The Support to Agricultural Revitalization and Transformation (START) facility has announced the first two successful applicants from its first call for proposal, whose proposals have been completed and submitted to Uganda Development Bank Ltd. (UDBL) for financing. One company runs a maize processing plant in Omoro District and the other produces honey and related products in Lira District. The total cost of the two projects is UGX 945 million. In addition to commercial and financial viability, the two companies demonstrate a significant local development impact including new jobs for women and youth – one of the key objectives of the START facility.
Through the technical support of the United Nations Capital Development Fund (UNCDF) the businesses have been assisted through the project development and structuring stage that includes detailed due diligence, business case analysis and screening, verification of business opportunities, feasibility studies and preparation of business plans, and are now ready to receive funding through the UDBL. The two companies are together expected to receive concessional loans totaling to UGX 660 million from the START Facility.
Limited access to finance is one of the major obstacles to growth of small and medium enterprises (SMEs). SMEs are considered high-risk because of lack of or bad credit history and poor business management practices. Often, this perception is grounded in a sad reality. In February 2019, UNCDF carried out a due diligence exercise on 17 shortlisted companies and found that most of the companies lacked the proper financial and business management skills and structures to ensure business survival and sustainability. Out of these only five were identified for further project development to bring them to financial closure. The first two applicants are now ready, and UNCDF will continue to work with the other applicants to become investment-ready.
“Over the past few months we have worked closely with these two applicants to ensure that they have the right financial and business systems and structures in place, to make them investment ready,” says Deus Tirwakunda, START Facility Manager
The investment from the START facility will enable the applicants to scale up operations providing jobs for people within the communities and market for under-utilized resources. The maize processing facility is looking to purchase storage, cleaning and drying equipment while the honey producing enterprise hopes to improve its operations by acquiring better equipment for honey processing, construction of a honey store and vehicle for sourcing honeycomb and distribution.
“We are glad to be announcing the first beneficiaries of the START Facility, we are looking beyond just financing these businesses but will continue to work with them and support them to establish sustainable businesses,” said Patricia Ojangole, Chairperson of the START Management Board.
The START facility not only provides affordable medium-term finance for SMEs engaged in agro value addition but also offers a customized mix of business development services, project development and structuring services to create an enabling environment for a wholesome business to thrive. The two companies will also benefit from business development grants to address any outstanding challenges such as improvement in financial management.
START Facility will be issuing the second call for proposal in July 2019 for entities including companies, cooperatives and association engaged in agro-processing and value addition in Northern Uganda to apply financial support.
The facility is implemented by UNCDF, UDBL and Private Sector Foundation Uganda to support the implementation of the food security and nutrition component in the context of the Development Initiative for Northern Uganda (DINU) programme. DINU is a Government of Uganda programme financed by the European Union under the overall oversight of the Office of the Prime Minister.