Context and Project Objective
Smallholder farmers in Uganda, even the trained ones in East-West Seed Knowledge Transfer Foundation’s network, generally lack access to affordable business loans. Having access to such financing could enable profitable production at scale or basic infrastructure development, thus transforming subsistence farmers into professional vegetable farmers.
Smallholders lack traditional financing collateral, and their smaller loan profiles make the transaction costs for traditional lenders prohibitively expensive. Without reliable historical data on smallholder farming ventures, financial institutions have not recognized the potential steady income that vegetable farming can bring to rural communities.
Without the combination of needed extension services, quality training, and financing, vegetable farmers will continue to suffer from low and poor-quality yields, which keep farmer incomes low and rural communities trapped in poverty.
Therefore, the objective of the Piloting Access to Finance for Smallholder Farmers in (Northern) Uganda project is to find a replicable proof of concept for a combined approach to quality training, extension services, and affordable access to financing for vegetable smallholders. This integrated concept, with a special focus on climate-risk adaptation and fostering the participation of women and youth, is designed to enable sustainable, climate-smart vegetable production at marketable scale for 8,000 smallholder farmers. The resulting improvement in product quality, yields, and incomes is expected to lead to adoption of resilient, sustainable, and climate-smart farming practices and to offer communities a pathway out of poverty.
To achieve the project goals, EWS-KT and Financial Access Consulting Services B.V. (FACS), a bank financial advisory entity with experience in accelerating access to finance in agriculture value chains, will implement an innovative joint and complementary approach that (1) improves farmers’ agricultural practices, business skills, and financial literacy; (2) builds farmer risk profiles; and (3) increases access to affordable financing.
Activities
EWS-KT will use peer-led vegetable farming demonstration plots to train 8,000 farmers (4,000 per year over the first 2 years of the project). EWS-KT will hold trainings in effective climate-smart farming techniques, financial literacy, and business planning, empowering farmers to treat their farms as businesses. Through the financial literacy training, farmers will come to understand the purpose of loans, the associated risks, and the financial impact on their farms and households. EWS-KT’s monitoring app will be used to track activities and results, such as increased crop yields and income.
Based on EWS-KT’s certification of trained farmers and on available farm data, FACS will prepare individual farmer credit scores, which will provide microfinance institutions with the confidence level they need to offer financing. The project expects 40% of project farmers to be eligible for a loan to purchase inputs for the next crop cycle, spurring agricultural expansion and catalyzing growth of competitive agro-input markets.
Expected Outcomes
EWS-KT Partners
Funding partner: Austrian Development Agency (ADA), the operational unit of Austrian Development Cooperation
Implementing partner: Financial Access Consulting Services B.V.
Project Period
31 July 2024 – 30 June 2027
Location
Uganda: Lango Region (Alebtong, Kole, Kwania, and Lira districts)
