The Danish Investment Fund for Developing Countries (IFU) and the European Union (EU) were integrated as new shareholders of the Agricultural Business Initiative (aBi) and financed it to the tune of 68 billion shillings to support agricultural value chains and smallholder incomes. farmers, productivity, quality and added value in agribusinesses.

This came after the signing of a shareholders agreement between the Royal Danish Embassy, ​​the European Union and the IFU to enable further investment in aBi Finance, marking the reorganization of aBi Finance as a business entity.

The EU is investing $8.7m in aBi Finance, together with the IFU adding another $9m and these investments will see aBi Finance Ltd transition from a company limited by guarantee to a limited liability by shares, to market its operations, to attract more investors and to create a broader impact overall.

Speaking at the signing ceremony of the agreement in Kampala, Danish Ambassador to Uganda Nicolaj Hejberg Petersen said that by investing money in aBi they are making it bigger and better for the people. farmers.

“We are confident that the next chapter of aBi Finance will not only allow the organization to grow, but also benefit Ugandan farmers and agribusinesses even more,” Hejberg said.

“The investment in aBi Finance holds promising potential to increase financial services to rural smallholder farmers, giving them more opportunities to grow their business and improve their livelihoods. But to create a strong business case that IFU can invest in, we needed concessional funding, which we secured by co-investing with the European Union’s blending mechanisms,” said Anders Frigaard , Senior Director of Investments at IFU.

Achievement of goals

According to European Union Cooperation Officer Caroline Adriaensen, they are committed to helping smallholder farmers achieve their goals, noting that the funding reflects this.

“We are delighted to partner with the Danish Investment Fund for Developing Countries (IFU) to de-risk their investment in the Agricultural Business Initiative (aBi) in a true European team approach. We are confident that with this additional capital injection, aBi will be able to reach more smallholder farmers in Uganda with better products, tailored to their needs. Access to finance will positively impact their small businesses and lift many people out of poverty,” Adriaensen said.

Chairman of the board of aBi Finance, Felix Okoboi, said that they manage a capital fund worth 177 billion shillings and through this fund they fulfill a mandate towards a competitive, profitable and sustainable agricultural and agri-food sector,

“All this to support equitable wealth creation in Uganda. This is achieved through three main interventions of lines of credit, agricultural guarantees as well as technical assistance to build the capacity of financial institutions to effectively finance agriculture and agribusiness,” Okoboi said.

He noted that in recognition of climate change on smallholder farmers and agribusinesses, aBi Finance will this year manage a green challenge fund through which 24 billion shillings will finance green, climate adaptation and mitigation investments. .

“Climate change adaptation investments aim to reduce the vulnerability of smallholder farmers and agribusinesses to current and expected climate change impacts, while mitigation investments aim to reduce or limit greenhouse gas emissions. greenhouse gases or improve the absorption of greenhouse gases from the atmosphere.Therefore, this additional investment of Shs 68 billion in aBi Finance from IFU and the European Union will go a long way to aBi Finance’s interventions”, he added.

According to aBi Finance officials, the additional funding is expected to benefit 27,000 new beneficiary customers and create Shs. 14.5 billion in additional revenue and 900 additional jobs per year.

aBi Trust and aBi Finance is a multi-stakeholder entity co-founded in July 2010 by the Ugandan and Danish governments with the aim of promoting the development of private sector agribusiness to enhance wealth creation in Uganda.

The fund invested in a line of credit, loan guarantee program and fixed deposits has since 2010 disbursed a total of 1.4 million new loans worth 3.5 trillion shillings, benefited 425,000 farmers in the form of a line of credit, 191,000 in the form of beneficiaries of agricultural guarantees, 359 billion shillings. savings accounts opened while 240,000 farmers have access to agricultural insurance.

Speaking on Thursday, the Permanent Secretary of the Ministry of Finance, Ramathan Ggoobi, described the new development as historic but which will also greatly benefit Ugandan farmers.

“Today, aBi is a testament to the great work the two countries have done together to improve the agriculture and agribusiness sectors and especially smallholder farmers. The injection of cash through the new partnership is expected to go a long way in achieving government middle income status by 2030 and the 900 additional jobs and 27,000 beneficiaries and 14.5 billion shillings of additional income that will be created by this partnership will go a long way in the achieving the goal of middle-income status,” said Ggoobi.

He noted that the government will always welcome similar interventions aimed at supporting the country’s recovery after being hit hard by the Covid pandemic.

“Given the dominance of agriculture as a source of income, the sector offers greater opportunity for Uganda to realize its long-term aspirations of increasing household incomes and improving livelihoods and livelihoods. status of Ugandans. This will help the country to improve the trade balance and all interventions in the sector are welcome.