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Julius AKais, PostBank’s Supervisor Agriculture and Partnerships speaks to CEO Magazine on how the bank through its credit channels is set to support farmers and agricultural businesse, as the bank continues to fulfil its purpose of fostering prosperity for Ugandans in the agriculture sector which aligns with its new tagline, ‘Grow Prosper’.
The second planting season for farmers in Uganda is due in August. What specific loan products or financing options do you have in store for farmers and agricultural businesses, and how specialised are they?
We have the Agricultural Seasonal Loan; This facility is specifically tailored for agricultural purposes, including land preparation, purchasing seeds, fertilizers, pesticides, and other related farm activities required for planting. This loan is structured to meet the seasonal cash flow needs of farmers, particularly for planting seasons. They often have flexible repayment terms that align with the agricultural/project cycle.
Equipment/Asset Loans designed for purchasing agricultural equipment such as tractors, plows, or irrigation systems. This helps improve efficiency and productivity during planting and harvesting and the bank has so far financed over 390 tractors.
Livestock Loans are offered mainly to farmers involved in animal husbandry and they are available for purchasing livestock, feed, and veterinary care and farm improvement in terms of structures.
What are the interest rates and terms typically offered for agricultural loans?
We offer flexible and competitive interest rates as low as 18% per Annum
In partnership with Bank of Uganda through the Agricultural Credit Facility (ACF), as low as 12% per annum (Capital expenditure and other agricultural projects), and 15% per annum for Grain Trade & Pulse. This is the initiative by GoU to support commercialization of Agriculture.
Our Loan Terms:
Repayment Period is structured to align with the agricultural/project cycle, repayment periods can range from six months to five years. For example, loans for inputs may have shorter repayment periods, while equipment loans could extend over five years
PostBank offers a grace period for agricultural loans before repayment starts, to allow farmers time to generate income from their harvest/projects being financed.
Our Collateral requirements are flexible as land, farm equipment, or can secure the loan. Our agricultural loan size varies from small loans for individual small holder farmers to larger amounts for agricultural cooperatives or commercial farms.
Do you provide any advisory or consulting services to help farmers manage finances or improve agricultural practices?
The bank conducts Agricultural forums that serve as a platform for educational sessions, networking opportunities, and resource sharing, targeting a diverse array of participants ranging from lead farmers to government officials and private sector stakeholders.
Are there resources available to help farmers understand financial planning or risk management?
Yes, as a bank we offer these through our agricultural forums, that cover topics such as financial literacy, market access, value addition, and best farming practices. With a focus on regions with significant agricultural activity, the forums engage between 50 to 100 farmers per region, prioritizing those involved in key sectors like coffee, maize, poultry, and cattle keeping.
Do you participate in government-backed agricultural lending programs or partnerships?
We do aggressively, especially Agriculture Credit Facility, we are the leading bank in the market in ensuring that most people dealing in Agric Value Chain have access to Agricultural Credit Facility, and this takes over 43% of our Agriculture portfolio, and given that we’re a government bank, we must take lead in promoting government programs so that people can Grow & Prosper.
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How does your bank collaborate with agricultural agencies or organizations to support farmers?
While conducting our regional agricultural forums we partner with different agencies or organizations.
Are there opportunities for funding agricultural technology or innovation projects?
The opportunities are there, given the changing trends in the Agricultural sector and the sector has a lot of opportunities.
How does the bank support farmers looking to integrate new technologies into their operations?
Through our forums, in collaboration with technology providers or agricultural experts, we educate farmers to adopt and use new technologies.
What measures does the bank have in place to mitigate risks specific to agricultural lending?
PostBank through our Bancassurance offers insurance products or required crop insurance as part of the loan package to mitigate risks associated with agricultural production.
How does the bank handle situations like crop failure, market fluctuations, or other agricultural risks?
In partnership with insurance companies with our Bancassurance products, we offer crop insurance products that protect farmers against losses due to crop failure caused by natural disasters for instance; drought, floods, pests, diseases, or adverse weather conditions.
Crop insurance can provide financial compensation to farmers to help cover the costs of replanting or lost income and our farmers from Kapchorwa and Bweyale have already benefited from the compensation.
As a bank, we collaborate with agricultural agencies that provide access to market information systems which help farmers make informed decisions on when to sell and where to sell. We also link them directly to some of our aggregators and traders that offer competitive prices.
How accessible are your services for rural farmers or agricultural businesses?
Our branch network makes it easy to access our service for rural farmers and we have branches located as far as Moroto, Kotido, Yumbe, Anaka, Amolatar, Kitgum. The bank services are well distributed to rural areas where much of the Agricultural activities are predominant as we foster Grow & Prosper to all Ugandans through Financial inclusion, hence aligning ourselves with the Government.
Do you have dedicated branches or representatives knowledgeable about agricultural financing?
Yes, the Central Business District branches mainly finance trade & storage and agro-processing. Greater Kampala, Eastern, Northern & Western Regions finance all projects under the agriculture value chain.
However, production loans are specialized, and they are financed with personal bankers who have specialized/trained Agriculture knowledge and the bank employees qualified staff in Agriculture to handle mainly production loans, since they not only provide financial assistance but also guide the farmers and also know what exactly they are financing.