The Support to Agricultural Revitalization and Transformation (START) Management Board last month approved six investment proposals for financing during its quarterly meeting. The projects, which had initially failed to make the pipeline, received pre-investment business development services support to address operational gaps in their business processes, allowing them to move to the proposal development stage and ultimately before the Board for approval.

START provides business development support to targeted small and medium enterprises (SMEs) at different stages of growth to help address both basic and complex business challenges to enable the businesses access funding from START and other financial institutions. The business development support is also designed to address issues that may affect the growth and performance of the SME after accessing financing.

Projects approved by the Board are submitted to Uganda Development Bank (UDB) for concessional loan structuring and disbursement. This process includes credit analysis and due diligence as per the bank’s standards. However, many SMEs still struggle with the bank’s requirements such as paying appraisal fees, providing appropriate collateral and valuation, which cause delays in disbursement.

“Given this experience, UDB is rolling out an SME policy that will allow SMEs to access money faster and make it simpler for them to qualify for funding. We have revised our requirements so as to allow more SMEs [to] benefit from the bank’s financing options.” shared Stephen Kakonge Senior Investments Manager Agriculture, UDB.

The six projects approved bring the total to 28 of the active START pipeline, achieving 70 percent of the facility’s target to finance 40 SMEs by the end of the five-year period of 2018 to 2022.
The total project cost for the 28 projects stands at UGX 41,535,883,827 (US$ 11,867,395) with UGX 8,706,961,127 ($2,487,703) contribution from START leveraging UGX 23,735,747,602 ($ 6,781,642) in owner contributions and UGX 9,093,165,098 ($2,598,047) from UDB and other financial institutions. The facility is achieving financial leverage of 1:1 from UDB and other financial partners.

“While the project was designed to require only 25 percent contribution from the SMEs, the actual contribution has been overwhelming at nearly 60 percent implying the high potential of the targeted SMEs to contribute to local economic development. The facility is also using the limited project funds to unlock financing from other financing partners at a ratio of 1:1, thus helping to achieve the project goal of increasing access to finance,” said Deus Tirwakunda START Facility Manager, United Nations Capital Development Fund.

By providing customized business development support START is empowering local businesses to access markets, finance and acquire skills and technology to manage sustainable enterprises that promote local economic development. By the end of 2020, the projects had created market for 85,000 farmers and over 500 jobs.

Read more about the facility’s progress in our recently released brochure: https://uncdf.link/start

About START
Established in 2018, START is improving access to affordable finance for SMEs engaged in agro value addition in Northern Uganda. The facility provides a customized mix of business development services, project development and finance structuring services, and financial products in the form of concessional and zero interest loans, technical assistance grants and partial credit guarantees.
START was designed to support the implementation of the Development Initiative for Northern Uganda (DINU) programme’s food security, nutrition, and livelihoods component by providing affordable financing to improve access to locally diversified foods.