Assessing access to finance for small scale farmer : case of Buvuma Islands

Abstract

This study investigated access to finance for small-scale farmers in Buvuma Island. The study was premised on three research Objectives; to assess the specific challenges faced by small-scale farmers in accessing formal financial services in Buvuma Island District, Uganda, to assess the level financial inclusion of small-scale farmers in Buvuma Island district and to determine potential solutions to address the financial exclusion of small-scale farmers in the district. The study employed a descriptive research design and adopted a quantitative approach, involving the collection of numerical data from 244 farmers in Buvuma Island using simple random sampling through a survey questionnaire. Data were analysed using the Statistical Package for the Social Sciences (SPSS), Version 27. The study revealed that small-scale farmers in Buvuma Island District face significant challenges in accessing formal financial services, notably long distances to financial institutions (mean = 3.55, SD = 1.019), complex loan application procedures (mean = 3.55, SD = 1.245), and limited institutional support (mean = 3.59, SD = 1.174). Financial inclusion was found to be moderate, with most farmers owning bank or mobile money accounts (mean = 3.76, SD = 1.131), receiving payments through formal channels (mean = 3.59, SD = 1.250), and trusting financial institutions (mean = 3.57, SD = 1.268), though confidence in using digital services remained low (mean = 2.36, SD = 1.015). To address financial exclusion, farmers strongly supported involving local leaders to build trust (mean = 4.01, SD = 1.239), training on digital platforms (mean = 4.01, SD = 1.239), expanding mobile and agent banking (mean = 3.83, SD = 1.184), and subsidizing loan interest rates (mean = 3.81, SD = 1.321). These findings underscore the need for accessible, affordable, and context-specific financial solutions that empower farmers through education, trust-building, and tailored services. Thus, The study recommends improving financial inclusion for small-scale farmers in Buvuma Island District through five key strategies: expanding mobile and agent banking to reduce geographic barriers, delivering targeted financial literacy programs through trusted community channels, simplifying account and loan application procedures to reflect farmers’ realities, designing loan products aligned with agricultural cycles, and involving local leaders to build trust and encourage engagement with formal financial institutions. These recommendations aim to make financial services more accessible, relevant, and inclusive for rural farming communities.