EU and UNCDF Renew Collaboration to Foster Sustainable Agribusiness Growth in Uganda

The European Union Delegation in Uganda, in partnership with the United Nations Capital Development Fund (UNCDF) on 6 March 2024 announced the launch of a new initiative aimed at promoting sustainable agribusiness growth throughout Uganda.

 The facility, known as Support to Agricultural Revitalization and Transformation (START) Phase II, represents an investment of EUR 11.5 million (UGX 48.9 billion) co[1]financed by the European Union. This initiative is geared towards catalysing economic development, job creation, and sustainable growth in the country. 

Building upon the success of START Phase I, where over 50 SMEs received UGX 13.5 billion in concessional loans and reimbursable grants, creating markets for over 120,000 farmers, START II is expanding its reach across Uganda. The overarching objective of this phase is to tackle the significant obstacles faced by agribusiness SMEs in accessing financing for their expansion and growth. 

START II will focus on promoting value addition and agro-processing by providing agribusiness SMEs with access to affordable medium-term financing. This support aims to facilitate the expansion of their operations while prioritizing the adoption of green practices and inclusivity, particularly for vulnerable groups and women-led enterprises. Notably, the initiative is committed to allocating 30% of its resources towards promoting gender equality and supporting green SMEs.

Sophie De Coninck, Head of Uganda Office at UNCDF, remarked, "The launch of the START Facility is a crucial step towards unlocking the potential of agribusiness SMEs in Uganda. By addressing the financing gap and enhancing technical capabilities, we aim to drive sustainable growth, create jobs, and foster economic resilience in the country and beyond."

European Union Ambassador to Uganda Jan Sadek said: "Cultivating sustainable growth and prosperity in Uganda remains a top priority for the European Union. Through our continued collaboration with the United Nations Capital Development Fund, we are committed to empowering agribusiness SMEs and fostering an environment conducive to economic resilience and job creation. The launch of START Phase II underscores our dedication to supporting inclusive and green economic transformation, ultimately contributing to the long-term prosperity of Uganda and its people." 

To ensure effective implementation and maximize impact, START II will collaborate with various stakeholders, including financial institutions, private sector foundations, government bodies, and international organizations. Key partners involved in the implementation of the START facility include the Private Sector Foundation Uganda (PSFU), Federation of Small and Medium Enterprises (FSME), Aceli Africa, and the Uganda Development Bank Limited (UDB). 

In summary, START Phase II aims to revolutionize the agribusiness landscape in Uganda by: 

• Strengthening institutional capacity through tailored Business Development Services (BDS) and digitalization of SME operations. 

• Enhancing technical capacity to create bankable green investment proposals and adopt sustainable practices. 

• Enabling access to affordable finance for agribusiness SMEs, with a focus on value addition and responsible agro[1]processing.

The development challenge addressed by START Phase II is rooted in the difficulties faced by SMEs, particularly agribusinesses, in accessing appropriate and affordable financing mechanisms. With approximately 1.1 million micro, small, and medium enterprises (MSMEs) employing around 2.5 million people in Uganda, these businesses play a crucial role in the country's private sector and development. However, challenges such as poor management, lack of records, collateral, and capital hinder their growth potential. 

Agribusiness SMEs interested in participating in the START facility are encouraged to apply through the online portal: https://www.start.go.ug/ The portal will remain open throughout the year to receive applications.