By Herbert Musoke
Participants at the Harvest Money Expo will have a chance to know how they can use their produce as collateral to get financing.
Deborah Kyarasiime, the director of Uganda Warehouse Receipt System Authority, which is one of the sponsors, said the authority promotes the concept of using agricultural commodities as collateral to get financing.
“This means that if one has their commodities and say the prices haven’t appreciated to the level they like, they can go into the warehouse receipting system and use what they have currently to seek financing, until the prices rise,” Kyarasiime said.
The expo will take place from February 10-12 at Kololo ceremonial grounds. Entrance fee will be sh10,000 and sh10,000 to attend trainings per day.
The annual Harvest Money Expo, organised by Vision Group, is sponsored by, among others, the Netherlands Embassy, Champrisa International, Engineering Solutions Ltd (ENGSOL), National Agricultural Advisory Services (NAADS), UpFront partners/Riela, Uganda Investment Authority (UIA), Pepsi and the Ministry of Agriculture, Animal Industry and Fisheries.
In Uganda, the warehouse receipt system was established in 2006 under the trade ministry. It is a system where commodities can be used as security/collateral for financing (inventory credit).
The issuer of the warehouse receipt will certify the deposit of commodities, hold the commodity in the custody until the depositor or a new ascertained buyer claims the goods.
The system enables farmers, co-operatives or farmer groups, individual traders, groups of traders, processors and exporters to deposit storable goods in exchange for a warehouse receipt.
“The receipt is then used as evidence that specifies the commodities, the quantities and quality of those deposited at a particular location to secure fi nance,” Kyarasiime said.
The receipt must be issued by an authorised warehouse. The receipt must represent a commodity that is the same quantity and quality as the eligible commodity actually in storage in the warehouse of the original deposit.
“We have several stakeholders we deal with. Our role is to regulate the system, for example, if a farmer wants to use their beans, coffee or maize as collateral, we must ensure that the warehousing is right, the quality of the commodities is good and observed,” she added.
Kyarasiime said the system facilitates the development of efficient and accessible trade financing system.
Lenders mitigate credit risk using collateral that is more readily available to produce and it is easier to liquidate than the traditional collateral that would be previously demanded by banks.