The European Union (EU) and the Danish Investment Fund for Developing Countries (IFU) have announced an investment of $18 million in Agricultural Business Initiative Finance (aBi Finance).
The EU is investing $8.7 million in aBi Finance, while the IFU has invested $9 million.
The investment was announced during the signing of the IFU-EU Memorandum of Understanding with aBi Finance Limited in Kampala on Thursday. The MoU aims to boost sustainable agriculture in Uganda.
aBi Finance was established in 2010 by the Ugandan and Danish governments as an entity that channels development cooperation finance to agribusinesses and agricultural service providers in Uganda.
The investments will enable aBi Finance Limited to transition from a company limited by guarantee to a company limited by shares with the aim of commercializing its operations and attracting new investment to continue contributing to building a competitive, profitable and sustainable agriculture and agri-food sector in support of equitable development. wealth creation in Uganda.
The combined IFU and EU investments will enable aBi Finance Ltd to further support the growth of agribusinesses and improved livelihoods of beneficiary smallholder farmers through the creation of new jobs and increased revenues.
It is expected to benefit 27,000 new beneficiary customers and create 14.5 billion shillings of additional revenue and 900 additional jobs per year.
Additionally, the capital increase will prepare aBi Finance Ltd for the future, optimize its operations and continue to help businesses thrive after the COVID-19 pandemic.
It will also maximize returns for its shareholders and increase access to finance for green businesses and investments through aBi’s Green Challenge Fund.
Speaking at the signing of the MoU, Denmark’s Ambassador to Uganda, Nicolaj A. Hejberg Petersen said, “With over 12 years of involvement in aBi Finance, we are delighted that the institution is now ripe for greater commercialization. This will make aBi Finance much more sustainable.
“The new investments from IFU and the EU will ensure aBi Finance’s continued support to smallholder producers and agribusinesses in Uganda. A commitment 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 promising potential to increase financial services to rural smallholders, giving them more opportunity to grow their business and improve their livelihoods.
European Union Cooperation Officer Ms Caroline Adriaensen said that with the additional investment, aBi will reach more small-scale farmers and facilitate their access to finance.
“We are confident that with this injection of additional capital, aBi will be able to reach more smallholder farmers in Uganda with better products, tailored to their needs. Access to finance will positively impact their small businesses and lift many people out of poverty,” she said.
Diana Nanono, who represented Permanent Secretary and Treasury Secretary Ramathan Ggobi, said aBi Finance will help help the agriculture and agribusiness sector build back better in the wake of the pandemic and the disruptions that she trained.
“Therefore, we welcome this additional funding to support the recovery of Uganda’s economy as a whole,” she said.