Strengthening micro financing for rural farmers: Evidence from SACCOs in Soroti district, Uganda

Micro financing has been hailed as an effective poverty alleviation and development tool. Despite its recognition, the expected benefits have not trickled down to all the beneficiaries due to several challenges. Indeed poverty alleviation and rural development can only be achieved if microfinance is effectively utilized by rural farmers. This study investigated possible solutions for strengthening micro financing among rural farmers drawing evidence from SACCOs in Soroti District, Uganda. Findings indicated that SACCOs carry out individual lending leading to limited participation of women in borrowing. Support and cooperation from family members as well as planning for credit contributed to effective utilization of credit. However this faced challenges such as high interest rates, limited training on credit utilization, and collateral requirement all of which contributed to limited participation of women in borrowing and unfavorable repayment schedules which also affected agricultural production. Therefore, strengthening micro financing requires MFIs to carry out group lending, train farmers on credit utilization and provide incentives that encourage farmers to save. The Uganda Government should also provide funds for monitoring farmer businesses in order to facilitate prompt repayment of loans.