Seeking Success in Agriculture Finance

small holder, 2

Date: June 7, 2019.

By: Mike Watmon Kinyera

“In war the victorious strategist only seeks battle after the victory has been won, whereas he who is destined to defeat first fights and afterwards looks for victory.” — Sun Tzu

 

The story of agriculture in Uganda is one that will continue to be told for many years to come. The country’s 6Mn plus households are dependent upon and reliant on agriculture to achieve the Sustainable development goals poverty, hunger health and nutrition. Examined closely, several other of the SDGS are impacted on by agriculture and agricultural development. Whether in famine or war humankind has to eat; short of that extinction; this underlies the centrality of agriculture in the existence of our race. Strategic intervention in the sector need to have a good feel of the context of the sector, its current bottlenecks, historic factors and best practices bench-marks.

The GOU has a plan of taking the country to middle income status; while am not sure this is achievable in the short run, am firmly convinced that the vehicle to deliver us to that destination will be agriculture and not manufacture of rockets or cars. Uganda has a comparative advantage in agriculture; the eminent Sir Winston Churchill once described it as, “a veritable paradise!” Furthermore, he adulated it thus, “For magnificence, for variety of form and color, for profusion of brilliant life — bird, insect, reptile, beast — for vast scale — Uganda is truly “the Pearl of Africa.”

The decision by the government of Uganda to improve the regulatory framework for agricultural finance is laudable. A framework to form the basis of development of a coherent intervention to enable the sector realize its full potential. Such a development has to be made with a consideration of empowering the small holders who are already the major contributors to Uganda’s GDP. The critical question to be addressed is how can they be empowered into order to contribute more? How can the known risks be mitigated about to make agriculture finance more attractive?

Unfortunately, even as government makes interventions there is a rising concern on the actions of man that make inevitable emergent challenges of climate change. Consequently, there is need to reexamine the approach to agriculture and adopt what is called, “Climate Smart Agriculture!” Climate agriculture can simply be defined as that agriculture that does not rely in rain fed agriculture. Cognizant of the inherent risks in agriculture, interventions and made to produce without relying on rain. Simple practices like water harvesting for irrigation, hydroponic are just part of the wider developments in this regard.

Lessons need to be learnt and good practices adopted from previous working models and current models of excellence. Consider the challenge of the market distortions and structural bottle-necks. Absence of sufficient silos for storage, inadequacy of the existing ones, good weather for vermin like rats and other pests, human laziness all combined to make the growth of the sector sluggish.

Lack of knowledge occasioning much waste and rendering lower than optimal the returns of the farmers investments. A case study is the mangoes. In India at the agriculture produce market facility cottage industries make optimal use of all part of the mango from the seed, the pulp and the skin. Feeding into both animal and crops cycles.

Interventions for the growth of the sector needs to be holistic- how do we empower the small holders grow more and how do we ensure the development of the big brothers. Entities with the ability to aggregate, source more markets? The growth of the small holder is intractably intertwined with the success of the bigger players.

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