Such a saying that Agriculture is the backbone of Uganda’s Economy triggers many unanswered questions in many people’s minds on whether its true or not and this backed by the statistics which portray that 68% of Uganda’s population is involved in Agriculture and directly earn from the practice is just probably only big on paper and reality is a myth.
Uganda’s case point on Agriculture has seen many farmers both small and medium and large scale, struggle a lot with numerous challenges including rampant pests and diseases, poor seed variety, climate change and above all low or no proper funding to enable them purchase farm equipment among others. This has greatly affected the Agricultural sector in the country way from many years back and still counting but great thanks to Uganda Development Bank (UDB) which has shown light on farmers and has brought the hope alive.
UDB, the country’s national Development Finance Institution, in partnership with Ensibuuko, European Union, United Nations Capital Development Fund (UNCDF), and Food and Agriculture Organization (FAO) has taken a decision and introduced a Fintech solution dubbed AgriConnect to ease access to digital financing for both large scale and smallholder farmers in Uganda. In this particular project, UDB has has ensured that famers do not have to cry fowl of finances since they can now access Agricultural loans with repayment interest of as low as 1.25% which has never featured anywhere before in the history of Uganda!
With this affordable loans and innovation the farmers should be sure of bumper harvests whilst propelling not only the Country’s Agricultural sector but as well as realize the soo much desired and talked about goal of the middle income status quo.
According to UDB, AgriConnect, the first ever digital solution well designed and tailored to a savings and lending option for small-holder farmers in the country, will go a long way in offering a platform for Village Saving and Loans Associations (VSLAs) to digitally access short-term seasonal loans and saving products at affordable rates to grow their businesses. Through this arrangement, farmers can assess loans and as low as Shs50,000 to enable them address any itching challenge in the farm or their small gardens.
The entire lending process – application, approval, and disbursement – will be done digitally with the funds credited directly to the farmer’s e-mobile wallet with convenience and at any time no matter where they are.
While addressing the target groups and partners at the innovation launch held on Monday in Yumbe District, Ms Patricia Ojangole the Managing Director of Uganda Development Bank said, “Together with our partners, we have unveiled an innovative Fintech solution aimed at disseminating credit to the mass lower underserved markets consequently driving financial and digital inclusion.”
Ms Ojangole re-assured farmers of the Bank’s well thought and considerate vast decisions undertaken to foster development and tackle some of the daily issues faced by Ugandans arising from different sectors and that the Bank recognizes ever evolving changes and makes deliberate effort to back inventions that influence the growth of key sectors including Agriculture.
“The world is fast evolving resultant of advancements in technology, and it is key that as a development finance partner, we recognize such changes and make deliberate effort to back inventions that influence the growth of key sectors of the economy like Agriculture, which employs 68% of the country’s population.”
AgriConnect targets to reach at least 1,000 smallholder farmers who will have easy access to digital loans to enable them to increase production, intensify food security, and boost household incomes of the farming communities across Uganda. And considering the AgriConnect success and experience from it will give the implementers more reason to scale up the solution to change livelihoods of even more farmers with a target of over 18,000 at full cycle.
Gerald Otim, the brains behind Ensibuuko one of the project partners said that, “The event is special in two ways: It is the launch of Uganda’s first ever digital agricultural loan for savings groups, it is also the first-ever launch of a strategic partnership between the Uganda Development Bank and a Ugandan fintech. Such purposeful collaborations are important for financial inclusion, and will go a long way in validating the maturity of Uganda’s fintech landscape.”
Uganda’s scope of financial services encompassed by Fintech has steadily been increasing and this has been necessitated by network readiness, digital literacy, and mobile phone penetration. According to World Bank, Uganda ranks 172nd on Gross National Income (GNI) and 116th on the Network Readiness Index (NRI), respectively. The country’s Mobile penetration is at 49% and smartphone adoption is at 16%; all of which account for the contribution of the digital economy which contributes 7% to the economy.
“Over the last few decades, digitalization has transformed the way of life world-over, causing varied social and economic changes. Likewise, in Uganda, digitalization continues to take root in shaping various sectors, and specifically the financial services. AgriConnect will reinvigorate and reshape our country Uganda. This indeed is a timely product for Uganda,” said State Minister of Finance for Investment and Privatization.
“With services like this, Uganda is indeed on a good trajectory to achieve its goals as stipulated in the National Development Plan and Vision 2040.”
Hon. Anite lauded UDB, FAO, UNCDF, EU and Ensibuuko for the critical role in the socio-economic transformation of Uganda and pledged the government’s continued support towards this agenda.
UNCDF reaffirmed its commitment towards boosting financial inclusion in Uganda.
“UNCDF has been involved in advancing access to finance through digital financial services in Uganda for the last seven years. We have seen solutions like digital payments and savings accounts grow significantly in various agri-value chains. The promise of digitalization unlocking financing for farmers still falls behind – yet it holds the greatest value proposition for them,” UNCDF Technical Advisor – Inclusive Digital Economy, Richard Ndahiro said.
“According to the Findex 2021, digital financial services have enabled more Ugandans to access formal financial services. 66% of Ugandan adults are estimated to have access to an account. However, while 77% of Ugandans borrow money – only 31% borrow from a formal financial institution. Smallholder farmers are top on the list of those excluded from access to formal borrowing. The solution launched today leverages digital innovation to enable access to finance for farmers. This project is one of the ways UNCDF is working with partners and financial services providers to drive digital financial inclusion beyond payments.”
According to FAO, AgriConnect will enhance the agriculture sector and improve farmer livelihoods in Uganda; “FAO believes that Public funding alone is not enough to tackle the world’s most pressing sustainable development challenges – from ending poverty and hunger by 2030 to reducing inequalities. Private investments that generate social or environmental benefits alongside returns can help fill that investment gaps. The pilot solution we are launching today is hoped to boost sustainable private investments in the agrifood sector and improve farmers’ access to digital credit,” said FAO’s Country Representative in Uganda, Dr Antonio Querido.
The European Union expressed delight for the partnership mentioning that it will set the tone for further deeper and sustainable collaboration in the future, benefitting underserved populations.
In conclusion, MS. Ojangole urged the smallholder farmers in Yumbe District and the neighboring areas to embrace this service which will boost their output and participation in agribusiness and called for more meaningful partnerships.
“I would like to specifically thank our partners Ensibuuko, EU, FAO, and UNCDF for joining us on this journey that aims to transform communities through financial empowerment, which will in the long run boost the performance of Uganda’s agricultural sector,” Ms Ojangole concluded.
