New pilot project is introduced with aim of boosting smallholder farmer financing in Uganda
In northern Uganda, the East-West Seed Knowledge Transfer Foundation (EWS-KT) has said it is seeking to establish an innovative approach to farmer finance that combines upskilling vegetable farmers and developing farmer credit scores, with funding from Austrian Development Cooperation.
Together, EWS-KT, Financial Access Consulting Services (FACS), and the Austrian Development Agency (ADA) are aiming to set up a replicable model that expands access to finance for the country’s smallholder farmers.
”Smallholder farmers in Uganda, even those with sustained success and strong farming practices, generally lack access to affordable business loans,” stated East-West Seed.
“This makes it difficult for vegetable farmers to invest in the necessary supplies for the next planting season, much less expand their operations.
”Smallholders’ lack of traditional financing collateral is a barrier to financial inclusion, and their smaller loan profiles raise transaction costs for traditional lenders,” the group continued.
“In addition, without reliable historical data on smallholder farming ventures, financial institutions have not recognised the steady income that vegetable farming can bring.”
Addressing the finance gap, EWS-KT and FACS are piloting a financial inclusion concept that improves farmers’ agricultural practices, business skills, and financial literacy; builds farmer credit score profiles for lenders; and increases access to affordable financing.
The three-year pilot, which will be carried out in the Lango region of Uganda, is co-funded by ADA, which is the operational unit of Austrian Development Cooperation, and EWS-KT.
ADA supports projects that capitalise on the potential of the private sector to reduce poverty and promote sustainable growth through its Business Partnerships scheme.
In this case, ADA will provide funding to EWS-KT due to “its unique and collaborative solution bridging smallholder farmers’ needs for affordable financing and financial institutions’ needs to make informed lending decisions,” as stated in the funding decision.
“We are excited to engage in a partnership that has the potential to improve the living conditions of 8,000 smallholder farmers,” emphasised ADA managing director Friedrich Stift.
“We look forward to seeing the project’s promising approach fully take shape and are proud to take part in a business model that translates into solid results for people in our partner country Uganda.”
Using its proven model of farmer-led vegetable cultivation demonstration plots, EWS-KT will train 8,000 farmers in effective climate-smart farming techniques, along with financial literacy and business planning.
Based on EWS-KT’s certification of trained farmers and on collected farm data, FACS, through its LendXS digital services platform, will prepare individual farmer credit scores, which will provide partner financial institutions with the information and confidence they need to offer financing at lower cost and risk.
“The project, which will run through June 2027, is designed to enable sustainable, climate-smart vegetable production at marketable scale for smallholder farmers, while establishing a replicable pathway for agricultural expansion and market growth through affordable financing,” East-West Seed added.
