First ever digital agricultural loan solution launched in Uganda to support smallholder farmers

Some of the smallholder farmers in Uganda. AgriConnect solution providers are targeting 18000 smallholders 18000 at full cycle

For the first time, Uganda Development Bank (UDB) in partnership with Ensibuuko, European Union, United Nations Capital Development Fund (UNCDF), and Food and Agriculture Organization (FAO) to launch a Fintech solution to facilitate digital financing for smallholder farmers in Uganda

The solution dubbed AgriConnect offers both a savings and lending option for small-holder farmers in the country and will provide 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.

According to Patricia Ojangole, the managing director UDB, the fintech solution aims to disseminate credit to populations under served by banks, most of whom work and rely on their village saving and loan schemes in their respective villages.

“The aim for this pilot project is to reach at least 1,000 smallholder farmers as this will enable them to have access to digital loans to increase production, intensify food security and boost household income,” said Ojangole.

In this,  farmers will not have to travel to Kampala to access the services as the entire lending process including application, approval, and disbursement will be done digitally with the funds credited directly to the farmer’s e-mobile wallet said Steven Kakonge, executive director at Ensibuuko Uganda, a fintech service provider.

The launching of AgriConnect a Fintech solution to facilitate digital financing for smallholder farmers in Uganda

18,000 farmers targeted

Lessons and insights from the pilot project will enable the solution providers to scale it to impact more farmers with a target of 18,000 at full cycle.

“As a development finance partner, we recognize such changes & make a deliberate effort to support inventions that influence the growth of key sectors of the economy like agriculture, which employs 68% of our population”, said Ojangole.

According to Gerald Otim, CEO at Ensibuuko , the solution will ease access to digital financing for small holder farmers.

“We have already made progress in terms of digital transformation and commending the Government of Uganda and various partners like UDB that are making it possible,” said Otim adding that digitization is now happening all over the world and thus farmers in Uganda should also go digital.

Digital transformation in Uganda

The State Minister for Finance in charge of Investment and Privatization, Evelyn 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.

“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 Anite.

“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.”

Financial inclusion

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 in charge of 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 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 have launched 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.