On the empirical nexus of agricultural credit facility scheme and agricultural output dynamics in Uganda
Abstract
The role of the agricultural sector in economic growth cannot be overemphasized. Agriculture is basically one of the key sub-sectors that enhance economic growth in all economies of the world. Since no sector of the economy can grow without enough capital, agricultural credit is considered as imperative for improved agricultural output. To contribute to knowledge in this regard, this study examined the impact of agricultural credit fund (ACF) on agricultural output in Uganda using quarterly data from 2009 to 2021. By employing the Autoregressive Distributed Lag (ARDL) framework, the results revealed that ACF has no significant effect on agricultural output in Uganda in the short run, but it significantly has positive effect on the sector in the long run. We control for economic growth, proxied by gross domestic product (GDP), interest, inflation, and exchange rates and find that exiting level of GDP, spurred agricultural output, while the rate of interest and inflation retard agricultural productivity (output), especially in the long run in Uganda. We recommend that the government of Uganda needs to increase agricultural financing through the credit facility scheme for further productivity of the sector.
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