European Commission, Delegation of the European Union to Uganda
Catalysing the provision of green and climate finance to Uganda's micro, small and medium enterprises through capacity building and innovative financial instrument development.
The Uganda Green Growth Development Strategy (2017/18 – 2030/31) outlines the importance of engaging the private sector in the transition to a green and inclusive economy that is resilient and contributes to improved wellbeing of Uganda’s growing population. Micro, small and medium sized enterprises (MSMEs) account for around 90% of the private sector, employ over 2.5 million people, and contribute 20% to the Gross Domestic Product (GDP), and are a crucial driver of the green transition in the private sector. They develop products and services that respond to climate change adaptation needs of local communities, advance and commercialise eco-innovations that reduce carbon emissions and protect local biodiversity ecosystems, and integrate marginalised communities such as women and youth along their value chain as suppliers, employees, partners and customers.
Increasing access to finance for green enterprises The path to starting and scaling green MSMEs is hindered by significant challenges – ranging from limited financial expertise of the enterprise team to few financial services targeted to the specific needs of green MSMEs. As a result, green MSMEs struggle to access growth finance for their businesses to access markets and grow their operations and impacts. The Uganda Green Enterprise Finance Accelerator (UGEFA) was launched in 2020 with support from the European Union Delegation to Uganda to address these challenges. UGEFA followed a dual-pronged approach by building the capacity of both demand and supply side of finance and establishing an Access-to-Finance facility to reduce the risks of financing green enterprises.
Building on prior success and lessons learnt Since 2020, UGEFA has provided tailored capacity building support on financial readiness and growth strategies to 206 growing green MSMEs in sustainable tourism, sustainable transport & mobility, green manufacturing, waste management, and clean energy. UGEFA has also partnered with 6 local commercial banks to finance the growth projects of UGEFA-supported green MSMEs. In the first phase, 102 loans were facilitated for green MSMEs totalling over 8.3 million euros, of which 2.7 million euros of grant finance.
The second phase of UGEFA continues the approach of providing capacity building support and funding facilitation, drawing on adelphi's tool-based approaches to financial skills and systems development, innovative financing mechanisms and strong partnerships with Business Advisors and local commercial banks to extend access to finance to green SMEs in additional sectors and geographies in Uganda. The second phase will facilitate over 150 loans to green enterprises.