1) The document discusses plans to establish a Small and Medium Agribusinesses Development Fund in Uganda to improve access to financing for small and medium enterprises engaged in agribusiness. 2) The proposed fund would provide $30 million over 10-15 years for equity investments up to $3 million in eligible agribusinesses along with $4 million in matching grants for business development services. 3) The fund is envisioned to be set up with governance and management structures involving the EU, IFAD, a fund board, investment committee, and external fund manager to oversee investments and ensure social and environmental criteria and impact are met.

1. Small and Medium
Agribusinesses
Development Fund
Tailoring
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2. Importance of agribusiness for EU in Uganda
• Agriculture/rural development one of focal
sectors in NIP under 10th
(60 million Eur for the
period 2006-2013 )+ 25 million Budget lines and
11th
EDF
• Under 11th
EDF (2014-2020) focus on:
- Support private sector along selected value
chains agreed with MAAIF and other DP (ie
fishery/aquaparks, beef, commercial forestry)
- Support to Local Governments capacity building
in Northern Uganda
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3. Background to the initiative
• Importance of agricultural sector socially,
economically and environmentally (livelihood and
food security)
• Importance of SMAs for job creation and
economic development, through pulling effect
•Medium and long term finance constraints
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4. Importance of agriculture in Uganda
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77%
24%
EMPLOYMENT GDP
47%
EXPORTS

5. Agribusiness as driver of growth
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6. SMEs Agribusiness access to finance
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7. Challenges
• - Demand and competition: can we identify a
sufficient number of reliable/eligible investees?
• - Investees financial transparency
• - Mutually agreeable valuation of investee
• - Exit strategy from investees
• - Volatility of UGS (forex cover?)
• - Contracting an experienced Fund Manager for a
small Fund
• - Weakness of financial sector to complement our
fund investments (max 35% of investees needs)
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8. Risks
• - Limited demand: one country, one sector
• - Sensitive environment (ie: land issues, GMOs)
• - Difficulty in finding reliable fund manager (also
because of inclusion of socio-environmental criteria)
• - Investors’ potential default
• - Non-diversified illiquid speculative long term
investments
• - Foreign exchange and inflation risks
• - Fraud issues
• - Limited access to financial information
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9. Opportunities
• - Strong macro-economic outlook (oil, further
integration and growth of EAC)
• - Comparative advantage of agriculture/agribusiness
sector
• - Demographic growth
• - MLT funding needed
• - Sound banking sector, even if limited MLT lending
capacity and spread out
• - Development Partners’ support partly reducing
risks for private sector
• - Complementary programmes by other DPs in the
sector 9

10. Fund objectives
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•Objective : contribute to the development of
Uganda's agriculture and to the improvement of
rural livelihoods, incomes and food security.
•Project purpose : support the development of
Small and Medium Enterprises (SME) engaged in
agribusiness by improving access to Business
Development Services and to long-term finance.
•Development impact : maximized through strict
criteria for socially and environmentally responsible
investments, a sound investment assessment and
selection methodology and a strong monitoring and
evaluation system.

11. Fund design steps followed
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•Four in depth studies carried out in 2011 and 2012, with results
validated by a reference group including several relevant
stakeholders (development partners, private sector, GoU
representatives, service providers):
1)Feasibility study: analyze demand (desk review), supply and
proposed structure and governance
2)In depth survey of more than 40 SMAs to deepen demand
analysis (is there enough potential market to sustain the fund?)
3)Ex ante impact analysis and design of socio-environmental
criteria
4)Detailed design study
•Contacts with perspective investors and potential fund
managers

12. • 10 to 15 years US$ 30+ million non- revolving
Fund incorporated in Uganda
• Minority investment, US$ 200,000 up to 3 million
for 4-5 years in agribusiness SMAs
• Instruments :Equity, mezzanine/convertible debt,
debt financing, self-liquidating instruments with
equity components, targeting a net annual IRR of
at least 10% (in USD)
• Supported by a BDS matching grant component
Proposed Equity Fund characteristics
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13. Project structure
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•Funds Structure :Structured fund to accommodate different categories
of investors (public investors and development partners), intermediate
investors (FDIs, institutional investors) and private investors (private
funds and private investors). EDF funds (around 13 million USD) used to
leverage public and private investments.
•BDS matching grant Facility (around 4 million USD): the SMA DF will
provide Business Development Services (BDS), through a matching
grant facility, to improve corporate governance and the technical,
managerial and marketing capacities of small and medium enterprises
(investees and potential investees), and to strengthen their upward
(market) and downward (smallholder farmers) linkages.

14. Investment criteria
•SMA up to 500 permanent employees…
•Strong, reputable and trustworthy management,
with sound governance and good financial records
•Promising development perspectives: SMAs with
strong growth potential
•Based on satisfactory social (ie reach smallholder
farmers as customers or suppliers), environmental,
economic and financial criteria
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15. Governance and Management
- - EU funds channeled through IFAD, who will also
provide TA
• - Fund Board responsible for strategy and
governance
- - Fund Manager with a team presence in Uganda
- - Supported by an Investment Committee
(nominated by Fund Board, in charge of
assessing Fund Manager proposed investments) 15

16. Governance and management -
follow up
• - Equity and quasi equity prioritized financial
instruments (60% equity/40% debt)
• - Non cash detrimental exit strategy (ie privilege
integration with strategic partners)
• - Hands on management by the Fund Manager
throughout the whole investment period
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17. Implementation process
• - 12 months preparation phase supported by EU
funds
• - 3-4 years investment phase,
• - 5 to 6 years management and disinvesment
phase
• - Investment decision by Investment Committee
upon proposal by Fund Manager
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18. BDS grant component
• - Beneficiaries: (potential) investees, value chain
partners up and down stream
• - All type of business support through TA,
twinning, coaching… 50% co-financed by
beneficiaries
• - Managed by Fund Manager embedded BDS
Officer
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19. Reporting, monitoring & evaluation
• - Quarterly reporting by Fund Manager (FM) on
social, environmental, economic and financial
performance of investees and Fund
• - Yearly monitoring of global Fund impact by
Fund Manager
• - Five yearly impact monitoring by outside
independant party
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20. The Fund envisaged set-up
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21. The way forward
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After approval by EU HQ:
1.Signature of Financing Agreement with GoU
2.Contribution Agreement with IFAD
3.Recruitment of Fund Manager
4.Fund establishment and set-up
5.Investors joining in
6.Operational phase (investments and BDS
matching grant scheme)
7.EU exit strategy on the basis of Fund performance
and interest by GoU and other investors

22. Thank you !
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