Postbank’s Agriculture Loan Book Registers 70% Growth from 2021 To Date

By Namutebi Sumayiya

PostBank Uganda’s agricultural loan book has registered commendable growth of 70% over a four-year period, from Ushs. 107 billion in 2021 to a 70% growth rate by June 2024. This impressive performance can be attributed to several factors, including favorable lending rates, government support, and other contributing elements.

The agricultural sector boasts a rich value chain where products move from producers to final consumers, hence this requires access to affordable financing to aid participation at the various stages, making agricultural loans among the best-performing products in the banking sector, given the number of people involved at different production phases.

Agricultural loans are designed to finance legal agricultural undertakings across the agriculture value chain like Production, Processing, Marketing among others, and it applies to both individual and non-individual entities.

According to Uganda Bureau of Statistics (UBOS) about 68% of Uganda’s working population is employed in agriculture, which has a wide range of agricultural products including coffee, livestock, maize, tea, sugarcane, cotton, beans, cassava, sweet potatoes, millet, among others. Additionally, in the 2022/23 financial year, agriculture accounted for about 24% of GDP, and 35% of export earnings.

The Supervisor Agriculture and Partnerships at PostBank Uganda, Julius Akais said, “As a bank that is committed to fostering prosperity for Ugandans by enabling them to Gow and Prosper in their day-to-day livelihood, we are keen on designing products that are not only affordable but those which address our customer’s demands at the different agricultural production phases, which saw our loan book grow to 70% in a four year period.”

Akais attributed the growth to a number of factors including, targeted financial products or value chains such as coffee, poultry, cattle keeping, grain trade (maize), well-structured Agriculture loans that match the business or project cycle, financial literacy through our Agricultural forums and this is done in every region, enhanced outreach and services by expansion to rural branches and mobile banking services that better serve farmers and Agribusinesses.

“In line with our Agric- SME Development Programme, we recently conducted a financial literacy training with over 150 Casava farmers in Arua District in partnership with the Federation of Small and Medium Sized Enterprises (FMSE),” Akasi revealed.

Government support for the commercialization of agriculture through the Agricultural Credit Facility loans, with interest rates as low as 12% per annum and 15% per annum, is implemented through the support provided by the Bank of Uganda in partnership with participating financial institutions. PostBank Uganda, a government entity, is leading in offering these loans.

PostBank’s loan book performance has also been influenced by strong relationships with Agricultural stakeholders, and partners such as ACELI Africa, aBi Development Limited, insurance partners through the bancassurance products, human resource with knowledge in Agriculture Value Credit financing, strategic marketing and communications, technological advancement through encouraging farmers and Agribusiness customers to adopt technology in banking services, such as mobile banking and online platforms, making it easier for Agricultural clients to access financial products.

“Commercialization of the sector through financing will continue to play a critical role in increasing the sectors performance as those actively involved in the agriculture value chain will have the financial muscle to produce quality products that will enable them to trade within the country as well as export to surplus to the region,” Mr. Akais, concluded.

Postbank’s Agriculture Loan Book Registers 70% Growth from 2021 To Date

PostBank Uganda’s agricultural loan book has registered commendable growth of 70% over a four-year period, from Ushs. 107 billion in 2021 to a 70% growth rate by June 2024. This impressive performance can be attributed to several factors, including favorable lending rates, government support, and other contributing elements.

The agricultural sector boasts a rich value chain where products move from producers to final consumers, hence this requires access to affordable financing to aid participation at the various stages, making agricultural loans among the best-performing products in the banking sector, given the number of people involved at different production phases.

Agricultural loans are designed to finance legal agricultural undertakings across the agriculture value chain like Production, Processing, Marketing among others, and it applies to both individual and non-individual entities.

According to Uganda Bureau of Statistics (UBOS) about 68% of Uganda’s working population is employed in agriculture, which has a wide range of agricultural products including coffee, livestock, maize, tea, sugarcane, cotton, beans, cassava, sweet potatoes, millet, among others. Additionally, in the 2022/23 financial year, agriculture accounted for about 24% of GDP, and 35% of export earnings.

The Supervisor Agriculture and Partnerships at PostBank Uganda, Julius Akais said, “As a bank that is committed to fostering prosperity for Ugandans by enabling them to Gow and Prosper in their day-to-day livelihood, we are keen on designing products that are not only affordable but those which address our customer’s demands at the different agricultural production phases, which saw our loan book grow to 70% in a four year period.”

Akais attributed the growth to a number of factors including, targeted financial products or value chains such as coffee, poultry, cattle keeping, grain trade (maize), well-structured Agriculture loans that match the business or project cycle, financial literacy through our Agricultural forums and this is done in every region, enhanced outreach and services by expansion to rural branches and mobile banking services that better serve farmers and Agribusinesses.

“In line with our Agric- SME Development Programme, we recently conducted a financial literacy training with over 150 Casava farmers in Arua District in partnership with the Federation of Small and Medium Sized Enterprises (FMSE),” Akasi revealed.

Government support for the commercialization of agriculture through the Agricultural Credit Facility loans, with interest rates as low as 12% per annum and 15% per annum, is implemented through the support provided by the Bank of Uganda in partnership with participating financial institutions. PostBank Uganda, a government entity, is leading in offering these loans.

PostBank’s loan book performance has also been influenced by strong relationships with Agricultural stakeholders, and partners such as ACELI Africa, aBi Development Limited, insurance partners through the bancassurance products, human resource with knowledge in Agriculture Value Credit financing, strategic marketing and communications, technological advancement through encouraging farmers and Agribusiness customers to adopt technology in banking services, such as mobile banking and online platforms, making it easier for Agricultural clients to access financial products.

“Commercialization of the sector through financing will continue to play a critical role in increasing the sectors performance as those actively involved in the agriculture value chain will have the financial muscle to produce quality products that will enable them to trade within the country as well as export to surplus to the region,” Mr. Akais, concluded.