Centenary Bank, in partnership with the World Bank Group will today launch a program that will improve Centenary’s agriculture finance capacity to benefit emerging smallholder farmers, and Small and Medium Enterprises (SMEs) in key agricultural value chains. This initiative will provide an example to other financial institutions worldwide on how to successfully and sustainably finance smallholder agriculture.
farmers picking cotton in Gulu northern Uganda
The project will improve Centenary Bank’s agricultural finance portfolio, including all aspects of value chain finance. The agricultural portfolio is expected to double translating into a growth of US$ 34 million and the number of agricultural finance clients are projected to increase by approximately 30,000 over four years. The mix of products and services to clients will also be improved and transaction and loan losses reduced. To achieve this, Centenary Bank will create five new service centers in rural areas, upgrade staff skills and reinforce key systems such as agricultural risk management.
“We hope that the funds we are investing will improve the mix of products and services to clients whilst targeting different value chains such as coffee, maize and livestock. It will also roll out innovative e-banking products to rural areas and train staff in advanced agricultural lending methods, like structured financing, contract farming, trade financing including warehouse receipts and linkage banking,” saidFabian Kasi, Managing Director, Centenary Bank.
Centenary Bank is contributing $1.1 million while the World Bank’s Agriculture Finance Support Facility (AgriFin) is contributing an additional $1 million to support the program. Signed on May 25, 2011, the $2.1 million Centenary Bank-AgriFin project is the 2nd to be signed in Africa, in addition to Rwanda.
AgriFin, which is part of the World Bank’s Agricultural and Rural Development Department, is a Global Partnership Program that has been established with the support of a US$20 million grant from the Bill and Melinda Gates Foundation. The Facility co-finances innovative proposals from financial institutions in Africa and Asia to develop their value chain finance business lines. It also facilitates peer – peer learning and generation and dissemination of acquired knowledge in smallholder and SME agricultural finance. This provides a platform to AgriFin clients and non-clients to learn from the different initiatives and models that are being co-financed.
“I am glad that we are partnering with a farmer-oriented Bank to implement this program. AgriFin’s goal is to assist financial institutions to improve and expand their services to commercial smallholder farmers and SMES by building Centenary’s capacity and systems. We hope that this small initiative in addition to what we are already investing in the agriculture sector will make a big difference for Ugandan farmers,” said Kapil Kapoor, Ag. World Bank Uganda Country Manager.
To date, the World Bank AgriFin program has supported 10 agricultural finance business development projects of which 7 are in Africa and 3 in Asia.
Centenary Bank is the leading microfinance bank in Uganda with over a million customers. It is also leading in financing the agricultural sector, with 17 percent of the Bank’s lending portfolio is in agriculture against the industry average of 6.5 percent. The bank has 6 agricultural products supported by various partners including the Rockefeller Farmer Guarantee Program and DANIDA.