Agriculture in Uganda especially in the rural areas has always faced the challenge of limited access to credit finance. Most of this limited funding is allocated to commercial large-scale agricultural production, processing, and trade with the least going towards small-holder farm production which dominates the rural areas. Given its predominantly informal nature with heavy reliance on rudimentary agronomical practices, formal financial institutions are hesitant to advance credit to small-holder farm production.
First and foremost, these farmers are in far to reach remote areas making it costly to serve this market segment. Additionally, the potential return on investment from this market segment is very low considering the informal nature of their farm production units.
Their production levels are highly unpredictable and susceptible to adverse weather patterns and fluctuating market prices. Combined, these factors make this market segment risky and barely profitable.
Despite all the disadvantages associated with small-holder farming, technology presents a unique opportunity that could turn this market segment into a viable and profitable business opportunity for formal financial service providers. The partnership was focused on digitising farmer records and creating credit scores that could help farmers access credit. FSD Uganda also provided technical assistance towards a human-centred approach to product design for the loan origination and repayment process on the Emata platform.
After a successful pilot, Emata was officially registered as a company in March It received its lending license in December and started lending in February Emata meets the need for agricultural financing by providing affordable digital loans to farmers that are three to six times more affordable than informal loans that smallholder farmers use today.
