Agricultural finance and the youth: Prospects for financial inclusion in Uganda
This paper (PDF) by FAO aims to provide a comprehensive assessment of the current state of financial inclusion of the rural youth in Uganda, with a specifc focus on their engagement in the agricultural sector and the financial services that are available to them to pursue their business ventures in this area. A number of recommendations result from the study and are key enabling elements with the most direct and promising channels to foster the financial inclusion of rural youth in Uganda are: 1) Leverage the potential of Youth Savings Group and solidarity lending, since they can be essential entry point to provide financial services and mitigate lending risk. 2) Expand the range of available options in terms of digital financial offers, such as mobile payments. 3) Develop new lending approaches that do not exclusively rely on traditional colleteral, since young entrepreneurs often lack “conventional” forms of guaranteers that are required. 4) Foster the expansion of agent banking in the country, which will allow format financial institutions (FIs) to extend their outreach to rural youth. 5) Leverage the expertise on youth-focused provision developed at Ministry level by engaging the formal financial sector in a shared reflection on youth-tailored financial provision. 6) Jointly foster basic education and mobile penetration to further increase digital financial inclusion, for examply through public campaigns and subsidy programmes. 7) Eliminate policy barriers to youth access, for example related to managing bank accounts and identity documents. 8) Foster youth-specific financial offer among formal FIs by promoting internal restructuring. 9) Tailor and focus the financial offer of formal FIs to the needs of under-18 clients, since they face the greatest variety of access constraints. 10) Improve data collection practices in the agricultural finance sector to monitor progess of the sector. 11) Improve the perception of agriculture as a profitable and appealing business among young entrepreneurs.