Technology and data are helping financial institutions better understand agricultural businesses and could widen access to credit as Uganda seeks to accelerate the commercialisation of the sector, dfcu Bank has said.
Mercy Iselu, the sector head for food and agriculture at dfcu Bank, said digital transaction records and other data sources are giving lenders greater visibility into farmers’ businesses, including production cycles, cash flows and overall performance.
Iselu made the remarks during the French Week Business Forum at the Uganda Business Facilitation Centre.
She said the availability of reliable business data is enabling banks to make more informed lending decisions and extend credit based on demonstrated business activity rather than relying mainly on limited historical records.
“If the bank is satisfied with the data available, it creates trust by providing verifiable evidence of a farmer’s income,” Iselu said.
She said better-quality data can provide lenders with stronger evidence of income patterns and repayment capacity, allowing them to structure loans around the realities of agricultural businesses.
The push for greater use of technology in agricultural finance comes as Uganda continues to grapple with the challenge of moving households from subsistence production to commercial activity.
According to the 2024 National Population and Housing Census, 33.1 per cent of households remain in the subsistence economy, while 66.9 per cent operate in the money economy.
Iselu, however, cautioned that better data alone will not resolve the financing challenges facing agriculture.
She said much of the financing available to farmers is structured around seasonal production, yet commercialisation requires longer-term capital for productive assets and infrastructure.
“Most of the financing available is based on the season. But if financial institutions want to transform the sector, there is a need for long-term financing,” she said.
Farmers, she said, require capital not only for seeds and other seasonal inputs but also for machinery, irrigation systems, solar-powered equipment and post-harvest infrastructure.
Financing such investments, she added, requires closer cooperation between banks, equipment suppliers, technology companies, agricultural insurers and other players across the value chain.
Iselu also warned against viewing digital technology as a standalone solution to the financing gap.
She said digital applications can help farmers identify crop diseases, production challenges and operational inefficiencies, but many farmers still lack affordable capital to act on the information generated by such technologies.
“The biggest disconnect is therefore affordability and access to finance,” she said.
Value-chain financing
Dr Sam Mugume, the acting commissioner for macroeconomic policy at the Ministry of Finance, Planning and Economic Development, said agriculture remains central to Uganda’s economic transformation because of its contribution to employment, production and household incomes.
He said increasing agricultural productivity will be critical if Uganda is to achieve its long-term development objectives.
Mugume said digital financing could widen access to capital, while public investment in rural roads, irrigation and other infrastructure could reduce some of the risks associated with agricultural lending.
He called for a shift from financing individual farmers to supporting entire agricultural value chains.
Such an approach would bring farmers, processors, equipment suppliers, insurers, transporters and markets into a more coordinated financing system.
Mugume said public financing should focus on creating an enabling environment capable of attracting private investment, particularly in areas such as mechanisation and irrigation.
He also called for stronger public-private partnerships to address structural barriers that continue to constrain agricultural productivity.
The discussions at the forum highlighted the growing role of data-driven lending in assessing agricultural businesses, but speakers said lasting transformation will require more than technology.
They said Uganda will need to combine reliable data with affordable long-term financing, productive infrastructure and partnerships across agricultural value chains to support the transition from subsistence farming to commercial production.
