Assessing the effect of financial inclusion interventions on the development of agroecological innovations by farmer innovators in central Uganda.

Abstract

This study investigated the effects of financial inclusion interventions on the development of agroecological innovations in Central Uganda, with a focus on farmer innovators engaged in creating organic agricultural inputs. Recognizing agroecology as a sustainable pathway for agricultural development, the study examines how access to and quality of financial services, such as credit, savings, insurance, and financial literacy, shape innovation processes and advancement. Despite increasing global recognition of financial inclusion as a catalyst for rural transformation, the specific linkages between financial access and agroecological innovation remain underexplored, particularly in Uganda’s smallholder farming context. A mixed-methods design was employed, involving 192 purposively and snowball-sampled agroecology innovators. Data were collected through structured questionnaires administered via Kobo Toolbox. Quantitative data were analysed using descriptive statistics and the Mann Whitney U test to assess differences between innovators with and without access to financial services. Qualitative responses were thematically analysed to capture experiential insights into financial access and innovation dynamics. Findings revealed that although over 80% of respondents had applied for and accessed financial services, the interventions were widely perceived as misaligned with their innovation needs. Notably, 77.7% found the services unsuitable, and nearly 60% considered them unaffordable. Key issues included high interest rates, poor affordability, institutional inefficiencies, and product mismatch (18.2%), along with limited access points (15.2%) and inadequate loan sizes (14.1%). The Mann-Whitney U test showed no statistically significant differences in the number (p = 0.650), type (p = 0.814), or certification (p = 0.355) of innovations between those who accessed financial services and those who did not, suggesting a limited measurable impact of current financial interventions on innovation outcomes. Additionally, barriers such as limited financial literacy and the high cost of innovation certification further hindered implementation and scalability. The study concludes that while financial inclusion is recognized as essential to supporting agroecological innovation, the current interventions are neither affordable nor adequately tailored to innovators’ needs. Consequently, their effect on innovation development, implementation, and certification remains minimal. The research underscores the need for more context-sensitive, accessible, and affordable financial products designed specifically for agroecological practices. It also calls for complementary policy and institutional reforms, capacity building, and infrastructure investment to facilitate innovation adoption and sustainable agriculture development. These findings offer critical insights for policymakers, financial institutions, and development partners aiming to enhance inclusive finance frameworks that truly empower farmer innovators in agroecology.