"IT IS IN MY BLOOD AND WE EMBRACE IT AS A FAMILY,” says Mibiiri Davis, coffee farmer and father, about a crop that represents the deep bonds that bind most Ugandan communities to the land. 

     Davis is an executive with Karangura Peak Coffee, a farmer-owned and operated cooperative in the highlands of Kabarole in Western Uganda. Coffee runs in the family. His father was a coffee farmer and so are many of his neighbours. He expects his children to follow the tradition. “Pick, don’t trip,” he tells his eldest child when he helps on their coffee plantation on weekends. 

     Otherwise, Davis is a busy man. Karangura is a mid-size cooperative with 764 registered members. Individual farmers pay a subscription and are part-owners of the organisation. But the cooperative is more than a farming organisation that has improved farmers’ revenues considerably, says Davis. It has also improved the quality of produce by mobilising farmers to pick better cherries. It has further introduced modern drying, storage and grading facilities, and provides marketing and export support. 

     The cooperative doubles as a social institution, a sort of local clearing house for common challenges. Karangura encourages them to put some of the money away for a rainy day. When harvests come in, neighbours share in the benefits when they pay school fees, build a new home or celebrate a family event.

     Karangura does some heavy lifting on behalf of the community. “All my neighbours now have clean water,” says Davis, which is a result of the facilities put up in their coffee-processing plant. Then there are the power lines they share with the cooperative, and a planned new road. 

     “We opened an account with Stanbic Bank when we learnt that it was working with savings and credit cooperative organisations (SACCOs),” Davis explains. “What we appreciate most are the unsecured loans, which give us working capital to export our coffee, mostly to Europe, and repay the loans once we’ve been paid."

Stanbic, SACCOs and agriculture

To explain the bank’s decision to support Uganda’s agriculture sector, we must take a step back to 25 March 2020 – the day the country began its COVID-19 lockdown. Uganda had one of the longest and most severe lockdowns in the world. It lasted more than 24 months, and restrictions included non-movement orders during which farmers could not visit their land. This wiped out their savings and affected production.

     Stanbic soon realised that the poor crop production was affecting the entire value chain. Corporate clients, including large exporters and food processors, did not have sufficient raw material to remain profitable. Something had to be done to firm up the base so that the whole system could benefit and be made solid again. 

     This led to an ecosystem rethink, which, in turn, led Stanbic Bank to set up its Economic Enterprise Restart Fund (EERF) in November 2020. The bank assembled training organisations, fintechs, NGOs, the Ugandan government, the United Nations and foreign direct investors to solve farmers’ problems.

     The fund, part of the largest single financial outreach in Ugandan agriculture by a financial institution, has so far banked over 7  000 SACCOs and village savings and loans associations, and issued loans to 600 groups. The bank also set up an agribusiness division dedicated to the sector.  Stephen Segujja, who heads up the EERF, says direct lending across the entire agriculture value chain stands at UGX450 billion and totals UGX750 billion (approximately USD200  million).

     “We see this growing to USD400 million in the next three to five years,” he adds. It’s a large undertaking and a huge commitment, but not when you consider the vital importance of Uganda’s agriculture sector. It contributes 23% of the country’s GDP. Uganda is the food basket of the region and exports foodstuffs like milk, eggs and cereals to nearby countries. 

     “It would be suicide on our part if we did not put our weight behind this critical sector,” says Segujja, who expects agriculture’s share of Uganda’s GDP to increase to 30% in the next few years.

     The bank’s growing portfolio in the sector is linked not only to profitability, but also to social and developmental impact, he says. Agriculture, processing and related manufacturing industries employ 75% of Uganda’s predominantly young population. In addition, investment in the sector helps to uplift women, who make up the majority of the labour force and comprise more than 70% of reliable borrowers from financial institutions.

     Coffee is at the heart of Uganda’s agriculture sector and holds the most opportunities, thanks to the global coffee boom. The country enjoys some of the highest export earnings in its coffee history: USD1.4 billion in 2023/24, according to Segujja. This amount of forex has helped to stabilise the Ugandan shilling. 

     Ranked second in Africa by volume and 10th globally, coffee is central to national conversations on economic growth and farming policy. Approximately 10% of the world’s coffee farms are in Uganda, and the sector supports about two million households. 

WHAT THE BANK'S SUPPORT LOOKS LIKE

“We have given out 600 loans to the value of UGX165 billion under our SACCO proposition,” says Segujja. “But the EERF is about much more than financial support.”

     Before launching the fund, the bank had to decide which form its support would take and conducted a broad needs assessment among farmers. They found that small-scale farmers had three primary requirements: more affordable liquidity, training and technical assistance, and digitalisation. 

     Meeting these requirements required a three-pillar approach. To solve the liquidity problem, Stanbic lends to farmer groups at 10% per annum, and at 12.5% per annum to other multipurpose groups. The bank also helps digitise the operations of members on the FlexiPay platform and offers the lowest interest rates in the country for this segment, in particular.

     An added benefit of the platform is that rural farmers, most of whom are located kilometres from the nearest bank, no longer have to travel all that way – often by foot – each time they need to transact. This usually entailed two trips – one to get their savings from the village savings and loan association, and another to go to the bank. “It sometimes meant walking as far as five kilometres,” says Segujja. “Some farmers had to stay overnight. And if they needed to borrow money too, just imagine the time it would take before they could go back to working their fields.

     “Now, they can save, transfer money, pay for inputs like seed, and receive payment for produce. FlexiPay also keeps an up-to-date record of transactions that they can use to apply for loans on the platform.” 

     On the training side, Stanbic partners with other organisations to support and reinforce aspects such as farming methods, marketing and post-harvest handling of produce. The partnerships span NGOs, grant organisations and community savings associations. This makes the value chain more resilient and stable – from farmers to aggregators and buyers to corporate organisations higher up the agriculture value chain, including manufacturers. 

     For high-value crops such as coffee, the bank’s involvement is as comprehensive at the bottom of the pyramid (with the farmer who takes out a loan to buy fertiliser) as it is further up the value chain. Financing extends beyond crop production, from driers, hullers, trucks for transportation, and warehousing to “working capital and hedging facilities” for trading on the international market. 

     This strategy, says Segujja, de-risks the entire value chain, enhances value across the board, and ensures that the bank can meet its obligations to a diverse range of clients. “Our interventions are designed to stabilise the sector and improve margins that traditionally tend to be small.” 

     One such intervention deals specifically with the demand for better technical capacity. The Stanbic Business Incubator, an autonomous subsidiary of the bank, was established in 2017 and provides mentorship and training to individual farmers and early-stage and evolving small and medium-sized enterprises. Its programmes and interventions include workshops on bookkeeping, branding, marketing, admin and record-keeping, regulatory compliance, good agronomical practices, and networking for growth. 

     “The incubator has so far trained over 3 000 SMEs and 5 000 individuals, generating a ripple effect in the sector,” says Segujja. With the help of funding from partner organisations, it has entirely transformed some of the participating businesses. 

     One of its stars is Kanyes Dairy Goat Farm, a hybrid agriculture and cosmetics company that makes lotions and body soaps from goats’ milk. Kanyes Dairy founder, Juliet Kanyesigye, is a member of the Uganda Association of Women Entrepreneurs, a relationship that began with Stanbic’s business incubator. She credits this programme for helping her with tax and standards compliance, as the transition from farming to manufacturing is particularly delicate for entrepreneurs, and demands new skills.

BUILDING STRONG VALUE CHAINS

When looking at sugar and beer, the holistic approach of Stanbic’s three-pillar system (liquidity, training and capacity building, and digitalisation) is evident. Sugar-cane farmers are outgrowers – essentially, contracted suppliers – for larger plantations that provide cane to the beverage industry and health sector. 

     Likewise, Ugandan beer companies have experimented with local grain varieties, such as sorghum, opening a value chain for beer that relies on local farmers for grain.

     The business incubator is particularly intentional when it comes to building agri-based value chains tied to specific opportunities. It is, for instance, committed to growing the number of local businesses that are direct suppliers to the oil and gas sector – a sector with a dense concentration of personnel in camps in Western Uganda, and high health, safety and general standards. This has created a large and captive market for food and other local products. 

     Pure Grow Africa is one of the incubator’s partners that prepares farmers to participate in the oil sector while also running an aggregator business that supplies fresh produce to camps, hotels and airlines. The programme has formed successful partnerships with the Petroleum Authority of Uganda and the Uganda National Oil Company as well as enterprise development NGOs that further train farmers. 

     The focus and the foundation of all these initiatives are the farmers. “The money farmers earn with our cooperative is changing their lives. They can educate their children. It has helped them to buy land, build homes and farm buildings, and meet social responsibilities like getting medication,” says Davis.

     “I’ve acquired education from coffee. I’m building a beautiful house on my own land. I have married because of the coffee revenue accumulated from my four acres. So, as I talk, I’m a happy man.”