aBi launches the Green Taxonomy and Green Finance Fund

In Summary
  • The Green Finance Fund is a blend of three green finance instruments including;
    Green Lines of Credit worth Ugx.120 billion, Capacity building worth Ush 4 billion
    and Green Agribusiness Guarantees.
  • The fund is designed and can be accessed by Tier 1, 2,3 and 4 financial institutions in Uganda.
Ms. Mona Muguma Ssebuliba, the CEO aBi Finance, signs a board to signify the launch of the Green Finance Fund and Green Taxonomy
Image: Courtesy

aBi Finance Limited has unveiled the Green Finance Fund and Green Taxonomy worth Ugx.124 billion, to promote the sustainable growth and resilience of the agriculture sector .

During the launch of the aBi Green Finance Fund  Chief Executive Officer, Mona Muguma said that dedicated green investments will mitigate climate change and biodiversity conservation through the Fund.

 Muguma noted that Smallholder farmers and agribusinesses continue to suffer from climate change vagaries evidenced by changing rainfall patterns, drought, and temperature rise.

Deputy Governor Dr. Michael Atingi-Ego said that the Commercial Banks will be tasked to support agriculture through embedding environmental sustainability in their business principlals.

Bank Of Uganda Deputy Governor Michael Atingi-Ego delivers his remarks
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“Through a new climate change risk policy that was recently adopted in Bank of Uganda and other programs, BOU will require the banking sector to review its business models, by strengthening the links between the preservation of the natural environment including green financing which supports agriculture and the risk –adjusted returns sought by their shareholders.”

“We aim to integrate climate risk management in micro-prudential and risk-based supervision as well as the monetary policy framework. This arises from the fact that climate change directly affects the delivery of our mandate because extreme weather causes price volatility and exposes commercial banks’ balance sheets to risks such as the potential defaults of agricultural industry borrowers as well as negatively affecting our exports thereby diminishing forex earnings.”Atingi-Ego added.

Food crop inflation in November was recorded at 27.2% annual inflation whereas the headline inflation was 10.6% down from 10.7 percent in October, a trend attributed to long drought spells that affected food crop prices.

Her Excellency,Signe Winding Albjerg the Danish Ambassador to Uganda at the launch
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Head of Investments - Green Growth and Business Development Services, Noah Owomugisha said that the purpose of the Green Finance Fund is to increase access to sustainable financial services for investment in green (inclusive and climate smart) agribusiness by SMEs and farmers through Financial services development by developing green finance products, training staff on green finance and management of green loans and market-oriented/sector level greening awareness creation.

 Other interventions include the creation of Green lines of credit by increasing liquidity for financial institutions to green loans and Green Agribusiness Guarantees through de-risking green agribusiness loans, with a risk share of 70% aBi Finance and 30% Financial Institutions.

Ms. Mona Muguma Ssebuliba (R), the CEO aBi Finance, Dr. Michael Atingi-Ego ( L), Deputy Governor - Bank of Uganda, and Signe Winding Albjerg (c), Her Excellency, the Danish Ambassador to Uganda
Image: Courtesy

Also at the event Mr. Tigran Sukiasyan, Senior Adviser, Climate Finance and Institutions gave an insight on the assignment to support establishment of Green Finance Taxonomy for aBi Finance, with a focus on Agribusiness, and to lead stakeholder engagements on Green finance in Uganda

The aBi Green Finance Fund is made accessible through financial institutions that work with smallholder farmers that practice Green Farming interventions and was made possible with Denmark’s financial support and support from the European Union.

The Danish Ambassador to Uganda, Signe Winding Albjerg, who was in attendance noted that as the Royal Danish Embassy, they would continue to support all interventions of the Green Finance Fund.