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Digital Credit and Payments in the Dairy Sector in Uganda

Agriculture Uganda

Workshop at one of the savings groups in the Lowero area, Uganda | Photo Credit: Alfredo Burlando


Uganda’s dairy market is growing rapidly and now accounts for more than a third of the country’s agricultural exports. In the Ugandan context, cooperatives play an important role in the lives of farmers: they connect farmers with bulk buyers, provide inputs, facilitate loans, disperse advice, and more. Alongside this growth in the dairy market, mobile money account ownership has grown quickly and there is a large scale effort to digitize a number of agricultural value chains, including coffee, tea, seeds, and dairy. Digital financial services (DFS) could play a critical role in giving farmers access to the formal financial system, but it is still an open question whether the hypothesized benefits of DFS will materialize.

Study Design

The researchers worked with Yo! Uganda to train farmers within 44 Ugandan dairy cooperatives how to access and use digital credit products, and to train the cooperatives how to digitize payments to their farmer members. The pilot was designed to assess (a) whether access to digital payments could increase take-up and utilization of digital credit, and (b) whether access to digital credit affects farmers’ milk production, income, assets, investments, or consumption-smoothing ability.

Results and Policy Lessons

By the conclusion of the study, only 10% of cooperatives had implemented the digital payment systems, making it difficult to determine how adopting digital payments or having access to digital credit affected farmers in this context. However, the majority of the cooperatives that did not sign up expressed interest in the service and provided insight into the barriers they faced, offering lessons for the future. Based on this feedback from the dairy cooperatives, the researchers suggest that the following may help increase take-up of digital payments: 1) ensuring that all cooperatives have a stable internet connection, (2) building trust in the digital payment system among farmers, and (3) additional training on the payment system, including support understanding how transactions take place.

  • IPA Uganda
  • Yo! Uganda

2018 — 2020

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