aBi Finance Limited readies loans for Tier IV MFIs and SACCOs

KAMPALA– Tier IV Microfinance institutions [MFIs] and SACCOs in Northern and Eastern Uganda looking for funding no longer have to worry. This is because aBi Finance Holdings Limited has availed concessional loans for the targeted borrowers in the two regions of the country.

The concessional loans for balance sheet items [capital expenditure] go for an interest rate of 1 percent to 5 percent on reducing balance, with a grace period of up to 24 months, based on cashflows.

In an advertorial published June 16, 2022, Abi wants to support Tier IVs and SACCOs in intervention areas such as governance and management, outreach and expansion, financial performance, product development, management information systems and technical assistance to staff.

aBi, also known as Agricultural Business Initiative, says those to be funded should have their activities covered in two years. “The loan covers maximum tenure of five years, even though the proposed activities should, however, be covered in a maximum period of two years,” it says in the advertorial.

There is also a grant for non-balance sheet activities/ business development services.

However, aBi says it will only work with legally registered Tier IV MFIs.

Among others, borrowers should present proposals; with viable projects with a strong value for money rational; demonstrate complementarity with existing initiatives or programmes of aBi or other business entities and description of proposed solutions and value proposition to smallholder farmers and agribusinesses in the rural communities of one or more of the districts in the regions targeted.

According to the advertorial, those interested must apply for the loans online and beat the deadline of July 26, 2022.

In 2021 aBi Finance transitioned from a company limited by guarantee to a company limited by shares in a bid to commercialize its operations and attract new investments.

aBi Finance Limited provides Lines of Credit [LoCs] to Financial Institutions for on-lending to agribusinesses across the entire value chain. aBi Finance Limited also runs an Agriculture Loan Guarantee Scheme (ALGs) for Financial Institutions to share losses incurred through defaulting loans.

Early this month, as reported on the company’s website, the Danish Investment Fund for Developing Countries [IFU] and the European Union [EU] were onboarded as new shareholders of aBi Finance Ltd. This is a culmination of a Shareholders Agreement signed between the Royal Danish Embassy, the European Union, and the IFU to allow new investments into aBi Finance, marking the reorganization of aBi Finance as a business entity.

The EU is investing US$8.7 million in aBi Finance, together with the IFU which tops this up by US$9mln. The investments allowed aBi Finance Ltd. to 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, totaling approximately US$18mln, will enable aBi Finance Limited 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 Shs 14.5bln 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.

After signing the partnership agreement, the Danish Ambassador to Uganda, Nicolaj A. Hejberg Petersen, noted that: “With more than 12 years of involvement in aBi Finance we’re 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 Mr. Anders Frigaard, Senior Investment Manager at IFU.

“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 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” said European Union Head of Co-operation, Ms. Caroline Adriaensen.

“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,” said Ms. Mona Muguma-Ssebuliba, aBi CEO.

Since 2010 aBi Finance Ltd has sustainably encouraged the growth of agribusiness value chain actors by stimulating access to finance through; providing liquidity, de-risking agricultural finance, and building the capacity of financial services actors to avail financial services to agribusinesses. For the period 2010/2021, aBi Finance Ltd has made the following milestones:

It has disbursed a total of 1.4million new loans worth Shs 3.5 trillion, raised the capital fund of Shs 177bln; served 425,000beneficiaries while the number of agricultural guarantees beneficiaries 191,000.

The savings accounts opened hit Shs 359bln while savings volume for financial institutions hit 1.1mln while the number of farmers accessing agriculture insurance is 240,000.

Prior to this capital injection from IFU & EU, aBi Finance capital fund size stood at over US$50mln [Shs 200bln] with an average return of 10 percent. The Fund is invested in line of credits, loan guarantee scheme, and fixed deposits.

https://thecooperator.news/avsi-injects-shs-73mln-for-agribusiness-in-lira-school/

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