aBi Trust Uganda 2015-2018 - aBi Trust 2015-2018 aBi Trust Uganda 2015-2018 The proposed decision refers to continued Swedish support to the Agricultural Business Initiative Uganda (aBi) Trust corresponding to SEK 40 million during the period 2015-2018. Financial support should be seen as a core support to aBi Trust for implementation in accordance with the business plan and budget for 2014-2018. aBi Trust aims overall to strengthen Uganda's competitiveness, and hence economic growth through increased productivity and value addition in the agriculture sector. Agriculture has untapped potential and is still the sector that employs most people in Uganda, particularly in rural areas. aBi Trust aims at reducing what is considered to be specific barriers/risks for the development of farming as a business (i.e. transition from subsistence to more commercial farming) through capacity development and access to financial resources and services that focus on the entire value chain in a  number of prioritized commodities. Implementation is done through collaboration with private sector actors (companies and financial institutions), which in turn reaches out to the lower production levels (farmers and households).

aBi Trust will serve as implementing partner but Sweden will sign a so-called Agreement on Delegated Cooperation with Denmark in accordance with the principles of development effectiveness and donor coordination. The agreement has been negotiated in close collaboration with Sida's legal department and  implies that the overall responsibility for monitor and follow-up will be delegated to Denmark. In relation to Sida's Rule on Contribution Management, there will be an exemption related to repayment of accrued interest to Sweden. Following the agreement, any income from accrued interest will be kept by aBi Trust, as part of the Swedish financial contribution.  

The Agribusiness Initiative Uganda consists of two different “legs”. aBi Trust that contributes to capacity development and access to finance and financial services to the actors in specific value chains and aBi Finance, which is an equity fund. The proposed decision includes only support for aBi Trust. In order to further strengthen the conditions for long-term financing of aBi Trust and to trigger development of more innovative financial products for increased lending and risk-taking among financial institutions, Sweden intends to initiate discussions on possible support for aBi Finance.

Sweden participated very actively when the aBi Trust initiative was developed and contributed with SEK 45 million during the period 2010-2013 (ref. UF2009 / 3764). The previous cooperation with aBi Trust has been good, and the Embassy is recognizing the good results achieved. aBi has managed to reach out to a large number of beneficiaries and evaluations (including control groups) indicate that the program has contributed to higher income generation and more productive jobs in the agriculture sector. This is a consequence of better utilization of land and improved access to markets and agricultural capital. Previous experiences justify continued Swedish support.

During the appraisal, the Embassy commissioned an external review to assess aBi Trust's financial control environment (call-off against the Embassy framework agreement for audit services). Following the general recommendations from this desktop review, it is concluded that Sweden is able to continue allocating financial support to aBi Trust. Important however to recognize the weaknesses identified, which need to be further assessed and followed-up during implementation.  See also 2.2 below and further clarified in the risk register. Sverige avser att gå in med fortsatt finansiering till the Agricultural Business Initiative Uganda (aBi) Trust motsvarande SEK 40 miljoner under perioden 2015-2018. Finansiellt stöd skall betraktas som ett kärnstöd till aBi Trust för implementering i enlighet med affärsplan och budget för 2014-2018. aBi Trust syftar övergripande till att stärka Ugandas konkurrenskraft, och därmed ekonomiska tillväxt genom ökad produktivitet och förädling inom jordbruket. Jordbruket har en outnyttjad potential och utgör alltjämt den sektor som sysselsätter flest människor i Uganda, särskilt på landsbygden. Utgångspunkt för aBi är att genom partnerskap med privata marknadsaktörer reducera vad som anses utgöra särskilda hinder och risker för utveckling av ett mer kommersiellt jordbruk (som del av en successiv övergång från självhushållning). Genom att fokusera på hela värdekedjan i ett urval av strategiska råvaror, kommer de specifika initiativen involvera även de lägre produktionsnivåerna (bönder och hushåll). Detta förväntas leda till bl.a. inkomstökningar och fler produktiva jobb i enlighet med Sveriges strategi för utvecklingssamarbete med Uganda 2014-2018. 

aBi Trust kommer att utgöra genomförande part men Sverige kommer att signera s.k. delegeringsavtal med Danmark i enlighet med principer om utvecklingseffektivitet och givarsamordning. Avtalet har förhandlats fram i nära samarbete med Sidas juridiska avdelning. Avtalet innebär att övergripande ansvar för uppföljning av samarbetet delegeras till Danmark. I förhållande till Sidas insatsregel uppfyller delegeringsavtalet samtliga krav med undantag för villkor relaterat till ränteåterbetalningar. I samtycke med Sida/JUR har Sverige beviljat avsteg, med innebörd att ränta ej skall återbetalas till Sida utan kan tillfalla programmet (aBi Trust) som del av svenskt stöd.

aBi består av två olika verksamhetsgrenar. aBi Trust som bidrar till kapacitetsutveckling och tillgång till finansiering och finansiella tjänster till aktörer inom de specifika värdekedjorna och aBi Finance, vilket är en kapitalfond. Aktuellt beslut avser enbart stöd till aBi Trust. I syfte att ytterligare stärka förutsättningarna för långsiktig finansiering av aBi Trust och utveckling av mer innovativa finansiella produkter för att öka utlåningen och riskvillighet bland finansiella institutioner, avser Sverige inleda diskussioner om eventuellt stöd till aBi Finance.

Sverige deltog aktivt i samband med att aBi Trust utvecklades och bidrog med SEK 45 miljoner under perioden 2010-2013 (ref. UF2009/3764). Ambassaden har goda erfarenheter av detta samarbete och anser vidare att aBi har uppnått goda resultat. aBi har lyckats nå ut till ett stort antal mottagare (s.k. outreach) och utvärderingar (som inkluderar kontrollgrupper) pekar på att programmet bidragit till såväl inkomstökningar och mer produktiva arbetstillfällen inom jordbruket. Detta till följd av bl.a. bättre utnyttjande av odlingsbar mark samt tillgång till marknader och kapital. Detta motiverar fortsatt svenskt stöd. 

Som del av beredningen genomfördes en extern bedömning avseende aBi Trust finansiella kontrollmiljö (avrop mot ambassadens ramavtal för revisionstjänster). Övergripande slutsats från denna bedömning innebär att Sverige fortsatt anses kunna allokera finansiellt stöd till aBi. Viktigt emellertid att de svagheter som identifierats följs upp i samband med implementeringen. Se mer utvecklat i beslutsunderlaget och riskregister. The overall objective of aBi is to strengthen the competitiveness of Uganda's Agricultural and Agro Processing Sectors.
aBi is composed of two separate but complementary legal entities, aBi Trust and aBi finance (during 2019 merged to aBi Development). It is a multi-stakeholder organisation co-founded by Government of Uganda and Denmark. Sida's support to aBi Trust is set to deliver on one of three components of Denmark's U-growth programme (from 2019 the new Up-side programme). The component is called Agribusiness initiative and aims at supporting private agribusiness development in ways that will help achieve the objectives of the Government's strategies.
The mandate of aBi trust is to support private sector actors in selected value chains to increase their contribution to the agriculture sector by strengthening the productivity of land and labour as well as market competitiveness. The value chains are: Coffee, Oilseeds, pulses, cereals (maize and rice), horticulture and diary. The business plan (new BP decided 2019-2023) states the ambition for aBi is to be a vehicle for agricultural transformation. Success in doing so will contribute to poverty reduction through economic growth, wealth creation, and increased employment opportunities in value chains that are important to the poor and therefor for poverty reduction.
Constraints affecting agribusiness development in selected value chains are identified by aBi Trust. They include, among others, low quality inputs, limited adoption of technologies, few market linkages, limited access to finance and low quality of produce. Activities to address these constraints are implemented, such as training in good agriculture practices, quality improvements through provision of training equipment, value addition, improved inputs and collective marketing. When farmers have access to more appropriate services, inputs and markets and financial services, their production capacity and their competitiveness increases which results in increased incomes and increased employment.
The Embassy has a delegated partnership with RDE for this contribution. The aBi Investor Council is formally, on behalf of its development partners and founders, putting reports forward for approval by the aBi board in which RDE is represented. RDE is assessing reports (and also sharing formally their assessment with DPs) and are in daily contact with/dialogue with aBi. Sida assess the reports, audits etc. and provides feedback to the delegated partner/RDE and to the IC in regards to performance and reporting. Conclusions are discussed in a development partners annual meeting ahead of the Investor Council, IC.
The following concluding memo is based on Sida's assessment as well as on RDE assessment of aBi performance 2015-2019.