The Land and Equity Movement in Uganda (LEMU) has on Saturday released a groundbreaking study exposing major obstacles that hinder rural farmers from using Certificates of Customary Ownership (CCOs) to access loans from financial institutions.
The study, conducted between July and October 2025, was part of a project titled “Land Documentation as a Means of Enhancing Rural Farmer/Cooperative Access to Financial Services in Lango and Teso Regions of Uganda”, funded by Deutsche Gesellschaft für Internationale Zusammenarbeit – Responsible Land Policy in Uganda (GIZ-RELAPU).
It focused on Lango and Teso sub-regions, specifically in Soroti, Katakwi, Dokolo, and Amolatar districts, where over 10,000 CCOs have been issued to customary landowners between 2016 and 2025.
Despite this milestone, only 3% of CCO owners have successfully used their documents to obtain financial credit, according to the findings.
Speaking during the release of the findings, Dr. Theresa Auma, Executive Director of LEMU and Principal Investigator, revealed that while the CCO project improved land tenure security and reduced disputes, it fell short in unlocking access to credit.
“The study sought to understand why farmers and communities with CCOs were not using them to obtain loans. What we found was a combination of legal, cultural, and institutional barriers that prevent financial institutions from accepting CCOs as valid collateral,” Dr. Auma said.
Adventino Banjwa, the Co-Principal Investigator, added that the project aimed to enable financial institutions to assess creditworthiness beyond traditional collateral systems.
“We wanted to show that farmers could be evaluated based on productivity and reliability, not just formal land titles,” he said.
However, financial institutions, the study noted, remain hesitant to engage with customary land documentation due to legal uncertainties and the perceived risks of foreclosing on communal property.
Over 80% of Uganda’s land is held under the customary tenure system, particularly in Northern and Eastern Uganda.
This system emphasizes family and clan ownership rather than individual ownership, making it difficult for banks to use such land as security for loans.
“From an economic development perspective, the inability to mortgage customary land limits rural transformation,” Banjwa explained. “But from a social protection view, it safeguards families from land loss.”
The findings indicate that most CCO holders in Teso and Lango saw the documents primarily as tools for land security, boundary protection, and inheritance management, not as instruments for accessing credit.
One respondent in Okwongodul village told TNN-Online, “If loans had been mentioned as one of the reasons for getting CCOs, we would not have accepted. Land is too dear to risk losing over a loan.”
The study highlighted multiple challenges discouraging both farmers and banks from using CCOs in financial transactions:
- Difficulty in Obtaining Family and Clan Consente
Beause CCOs record all family members as co-owners, loan applicants must obtain written consent from every listed individual. This becomes complicated when some members live far away, are minors, or simply fear losing family land to banks.
One respondent explained, “How can I convince my children to sign when they know failure to repay could make us lose our home?”
- Government-Imposed Restrictions on CCOs-
Each CCO contains legal restrictions that forbid transactions, such as mortgaging or selling without family and spousal consent. The study cited one case in Dokolo District where the CCO explicitly stated that “any dealing without written consent shall be null and void.” Such restrictions, while designed for protection, effectively limit the document’s financial value.
- Limited Demand for Loans Among Rural Households.
LEMU found that many rural families operate at subsistence levels and lack the appetite for formal loans. Respondents said they prefer borrowing small sums from local savings groups instead of exposing their land to potential risk.
- Banks’ Preference for Land Titles
Most banks still only recognize freehold and leasehold titles. According to the study, 60% of financial service providers (FSPs) surveyed had never heard of CCOs or Land Inventory Protocols (LIPs). Without legal clarity or precedent, banks are reluctant to accept CCOs as collateral.
- Limited Knowledge and Awareness
Some CCO holders admitted ignorance about the document’s potential for credit access. “I had no idea that the CCO could be used for a loan,” one respondent in Katakwi said.
- Fear of Losing Original Documents
Farmers expressed concern that financial institutions might confiscate or mishandle their original CCO documents, jeopardizing their ownership and family rights.
- Tedious Loan Application Processes
Respondents said banks often referred them to other institutions, a process that took months and discouraged applicants. One farmer shared that he gave up after visiting five banks without success.
- Fear of Default and Foreclosure
Many CCO owners feared that failure to repay loans could lead to the sale or confiscation of their land. “I got the CCO to protect my land from grabbers,” said one farmer in Amwoma. “Why would I use it to invite the bank to grab it?”
- Cultural and Emotional Attachment to Land
For most rural households, land is a family legacy and a source of livelihood. Many said that using it for financial gain would dishonor their ancestors and risk future generations’ survival.
- Gender-Based Limitations
Even when women’s names appeared on CCOs, cultural norms prevented them from independently using the documents to access credit. “It is unthinkable that a woman could use family land to get a loan,” one male respondent told researchers.
Rather than using formal financial institutions, 53% of CCO holders said they preferred Village Savings and Loans Associations (VSLAs), while 34% used banks.
Others relied on moneylenders, asset-financing companies, telecommunication-based credit services, and Parish Development Model (PDM) funds, which do not require collateral.
These informal channels offer flexibility and community trust, unlike banks which demand paperwork and strict repayment terms.
LEMU’s assessment of 25 financial institutions revealed that 15 had little or no knowledge of CCOs and LIPs.
Bank officers expressed uncertainty about the legal security of customary land and its enforceability in cases of default.
One bank officer in Soroti observed, “Security that cannot be transferred is not collateral.”
Others pointed out the complex consent process, which requires collective approval from family or clan members before any land-related transaction. While financial institutions view this as a barrier, LEMU’s researchers found that some microfinance entities saw it as a safeguard against default, since family and clan involvement ensures social accountability.
A financial officer in Dokolo told the researchers, “When a loan has the clan’s consent, it is very hard to default because everyone monitors the borrower.”
To bridge the knowledge gap, one major bank proposed a “Master Class” involving GIZ, LEMU, and the Ministry of Lands to train financial institutions on integrating CCOs into loan management systems.
The study highlighted one businessman in Muntu Sub-county, Amolatar District, who successfully used his CCO to secure a UGX 25 million loan from Centenary Bank in February 2025.
Although the process took three months, the borrower appreciated the transparency and support from bank officials who verified ownership through neighbors and obtained consent from his wife.
He used the loan to expand his existing agricultural business and has since repaid on schedule.
He advised fellow CCO owners, “Do not use a CCO to start a new business; use it to expand an existing one that guarantees repayment.”
The study recommended several interventions to improve the utility of CCOs in financial systems including to educate both farmers and financial institutions about the value and legality of CCOs, amend CCO-related restrictions to make them more adaptable to financial use while safeguarding land rights, and conduct joint training sessions for FSPs and local leaders on integrating CCOs into loan systems.
Other recommendations included, Develop community-approved consent frameworks that preserve family rights but streamline loan applications, encourage banks to adopt flexible credit scoring based on productivity and repayment history instead of collateral alone, and strengthen women’s decision-making rights in land and credit matters through targeted sensitization.
Dr. Theresa Auma emphasized that, “Our goal is not just to document land but to unlock its economic potential for rural transformation. However, this can only happen when both the community and financial institutions speak the same language on customary land.”
The findings underscore a critical truth: for Uganda’s rural farmers, land remains more than property, it is identity, security, and legacy. Until trust, policy, and awareness bridge the gap between customary systems and formal finance, the dream of transforming CCOs into engines of rural prosperity will remain largely unfulfilled.
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