Plans are underway to launch a shs48 billion (Euros 12 million) Fund to support Uganda’s small and growing agri-businesses positioned in the agricultural supply chains, it has been stated.
The Fund code-named Yield Uganda Investment Fund is a partnership of European Union Delegation to Uganda and the International Fund for Agricultural Development (IFAD), says Edward Matsiko, the Fund Manager.
The two organisations have provided initial funding of Euros 10 million. Another Partner, the National Social Security Fund (NSSF) of Uganda has staked Euros 2 million in the Fund as it expands its investment portfolio.
With the new Fund, organised agri-businesses will borrow at low interest rates or turn their businesses into equities in partnership with Fund managers.
Matsiko advises agri-businesses struggling with funding to turn them into equity, saying that this type of investment is getting much better than it was ten years ago.
“What is important is for investees to run SMEs as businesses with clear management and accounting practices and be as transparent as possible,” he says, adding that: “This kind of investment comes with free technical support.”
Initiators of the Fund intend to increase the size to Euros 25 million by November 2017 as due diligence on prospective investors continues.
The Fund, initiators say, comes at the time when Uganda’s macroeconomic environment is conducive for future economic activities.
“The outlook of inflation and interest rates shows gradual declines over the next five years 2020, which will provide a conducive operating environment for businesses,” they say.
Matsiko says the Fund is timely especially as the agriculture sector employs 65% of the population.
“Agriculture continues to be the most important sector in Uganda’s economy in terms of raw materials for industry, food security, employment and exports to regional and international markets,” Matsiko says.