Rikolto & Microfinance Support Centre Sign MoU to Extend Financing to Smallholder Farmers

Rikolto & Microfinance Support Centre Sign MoU to Extend Financing to Smallholder Farmers

26/09/2019
in News

Rikolto Country Office in Uganda has signed a Memoranda of Understanding (MoU) with the Microfinance Support Centre (MSC) to facilitate affordable financial services and strengthen management capacities of small holder farmers organised in agricultural Cooperatives. The MoU will also extend support to Small and Medium Enterprises and enable employment creation for the youth through business development services (BDS).

The MoU signed by the Rikolto in Uganda Country Manager, Ms. Caroline Kahamutima and Mr. John Peter Mujuni the Microfinance Support Centre’s Executive Director details five key areas of cooperation including; facilitating the extension of access to affordable finance to smallholder farmers and farmers’ organizations through Village Savings Loans Associations (VSLAs), Savings and Credit Cooperative Societies (SACCOs) as well as directly as working capital to increase the cooperative’s aggregation capacity and trade; strengthen the management, business acumen and entrepreneurial capacities of agricultural farmer organizations, VSLA’s and SACCO’s through training and mentorship to enable them to run sustainable businesses; and create awareness and understanding to farmers and their respective organizations on affordable financing options and preparedness for credit requirements.

The parties will also work together to create awareness and understanding to farmers and their respective organizations on affordable financing options and preparedness for credit requirements, create opportunities for youth employment through groups and individuals in agriculture by facilitating financing and piloting the growth of BDS in cluster communities and document these lending models piloted by Rikolto for possible scalability.

Established in 2011, the Microfinance Support Centre is a Government of Uganda owned Company mandated to manage micro-credit funds and offer business development services on behalf of the Government of Uganda.

The MSC which prioritizes financing to agricultural cooperatives carries a vision is to facilitate access to affordable financial services and strengthen management capacities of microfinance institutions and small & medium enterprises. Rikolto too has been working with farmer groups in Eastern Uganda for over 20 years and its mission is to enable and support smallholder farmers to take up their role in rural poverty alleviation and to contribute to feeding a growing world population in a sustainable way.

The MoU establishes a platform where Rikolto will engage MSC in providing BDS support to the VSLAs, farmer organizations, Cooperatives and youth initiatives, at the same time help in the initial client screening to reduce the time involved in processing target client credit.

Microfinance Support Centre’s Peter Mujuni commended Rikolto for their proactive engagement with smallholder farmer organisations, establishing that this was long overdue since Rikolto had negotiated for the financing of two farmer organisations in Butaleja and Bulambuli Districts from the Microfinance Support Centre.

Rikolto has already been engaging with MSC and as a result, two farmer organisations; Doho Rice Farmer’s SACCO in Butaleja District and TAABU Farmers’ Cooperative in Bulambuli District were advanced credit to support their operations. Doho Farmer’s SACCO received two loan instalments totalling to Ug. Shs. 100Million (about $28,000) to extend credit facilities to their members while TAABU Farmers’ Cooperative, in 2018 received Ug. Shs. 50Million (about $14,000) to support bulking efforts among the members. TAABU Farmers’ Cooperative with women as majority members trades in grains and pulses.

Ms. Caroline Kahamutima said this MoU will strengthen the on-going collaboration between Rikolto and MSC to enable farmers access affordable financing for increased production and cooperatives increase trade and revenue through obtaining working capital to support aggregation of produce.