Agriculture receives Sterling12m for value chain development

January 25, 2017 in Business, Companies, Financial Services, Land & Agriculture by Editor

Kampala January 24-Uganda’s agricultural sector has received a £12 million boost through the Yield Uganda Investment Fund which will support small and growing agribusinesses in the agricultural supply chain.

The Fund, which is a partnership between public and private investors which include the EU, IFAD, NSSF Uganda, Delloitte and Pearl Capital Partners will offer financial solutions using equity, semi equity and debt to about 20 Small and medium enterprises having potential to generate both  strong financial returns and significant  social impact  across the agricultural value chain covering inputs, production and agro processing within all subsectors, post-harvest storage and distribution, but also peripheral activities such as transportation, communications and certification.

“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 growth originating from agriculture is twice  as effective in reducing poverty is GDP growth linked to non-agricultural sectors, yet the sector is still underfunded,” NSSF Managing Director Richard Byarugaba said.

He also faults the lack of good investment vehicles as another reason that has constrained the economy from prospering. NSSF has contributed £2m towards the fund and Byarugaba adds that only farmers under a company or cooperative that has an organised corporate structure and are transparent will be able to access funding.

Ugandan Finance Minister Matia Kasaija adds that despite the sector’s potential, it is still considered a high risk investment and as a result long term financing has not been available to players. He said with the available funding, SME’s contribution to value addition will increase.

“The launch today marks an important milestone. In creating this investment fund, the EU has listened and is responding to the needs of Ugandan agribusiness. Yield Uganda Investment is a result of continued efforts and commitment from the European Union to support the agribusiness sector by lowering the cost and risks of investment. This Fund will offer presently lacking long term capita to entrepreneurs in the agricultural sector and contribute to the modernisation and expansion of agribusiness companies while providing quality financial returns for investment,” the EU Ambassador to Uganda Kristian Schmidt said.

Edward Isingoma the Fund Manager at Pearl Capital Partners says the Fund’s shelf life can only go for a maximum of 12 years and farmers can access up to a maximum of £2 million at 11 percent for those borrowing. A second closing for the Fund at the end of 2017 target grow the size of the fund to £25 million.