Responsible Agriculture Finance for Smallholder Farmers in Tanzania and Uganda

This report 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 in line with the Client Protection Principles. It was found that MCF could encourage governments: to establish price ceilings and price floors on agricultural products; to relax current restrictions on micro-finance institutions; to create a certification program for crop inputs, and to set up a formalized customer complaints department about concerns with financial service providers.

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