Abi Uganda receives Shs68bn to boost farmers

The Danish Investment Fund for Developing Countries (IFU) and the European Union (EU) have been on boarded as new shareholders of the Agricultural Business Initiative (aBi) and funding it to a tune of shs68 billion to support agricultural value chains and incomes of smallholder farmers, productivity, quality and value addition in agri-businesses.

This happened after signing of a shareholders agreement between the Royal Danish Embassy, the European Union and the IFU to allow new investments into aBi Finance, marking the reorganization of aBi Finance as a business entity.

The EU is investing $8.7 million in aBi Finance, together with the IFU who tops this up by $9 million and these investments will allow aBi Finance Ltd to transition from a company limited by guarantee to a company limited by shares, to commercialise its operations, attract more investors and create wider impact overall.

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

“We are convinced that aBi Finance’ next chapter will enable the organisation to not just grow, but also benefit Uganda’s farmers and agro-businesses even more,”Hejberg said.

“The investment in aBi Finance holds a promising potential for increasing financial services to rural small farmers, giving more an option to grow their business and improve livelihood. But to create a solid business case for IFU to invest in, we needed concessional financing, which we have secured by co- investing with the European Union’s blended finance facilities,” Anders Frigaard, the Senior Investment Manager at IFU said.

Realizing goals

According to the European Union Head of Co-operation, Caroline Adriaensen, they are committed to helping small holder farmers in realizing their goals, noting that the funding is a testimony to this.

“We are delighted to join hands with the Danish Investment Fund for Developing Countries (IFU) to de-risk their investment in the Agricultural Business Initiative (aBi) in a true team Europe approach. We are convinced that through this additional injection of capital, aBi will be able to reach more smallholder farmers in Uganda with better products, adapted to their needs. Access to finance will have a positive impact on their small businesses and pull many out of poverty,”Adriaensen said.

The chairperson of the aBi Finance board, Felix Okoboi said they manage a capital fund worth shs177 billion and through this fund, they deliver on a mandate towards a competitive, profitable and sustainable agricultural and agribusiness sector,

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

He noted that in appreciation of climate the change on small holder farmers and agribusinesses, aBi Finance will this year run a green challenge fund through which shs24 billion will finance green, climate adaptation and mitigation investments.

“The climate change adaptation investments aim to reduce the vulnerability of small holder farmers and agribusinesses to the current and expected impacts of climate change while mitigation investments aim to reduce or limit Greenhouse gas emissions or enhance the absorption of Greenhouse gases from the atmosphere. Therefore, this additional investment of shs68 billion into aBi Finance from IFU and the European Union will go a long way in deepening aBi Finance interventions,” he added.

According to officials from aBi Finance, the additional funding is expected to benefit 27,000 new beneficiary clients and create shs 14.5 billion of additional income and 900 additional jobs annually.

aBi Trust and aBi Finance, is a multi-stake holder entity co-founded in July 2010 by governments of Uganda and Denmark with an objective is to promote private sector agribusiness development to enhance wealth creation in Uganda.

The fund invested in line of credits, loan guarantee scheme and fixed deposits has since 2010 disbursed a total of 1.4million new loans worth shs3.5 trillion, benefitted 425000 farmers in form of line of credit, 191,000 in form of agricultural guarantees beneficiaries,shs359billion worth of savings accounts opened whereas 240,000 farmers are accessing agriculture insurance.

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

“Today, aBi stands as a testament to the great work that the two countries have done together towards the betterment of agriculture and agribusiness sectors and in particular small holder farmers. The cash injection through the new partnership is expected to contribute greatly towards the attainment of government’s middle income status by 2030 and the additional 900 jobs and the 27000 beneficiaries and shs14.5 billion in additional income to be created by this partnership will go a long way in achieving the goal of middle income status,” Ggoobi said.

He noted that 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 livelihood, the sector offers a greater opportunity for Uganda to achieve its long term aspirations of increasing household incomes and improving the livelihood and status of Ugandans. It will help the country improve the trade balance and all interventions in the sector are welcome.”