Abstract:
This paper argues that even though there is a growing need amongst farmers in Uganda to form agricultural
cooperatives for agricultural financing, there has been a decline in the volume of credit provided to farmer members’
compared to their expected need. The financial intermediary and cooperative credit theories emphasis the urgency of
establishing and managing this crisis as it’s got a negative effect on farmer productivity and ultimately the GDP from
agriculture. This paper examines this crisis from a decision challenges perspective faced during credit facilitation in
agricultural cooperatives in Uganda amongst other factors. Credit facilitation contains several sub-processes credit
capital sourcing, credit terms and screening and credit reporting, that the paper examines quantitatively and
qualitatively to explain the decision challenges empirically. A primary study was therefore conducted among 113
managers and members of six agricultural cooperatives in Uganda. The study findings present that there are decision
challenges across each sub-process. And that these (different sub-processes) have a positive significant relationship
with financial performance. The r values were at 0.300** for credit capital sourcing, 0.387** for credit terms and
screening and 0.296** for credit reporting and a variation of 0.29 overall for the credit facilitation process and
financial performance. Hence, this articulation of decision challenges and their effect on financial performance could
help cooperative managers and the ministry of trade and cooperative affairs to design empirically grounded
approaches and policies that can address this crisis.
