By Johannah Nantongo
Uganda’s ambition to transform agriculture into a commercially competitive sector could face setbacks unless farmers gain access to affordable, long-term financing for mechanisation, irrigation and other productive investments.
Mercy Iselu, Sector Head for Food and Agriculture at dfcu Bank, says financial institutions are increasingly relying on digital records and other data to assess agricultural borrowers, including farmers who lack conventional credit histories.
Speaking during the French Week Business Forum at the Uganda Business Facilitation Centre, Iselu explained that digital technology enables lenders to better understand farmers’ production patterns, income flows and overall business performance.
She noted that reliable transaction records can help banks establish farmers’ repayment capacity and make more informed lending decisions.
However, Iselu cautioned that improved access to information alone would not resolve the financing challenges facing the agricultural sector, particularly because much of the available credit is designed around seasonal farming activities.
She called for financing arrangements that allow farmers to invest in equipment and infrastructure capable of improving productivity over several years.
According to the 2024 National Population and Housing Census, 33.1 per cent of Ugandan households remain in the subsistence economy, while 66.9 per cent participate in the money economy, underscoring the need to expand commercial economic activity.
Iselu said agricultural financing should extend beyond seasonal requirements such as seeds and fertilisers to include tractors, irrigation infrastructure, solar-powered equipment and post-harvest handling facilities.
She also emphasised the need for stronger partnerships between banks, technology providers, equipment dealers, insurance companies and other stakeholders to develop financing solutions that respond to farmers’ needs.
Although digital tools are helping farmers identify crop diseases, production challenges and other inefficiencies, she observed that many remain unable to implement recommended solutions because of limited access to affordable credit.
Iselu identified the gap between technological opportunities and the ability to finance them as a major obstacle to agricultural modernisation.
Government Calls for Value Chain Financing
The discussions come as Uganda seeks to accelerate economic transformation, with agriculture continuing to support employment, household incomes and national production.
Dr Sam Mugume, Acting Commissioner for Macroeconomic Policy at the Ministry of Finance, Planning and Economic Development, said improving agricultural productivity would be essential to achieving the country’s long-term development objectives.
Mugume noted that digital financial services could help broaden access to capital, but stressed that investment in supporting infrastructure, particularly rural roads and irrigation systems, was equally important in reducing the risks associated with agricultural lending.
He called for a shift from financing farmers as individual borrowers towards financing entire agricultural value chains.
Under this approach, farmers would be linked to processors, equipment suppliers, insurers, transport operators and potential markets through coordinated financing arrangements.
Mugume explained that such collaboration could improve efficiency, strengthen market access and create better conditions for private investment in agriculture.
He added that government financing should prioritise infrastructure and other enabling conditions that attract private capital, especially in mechanisation and irrigation.
Public-private partnerships were also highlighted as a possible way of addressing infrastructure gaps and other structural barriers that limit agricultural productivity.
Call for Sustainable Agricultural Investment
The forum highlighted the growing importance of digital data in helping financial institutions understand agricultural businesses and make lending decisions.
However, participants emphasised that technology must be supported by affordable, long-term financing and adequate infrastructure if farmers are to move beyond subsistence production towards commercially sustainable enterprises.
They also stressed the importance of coordinated investment across agricultural value chains to improve productivity, strengthen market linkages and support Uganda’s wider economic transformation agenda.