In Uganda, businesses in the agricultural sector face significant constraints to grow due tolimited internal capital and restricted access to formal financial systems. The United Nations Capital Development Fund (UNCDF) with funding from the European Union Delegation, is working to catalyse investment in the sector by unlocking access to commercial capital for promising agribusinesses. Through a new partnership with Aceli Africa, UNCDF is helping de-risk investment and support enterprise growth.

The Support to Agricultural Revitalization and Transformation (START) Facility, which was designed by UNCDF and is implemented in partnership with Private Sector Foundation Uganda (PSFU) and Uganda Development Bank Ltd (UDB), aims to extend lessons learned in delivering financial solutions to agribusinesses in northern Uganda nationwide and transform US2 million in grant financing to leverage Aceli resources and networks to unlock commercial loans worth an anticipated $20 million.

“When START came, we were struggling to meet growing market demand,” says Sam Aderubo, Director of Honey Pride Arua, a honey producer in Northern Uganda that used a concessional loan from UNCDF to invest in new machinery to boost production and improve honey quality. “We’ve opened up new markets, but to sustain them, we need additional financing. We’re applying for START II to help us keep up with demand and improve productivity.”

Sam Aderubo, Director of Honey Pride at Honey Pride’s production center in Arua, Uganda. A START concessional loan helped grow the business into a thriving honey value chain supporting beekeepers across West Nile, in Northern Uganda. Credit: Hisae Kawamori, UN News

“We’ve opened up new markets, but to sustain them, we need additional financing. We’re applying for START II to help us keep up with demand and improve productivity.” - Sam Aderubo, Director of Honey Pride Arua

Shifting Risk, Unlocking Growth

UNCDF supports market development in high-risk environments by deploying catalytic concessional capital and risk-absorbing instruments to de-risk investments and shift the risk profile of early-stage markets. In Uganda, this approach is helping unlock affordable finance for tens of thousands of small and medium sized agribusinesses.

“In Uganda, as in much of Africa, the agricultural sector remains the backbone of the national economy, the main employer in the labour market and the basis of most household incomes,” said Omon Ukpoma-Olaiya, Regional Investment Team Lead at UNCDF. “We aim to unlock the investment potential in the agricultural sector through access to the catalytic capital businesses need – not just to survive, but to thrive and be a driving force in Uganda's national economic development. Through this strategic partnership, we are also prioritizing access to affordable investment capital to people in underserved communities (such as rural entrepreneurs, women, youth and persons with disabilities.)”

Aceli Africa, a nonprofit market catalyst, is working with UNCDF under START II to bridge the gap between agribusiness SMEs and financial institutions. Using a mix of portfolio first-loss coverage and origination incentives, Aceli helps commercial lenders and impact investors reduce the risk and cost of serving high-potential but underserved SMEs.

Teopista Amony, employee at Sunrise Agro-processing, at Sunrise’s sunflower facility in Lira, Uganda. With START financing, the company expanded production and created jobs for over 3,000 youth and women farmers.

With support from UNCDF, Aceli is targeting loans to SMEs in rural and frontier markets worth between UGX 36 million and UGX 900 million, approximately $10,000 - $250,000. The $2 million grant from UNCDF is expected to unlock 10 times its value in commercial loans to 200 agribusiness SMEs, reaching 75,000 smallholder farmers, at least 30% of which will be women-led businesses.

“There’s a massive divide between the demand for capital in the agricultural sector across Africa - including in Uganda – and the availability of affordable capital that can enable businesses to meet their potential,” said Brian Milder, Founder and CEO of Aceli Africa. “We’re excited to be working with UNCDF to bridge that divide by addressing the real and perceived risks that prevent commercial lenders from entering this space and contributing to the inclusive growth of the Ugandan agricultural sector.”

Banner Image: Patricia Alimo, employee at Adonyo Limited, Northern Uganda | Patricia at Adonyo’s rice outlet. With START facility financing, the company improved rice processing, reduced post-harvest losses, and increased farmer incomes across Northern Uganda.