Fund GovernanceDecision Making Structure

In the short run, the fund shall be governed by the same structures as spelled out in the Investment Policy of aBi Finance (aBi Finance Board).

The Management Investment Committee shall co-opt the services of a specialist in this area, from time to time to support technical decision making.

Technical Assistance decisions that need to be made shall have to be endorsed by the relevant Committees as spelled out in the Operations Manual.

Financial Instruments

The Fund shall use mixed financial instruments, including grants, concessional loans and guarantees to make investing in clean technologies more attractive to Agribusinesses in Uganda.

The Fund may deploy the following instruments:

Lines of Credit to Financiers

Direct loans/grants to suppliers/producers who market, sell and service clean technologies

Credit Guarantees to the borrowers

Combinations of these products as appropriate.

Supplementary grant elements tailored to cover costs associated with preparing the application for aBi support and/or for technical assistance necessary to implement the project.

Terms and conditions

The size, tenure and process flow shall be as per existing policies and procedures (Operations, Investments and Guarantee Manuals) and pricing (where applicable) shall be based on risk inherent in project, current market conditions and break even projections.

1 In July 2014, an overview of Uganda Climate Change and Infrastructure by USAID highlighted that the warming trend is projected to continue and increase by 2° C by 2030. This is expected to negatively affect many factors related to agriculture and livestock production as risks of pest and diseases increase. Papers like “Building Community based adaptation and resilience to climate change in Uganda presented by Dr. Samson Gwali in 2014 highlight that; “the impacts of climate change are already being felt in Uganda in the form of erratic rains, drought, famine, floods and landslides. These hazards not only affect the crop life cycle but also the entire value chain from pre-production to post-harvest storage, marketing and transport.

USAID’s Uganda Climate Change vulnerability assessment report of August 2013 included a crop value chain analysis indicating that the biggest cash crop in Uganda (Coffee) is also the most vulnerable to projected rising temperatures, closely followed by rice and maize. These are all crops currently supported by aBi, whereas the least vulnerable crops (sweet potato and cassava) are not.

Agricultural Business Initiative (aBi)

Umoja House, 2nd FloorPlot 20, Nakasero Road

Kampala, Uganda

Tel: +256 312 351 600Fax: +256 312 351 620E-mail: info@abi.co.ug

www.abi.co.ug

How to Apply Application form that avails opportunity to self-appraise for eligibility, supported by documents required for investment appraisal, eg.: Copies of business registration and licences, audited financial statements, project investment plan, business plan, disclosure of funding sources.

The applications will need to explain how the Projects are expected to contribute towards the objective of achieving transformational outcomes in Agricultural sector, and its environment, whilst also demonstrating that these outcomes would not be possible without support from aBi.

Applicants will need to demonstrate that the business will be able to sustain the investment, beyond the period of support provided by aBi.

Applications will be appraised for their financial and economic feasibility using conventional investment appraisal methodologies and tools.

a B i

F I N A N C E

aBi Clean TechnologyFund

Studiesi confirm that with a very high population growth and a continued dependence on agriculture as a driver of economic growth and livelihoods for its mostly rural populace, Uganda is vulnerable to climate change and land degradation. Productivity in key sectors such as coffee and maize already show signs of being impacted. To mitigate against further declines and to adapt to climate change, aBi integrates green growth in its support to agribusiness in Uganda.

Most agribusinesses in Uganda are constrained in their capacities to adopt green growth measures and this has prompted aBi to extend both technical services and financing to overcome these challenges.

aBi’s Clean Technology Fund has been established to finance sustainable land management initiatives, efficient energy solutions, the use of renewables, environmentally friendly waste management, efficient water use and soil moisture management, and other climate smart practices for the value chains it supports.

1 Definition of climate-smart agriculture: agriculture that sustainably increases productivity, resilience (adaptation), reduces/removes GHGs (mitigation), and enhances achievement of national food security and development goals. FAO 2010

Introduction Possible affirmative value chain interventions in aBi.

aBi Areas of Interventions Concerns Investment

Crop production Sustainable use of land and water.

Climate Smart Agriculture1: water and soil moisture and nutrition management and conservation. Irrigation. Choice of crop and variety. Agronomic practice. Use of crop wastes.

Animal Production

Sustainable use of land and water. Productive Use of animal biproducts.

Water and soil conservation. Use of bio-waste and biogas. Choice of breed and animal husbandry practice. Feeds and nutrition.

Agro-processing Reliance on fossil fuels. CO2 emissions. Inefficient energy use. Effluent and air quality management.

Biogas, bio waste, solar and other renewables solutions. Waste minimisation and management. Energy optimising production. Efficient transport. Compliance with standards (voluntary and formally regulated).

Inputs supply Environmental Pollution. Health and safety.

Appropriate labelling and packaging. Education. Efficient application of chemicals and fertilisers and adoption of alternatives. Waste minimisation and management. Sensitization, training and safety.

To promote financing for demonstration, deployment and transfer of clean, sustainable and efficient technologies that have the potential to significantly enhance the resilience of agribusinesses to adapt to and/or mitigate climate change and declines in land productivity.

The Fund will:

a. Provide incentives to investors and businesses to demonstrate and adopt technologies for the above, as an integral part of their business;

b. Realize environmental and social benefits that contribute to sustainable development;

c. Align with other efforts being made to respond to Climate Change, promote Green Growth and Climate Smart Agriculture opportunities

d. Integrate aBi services through the offer of mixed instruments to agribusiness partners;

e. Share experiences and lessons learned in responding to climate change challenges and disseminate the same.

Objectives

Proposed Life of Fund

The fund shall stay operational for the life of approved Business Plan periods, when the Board of aBi shall reassess operations and agree whether/how to continue with the fund or channel finances to other Agribusiness investments.

Financing of the Fund

• Percentage of aBi Finance capital funds;• Injections from aBi Trust to be deployed as grants or subsidies on their

behalf;• Grants from other likeminded partners;• Interest and fees earned.

Administrator aBi Finance is the administrator of the fund, in collaboration with aBi Trust providing or sourcing the technical assistance required. The product shall be administered in accordance with aBi policies and procedures.

Activities Supported

Activities supported by Fund shall primarily be agro-related, example of which are given above.

Basic Description Conditions and Eligibility Requirements

aBi shall take a two pronged approach where the fund can be accessed directly by a medium sized enterprise which is promoting clean technologies or indirectly through a Financial Institution for on lending to clean technology initiatives as per criteria below:

• FIs which facilitate lending for Clean Technology acquisition

• Agribusinesses only or projects directly supporting Agriculture

• Business should have been in existence for at least three years and demonstrate that they are a going concern, even though the specific project maybe new

• Project eligibility and level of financing is assessed on potential “transformative” effects as well as project viability in the absence of concessional finance. Investments are intended to “stimulate lasting changes in the agricultural sector, sub-sector or market” by improving resilience to Climate change, energy efficiency and water management

• Initial Investment (Typically USh 300M-4 Billion)

• Tenure - 3-10 years after initial disbursement

At least 20% owner contribution to the projectAlignment to fund objectives