Despite the obvious business potential and economic contribution, Ugandan banks are still reluctant to finance agriculture, citing unpredictable risks of weather and disease attacks – with only 13 per cent of the total credit advanced to the sector.
But going by the discussions at the recent 2019 annual Uganda Bankers Association (UBA) conference at Serena hotel, from blockchain, mobile money and agent banking, technology is helping de-risk agriculture for banks by creating data-driven individual farmer profiles, a digital track record for farmers and de-cashing agricultural transactions as FRANK KISAKYE writes.
Keynote speaker at the conference, Marianne Schoemaker from Rabo bank in the Netherlands, the world’s second biggest exporter of agricultural products, said unlike Uganda where over 70 per cent of the labour force is involved in agriculture, only 10 per cent of the labour force in the Netherlands is involved in the sector with amazing yields thanks to technology and innovation.
Technology, she said, has made the young people in the Netherlands interested in agriculture because they know they can earn a decent living and the sector is also very attractive to the banks.
By 2050, Shoemaker said, it is projected that there will be one billion people in the Americas and Europe apiece, two billion in Africa and five billion in Asia – 1125. And in 2100, there will be one billion people in Europe, one billion in Americas, four billion in Africa and five billion in Asia. This, she said, will create a massive demand for food both in quantity and diversity.
To avoid a food crisis, agribusiness and production needs to get up and face the challenge because countries like India and China are not able to be self-sufficient, resulting in increased food trade.
But as Samuel Kirubi, CEO Equity bank, pointed out, it may not be obvious to the naked eye, but Ugandan banks have now also moved into financing agriculture value chains thanks to technology. He said cashless transactions for farmers may actually mean more profits for them as it eliminates fraud by the middlemen and clearly identifies and records the existing value chains thus helping banks effectively profile potential agricultural firms and individual farmers eligible for credit facilities.
In Kasese and Fort Portal, for example, Kirubi said, payment for the over 10,000 cotton farmers has been digitized by Equity bank and now farmers can purchase merchandise for as low as half a kilo of sugar using swipe cards from the […]