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June 26th, 2017

Responsible agriculture finance for smallholder farmers in Tanzania and Uganda

Published by Mastercard Foundation; RAF Learning Lab,

This report (PDF), commissioned by the MasterCard Foundation, analyses input credit for smallholder farmers in Tanzania and Uganda. Agricultural inputs (either cash or in-kind) are provided on credit and the farmer reimburses the provider after harvest. Input credit products for farmers in Tanzania and Uganda are often ‘bundled’ with other compulsory services and fees. As a result, smallholder farmers may not fully understand the pricing structure and compulsory nature of bundled credit products, and may be taking on more risk than they can handle. It appears there may be a number of smallholder farmers who are indeed struggling to comprehend input credit bundles and the associated relatively high but variable risks of input credit. The objective of the study was to improve The MasterCard Foundation’s (MCF) understanding of how agricultural finance can be delivered in a responsible way. It was found that MCF could encourage governments to; (1) establish price ceilings and price floors on agricultural products, (2) relax current restrictions on micro-finance institutions, (3) create a certification program for crop inputs, and (4) set up a formalized customer complaints department about concerns with financial service providers. MCF could also work directly with financial institutions to modify and improve upon existing input credit products; and encourage them to provide a more comprehensive set of credit products that targets all entities within the agricultural value chains.

Curated from raflearning.org