The Role of the Product-Process Matrix in the Consumption of Agricultural Finance by Smallholder Farmers: The Case of Centenary Bank in Uganda

This study analyzes the contribution of the supply-based product and process matrix to smallholder farmers’ consumption of agricultural finance. The authors adopted a qualitative research design applying a semi structured interview guide to provide in-depth content about the products and processes of agricultural finance delivery. Data were collected from various bank staff, smallholder farmers, and documentary reviews. The results revealed that value chain financing is not a panacea for smallholder farmers to borrow and use funds to engage into higher agricultural value chain activities. In addition, product pricing and duration alongside inefficient and linear product delivery processes hinder smallholder farmers’ adoption of agricultural finance. Thus, inappropriate products and inefficient processes discourage smallholder farmers from exploiting agricultural finance. The methods of engagement are premised on respondents’ narratives implying that one person’s experience may limit the representation of multiple viewpoints. Central banks and financial institutions seeking to increase smallholder farmers’ use of agricultural finance must develop policies to understand end-user needs and create seamless delivery processes to deliver agricultural financing. This is one of the few studies that comprehensively and qualitatively assesses how the combination of pricing and products addresses smallholder farmers’ financing needs in the commercial banking context. Thus, this study contributes new ideas for increasing the consumption of agricultural finance.