Digital Credit and Payments in the Dairy Sector in Uganda

As mobile money account ownership grows in Uganda, digital financial services could play a critical role in giving farmers access to the formal financial system (FAO 2020). 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.  However, most cooperatives did not implement the digital payment systems, making it difficult to determine how adopting digital payments or having access to digital credit affected farmers in this context. The dairy cooperatives in this setting may have needed more support to implement the digital payment systems. Suggestions from the researchers on how to increase take-up of digital payments among dairy cooperatives include: 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.