Uganda urged to set up Agric bank

Business Week, October 25, 2010

While Uganda's economy has been registering growth over the last two decades, growth rate in agriculture and its share to total Gross Domestic Product (GDP) has been declining since 2001, a move that researchers say, calls for urgent government intervention if productivity is to be achieved.

To avert some of the impediments on growth of the sector that the country is dependent on, researchers want an agricultural bank to be set up to offer soft loans.

Against the background that commercials banks have been very reluctant to lend to the sector for fear of return on investment, the bank will finance agricultural productivity improvement.

A research report on : "Linkages between agricultural productivity and rural livelihoods" presented in Kampala-Uganda last week, by Mr Mwambutsya Ndebesa, a Makerere University Lecturer, says Government should put in place a mechanism and policy targeting subsidies to increase agricultural productivity

Unlike countries like Switzerland where each cow is entitled to $2 per day, there is nothing like that in Uganda, a landlocked Least Developed Country LDC).

With productivity decreasing in tandem with international commodity prices, the report wants Government to come up with a system of price stabilisation fund for strategic crops or livestock sector.

"The global development analysis should shift from the existing market orientation towards mixture of market and livelihood orientation. Research institutes should find out more on impact of external trade liberalization on agricultural productivity," the report said.

The report conducted by Fostering Equity and Accountability in the Trading System (FEATS) and SEATINI Uganda, to collect information and analyse trends in agricultural productivity.

FEATS is a three year project to build the capacity of relevant stakeholders from Kenya, Malawi, Tanzania, Uganda and Zambia through research, public education and network to enhance positive linkages between activities in Geneva and project countries.

The Director CUTS Geneva Resource Centre Geneva, Mr Atul Kaushik, said the report examines the complex relationships involved using a holistic framework to generate new insights and knowledge that has practical implications.

The report presented to stakeholders argues that Civil Society Organisations (CSOs) like SEATINI, should increase their capacity building endeavours in order to sensitise their constituents into the need to link productivity to livelihood indicators.

The Country Director SEATINI, Ms Jane Nalunga, said the report contributes to finding solutions through coherent policy framework that will assist Uganda in meeting the objectives of national development plan.

The report notes that lack of improved inputs was the major cause of low agricultural productivity levels.

Uganda's application of improved inputs is said to be one of the lowest in the region. Accelerated growth in imports has resulted in a widening trade deficit standing at 2.5 billion in 2008

The report challenged researchers to unravel the paradox of why official statistics show that rural poverty is declining at the same time as the share of agriculture to GDP is declining and yet this is where the majority of the rural population is employed.

It says there is need to control the population growth to make economic growth. At 3.2% per annum, Uganda has one of the fastest population growth in Sub-Saharan African.

Findings indicate that there is an interesting correlation between agricultural productivity and livelihood indicators For example there is an imbalance in the structure of the economy and labour force employment.

Much as the proportion of persons engaged in the agricultural sector has increased from 65.5 percent in 2002/03 to 73.9 percent in 2005/06, the report said, the share of agriculture has been declining Uganda's total labor force in 2007 stood at about 12.5 million people.