EU and Uganda set up €25 million fund to support agribusiness development
Some 35 private small and medium-sized enterprises (SMEs) engaged in agribusiness in Uganda will be able to access interest-free grants through a €25 million equity fund.Some 35 private small and medium-sized enterprises (SMEs) engaged in agribusiness in Uganda, will be able to access
interest-free grants through a €25 million equity fund.
The Small and Medium Agribusiness Fund (SMADF) - which was launched at the end of August - is a joint European Union (EU) and Ugandan initiative expected to address capital constraints faced by small and medium-sized agribusinesses in the country.
The EU Head of Delegation to Uganda, Kristian Schmidt said in a press release that the EU attempted to blend public and private resources to boost the agribusiness sector by lowering the cost and risk of investments.
"The purpose of blending the public resources with resources from investment banks, institutional and private investors is to initiate the process of capital investment in Uganda and create a capital market for domestic financial resources," he said.
Schmidt added that formal banking and microfinance institutions shied away from agriculture because of the perceived high risks, and yet the sector is crucial to Uganda's growth, where three out of four people are employed.
The agriculture sector contributes 21 per cent to Uganda's Gross Domestic Product, according to figures from
the National Planning Authority (NPA) published by New Vision.
However, it continues to face challenges such as the continued practice of subsistence farming, inadequate mechanisation and improper accountability for funds.