Unlocking Finance for Uganda’s Brightest Entrepreneurs
What happens when Uganda’s brightest entrepreneurs cannot access finance? Picture a young Ugandan with a viable agribusiness idea, one with the potential to create jobs, improve food security, and uplift communities, yet unable to secure the funds needed to bring it to life. For many youths, especially women and persons with disabilities, this is not just a story. It is a daily reality shaped by systemic barriers in the financial system.
Why It Matters
Uganda is a young country. Its future rests heavily on the energy, creativity, and determination of its youth. But without access to finance, even the most promising ideas stall, limiting innovation and weakening the country’s economic potential. Recognizing this, Financial Sector Deepening Uganda (FSDU) contracted FRIENDS Consult Limited to conduct a review of Uganda’s legal, policy, and regulatory environment. The study focused on the Busoga sub-region under the Stimulating Agribusiness for Youth Employment (SAYE) project.
The objective was clear: to assess how existing policies impact youth, women, and persons with disabilities (PWDs) in accessing finance for agribusiness and MSMEs; to identify gaps; and to recommend policy reforms that can make inclusion a lived reality, not just an aspiration.
The SAYE Project
The SAYE project, funded by the Mastercard Foundation and delivered by a consortium of five partners (Heifer Projects International, CURAD, Federation of Small and Medium Enterprises, ASIGMA and Financial Sector Deepening Uganda), is being implemented in Busoga. It seeks to empower 250,000 youth with a deliberate focus on at least 70% women and 3% PWDs, through agricultural skills training, improved market access, and inclusive financial services. Of these, at least 175,000 youth are expected to transition into dignified work in agribusiness and related value chains, including poultry, horticulture, oilseeds, dairy, and beef.
The Review
The assignment undertaken by FRIENDS Consult Limited involved three layers of work:
- Policy and Legal Analysis: Examining the landscape of laws, regulations, and institutional strategies governing MSME and agribusiness finance.
- Stakeholder Engagement: Consulting policymakers, regulators, financial institutions, and community representatives to capture perspectives and lived experiences.
- Evidence and Best Practices: Analyzing data on access to finance and drawing lessons from comparative contexts that could inform Uganda’s reforms.
Uganda’s Efforts at Inclusion
Uganda has introduced several inclusive financial programs such as the Parish Development Model (PDM), Youth Livelihood Programme (YLP), Emyooga, GROW and the Uganda Women Entrepreneurship Programme (UWEP). These initiatives demonstrate strong political will to extend financial access.
Yet, implementation challenges continue to undermine their reach and effectiveness. Many young people and MSMEs remain excluded due to:
- Limited awareness of financial services and rights
Many young people, especially in rural Uganda, lack exposure to the range of financial services available to them. They are often unaware of their rights as consumers, the existence of government or donor-supported financial programs, or the requirements needed to access credit. This lack of awareness leaves them vulnerable to misinformation, exploitation, or exclusion from formal financial systems. - High collateral demands and prohibitive interest rates
Commercial banks and microfinance institutions often require immovable assets such as land titles or property deeds as collateral for loans. For youth, young women, and persons with disabilities, these assets are usually out of reach. Even when collateral is secured, the interest rates charged are often prohibitively high, making loans unattractive or unsustainable, especially for first-time or small-scale entrepreneurs in agribusiness. - Lengthy, complex loan application processes
Accessing credit is rarely straightforward. Applicants are required to complete extensive paperwork, produce multiple guarantors, and provide documentation that many young people do not possess. These lengthy and bureaucratic procedures discourage potential borrowers, delay urgent business needs, and push many to abandon the process altogether. - Loan terms that fail to align with agribusiness cycles
Agribusiness financing requires flexibility because production cycles vary from planting to harvesting to marketing. Yet most financial products in Uganda operate with rigid repayment schedules, such as monthly installments, which do not match the cash flow realities of farming. This mismatch places undue pressure on borrowers, often forcing premature repayment or loan default. - Long distances to formal financial institutions in rural areas
Many rural communities remain underserved by banks and microfinance institutions. Young entrepreneurs often must travel long distances, sometimes hours to reach the nearest branch, incurring transport costs and losing productive time. While digital finance has improved access in urban areas, weak rural infrastructure and limited agent networks mean that many are still excluded. - Persistent discrimination against persons with disabilities when seeking financial services
Persons with disabilities face unique barriers, including outright discrimination at service points, inaccessible banking infrastructure, and financial products that do not account for their specific needs. Negative stereotypes about their ability to repay loans or manage businesses further exacerbate exclusion, leaving many PWDs locked out of mainstream financial systems.
Bridging the Gap: What Needs to Change
The review highlights that policy intent must be matched by practical reforms to dismantle barriers. Seven priority actions stand out:
- Reduce the cost of digital transactions and expand rural agent banking.
Digital finance is one of the fastest routes to inclusion, but high taxes on mobile money and digital transfers discourage adoption. Eliminating or reducing these transaction costs would allow youth, women, and PWDs to save and transact affordably. At the same time, expanding rural agent banking networks would bring services closer to underserved communities, reducing the time and expense of accessing formal finance. - Reform laws to allow youth to independently access financial services.
Current regulations sometimes restrict youth, especially those under 18 or without formal guardianship, from opening bank accounts or applying for credit. Legal reforms are needed to recognize young entrepreneurs as capable of managing accounts and loans. This would empower youth to participate more fully in business and financial life without unnecessary reliance on intermediaries. - Accelerate issuance of digital National IDs to simplify KYC processes.
The Know-Your-Customer (KYC) process remains a bottleneck for many, particularly rural youth who may lack identification. Speeding up the issuance of digital National IDs would not only streamline account opening but also improve financial institutions’ ability to verify identities securely. This would help combat fraud while ensuring that no young person is excluded due to lack of documentation. - Co-create financial products with youth, women, and PWDs.
Too often, financial products are designed without input from those they aim to serve. Involving target groups directly in product design and testing ensures solutions are realistic, user-friendly, and responsive to their needs. For example, youth in agribusiness could advise on repayment schedules that align with crop cycles, while PWDs could highlight the accessibility challenges that financial providers often overlook. - Scale up nationwide financial and digital literacy programs.
Lack of confidence and knowledge keeps many from using available services. Nationwide literacy campaigns delivered through schools, vocational training centers, farmer cooperatives, and digital platforms can empower youth to make informed financial decisions. Practical training in budgeting, savings, investment, and digital tools builds trust in the system and enables more effective use of credit. - Create flexible, youth-friendly financial products with alternatives to traditional collateral. The reliance on immovable assets like land titles shuts out most youth from accessing loans. Financial institutions must innovate with alternative forms of collateral such as group guarantees, warehouse receipt systems, moveable asset registries, or digital credit scoring based on transaction histories. These alternatives lower barriers while still protecting lenders, making credit more accessible without compromising financial stability.
- Strengthen data systems and digital infrastructure
A modern, inclusive financial system requires reliable data to inform policy and reduce risk. Strengthening data collection, sharing, and analysis combined with investments in digital infrastructure will allow financial providers to better assess creditworthiness, track performance, and combat fraud. For youth and MSMEs, this creates a fairer, more transparent system that rewards good behavior and builds long-term trust between lenders and borrowers.
Looking Ahead
Uganda’s financial inclusion journey is at a pivotal moment. The country’s youth have the potential to drive innovation and growth in agribusiness and MSMEs but only if they can access the finance they need. The SAYE project demonstrates what is possible when youth empowerment, policy reform, and inclusive finance converge.
The challenge now is for government, financial institutions, and development actors to turn policy ambition into tangible results. Uganda’s future depends on building a financial system where every young entrepreneur, regardless of gender or disability, can transform their ideas into enterprises that create jobs, wealth, and dignity.
Written By
Joash Watema- Projects Officer at FCL