure under the scheme shall be a maximum of 12% per annum.

• The client forwards his/her loan application to any PFI of his/her choice.
• The PFI will then advise him/her on the terms under the ACF.
• A detailed bankable project proposal/feasibility report may be required by the PFI (depending on the loan amount applied for).