The European Union (EU) and the Danish Investment Fund for Developing Countries (IFU) have announced an investment worth 18 million dollars in the Agricultural Business Initiative Finance (aBi Finance).
EU is investing $8.7 million in aBi Finance, while IFU has made an investment of 9 million dollars.
The investment was announced at the signing of the memorandum of understanding between IFU and the European Union together with aBi Finance Limited in Kampala on Thursday. The MoU is aimed at boosting sustainable agriculture in Uganda.
aBi Finance was established in 2010 by the Governments of Uganda and Denmark as an entity that channels development cooperation funding to agribusinesses and agricultural service providers in Uganda.
The investments will allow aBi Finance Limited transition from a company limited by guarantee to a company limited by shares in a bid to commercialize its operations and attract new investments to continue contributing towards building a competitive, profitable and sustainable agriculture and agribusiness sector in support of equitable wealth creation in Uganda.
The combined investments from the IFU and EU will enable aBi Finance Ltd to further support the growth of agribusinesses and improvement of the livelihood of beneficiary smallholder farmers through creation of new jobs and boosting incomes.
It is expected that it will benefit 27,000 new beneficiary clients, and create 14.5 billion shillings of additional income and 900 additional jobs annually.
Further, the capital increase will make aBi Finance Ltd future-ready, optimize its operations and continue to support businesses to thrive post COVID-19 pandemic.
It will also maximize returns to its shareholders as well as increase access to finance for green enterprises and investments through aBi’s Green Challenge Fund.
Speaking at the signing of the MoU, the Danish Ambassador to Uganda, Nicolaj A. Hejberg Petersen, said, “with more than 12 years of involvement in aBi Finance, we are pleased that the institution is now mature for a greater commercialization. This will make aBi Finance much more sustainable.”
“The new investments from IFU and EU will ensure aBi Finance’s continued support towards smallholder producers and businesses in the agribusiness sector in Uganda. An engagement that has been and still is of great importance to the work of the Danish Embassy in Uganda,” he added.
The investment in aBi Finance holds a promising potential for increasing financial services to rural small holder farmers, giving more an option to grow their business and improve livelihood.
The European Union Head of Co-operation, Ms. Caroline Adriaensen said that with the additional investment, aBi will reach more small holder farmers, and ease their access to finance.
“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,” she said.
Diana Nanono who represented the Permanent Secretary, and Secretary to Treasury, Ramathan Ggobi said aBi Finance will help to assist agriculture and agribusiness sector to build back better in the wake of the pandemic, and the disruptions that it brought with it.
“Therefore, we welcome this additional funding towards supporting the recovery of Uganda’s economy as a whole,” she said.