Why Uganda wants private money to help transform farming

Getting more milk, grain or vegetables to market isn’t simply a question of producing more.

Ugandan farmers can see their earnings disappear when unreliable electricity, inadequate cold storage or lack of affordable credit prevents their produce from reaching buyers in good condition. 

The government says closing those gaps will require more than public spending. It wants banks, technology companies, investors and development partners to put more money into agriculture, particularly businesses investing in technologies that can reduce losses and withstand the effects of climate change.

State minister for Agriculture, Animal Industry and Fisheries Dr Bright Rwamirama Kanyontore said government alone cannot finance the transformation the sector requires.

“The opportunity before us is to connect productive agricultural businesses, appropriate technology, reliable markets and suitable financing,” Rwamirama said. “When these elements come together, climate solutions become investable opportunities capable of attracting private capital.” 

He was speaking on Thursday at the Climate Finance Nexus Forum, convened by Heifer International during the Africa Food Systems Forum in Kigali, Rwanda.

The problem is familiar across agriculture. Farmers and agricultural businesses need technologies such as solar irrigation, cold storage, renewable energy and better water management, but financing them can be difficult. Banks, meanwhile, may view agricultural investments as too risky or struggle to identify businesses that can reliably repay loans.

William Matovu, Heifer International Uganda Country Director, said this has repeatedly frustrated attempts to connect dairy cooperatives with commercial banks.

“For years, when we took dairy cooperatives to banks, the answer was always the same: they could not see the business. In African agriculture, the constraint is bankable transactions, and building them is the real work,” Matovu said. 

A “bankable” business, put simply, is one that a lender believes can generate enough reliable income to repay its borrowing.

Heifer International has been testing one way of overcoming that problem through solar-powered cooling systems for dairy cooperatives.

Milk collection centres depend on reliable refrigeration. When electricity fails or centres rely on expensive diesel generators, milk can spoil before it is sold, leaving both farmers and cooperatives with losses.

Matovu cited Migina Milk Collection Centre as an example of what can change when that problem is addressed.

“At Migina, milk losses fell to zero after the system went in, and members brought their milk back to a place they could rely on,” he said.

According to Heifer International, the centre now chills 197,321 litres of milk each month and has recorded a 22.6 per cent increase in suppliers. That means more farmers are bringing milk to the collection centre after investment in reliable cooling. 

The financing model is designed so that farmers don’t have to pledge their land as security for borrowing. Instead, the cooperative operates the business and generates the income used to repay the loan, while a processor provides a reliable market for the milk.

A commercial bank supplies credit secured against the solar equipment itself, and insurance and catalytic financing help reduce the initial risk.

“The cooperative is the business. It runs the centre and earns the cash flow that repays the loan,” Matovu said. 

The wider ambition is to determine whether such arrangements can work beyond one successful project.

Rwamirama said financing models must be replicable across the dairy industry and other agricultural value chains. Matovu was more cautious, describing the approach as something still being tested and improved rather than a finished solution.

“We are not here to chest thump about the model but to share what we are testing, learning, refining and contributing to the Africa food systems,” he said.

More than 100 milk collection centres in Uganda could provide opportunities for similar investment, according to Matovu. He also sees potential jobs for young people as technicians, operators, entrepreneurs and managers of technology-enabled agricultural businesses. 

The bigger test is whether climate finance can move beyond conferences and large institutions to what the forum described as agriculture’s “first mile” — the farms, cooperatives and rural businesses where investment can directly reduce losses and raise productivity.

For farmers, that is where the government’s call for private capital will ultimately be judged: not by how much money investors promise, but by whether financing reaches viable agricultural businesses and helps farmers produce, preserve and sell more of what they grow.

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