European Union, IFU becomes new aBi Finance shareholders

The two new shareholders invests an additional US$9million in the company to support businesses

| THE INDEPENDENT | On June 2, the Danish Investment Fund for Developing Countries (IFU) and the European Union (EU) were onboarded as new shareholders of aBi Finance Ltd.

The EU will be investing $8.7m in aBi Finance, together with the IFU who tops this up by $9m.

The new investments will see  aBi Finance Ltd  transition from a company limited by guarantee to a company limited by shares to commercialise its operations, attract more investors and create wider impact overall.

The combined investments from the IFU and EU, totalling to approx.$18m, will enable aBi Finance Ltd to further support the growth of agribusinesses and improvement of the livelihood of beneficiary smallholder farmers through creation of new jobs and boosting incomes.

It is expected that it will benefit 27,000 new beneficiary clients and create Shs14.5 billion of additional income and 900 additional jobs annually.

Further, the capital increase will make aBi Finance Ltd future-ready, optimize its operations and continue to support businesses to thrive post COVID-19 pandemic.

It will also maximize returns to its shareholders as well as increase access to finance for green enterprises and investments through aBi’s Green Challenge Fund.

The Danish Ambassador to Uganda, H. E. Nicolaj A. Hejberg Petersen said “With more than 12 years of involvement in aBi Finance we are pleased that the institution is now mature for a greater commercialization.

“This will make aBi Finance much more sustainable. The new investments from IFU and EU will ensure aBi Finance’s continued support towards smallholder producers and businesses in the agribusiness sector in Uganda. An engagement that has been and still is of great importance to the work of the Danish Embassy in Uganda.”

The investment in aBi Finance holds a promising potential for increasing financial services to rural small farmers, giving more an option to grow their business and improve livelihood.

“But to create a solid business case for IFU to invest in we needed concessional financing, which we have secured by co-investing with the European Union’s Blended Finance Facilities,” said Anders Frigaard, Senior Investment Manager at IFU.

The European Union Head of Cooperation, Caroline Adriaensen said, the EU is delighted to join hands with the Danish Investment Fund for Developing Countries (IFU) to de-risk their investment in the Agricultural Business Initiative (aBi) in a true Team Europe approach.

“We are convinced that through this additional injection of capital, aBi will be able to reach more smallholder farmers in Uganda with better products, adapted to their needs. Access to finance will have a positive impact on their small businesses and pull many out of poverty,” she said.

Mona Muguma-Ssebuliba, aBi CEO said, with the acquisition of new investments, aBi Finance has demonstrated that it is a sustainable and professionally run organization that can and will continue to attract foreign direct investment.

“We are confident that this investment will add to our past and ongoing initiatives to develop a competitive, profitable and sustainable agribusiness sector in Uganda,”Ssebuliba said.

Agricultural Business Initiative Finance (aBi Finance), since 2010 has sustainably encouraged the growth of agribusiness value chain actors by stimulating access to finance through; providing liquidity, de-risking agricultural finance and building capacity of financial services actors to avail financial services to agribusinesses.

For the period 2010/2021, it has made several milestones; disbursed a total of 1.4million new loans worth Shs3.5trillion; increased the size of the capital fund to Shs177billion; number of beneficiaries grown to 425,000.

The number of agricultural guarantees beneficiaries have also increased to 191,000; savings accounts opened and holding Shs359 billion. The number of farmers accessing agriculture insurance are 240,000.

Prior to this capital injection from IFU and EU, aBi Finance capital fund size stood at over US$50million (approx.200billion) with an average return of 10%. The Fund is invested in line of credits, loan guarantee scheme and fixed deposits.

****