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In sub-Saharan Africa typical goals of rural development include food production and poverty alleviation. Despite varying views on the best ways of achieving these goals, production intensification, exploitation of marginal lands and expansion of trade are among the options often sited. At small holder level accelerated adoption of improved agricultural technologies and practices with focus on markets for enhanced livelihoods are some of the driving factors that can sustain rural development, and that intensification of farming must be part and parcel of the strategies for ensuring livelihood security. This paper focuses on a number of issues related to micro-financial service delivery for food production and poverty eradication as a viable path to enhancing rural development. It defines Micro-finance, outlines the needs for micro-finance and characterizes micro-finance institutions that address needs of different levels of recipients. Farmesa's experience in the step-by-step preparation of smallholder borrowers towards timely loan repayment is given. Special reference is made to the performance of the Farmesa's micro-finance initiatives in Kacaboi and Kasenge parishes respectively, in Kumi and Mukono districts of Uganda. The above stated micro-credit initiative attained a 250% increase in community membership from 163 persons (82 female) in 1998 to 471 members (269 female) by June 2004. This compared very favourably to the total offshore funds of about 16,000,000 released to the project over the same period. Accumulated loan portifolio in the two sites was estimated as Ushs 45,750,000 as of June 2004, up from Ushs 3,880,000 during the first cycle in 1998. Total beneficiaries from the micro-credit scheme grew from 171 members in mid-1998 to nearly 2,000 in 2004. Life examples, case studies and lessons on micro-finance as administered by the Farmesa Project are sited. In conclusion, the paper points out some of the salient challanges in micro-finance management and provides proposals for it's out-scalling among smallholder farmers and the rural poor in Uganda.