Structured Agriculture Input Finance Product Challenges in Uganda: A Case of Standard Chartered Bank

Abstract

This study was necessitated by the failed takeoff of Structured Input Financing (SIF) product in Standard Chartered Bank Uganda Limited. This is a pre-harvest product designed to ease access to financing of farmers based on reliance on underlying transaction and the strength of the value chain linkages between farmers and the impeccable, reputable and bankable corporate or institutional buyers. The study sought to address: Challenges inhibiting the takeoff of SIF, to assess the level of awareness of the stakeholders towards availability of SIF, to assess the suitability of SIF in Ugandan Market, and to come up with strategies to address challenges impeding the success of SIF in Standard Chartered Bank Uganda Limited To undertake this study, the entire population (65 employees) employed during the study period in corporate department covering business units; OCC, TB, and FM as well as operations department (T&O) were considered. The questionnaires were distributed to all these staff, collected and analyzed. The findings revealed that most of the respondents were from the corporate department with working experience ranging from 5-10 years. A significant number of respondents agreed that the fundamentals are ripe for SIF given growing commercial agriculture and the structure of Uganda’s economy, committed workforce and the revenue potential it presents to the bank. It was also revealed that absence of skilled personal, insurance and inadequate government support was affecting the ability of the bank to competitively offer this product. The study concluded that due to the special nature of SIF the bank should tailor interventions geared at; creating awareness, training of staff and improving risk mitigation through sharing and/or partnerships with government, insurance and other stakeholders. Findings can help management to intensify initiatives to encourage greater understanding and acceptance of the concept of structured finance and how commercial banks can be help agriculture sector to develop in Uganda.