SACCOs urge government to introduce subsidised agricultural insurance to tackle climate change
This call was made during a three-day training workshop organised recently in Mbarara City by aBi Finance, in collaboration with the Uganda Institute of Banking and Financial Services
MBARARA CITY, May 18, 2025 –– Savings and Credit Cooperative Organisations [SACCOs] in western Uganda have appealed to the government to introduce affordable agricultural insurance and climate finance support to help smallholder farmers mitigate the devastating effects of climate change.
This call was made during a three-day training workshop organised recently in Mbarara City by aBi Finance, in collaboration with the Uganda Institute of Banking and Financial Services [UIBFS], aimed at equipping SACCO management and board members with knowledge on Environmental, Social, and Governance [ESG] practices.
ESG frameworks are used to assess how institutions and organisations perform in relation to environmental sustainability, social impact, and governance standards.
Stephen Bongonzya, Chairperson of Shuuku SACCO, said climate change has significantly impacted SACCOs indirectly through loan defaults, as many of their members are smallholder farmers.
“Most of our members rely on farming, but agricultural insurance is prohibitively expensive. When their crops are destroyed by hailstorms, drought, or floods, they are unable to repay loans, and we incur losses because those crops aren’t insured,” Bongonzya explained.
He welcomed the environmental training and said it would enable SACCO leaders to guide members on adopting sustainable farming practices that would ultimately improve both livelihoods and business resilience.
“When the environment is preserved, it creates opportunities for members to save and borrow, thus benefiting SACCOs. However, when environmental degradation continues unchecked, everyone loses,” he added.
Olive Nayebare, General Manager of Buyanja SACCO, urged aBi Finance to go beyond discouraging harmful environmental practices and instead introduce viable, eco-friendly alternatives for members who depend on activities like charcoal selling and roadside vending.
“You advise us not to lend to those involved in environmentally damaging businesses, but you haven’t introduced alternatives that allow our members to earn a living while protecting the environment,” Nayebare said.
Rebecca from KYAPs echoed similar sentiments, stressing the lack of practical alternatives for communities reliant on charcoal and firewood.
Nayebare added that despite their efforts to sensitise members about environmental risks and climate change, communities remain resistant to change.
“In regions like Kigezi, land is scarce. People continue to encroach on wetlands, draining them for farming despite our warnings. Even local leaders have failed to enforce environmental policies,” she said.
Kahiigi Paul Turyamureeba, Chairman of KYAPs, warned that environmental degradation directly threatens the sustainability of SACCOs.
“aBi Finance has supported us financially, but now they’re pushing us to incorporate environmental protection in our services because they know that without a healthy environment, businesses cannot thrive,” Turyamureeba noted.
He urged the government to boost funding to financial institutions like the Microfinance Support Centre (MSC) and aBi Finance so SACCOs can access affordable credit.
“MSC loans at 8% are fair, but the funds are insufficient. We end up borrowing from commercial banks at higher interest rates. The government should increase funding to these agencies so we can access more affordable credit,” he said.
Paul Mugerwa, a financial economist and ESG expert, encouraged SACCO leaders to partner with NGOs and other institutions to access grants and low-interest loans for crop insurance and climate adaptation.
“We can advance ESG goals through partnerships. aBi offers funding guarantees, training, and agricultural insurance. The government should support these efforts through policies and regulation,” Mugerwa said.
He also urged SACCOs to promote financial inclusion by targeting women, youth, refugees, and other marginalised groups, while embracing good governance and staff training.
“Even with limited resources, start small. Update your Tier 4 charter, integrate ESG into your work plans, and build trust with your members to strengthen your institution’s resilience,” he advised.
Mugerwa further appealed to the government to fast-track the introduction of a legal framework for ESG implementation in Tier 4 microfinance institutions, which currently operate without enforceable regulations.
“Without formal regulation, ESG implementation is voluntary. A legal framework would compel compliance across the sector,” he added.
David Kaweesi, Investment Manager for Financial Services Development at aBi Finance, said the training aimed to reach 50 major SACCOs in western Uganda.
“Over three days, we are engaging 10–15 SACCOs per day in the western region, including Muhame Financial Services, Kyamuhunga People’s SACCO, Buyanja SACCO, Shuuku SACCO, and others,” Kaweesi explained.
He said the training would introduce SACCO leaders to climate finance tools such as adaptation finance, mitigation strategies, and biodiversity conservation.
“We don’t want to just talk about the environment — we want a holistic change in how financial institutions operate and understand sustainability,” Kaweesi noted.
He added that agriculture remains a key sector in Uganda, with agribusiness loans making up around 20 percent of the national loan portfolio, or roughly Shs 2–4 trillion.
“Agribusiness is not only profitable but also sustainable, and both lenders and borrowers can benefit if proper environmental safeguards are put in place,” Kaweesi said.
Uganda, once among the world’s most biodiverse countries, has lost nearly 45 percent of its forest cover in just 30 years, according to the FAO Global Forest Resources Assessment [2020].
aBi Finance has so far invested over Shs 120 billion in Uganda’s agribusiness sector through affordable credit, and in December 2022 launched the Green Agribusiness Taxonomy and the aBi Green Finance Fund to address the impact of climate change on agriculture.
The Uganda Agriculture Insurance Scheme
The Uganda Agriculture Insurance Scheme[UAIS] is a public partnership between the government of Uganda and farmers aimed at protecting the farmers from financial losses due to damage and destruction of their crops and livestock resulting from; fire, drought, lightening, earthquake, explosions, uncontrollable pests and diseases, hailstorm, landslides, windstorm, malicious damage and flooding. The UAIS has a coalition of ten insurance companies that was setup to provide agriculture insurance know as Agro Consrtium.
The purpose of the scheme aims at protecting the Uganda farmer against effects of agricultural production risks. Small scale farmers may come together and form groups whereas large scale farmers may join the scheme as individuals.
The scheme covers crops like coffee, cotton, tea, maize, beans, millet, rice, banana, barley, irish potatoes, cassava, oil seeds, tea, friut trees, horticulture, vegetables and cocoa. Under animals the scheme covers cattle, poultry,pisg and fish. To add on, the scheme does not cover the following;
- Crops that have been harvested.
- Crops being transported.
- Crops which have been harvested before inspection by our loss assessors.
- Where recognised good farming and harvesting practices have not been followed.
- Loss or damage to crops by controllable diseases, weeds and insect infestations.
Now that the scheme is a public partnership between the government and the farmers, the government has availed Shs 5 million to subsidise the insurance premiums payable by farmers. The government pays 30% of the basic premium for large scale farmers and 50 percent for small scale farmers.
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