Improving access to affordable finance for agribusiness SMEs
The Support to Agricultural Revitalization and Transformation (START) Facility is a catalytic blended finance initiative designed to unlock investment for agribusiness small and medium-sized enterprises (SMEs) in Uganda and Burundi.
Designed in 2017 under the European Union-funded Development Initiative for Northern Uganda (DINU), the START Facility has established a proven model for de-risking agricultural lending. The START Facility is now in its second phase, scaling nationwide and regionally to unlock significantly greater investment and impact.
Through a combination of concessional and commercial finance, and financial advisory, the facility enables agribusiness SMEs to build capacity, improve bankability, and access appropriate financing through financial intermediaries under the START facility.
By blending catalytic capital with investment readiness support, START enables enterprises to invest in agri-processing, storage, and value addition thus strengthening agricultural value chains.
Objectives
- Strengthen institutional capacity of agribusiness SMEs to conduct sustainable business operations.
- Improve technical capacity of agribusiness SMEs to develop bankable & green investment proposals acceptable by financial institutions.
- Unlock affordable medium-term finance for agribusiness SMEs in value addition and responsible agro processing.
Bridging the agribusiness financing gap
Agriculture remains the backbone of Sub-Saharan Africa’s economy, with over 60 percent of the entire workforce involved in agriculture. Yet agricultural SMEs (agri- SMEs) which are critical for value addition, job creation, and market access face an estimated $74 billion to $106 billion annual financing gap, with roughly 84% of demand unmet.
These enterprises are often excluded from formal finance due to limited collateral, weak financial records, and perceived high risk. At the same time, financial institutions face constraints in lending to the sector, given high transaction costs and limited risk-sharing mechanisms. As a result, many high-potential businesses remain undercapitalized, unable to scale operations, invest in technology, or access new markets.
The START Facility addresses this gap by working across the entire financing ecosystem. It strengthens SME investment readiness while deploying catalytic capital to de-risk lending and crowd in both concessional and commercial finance. This dual approach unlocks sustainable capital flows into agribusiness, transforming a high-risk sector into a viable investment opportunity.
Digital solutions are central to this transformation. By supporting SMEs to adopt tools for financial management, record-keeping, and operational efficiency, START improves transparency, strengthens credit profiles, and enhances access to finance.
A blended finance model
The START Facility combines three complementary instruments to support SMEs:
START provides medium- to long-term concessional loans, typically ranging from UGX 50 million (about $13,000) to UGX 900 million ($237,000), with below-market interest rates (around 12 percent), longer tenures, and grace periods. These loans enable SMEs to invest in machinery, processing facilities, and storage infrastructure.
Through investment readiness support and partnerships with financial institutions, the facility enables SMEs to access commercial loans on market terms. By de-risking portfolios and strengthening SME capacity, START crowds in private capital and expands lending to agribusinesses.
Pre- and post-investment support helps SMEs develop bankable business plans, strengthen governance, adopt digital systems, and improve operational efficiency. This ensures that financing translates into sustainable growth and impact.
START phase 1 results
In its first phase (2018–2023), the START Facility demonstrated that targeted blended finance can unlock investment in high-risk markets:
- At least 50 agribusiness SMEs accessed financing of more than UGX13.5 billion ($3.5million) in the form of concessional loans from Uganda Development Bank (UDB), co-financing from other financiers and zero interest loans from UNCDF.
- More than 150 SMEs received technical assistance and business development support.
- Over 120,000 smallholder farmers were linked to reliable markets.
- More than 500 jobs were created across supported enterprises.
- Over 20 agribusinesses expanded processing and storage capacity significantly.
- These results validate the model: when risk is shared and enterprises are supported, agribusiness becomes investable at scale.
Scaling impact through START Phase II
Building on these achievements, the START Facility is now in Phase II (2023–2027), supported by the European Union in Uganda and expanded partnerships in Burundi with funding from WFP and UNDP in 2023 to pilot the START approach through revitalisation of the economic activities of MSMEs and cross border traders in Burundi.
An initial investment of $12.7 million is expected to unlock over $30.4 million in concessional and commercial finance for more than 300 agribusiness SMEs.
The scale-up aims to:
- Support 300+ SMEs to access finance
- Create over 1,500 direct jobs
- Unlock market opportunities for more than 250,000 smallholder farmers
- Promote inclusion, targeting 40% women and 30% youth
START Phase II expands geographically and deepens its focus on inclusive, climate-resilient, and digitally enabled agribusiness models, including expansion to Burundi.
Call for Proposals (CfP) to access consessional financing (May 2025 - May 2026)
Honey packaging to improve quality and shelf life. Photo: UNCDF.
Modern rice processing facility supporting agribusiness growth. Photo: UNCDF.
