The Economic Policy Research Centre (EPRC) has recognized Agricultural Business Initiative (aBi) as a major contributor to the Agricultural Finance Yearbook (AFYB) 2020. EPRC acknowledged aBi’s input, data and financial support toward facilitating the publication of the Agricultural Finance Year Book that was launched on 8th December 2020 under the theme, “Digitalization and Agricultural Financing in Uganda.”
The AFYB 2020 in particular communicates policy messages on the emerging issues in digitalizing agricultural finance, innovations and research in deepening agricultural finance and tracks investments in the agricultural value chains. It further highlights the challenges that policymakers, implementers and value chain actors must address if Uganda is to extend its agricultural finance frontier.
EPRC Executive Director, Dr. Sarah Ssewanyana appreciated the collaboration with the Agricultural Business Initiative (aBi), the Agricultural Finance Platform (AFP) and the Ministry of Finance Planning and Economic Development (MoFPED) which has supported the initiative since inception. She noted the need for significant investment in digital infrastructure to support the digital ecosystem.
Speaking as a panelist, the aBi Finance Business Development Manager, Ms. Anne Marie Mwaka Sabano acknowledged the relevancy of digitalization in Agricultural financing. She highlighted aBi’s products of Agricultural savings, credit, payments and insurance, adding that mobile credit products are more convenient for farmers because they can borrow as low as UGX 50,000 if compared to the conventional bank loans. Sabano also acknowledged the critical role of digitalization in farmer profiling, data aggregation, information credibility, risk assessment, credit scoring of clients, and financial literacy among others all of which are key in speeding up agricultural financing processes.
She however noted that digitalization alone is not enough considering the fact that majority of the small holder farmers are not banked; called for a holistic approach and products which are tailored to small holder farmers.
Emerging issues for aBi
Issues for aBi’s attention, included:
- Whether or not aBi applies a selective financing mechanism in supporting agricultural value Are both food crops and cash crops considered for agri-financing?
- Is there a possibility of blending seed financing and insurance? As this would be crucial in the event that seeds fail to germinate, farmers could still be compensated.
- Is there a study on agricultural insurance and finance? There is a concern that insurance mainly covers production risk and ignores the post production or marketing risk. In case a farmer has a bumper harvest and experiences losses how can he/she be helped?
In response, Ms. Ann Marie Mwaka Sabano stressed that aBi is not discriminative in her agricultural financing framework. However, it cannot finance any enterprise or crop that causes social harm such as Tobacco.
Concerning marketing, she explained that aBi works through financial institutions to support agribusinesses and that the partnering financial institutions do not discriminate the production, processing and marketing agribusiness. The reason why insurance concentrates on production and not marketing is that Uganda has more producers than off-takers. She added that aBi also prioritizes storage and drying facilities which has proven helpful in instances of crises.
In conclusion, Sabano reiterated the need to take a holistic approach, strengthen financial literacy and maximize partnerships.