Microfinance in Ugandan coffee farming : a case study of coffee farmers in the Ugandan savings & credit cooperative “Buikwe Riis Coffee Farmers”

Abstract: This thesis argues for utilizing microfinance when supporting Ugandan coffee farmers developing their coffee farming. To increase the effectiveness of microfinance in this context a modification of its repayment scheme is needed so it is to be more relatable to the special production properties that coffee farming inherently has. In order to further increase its effectiveness, it needs the support of three other inputs. The three other inputs suggested in this thesis is “provision of saving facilities”, agricultural and financial training” and lastly “network extension”. Through the tailoring of the microfinance scheme together with the inclusion of these aforementioned inputs the financial constraint that exist in Ugandan coffee farming as of 2019 can be reduced. The thesis argues that this will, in turn, lead to a more competitive Ugandan agricultural sector which will, arguably, affect the income of its farmers in a positive way. The previous statement is grounded in the argument that agriculture is an important tool when trying to address the eradication of poverty in developing countries. Uganda was selected for this research because of its potential of becoming a competitive agricultural exporter and due to the fact that coffee is a major cash crop for Ugandan farmers. It is currently, however, struggling to achieve strong competitiveness due to the financial constraint that exist for Ugandan smallholder farmers. More available financial capital can enable the Ugandan farmers to buy important production inputs such as fertilizer. Microfinance has the purpose of providing small and medium-size firms with financial capital which they cannot attain from conventional sources such as commercial banks. The thesis conducted semi-structured interviews with small/medium sized farmers in Uganda. The theory that emerged from the data concluded that microfinance should be seen as an integral part in making Ugandan coffee farming more productive. However, it needs the support of the three aforementioned inputs in order to increase its effectiveness when supporting said farmers. The generated theory found support for its main arguments from previous scientific research conducted on the subject.