Uganda Development Bank (UDB), in partnership with Ensibuuko, the European Union, the United Nations Capital Development Fund (UNCDF), and the Food and Agriculture Organization (FAO), launched ‘AgriConnect’ a fintech solution to ease access to digital financing for smallholder farmers in Uganda.
The digital solution offers both a savings and lending option for small-holder farmers in Uganda and provides 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. The lending process from application, to approval to disbursement, is done digitally with the funds credited directly to the farmer’s e-mobile wallet.
Ms. Patricia Ojangole the Managing Director of UDB while speaking to the press at the launch in Yumbe District said the digital innovative fintech solution is aimed at disseminating credit to the mass lower underserved markets consequently driving financial and digital inclusion.
Ojangole further noted that “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 a 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.”
Mr. Gerald Otim, CEO at Ensibuuko remarked that such purposeful collaborations are important for financial inclusion, and will go a long way in validating the maturity of Uganda’s fintech landscape.
The pilot project is targeting to reach at least 1,000 smallholder farmers. The farmers will have access to digital loans to enable them to increase production, intensify food security, and boost the household incomes of the farming communities across Uganda. Learnings from the pilot will enable the implementers to scale the solution to impact more farmers with a target of 18,000 at full cycle.
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 the world over, causing varied social and economic changes,” said Hon. Evelyn Anite, the State Minister of Finance for Investment and Privatization. “Likewise, in Uganda, digitalization continues to take root in shaping various sectors, specifically financial services. AgriConnect will reinvigorate and reshape our country Uganda. This indeed is a timely product for Uganda.”
Anite remarked that with services like this, Uganda is on a good trajectory to achieve its goals as stipulated in the National Development Plan and Vision 2040.
UNCDF reaffirmed its commitment to boosting financial inclusion in Uganda.
UNCDF Technical Advisor – Inclusive Digital Economy, Mr. Richard Ndahiro said 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,” he said. Adding that “The promise of digitalization unlocking financing for farmers still falls behind – yet it holds the greatest value proposition for them.”
According to 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 of the list of those excluded from access to formal borrowing. AgriConnect leverages digital innovation to enable access to finance for farmers. Ndahiro said AgriConnecet is one of the ways UNCDF is working with partners and financial services providers to drive digital financial inclusion beyond payments.”
According to Food and Agriculture Organization (FAO), AgriConnect will enhance the agriculture sector and improve farmer livelihoods in Uganda. “The pilot solution we’ve launched is hoped to boost sustainable private investments in the agri-food sector and improve farmers’ access to digital credit,” FAO’s Country Representative in Uganda, Dr. Antonio Querido told the press.
The European Union expressed delight in the partnership mentioning that it will set the tone for further deeper and more sustainable collaboration in the future, benefitting underserved populations.
Ojangole urged the smallholder farmers to embrace this service which will boost their output and participation in agribusiness and called for more meaningful partnerships.