The Bank of Uganda, in collaboration with the Ministry of Finance, is currently overhauling the Small Business Recovery Fund (SBRF) initially launched to aid enterprises impacted by the economic fallout of the COVID-19 pandemic.

The SBRF, which complements the decade-old Agricultural Credit Facility (ACF), was introduced in October 2021 as a 200 billion Shilling initiative. It is jointly funded by the government via the Ministry of Finance and the Bank of Uganda, and Participating Financial Institutions (PFIs) regulated by the central bank. These PFIs contribute half of the loan amounts provided under the fund.

Targeted at small and informal enterprises that typically fall outside existing credit frameworks, the SBRF has experienced slower-than-anticipated uptake. By June 2025, only 3,640 applications had been submitted, with approved loans amounting to 72 billion Shillings. Of this, 59 billion Shillings had been disbursed.

This slow performance has sparked concern among both the Uganda Bankers Association and leaders in the business community, who argue that the fund’s disbursement levels do not reflect the high demand for capital among small and micro businesses.

Comparatively, the Agricultural Credit Facility established in 2009 has demonstrated a stronger track record. To date, it has processed 15,346 loan applications, approving 7,666, and disbursed a total of 1.23 trillion Shillings through 20 participating financial institutions.

Although the SBRF offers a relatively low interest rate of 12 percent, many potential borrowers still find the fund difficult to access. Feedback from the recent National Budget Consultations revealed that many perceive the application requirements as overly strict.

Joseph Bbaale Bwanika, the Deputy Mayor of Makindye Division, noted that borrowers are often discouraged by procedural delays or are simply informed that funds are unavailable obstacles that, in his view, only large investors can manage.

Some local leaders have proposed the establishment of a dedicated Agricultural Bank, arguing that such an institution would better serve the needs of farmers. According to Paul Mugambe, Mayor of Nakawa Division, “commercial banks are primarily profit-driven and therefore ill-suited to manage specialised agricultural lending.”

Responding to criticism that the SBRF favors large players, Jean Martina Ainembabazi, Credit Appraisal Officer at the Bank of Uganda, clarified that “three-quarters of the beneficiaries are small and micro enterprises,” each receiving loans of 20 million Shillings or less.

She also addressed concerns that commercial banks are reluctant to promote the fund, opting instead to push their own high-interest products. Ainembabazi asserted that the central bank has been “actively sensitising communities across the country on how to access the facility,” and encouraged anyone facing difficulties with a financial institution to “report the matter directly to the Bank of Uganda.”

Regarding calls for a standalone agricultural bank, Ainembabazi explained that both the SBRF and ACF are structured to serve the entire agricultural value chain, and that working through licensed financial institutions helps maintain compliance and accountability.

As part of upcoming reforms, the SBRF will be renamed the Small Business Fund (SBF) to reflect an expanded scope that includes newer businesses established post-pandemic. Under the new framework, enterprises will be permitted to apply for multiple loans, unlike the current single-loan restriction. The criteria for eligibility, including enterprise size and number of employees, will also be revised.

In a further effort to boost accessibility, particularly in underserved rural areas, Ainembabazi revealed that Tier Four financial institutions, primarily SACCOs, will be incorporated into the revamped fund.

Source: URN