Agricultural and Rural Finance Programme

Programme description

Title: Agricultural and rural finance programme (AGRUFIN)
Commissioned by: German Federal Ministry for Economic Cooperation and Development (BMZ)
Country: Uganda
Lead executing agency: Ministry of Finance, Planning and Development (MoFPED); Bank of Uganda
Overall term: 2014 to 2017     

Uganda. Women in Karamoja preparing their savings for the meeting of their informal savings group. © GIZ


More than 85% of Ugandans live in rural areas, and as many as 95% of the country’s poor. Despite this, agriculture contributes only 22% of Uganda’s overall domestic production, and food production barely satisfies the demand of the rapidly growing population.

Demand-oriented financial services could make a significant contribution to help rural areas and the agricultural sector tap their full potential. However, only about 16% of rural people so far have access to formal financial products (rural finance). As they possess only a low level of basic financial literacy, people in rural areas are generally unable to demand financial services to suit their needs, or to take proper advantage of those that already exist.


Uganda’s rural population, especially the actors in agricultural value chains, benefit from increased access to improved financial services.

Uganda. A woman depositing her savings at Alutkot SACCO, Northern Uganda. © GIZ


The programme works together with ministries, supervisory bodies, associations and individual financial institutions. The lead executing agency is the Ministry of Finance, Planning and Economic Development, while the main implementing partner is the central bank, the Bank of Uganda. With activities in three action areas, the programme aims to improve the legal framework for financial intermediaries in rural areas, to enhance the rural and agricultural finance products available from the financial institutions, and to raise the level of financial literacy in the rural population. The project builds on the results achieved over several years, and on the long-term relationships with its partners.

Framework conditions and supervision of rural finance. The programme supports the central bank and the Ministry of Finance in developing new legislation, for instance to adapt the microfinance regulations. Through the Bank of Uganda’s Financial Inclusion project, which was launched with the support of an earlier GIZ project, a comprehensive regulatory framework is being developed covering innovative distribution mechanisms for financial services (branchless banking). This encompasses mobile money (mobile phone-based payment services) as well as agent banking (banking transactions through third parties).

Capacity and product development for rural and agricultural finance. To improve the available range of demand-oriented financial services, the programme targets financial intermediaries. It advises partner institutions in this group on developing financial products that address the needs of customers (e.g. production loans for small farmers), and on establishing sustainable structures for rural and agricultural finance. An important approach in this respect is value-chain finance – i.e. financial products specially adapted to specific agricultural products. This activity is largely being carried out by the consulting company NIRAS. In future, agricultural producers and retailers will be able to use a smartphone app which charts production and payments systematically, increasing the efficiency and transparency of the respective value chains, and improving the farmers’ credit worthiness. Meanwhile, the programme also supports financial institutions in penetrating more deeply into rural areas. This is achieved, for instance, in an approach called ‘linkage banking’, which connects informal savings and credit groups to banks.

Financial literacy for the rural population. The national strategy for financial literacy was passed by a multitude of important stakeholders. Within the scope of this strategy, the programme advises the central bank as the steering agent. Its key messages on financial literacy are disseminated broadly and sustainably, through schools, the media, associations and informal local groups in rural places.


The guidelines issued by the central bank on mobile phone-based and payments have, among other benefits, increased the transparency of prices in this area.

The bank for microfinance, PRIDE, has developed a production credit facility for smallholder farmers working in the value chain for sunflower seeds. This credit enables the farmers to increase their yields.

Uganda. GIZ staff during a needs assessment with farmers in Northern Uganda. © GIZ

In a development partnership with the private sector, by bringing together a number of informal savings and credit groups in Karamoja, one of the poorest regions of Uganda, GIZ and the commercially operating Centenary Bank have mobilised more than EUR 1 million from more than 14,000 women and men organised into groups.

More than 150,000 rural people have already benefited from pilot measures in the field of financial literacy. Basic financial education has been included in the new curricula for secondary schools, which will be used from 2017 for teaching more than 1.2 million pupils.

Over 4.5 million people have so far benefited from the consumer protection guidelines developed jointly with the central bank.