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Uganda's financial sector is underdeveloped and concentratedin the urban areas, leaving the majority the rural households withat the mercy of the often costly informal sources. This studyanalyses the demand for rural financial services in Uganda. Topromote agriculture and rural development in Uganda, and elsewherethrough the provision of credit, it is important to understand thecharacteristics of its demand in these areas. We find that Uganda'sthe credit market is segmented such that rural residents havelimited access to the formal financial services. Most of those whoapplied for loans applied to relatives and friends and communityself-help savings and credit association. Loan applicationsindividuals living in the rural areas are less likely to besuccessful, and for those that are, smaller loans are grantedcompared to the individuals in the urban areas. while governmentpolicy on agricultural modernisation considers credit as animportant input to its success, there is more to be done to getcredit working for the sector.
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