The European Union (EU), the International Fund for Agricultural Development (IFAD) and the National Social Security Fund (NSSF) have jointly launched the Yield Uganda Investment Fund.
An initial €12m (Ush 46bn) has been made available to provide much needed access to capital for small and medium agri-businesses in Uganda.
EU Ambassador to Uganda, H.E Kristian Schmidt, said: “In creating this investment Fund, the EU has listened and is responding to the needs of Ugandan agribusiness. This is a first of its kind to be funded by the EU where we are blending private equity and grants and we are proud that Uganda is a beneficiary.”
“Yield Uganda Investment Fund is the result of continued efforts and commitment from the European Union to support the agribusiness sector by lowering the cost and risk of investments. This Fund will offer presently lacking long-term capital to entrepreneurs in the agricultural sector and contribute to the modernization and expansion of agribusinesses companies while providing quality financial returns for investors,” he said.
Richard Byarugaba, NSSF Managing Director, added that agriculture plays a vital role for economic growth and sustainable development.
“Investment in the sector is an effective instrument to alleviate poverty and enhance food security. Evidence suggests that gross domestic product (GDP) growth originating from agriculture is twice as effective in reducing poverty as GDP growth linked to the non-agricultural sectors, yet the sector is still underfunded. The Yield Uganda Investment Fund is a great opportunity for NSSF to support the sector,” he said.
This new impact Fund, being arranged by Deloitte Uganda and Pearl Capital Partners Uganda (PCP Uganda), is expected to attract additional €13m (Ush 49.8bn) by the end of 2017 to reach €25m (Ush 95.8bn) in total commitments.
The Fund will offer innovative and tailored financial solutions, using equity, semi-equity and debt, to about 20 small and medium-sized Enterprises (SMEs), having the potential to generate both strong financial returns and significant social impact.
The Fund will be managed by PCP Uganda, which will make investments in the range of €250,000 to €2m (Ush 958.3m to Ush 7.7bn).
The Fund targets agriculture-related businesses across all value chains including supply of agricultural inputs, production and agro-processing within all sub-sectors, post-harvest storage and distribution, but also peripheral activities such as transportation, communications and certification.
Edward Isingoma, PCP Uganda’s Managing Partner, said: “The Yield Uganda Fund is a unique testament of the relevance of agriculture to Uganda. This Fund fully aligns previously dispersed interests to one goal, providing access to flexible financing for agriculture. As a Uganda focused Fund, it is a first, and will aim to achieve developmental impact alongside financial returns while transforming livelihoods in many different forms in the country.”
High-quality business development support (BDS) will be critically important when modernizing and expanding Yield Uganda’s investee companies to make them more effective, growth-oriented and profitable.
An integral and complementary part of the Fund’s investment process will be to support the operations of its investee companies through matching grants for BDS.
Typical areas of the Fund’s BDS support will include company governance, accounting, budgeting, auditing and tax compliance, innovation and technology transfer, marketing studies, and the adoption of international product quality and safety standards.
This extra service to Yield Uganda’s investee companies will be funded with grants from the EU managed by IFAD.
The Fund will benefit the economy by improving an estimated 100,000 rural household livelihoods, improve access to markets for an estimated 26,000 farmers, creating jobs and employment opportunities, ensuring food security while generating income, foreign exchange and new export opportunities, all fundamentally contributing to Uganda’s economic growth and goal to eradicate poverty. Source: Africa Global Funds