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Small-holder credit in Uganda: Roles of farmers, government and the private sector. Report of field work conducted in Uganda during September and November 1998

Small-holder credit in Uganda: Roles of farmers, government and the private sector. Report of field work conducted in Uganda during September and November 1998

Goodland, Andrew (1999) Small-holder credit in Uganda: Roles of farmers, government and the private sector. Report of field work conducted in Uganda during September and November 1998. Technical Report. Natural Resources Institute, Chatham, UK.

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Abstract

Cotton smallholders in Uganda have a number of potential sources of credit, including government/donor driven projects (including both those targeted specifically at the cotton sector and those more generally aimed at smallholder production), commercial banks, micro-finance institutions (including NGOs) and informal sources. A review of these sources reveals that the smallholder sector is poorly served. Partly as a response to this, within the cotton sector a number of private non-financial sector approaches have been implemented in the past three seasons to improve the access to inputs for cotton smallholders. The input credit schemes share similar characteristics to outgrower schemes, with input provision linked to output marketing. The experiences in the cotton sector have been mixed. The failure of the North Bukedi Cotton Company scheme provided useful lessons, especially with regard to the problem of strategic default (farmers selling to an alternative buyer). The approach in the 1998/99 season has seen the formation of a national association of ginners, who jointly take the liability for the provision of inputs on credit to smallholders. This approach overcomes the problem of strategic default, though may encounter significant inefficiencies which may not be apparent until the crop is harvested. The analysis of the experiences in cotton and other sectors where the private nonfinancial sector has provided credit services (notably tobacco), enabled the identification of key determinants of success. These include: the non-fungibility of inputs; lack of alternative uses for outputs; the ability to ensure repayment; and the will and ability of the private sector to provide such a service. A review of other crop sub-sectors in Uganda reveals further candidates for private sector led credit- but all are non-food cash crops. The problem associated with applying this approach to food crops is the alternative uses for the crop, which can be consumed within the household or traded at local markets, thus jeopardizing the repayment. The research has highlighted the low input -low output nature of smallholder production in Uganda. Increased access to inputs is essential for increasing smallholder productivity. Provision of credit services only provides part of the solution. Other critical factors include: the development and multiplication of improved varieties; the local availability of inputs; and extension services to increase the effectiveness of input use.

Item Type: Monograph (Technical Report)
Uncontrolled Keywords: small-holder, credit, Uganda, farmer, cotton, credit, lending, development, micro-finance
Faculty / Department / Research Group: Faculty of Engineering & Science > Natural Resources Institute
Faculty of Engineering & Science > Natural Resources Institute > Food & Markets Department
Related URLs:
Last Modified: 17 Jun 2016 08:36
Selected for GREAT 2016: None
Selected for GREAT 2017: None
Selected for GREAT 2018: None
URI: http://gala.gre.ac.uk/id/eprint/11531

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