High Interest Rates and Fragmentation Threaten Uganda’s Shea Exports

Uganda’s burgeoning shea butter sector is facing severe headwinds as prohibitive interest rates, stringent collateral demands, and fragmented producer networks stifle its global competitiveness. Small and medium-sized enterprises (SMEs) trying to scale up operations in Northern Uganda encounter massive roadblocks when seeking commercial loans to expand their processing capacity.

Speaking during an assessment of the Strengthening Agribusiness Resilience and Competitiveness (STAR) project in the Acholi sub-region, International Trade Centre (ITC) program officer Anna Summer pointed out that commercial lending rates hovering between 18 and 20 percent are simply unsustainable for local processors. Coupled with heavy collateral demands, these financial barriers leave businesses starved of vital operating capital.

Beyond financial constraints, supply chain inefficiencies and geographical isolation make it difficult to aggregate enough shea nuts for bulk processing and export. According to Ms. Summer, many producer cooperatives remain weak and loose, hampering steady collection efforts across remote districts.

To combat these challenges, the KOICA-funded STAR project, implemented alongside the Ministry of Trade, has introduced a matching grant facility. Project officer Allan Wayira explained that an $86,000 co-investment envelope was established to help SMEs catalyze investments and access new markets. The initiative also addresses poor branding and packaging, which historically hindered local items from meeting international export standards.

Running through June 2027, the STAR project targets agribusinesses across 10 districts in Northern and Northeastern Uganda, focusing on the cassava, shea, and oilseed value chains. Despite systemic hurdles, targeted interventions are already driving success stories.

Ms. Margaret Laloyo, Director of Blessed Organic Release Ltd in Pader Town, noted that the project helped lift her enterprise’s sales from 10 percent to 50 percent by improving packaging and funding international trade exposures. Exhibiting at trade shows in South Korea and Paris has enabled the firm to secure trial orders and bulk contracts in France, Germany, and Belgium.

Read more details on this story from the Daily Monitor.