Access to Finance is Crucial for Young Agripreneurs

We invited Arnest Sebbumba, a MasterCard Foundation Youth Think Tank Alumni and participant in the TechnoServe STRYDE Program to share his experiences as an agricultural entrepreneur (agripreneur) in rural Uganda.

To commemorate Global Money Week (March 14-20), we asked Arnest to reflect on the opportunities and challenges that face young people in accessing financial services to start and run their own enterprises in the agricultural sector.

Based on my experience as a young agripreneur in Uganda, I am aware of a number of opportunities that exist along the agricultural value chain that young people could be engaged in for meaningful employment.

These opportunities can include producing, processing (value addition to products), marketing, service provision (transportation, warehousing, cold storage operation, sorting, grading, and packing), technicians and many more.

However, we, as young people, cannot leverage these opportunities without a crucial enabler: finance. Finance plays a critical role in running a business smoothly, right from the beginning. For example, I need access to financial services for my daily business operations, salary payments, purchases and supplies.

To work or start a business in the agricultural sector, access to land is also very important. Despite Uganda having the largest percentage of arable land in East Africa, young people rarely have ownership to land except in cases where they have inherited it from their families. A young person can either rent or buy land, but not without access to finance to do so. Therefore access to finance could easily help in addressing the challenge of access to land.

More still, in order to have increased productivity, one could apply modern technological practices. For example, the application of fertilizers can increase the productivity of the soil, leading to increased yields and incomes. However, to buy this fertilizer, one needs finances to do so. With increased access to finance, agricultural productivity can also be increased resulting in a high return on investment.

In order for young agripreneurs to add value to their products, they would require modern equipment. This is very expensive to acquire. But if financial services were tailored for young agripreneurs with low interest rates, they could easily develop high value, high quality products and increase their incomes.

In my own experience attempting to find a solution in accessing financial services, I joined a village savings and loans association (VSLA). As a member of this group, I am able to access a small amount of credit, but it still not sufficient to run and expand my business. Apart from providing loans, the association runs a gift circle where members raise funds and pass it on to a single individual. This cycle continues until all members have benefited. The funds provided as a gift are used by a number of members as investment capital for their businesses.

I also save money with a bank, but it’s hard for me to access credit from the bank since I don’t have the collateral they require. Accessing enough credit to finance equipment for my farm is still a challenge.

In consider myself to be technologically savvy and I think financial service providers should leverage mobile technology to extend financial services to young agripreneuers who cannot easily access a bank, mainly due to geographical barriers. At least with my mobile phone, I am able to make money transfers to make purchases at the farm store and pay my employees’ salaries. At the same time, there continues to be reliability and safety challenges with the use of mobile platforms for money transfers, including network disruptions and fraudsters.

Apart from accessing finance, young agripreneurs need financial literacy training, including learning how to save. If young people are able to save, then they could also invest in their businesses. I consider myself to be very fortunate to have taken part in the STRYDE program with TechnoServe where I gained the business and financial skills I apply on a daily basis to run my farm. Also, a Coordinator for the Countryside Youth Foundation in Uganda, I work to ensure other young people in my community have access to information on financial services, training courses and local markets so that they can find meaningful employment or start their own enterprises.

Arnest Sebbumba is a dairy farmer in rural Uganda, a MasterCard Foundation Youth Think Tank Alumni, a participant in the STRYDE Program through our partnership with TechnoServe and Coordinator of the Countryside Youth Foundation in Uganda.