Source: Parliamentary Watch.
The Opposition has expressed concern over the government’s increasing reliance on foreign funding for the agriculture sector.
The Asinasi Nyakato, the Shadow Minister of Agriculture, says in the 2025/26 National Budget, external financing is set to rise from UGX 929.26 billion to Shs1.048 trillion, while government expenditure on the program will drop from Shs1.135 trillion in financial year 2024/25 to Shs640.06 billion.
“This means a significant portion of the sector is externally funded, leading to challenges such as delayed disbursements and high interest rates, which negatively impact an industry where Uganda has a strong comparative advantage in the region,” Nyakato states.
She further highlights that despite Parliament’s approval of a Shs72.2 trillion National Budget for financial 2024/25 representing a 36 percent increase from the previous year, the Agro-Industrialization program still faces major budget cuts.
Its allocation is set to decrease from Shs2.064 trillion in financial year 2024/25 to Shs1.589 trillion for the Budget Framework Paper of financial 2025/26, marking an Shs375 billion) representing 18 percent reduction.
This falls significantly short of the National Development Plan IV (NDP IV) estimate of Shs2.448 trillion.
Agriculture’s Role in Economic Growth
Nyakato emphasizes the sector’s critical role in Uganda’s socioeconomic development, noting that it employs nearly 70% of the population, contributes 24.7% to GDP (UBOS, 2024), and accounts for 35% of export earnings.
She points out that 33% of Ugandans engage in subsistence farming, underscoring agriculture’s significance in ensuring food security and economic stability.
“If prioritized effectively, agriculture can reduce hunger, boost trade, attract investment, drive industrialization particularly agro-industries-diversify the economy, and create jobs,” she argues.
Key Recommendations for Agricultural Development
Nyakato outlines several policy recommendations to strengthen Uganda’s agriculture sector:
Establishment of an Agency for Perennial Crops: A dedicated body should oversee Uganda’s major perennial crops to ensure proper management and productivity.
Revamping the National Seed Company: This would guarantee the availability of high-quality seeds for farmers nationwide.
Creation of a National Food Regulatory Agency: A regulatory body should be established to oversee food quality and safety, which are crucial for accessing international markets.
Nyakato urges the government to implement Parliament’s resolution to create an agricultural bank, offering affordable credit tailored to the farming cycle.
She suggests that funds currently disbursed through the Uganda Development Bank (UDB) should instead be channeled through a specialized agricultural financial institution.
Challenges in Agricultural Credit Access
Nyakato criticizes the Bank of Uganda for failing to effectively market the Agricultural Credit Facility (ACF), leaving the responsibility to commercial banks, which prioritize their own credit products, as result many farmers struggle to access these funds due to stringent requirements such as business proposals and collateral.
“The ACF was introduced in 2009 to increase agricultural financing, particularly for smallholder farmers, but commercial banks have failed to make it accessible. Farmers often lack the necessary paperwork, making it nearly impossible for them to benefit from the facility,” she explains.
According to the June 2024 Annual Report from the Bank of Uganda, the government has remitted Shs860 billion to cover loan disbursements under the ACF. However, nearly half of the loan applications by farmers are rejected.
Out of 7,726 applications worth Shs1.58 trillion, only 577 were approved, amounting to Shs981 billion. Similarly, out of 3,530 applications submitted to Participating Financial Institutions (PFIs) totaling Shs364.15 billion, only 987 were approved, amounting to Shs162.71 billion—just 30 percent of the Shs81.46 billion approved by June 2023.
Nyakato calls on the government to provide technical assistance to SACCOs and microfinance institutions engaged in agricultural financing and to establish a public database of farmers to improve their creditworthiness.
High Cost of Agricultural Inputs and Counterfeits
The Shadow Minister also raises concerns over the rising cost of agricultural inputs and the influx of counterfeit products on the market. She noted that while global fuel price increases and raw material costs have contributed to higher retail prices, the lack of price regulation and widespread counterfeiting have made farming unprofitable.
“Government must revamp the National Seed Company to provide improved, high-quality, and subsidized inputs for farmers. This will ensure the availability of affordable seeds on the market,” she stresses.
Nyakato proposes allocating funds in the financial 2025/26 budget to procure and distribute subsidized agricultural inputs such as seeds, seedlings, fertilizers, fishing gear, and irrigation equipment to improve productivity.
Threats to Uganda’s Agricultural Future
Nyakato warns that without urgent interventions, a large number of farmers might abandon agriculture, negatively impacting both the economy and food security.
“The rising costs of seeds, pesticides, machinery repairs, and operational expenses are squeezing farmers’ profits. Many are resorting to cheap, counterfeit inputs, which result in lower yields, reduced income, and increased poverty,” she says.
Food Safety Concerns
The Alternative Policy Statement also raises concerns over the impact of poor agricultural product quality on Uganda’s exports. Nyakato cited instances where Ugandan maize was rejected in Kenya and South Sudan due to high levels of aflatoxins, which are linked to cancer risks.
“Ugandan producers struggle to meet the phytosanitary standards required for exports to Europe, Asia, and the U.S. due to inadequate packaging, poor storage facilities, and weak post-harvest handling practices. This not only affects farmers’ incomes but also damages the country’s forex earnings,” she explains.
She recounts that in March 2021, Kenya banned maize imports from Uganda due to high aflatoxin levels, leading to heavy financial losses for farmers. Similarly, in June 2023, South Sudan impounded multiple truckloads of Ugandan maize at the Nimule-Elegu border, deeming it unfit for human consumption.
As a solution, the Opposition is pushing for a National Food Regulatory Agency through an Act of Parliament to oversee food safety and standards.
“The proposed Food Safety and Standards Act should establish science-based food quality regulations to control production, storage, distribution, and trade, ensuring safe and wholesome food for human consumption,” Nyakato emphasizes.
Nyakato reiterates the need for urgent reforms in Uganda’s agriculture sector to ensure sustainable growth, food security, and increased competitiveness in international markets.
“The development of agriculture must be treated as a national priority. It is a powerful driver of economic growth, job creation, and poverty reduction. Strengthening agricultural financing, enhancing food quality standards, and investing in research and technology are essential for unlocking Uganda’s full agricultural potential,” she adds.
