Access to credit through Digital Financial Services

The sound of the “SMS alert” triggered excitement among the smallholder farmers in Nakaseeta Sub-county Nakaseke district of Uganda. Kyakuwa Edith, a member of Anoonya Obugga Village Savings and Loan Association (VSLA) group was among the first beneficiaries to get credit through the Gmobile credit solution specifically designed for the rural poor. The Gmobile Credit Solution aims at using innovative and adaptable approaches to build robust social enterprises which promote social and economic development for rural communities.

Smallholder farmers in Uganda have for a long time gone through the pain of failure to access credit through the traditional financial systems which has denied them capital to venture into farming as a business as well as support other income generating activities. This is because smallholder farmers are un-bankable (do not have collateral and other supporting documents) to secure credit and are therefore sustained in a viscous cycle of poverty with hardly any light at the end of the tunnel.

Through crowd financing, Gutsinda Development Group, a social enterprise established a fund to facilitate farmers with credit through the VSLA groups. The groups have been trained and encouraged to save via MSente Mobile Money platform compared to savings using the metallic cash box which is prone to fraud and theft. All groups and their members are profiled through a digitized system prior to accessing credit. Farmers receive the credit through their mobile phones and pay back via Msente platform. The system accessible in 5 different local languages was launched in August 2016 with 21 beneficiaries subscribing to Anonya Obugagga and Bukuuku Women VSLA. Priority is given to women because they have been discovered to save and invest more in their households compared to men. The intervention believes that this will translate into better welfare and improved livelihood for the household.

The funds borrowed have been used to among others purchase inputs like seeds, fertilizers, chemicals in preparation for the next cropping season. A total of $8,000 has been loaned to farmers and 80% have within one month made repayment on the loan. It is believed that the Gmobile Credit scheme will go a long way to ease smallholder farmers’ access to credit in real time as well as drive a paradigm shift of financial inclusion for the hitherto unbankable. Gutsinda and Uganda Telecom seek to scale this intervention to other areas in Uganda and invite partnerships that wish to join this noble cause of reaching out to poor people through Gmobile Credit Solution.