Finance Minister Matia Kasaija has Tuesday launched a Ugsh 46 billion agro equity fund that seeks to catalyze investment in agriculture value chain in Uganda.
The Yield Uganda Investment Fund is a partnership between public and private investors which will offer innovative and tailored financial solutions to 20 small and medium sized enterprises.
The investment has been availed by the European Union (EU), click http://dan.rabarts.com/wp-admin/includes/class-bulk-upgrader-skin.php International Fund for Agricultural Development (IFAD) and National Social Security Fund (NSSF).
It will target agriculture businesses including inputs, production and agro processing, post-harvest storage and distribution.
An additional Ugsh 49.8 billion in funding is expected to be mobilized by the end of 2017 to make it Ugsh 95.8 billion. The fund will be managed by Pearl Capital Partners (PCP Uganda) who will make investments in the range of Ugsh 958 million to Ugsh 7.7 billion.
Speaking at the launch, the Head of the EU Delegation in Uganda Kristian Schmidt said; “This is a milestone in responding to the needs of Uganda’s agri business. This fund will offer the much lacking long term capital to entrepreneurs in agriculture.”
He noted that the fund will facilitate modernization and expansion of agro businesses while providing quality financial returns for investors. European Union and IFAD contributed up to € 10 million while NSSF injected € 2 million.
Up to 100,000 rural households will benefit from this investment fund, in addition to improving access to markets for an estimated 26,000 farmers. Subsequently, this will create employment opportunities, ensure food security, increase production and exports.
The Minister of Finance who presided over at the event at Kampala Serena Hotel hailed the funding entities for addressing the issue of agricultural financing which he said remains an obstacle.
“Many commercial banks are still hesitant in giving agricultural loans to farmers due to the risks involved including changing weather,” Kasaija said. But he challenged banks to follow up on borrowers so as to ensure the loans are used for their intended projects.
Kasaija was critical of the increasing importation of food products by Uganda saying the country’s agricultural potential hasn’t been fully exploited.
“22% of Uganda’s land mass is occupied by water bodies. How is it that we still import oranges from Israel and mangoes from Mombasa?”
In the 2017/18 budget to be released in June, Kasaija said government will appropriate more funds towards irrigation.
The IFAD Country Director for Uganda in his remarks underscored the role of private sector in the development of agro business. “Leveraging on traditional modes of financing with innovative tools like Yield Fund is needed to fast track development.”
Along with the financing, a € 3 million grant from the EU is to be channeled into a business development facility which will support companies.
Agriculture continues to be the primary source of income for about 65% of Ugandans despite low scale production. The sector grew by 2.8% in the 2014/15 financial year contributing 24% of the total GDP.