A recent report has highlighted the urgent need for an aggregated AgriTech database in Uganda to enhance data-driven financing for farmers and other agricultural stakeholders.
Commissioned by the Uganda National Council of Farmers (UNCOF), in collaboration with the Uganda Bankers Association (UBA) and the Financial Technology Service Providers Association (FITSPA), the study emphasizes that centralizing agricultural data could break existing barriers within the AgriTech ecosystem, improve financial access, and foster innovation in the agricultural sector.
While presenting the report, during the 6th Annual FITSPA, conference UNCDF Digital Country Lead Richard Ndahiro, revealed that for years, farmers and agricultural stakeholders have struggled with inadequate financing, often hindered by a lack of accessible and reliable data to support their financial needs.
Ndahiro noted that creating a centralised database to connect financial service providers (FSPs) with accurate, standardised agricultural data would provide valuable insights. These data-driven insights would allow lenders to assess risks more effectively and offer tailored financial products to farmers and other actors in the agricultural value chain.
The findings also revealed a significant market need for an aggregated database, both on the supply and demand sides. Financial institutions actively seek alternative data sources to tap into this under-served yet potentially lucrative market segment.
“The AgriTechs and FinTechs are already collecting valuable data and have expressed willingness to share it, provided they are compensated. However, the study highlights several challenges. Data quality and standardization are critical issues, as many AgriTech platforms operate on varying technologies and systems, limiting interoperability,” he said.
Nevertheless, the use of Application Programming Interfaces (APIs) was identified as a possible solution to bridge these technological differences and allow seamless access to the database.
Despite some FSPs being able to process this data efficiently, many others lack the necessary infrastructure and technical proficiency to make full use of it. This disparity underscores the need for training and capacity building within financial institutions, particularly those that aim to serve smallholder farmers.
The study also revealed that operationalizing the database poses another set of challenges, particularly around custodianship and management. “Interviews conducted with key informants presented four possible scenarios for managing the database, with a clear consensus that both FSPs and AgriTechs must be protected.”
The study also emphasized the need for financial resources to support both the initial setup and ongoing maintenance of the database. This includes adapting existing IT systems to meet the required data standards and investing in human resources for data collection and management. Effective management of these elements will be key to ensuring the long-term success of the project.
The Promise and Perils of Digitization in Agriculture:
For the past seven years, Uganda’s agricultural value chain has seen increasing digitization. Numerous private-sector-driven AgriTech platforms have emerged, collecting farmer data and building digital profiles.
However, these platforms have largely operated in silos a “walled garden approach” that has hindered scaling and partnerships necessary for growth. High costs associated with building platforms, registering customers, and providing digital and financial literacy have stymied their business models, resulting in inefficiencies across the ecosystem.
“These closed digital solutions offer limited value to smallholder farmers, who require a wide breadth of services and partnerships to truly benefit. Moreover, the lack of trust in the quality and integrity of the data being collected has further impeded collaboration between ecosystem actors,” he said.
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