Support to Agricultural Revitalization and Transformation Facility (START) under the Development Initiative for Northern Uganda (DINU) Programme.
The United National Capital Development Fund (UNCDF) in partnership with the European Union and the Government of Uganda is implementing a four year Development Initiative for Northern Uganda (DINU). The general objective of the Programme is to consolidate stability in Northern Uganda, eradicate poverty and under-nutrition and strengthen the foundations for sustainable and inclusive socio-economic development.
The START funding facility is designed to support the implementation of DINU food security and nutrition component and will benefit the 33 districts in Northern Uganda. START is structured as a blended financing facility providing a customized mix of Business Development Services, project development and financial structuring services and financial products to small and medium businesses engaged in agricultural value addition. These three lines of business are integral parts of the facility and are managed by the three participating institutions Private Sector Foundation of Uganda (PSFU), UNCDF and Uganda Development Bank Limited (UDBL) respectively.
START is expected to contribute to increased food security, improved maternal and child nutrition, and enhanced household incomes as a key outcome of the Development Initiative for Northern Uganda (DINU). DINU is a Government of Uganda programme supported by the European Union for an amount of 132,8 Mio EUR (approximatively 603 billion UGX).
START geographic coverage is aligned with DINU geographic coverage, i.e. it comprises 33 districts in Northern Uganda as listed below;
|Karamoja||Abim, Amudat, Kaabong, Kotido, Moroto, Nakapiripirit, Napak|
|Acholi||Agago, Amuru, Gulu, Kitgum, Lamwo, Nwoya, Omoro, Pader|
|Lango||Alebtong, Amolatar, Apac, Dokolo, Kole, Lira, Otuke, Oyam|
|West Nile||Adjumani, Arua, Koboko, Maracha, Moyo, Nebbi, Yumbe, Zombo|
START will support development and financing of capital-intensive agricultural projects promoted by small and medium enterprises that add value in storage and processing of agricultural products. START will take into account the impact of the complementary activities for food production and commercial agriculture.
START addresses the “middle missing” gap in agricultural finance targeting projects with a financing requirement from 10,000 EUR (approximately UGX 40 million) to 100,000 EUR (approximately 4 billion UGX). It will closely cooperate and coordinate with other financing and technical facilities supporting agriculture in Uganda.
The facility aims to achieve three interconnected objectives:
- Offer access to affordable medium-term finance for agricultural value adding projects in Northern Uganda;
- Support projects that contribute to economic empowerment of women and youth;
- Encourage projects that aim at reducing environmental risks and ecological scarcities.
START is structured as a blended facility providing a customized mix of Business Development Services, project development & structuring services, and financial products. These three lines of business are managed by the three participating institutions PSFU, UNCDF and UDBL respectively.
START offers the following services and facilities to project developers:
- Business Development Services: Support in development of grant, concessional loan and partial guarantee applications, legal support, technical and management training.
- Project preparation, development and transaction services: Targeted technical project development and financing support to project developers (e.g. enhanced project documentation, due diligence and financial structuring); customized project financing structures and investment vehicles; preparation of project investment documents in the format acceptable to commercial banks and investors; provision of capital grants, credit enhancements/guarantees.
- Financial services: linking developers to financial institutions and investors; preparation and issuance of term sheets and loan agreements; issuance and administration of concessional loans; leveraging funds from other commercial and development finance institutions; and monitoring and management of concessional loan servicing and repayments.
The initial capitalization is 4 Million EUR with an expected leverage of 8 Million EUR through private sector financing and financial support from development partners.
The Facility’s sustainability aspect will be achieved through creating a revolving fund which will live beyond the DINU Programme period. This will be made possible through creating more partnerships with other potential funders, corporates and agencies. Any interested potential partners are invited to contribute to the facility to transform it into a nationally-owned sustainable and adequately capitalized loan/grant facility to support small and medium-sized value adding agribusinesses in Northern Uganda with the further intention to scale up its operation and coverage nationally.
The first call for proposals has been issued in the local newspapers (Daily Monitor & New Vision, May, 17th 2018). Small and medium enterprises from the 33 districts mentioned above or operating in these districts, engaged in agriculture value addition are invited to submit applications. The Private Sector Foundation of Uganda, along with START Facility partners, will hold call for proposals pre-submission and information sessions in the Northern Uganda main cities as per the schedule below. The purpose is to allow project developers an opportunity to raise questions and for START partners to provide guidance on how to prepare proposals to increase the chances of meeting the eligibility and selection criteria. Further communication on the consultations will be disseminated through local/district leadership and media announcements.