Business

Leveraging Technology Can Reduce the Agricultural Risks- Experts

Banks have been advised to explore technological innovations that they can use to help farmers reduce the agricultural risks that make the sector unattractive for financing
Commercial Banks in Uganda have been hesitant to go into agricultural financing although agriculture remains Ugandans biggest sector, employing and sustaining more than 70% of the entire population.
The reasons for limited finance range from the informality of the agricultural sector, the high risks involved in agriculture, being that its largely dependant on nurture factors like rain which is not guaranteed for every season, and the lack of secure collateral for most farmers.
However, experts have urged that such risks can easily be addressed with use of technology and Digital innovations.
During the 3rd annual Bankers conference which run under the theme ‘De-risking financing and investment in agriculture to promote decent youth employment and inclusive growth’, commercial banks were encouraged by the Minister for Finance, Planning and Development,  Matia Kasaija to look at these risks as opportunities for investments and extending their market shares.
During a breakaway session on ‘Leveraging on Technology, Digital infrastructure to revolutionize the agricultural chain in Uganda’  the panelists agreed that also digital penetration amongst farmers is still low due to the low literacy levels and lack of computers/phones in addition to the high cost of data bundles, Banks, government and the business community can work together to ensure that these farmers access technological services that will help them in formalising their businesses and improving their credit worthiness.
Rashmi Pillai, the Executive Director Financial Sector Deepening Uganda who made the opening presentation for the same session said the financial inclusion is being hindered by the very low levels of business formalization among farmers which requires banks, business people and government to work hard in hard if these challenges are going to be addressed
“The challenges facing the agriculture sector leave more questions than answers. It is important to have a broader discussion on challenges of financial services accessibility, inclusion, digital penetrations, mechanisation among others” she said
Agriculture financing in Uganda among financial banks currently stands at Shs1.6trillion (12.22%) in 2018 having increased from Shs208.42b in 2009. This is still lower than the 22.4% share of the agricultural sector to Uganda’s GDP ratio.
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