Agricultural Investment in Uganda

Agricultural Investment in UgandaAround 70% of people working in Uganda are in the agriculture sector. And from 2021 to 2022, agropastoral earnings accounted for 24.1% of Uganda’s GDP. High employment within the agriculture industry is a result of Uganda having a favorable climate for crop production and livestock maintenance. The country has fertile soils and reliable rainy seasons that enable agropastoral households to make a living throughout the year.

Despite the high agricultural activities in Uganda, the country uses only 35% of its arable land for cultivation. Under conditions of maximum utility, the U.N.’s Food and Agriculture Organization (FAO) estimates that Uganda’s agricultural sector could feed 200 million people.

The following are five ways that agricultural investment in Uganda is bringing about economic growth and poverty reduction.

  1. Uganda Agricultural Insurance Scheme: The Uganda Agricultural Insurance Scheme started in July 2016 and aimed to support agropastoral households by subsidizing insurance and making financial protection more widely accessible. The scheme also sought to reduce the financial losses that farmers incurred due to natural disasters. Between June 2021 and June 2022, the number of farmers receiving insurance increased from around 260,000 to more than 375,000. Accessibility to insurance has created trust within the agricultural sector and allowed many Ugandan farmers to feel confident about the safety of their money.
  2. NAADS and Church of Uganda Partnership: In June 2020, Uganda’s National Agricultural Advisory Service (NAADS) and the Church of Uganda partnered to promote food security and the modernization of commercial agriculture. Between June 2020 and August 2021, NAADS provided the Church of Uganda with seven tractors. Hon. Frank Tumwebaze, the minister of agriculture, animal Industry and fisheries, stated that “agricultural mechanization is at the center of government’s program to promote food security and fight poverty.” NAADS, in March 2022, donated UGX 2 billion ($541,467) to the Church of Uganda to fund the implementation of farmer demonstrations and learning hubs for selected businesses and provide training to groups on farming practices. By supporting this initiative, NAADS aided the church’s efforts to assist 500 farmers and farming groups across five dioceses in Uganda.
  3. dfcu Bank’s Business Accelerator Programme: In February 2023, Uganda’s dfcu Bank and the Rabo Foundation’s Agribusiness Development Centre partnered with GOPA Worldwide Consultants for the implementation of two cohorts of the Business Accelerator Programme (BAP). The two-year BAP project, funded by the German Development Agency GIZ, aims to improve the competitiveness of Uganda’s small and medium-sized enterprises (SMEs). This initiative aims to support approximately 1,000 SMEs and create 3,000 jobs. It also aims to improve the employment conditions for 22,000 people. The BAP initiative demonstrates dfcu Bank’s commitment to improving the ”bankability and self-sufficiency” of the agricultural sector. Many agropastoral household incomes will increase as a result of dfcu Bank’s agricultural investment, potentially leading to national poverty reduction.
  4. Inua Impact Fund: In March 2023, the European Union allocated $2 million to Inua Impact Fund, an initiative focused on agricultural investment in Uganda. This initiative funds up to 30 investments in Ugandan agricultural enterprises and aims to support around 3,000 smallholders. Kim Kamarebe, managing director at Inua Capital, says that the fund will “catalyze and accelerate high-potential Ugandan enterprises that are providing solutions for Uganda’s most pressing needs.” The Inua Impact Fund is the first equity fund Uganda has received that focuses on investing in high-potential entrepreneurs and agropastoral SMEs needing an investment of less than $500,000. In addition, Inua Capital hopes to reduce gender inequality by increasing access to capital for Ugandan women.
  5. Parish Development Model: Since July 2021, Uganda’s Ministry of Local Government has been overseeing the implementation of the Parish Development Model (PDM). The PDM had an initial investment budget of almost $400 million for 10,400 parishes. The model dictates that parishes build infrastructure and systems that support the production and selling of Uganda’s agricultural products.

Looking Ahead

Agricultural investment in Uganda has become a key point of focus for the EU and U.N. and these five initiatives evidence a specific interest in maximizing Uganda’s agropastoral capabilities. Improving Uganda’s capacity to aid agropastoral households and SMEs could serve as an impactful poverty reduction measure that also stimulates economic growth and alleviates food insecurity.

Jennifer Preece
Photo: Flickr