KAMPALA – Agribusiness owners to use either contracts or harvest as security with pilot projects to kick off in Kampala and Lira.
Structured commodity financing is available for as low as 14% interest rate.
March 25th, 2020- Kampala: Equity Bank Uganda has launched a new loan portfolio dubbed Structured Commodity Finance Loan (SCF); a financing solution aimed at supporting the growth of agribusinesses and smallholders.
The structured commodity finance loan will allow agribusinesses to borrow against their agricultural inventory which can be used as collateral for security and repayment.
Agribusinesses stand to benefit from SCF by receiving financing to ensure that cash flow is available for maximum output; with the intention of repaying the loans once sale of the agricultural produce is complete. A financing solution that will allow them to sustain customer demand and have access to new markets and customers.
Commenting during the launch of the new financing solution, Equity Bank Uganda Executive Director Anthony Kituuka said, Agriculture remains a key sector in our economy and as Equity, we have chosen to invest in upscaling smallholder and medium holder farmers because they play a key role in the growth of the economy.
With the new Structured Commodity Financing, farmers and agribusiness SMEs can now effectively manage their liquidity and mitigate against risks related to the production, purchase and sale of farm outputs.
Working with the farmers, Equity will isolate assets which have relatively predictable cash flows attached to them through price discovery and discounting.
The agribusinesses will then use these to mitigate risk and secure affordable credit with flexible repayment terms.
With the new facility, customers can now access loan amounts of between shs30 million to shs5 billion at competitive interest rates per annum determined on a case-by-case basis and repayable within flexible periods as agreed during the application process.
Farmers and agribusiness SMEs looking to access the new financing solution will need to have an existing bank account with Equity Uganda while new customers will be required to open new accounts with the bank and provide previous banking history and statements.
All agribusiness SMEs will also have to provide proof of operation in the commercial agribusiness sector for at least one year and demonstrate ability to repay the loans as well as meet the other mandatory loan application requirements.
Other than SCF financing, Equity offers farmers various financing solutions including production loans which aims at improving crop and livestock production, asset finance loans for farm machinery such as tractors, marketing loans and processing loans which allows them to add value to their farm inputs and increase sales.
About Equity Bank Uganda
Equity Bank Uganda Limited is one of the fastest growing banks in Uganda, with a large network of 43 branches, 4,434 EquiDuukas, 1,279 POS Terminal and 48 ATMs spread across the country. 17 of these branches are in Central and greater Kampala, serving over 530,000 customers. The Bank has deployed a number of Alternate Business Channels to enhance its product and service delivery. These include: Internet Banking, Eazzy 247- a mobile banking service, Point of Sales (POS) machines as well as partnerships with major telecom companies.