aBi Finance has launched a new Green Finance Fund. The fund will provide financing and guarantees to financial institutions in Uganda, enabling them to increase funding for investments greening agribusiness and its supporting sectors, making them more adaptable to climate change.
The challenges to solve are evident. Smallholder farmers dominating the agribusiness sector in Uganda are already suffering production and productivity loss due to change in patterns of rainfall, drought and temperature. Moreover, they experience notable biodiversity loss as well as increase in pests and diseases. As agribusiness is the main economic sector in Uganda, employing 70 percent of the population, this has widespread consequences.
Introducing a new green taxonomy
The Green Finance Fund is guided by a new agribusiness taxonomy developed in cooperation with Global Green Growth Institute (GGGI). The taxonomy defines the type of investments that are environmentally sustainable and green. To be eligible for obtaining funding the financial institutions must develop and implement financial instruments and services that meet the criteria.
These instruments and services could be financing for construction and operation of electricity generation based on wind, solar and biogas; financing for replacement of synthetic fertilizers, including organic or green manures, financing for research, development and dissemination of climate resilient seeds and crops; as well as financing for installation and operation of water management system for agricultural use in the fresh water stressed districts.
“We welcome this initiative from aBi Finance. It is undoubtedly a solid push to create a more vibrant green finance system in Uganda that will enable the agribusiness sector and the many smallholder farmers to better adapt to and mitigate the negative effects of climate change. In turn, this will also have a positive impact on securing future incomes and living conditions in the country.”
Anders Frigaard, Senior Investment Manager at IFU, and member of the aBi Finance board of directors.
The Green Finance Fund is a blend of three green finance instruments, namely Green Lines of Credit, Green Agribusiness Guarantees and Capacity Building worth a total of close to USD 35 million. The fund can be accessed both by larger banks and small rural credit institutions.
IFU and the EU have invested in aBI Finance
In 2022, IFU in cooperation with the European Union invested USD 18 million in aBi Finance, which was established by Danish Danida more than 10 years ago.
If you want to learn more, watch our video on how aBi Finance works and the benefits it creates for smallholder farmers in Uganda.