Uganda Development Bank (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 launched a Fintech solution dubbed AgriConnect to ease access to digital financing for smallholder farmers in Uganda.
The innovation, the first digital solution which can offer both a savings and lending option for small-holder farmers in Uganda 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 at a monthly interest rate of 1.25 per cent.
The entire lending process; loan application, approval, disbursement and repayment will be done digitally with the funds credited directly to the farmer’s e-mobile wallet. The loan amount range will be dependent on assessment using the credit algorithm.
Speaking at the launch in Yumbe district, Patricia Ojangole the managing director of UDB, said that this innovative Fintech solution is aimed at disseminating credit to underserved markets consequently driving financial and digital inclusion.
“The program has been designed to scale up access to digital financial services in Uganda’s agricultural sector as well as boost the participation of Ugandans in agri business. These digitalized village savings and loan associations will ensure that farmers have access to credit and savings products at affordable rates,” she said.
She therefore urged the small holder farmers in Yumbe district and neighboring areas to embrace this service which ease their access to much needed credit which is required to complement and supplement their savings.
The pilot project targets 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 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. The application also has additional value adding features that will address non-financial farming key points relating to accessing key information of the market, pricing, farming practices, farming inputs, weather patterns, among others.
These features will be rolled out in the medium term. According to FAO’s country representative in Uganda, Dr Antonio Querido, AgriConnect will enhance the agriculture sector and improve farmer livelihoods in Uganda and boost sustainable private investments in the agri-food sector as well as improve farmers’ access to digital credit.
“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.”
Source: The Observer
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