Abstract:
Agriculture still remains a major sector in the economy of Uganda but. even with it being a major sector to the economy is still faced with numerous challenges. One of which is the issue of credit access by majorly small holder farmers who in this matter constitute the greatest percentage of all the farmers in the country. This problem has led to development of the informal financial service in the country, among these informal financial service providers are village savings and loans association which are formed by self-selected members who save together on periodic basis and provide credit during time of need. This groups have gained popularity in the Country recently with more of them getting registered throughout the country. This research therefore comes to focus on analyzing why small holder farmers in Serere district choose this groups as a source of agricultural credit y considering understanding the following: objectives. (1) To find out why Small holder farmers prefer VSLAs to formal financial institutions. (2) To find out the benefits small holder farmers obtain from being members of VSLAs. (3.) TO find out how finances generated in VSLAs are utilized by the smallholder farmers. (4) To understand the challenges VSLAs face in their operations. The study used a cross sectional research design where primary data way collected using various pretested and semi-structured questionnaires which were administered to The selected. members of VSLAs. A Key Informant (1<1) interview was conducted with selected civil servants and project coordinators of various organizations that were found implementing the VSLA frame work in the communities within the- study area. The study found out that small holder farmers in Serere district chose V SLA mainly due to absence of other financial service providers in the area with up to 90% of the respondents agreeing to these as the reason they chose VSLAs, secondly farmers up to 48.3% of the people in the area trusted the safety of their money in the group. Even with other challenges looming against these groups. The farmers still have trust in them. But as seen from the research findings that absence of other service providers Was the major reason for joining the VSLAs. This study recommends that government should put in place a frame work to enable monitoring operation and have. direct linkages with the local government so as to enable monitoring their operations and minimize risks associated with them. So as to minimize the challenges posed by these groups have on farmers' income.
