EU supports agribusiness in #uganda

At least 35 private small and medium enterprises, engaged
in agribusinesses, will benefit from the 25 million Euros
(approximately Shs 87.5bn) donor-supported equity fund
set up to avail interest-free grants and technical services.
The Small and Medium Agribusiness Fund (SMADF), which
was launched last week, is a joint European Union (EU) and
government initiative expected to solve capital constraints
faced by mid-size agribusinesses in the country. The fund
will specifically tend to beef, commercial forestry and fish
farming (aquaculture) enterprises over the eight years that
the pilot project will run.
Firms applying to access financing and related services
from the fund will be selected based on viability, business
models and prudent management. An independent board of
investors, comprising private sector experts, will assess the
viability of the projects applying for support the fund.
The EU, which has contributed 15 million Euros (Shs
52.5bn) in the project, has tasked the International Fund for
Agriculture Development (Ifad) to manage its investment in
the Fund.
Speaking after the launch of the of fund at the ministry of
finance in Kampala, the Head of EU Delegation Ambassador
Kristian Schmidt said they chose Uganda for the pilot phase
as the EU attempted to blend public and private resources to
boost the agribusiness sector by lowering the cost and risk
of investments. Previously, the EU had solely funded
government projects.
"The purpose of blending the public resources with
resources from investment banks, institutional and private
investors is to initiate the process of capital investment in
Uganda and create a capital market for domestic financial
resources," Schmidt explained
Schmidt noted that formal banking and microfinance
institutions shied away from agriculture because of the
perceived high risks, and yet the sector is crucial to
Uganda's growth, where three out of four people are
employed.
The EU envoy said the fund did not aim to compete with
local commercial banks, but simply to partner with them to
serve the needs of SMEs with the most appropriate financial
services.
Maria Kiwanuka, the minister of Finance, Planning and
Economic Development, described the fund as a "truly
public-private producer initiative."